Old Republic International (ORI) - 2025 Q2 - Quarterly Results

Executive Summary Old Republic reported significant Q2 2025 net income growth driven by investments, alongside increased net operating income, per share metrics, and shareholder returns, with management emphasizing net operating income for core performance evaluation Overall Financial Performance Old Republic reported a significant increase in net income for Q2 2025, driven by improved investment results, while net operating income also saw a modest increase of 3.3%. Consolidated net premiums and fees earned grew by 11.0%, and the combined ratio remained stable at 93.6% Key Financial Metrics | Metric | Q2 2025 ($M) | Q2 2024 ($M) | % Change | 6M 2025 ($M) | 6M 2024 ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net income | 204.4 | 91.8 | - | 449.5 | 408.6 | - | | Net income excluding investment gains (losses) | 209.2 | 202.4 | 3.3% | 410.9 | 387.2 | 6.1% | | Combined ratio | 93.6 % | 93.5 % | - | 93.7 % | 93.8 % | - | - Consolidated net premiums and fees earned were nearly $2 billion, an increase of 11.0%[4] - Net investment income was $171.5 million, an increase of 2.4%[4] Per Share Metrics & Shareholder Returns Diluted net operating income per share increased by 9.2% for the quarter and 14.7% for the first six months of 2025. Book value per share grew 10.1% since year-end 2024, reaching $25.14, and the company returned $71.8 million in capital to shareholders during the quarter Per Diluted Share Attributable to Shareholders | Metric | Q2 2025 ($) | Q2 2024 ($) | % Change | 6M 2025 ($) | 6M 2024 ($) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net income | 0.81 | 0.35 | - | 1.79 | 1.51 | - | | Net income excluding investment gains (losses) | 0.83 | 0.76 | 9.2% | 1.64 | 1.43 | 14.7% | Shareholders' Equity | Metric | June 30, 2025 ($M) | Dec. 31, 2024 ($M) | % Change | | :--- | :--- | :--- | :--- | | Total Shareholders' Equity | 6,185.6 | 5,618.9 | 10.1 % | | Per common share | 25.14 | 22.84 | 10.1 % | - Book value per share of $25.14, inclusive of cash dividends declared, up 12.6% since year-end 2024. Annualized operating return on equity was 14.6%[4] - Total capital returned to shareholders was $71.8 million for the quarter[4] Management's Financial Reporting Philosophy Management emphasizes net income excluding investment gains/losses (net operating income) as a key measure for evaluating insurance operations, believing it provides a clearer view of underlying performance by isolating discretionary and volatile investment results - Management uses net income excluding net investments gains (losses) (net operating income), a non-GAAP financial measure, in its evaluation of periodic and long-term results to better analyze and establish accountability for insurance operations, as realized investment gains/losses can mask operating trends[5][6] Detailed Financial Performance Consolidated operating revenues and net premiums grew significantly, with strong performance in Specialty Insurance, while Title Insurance underwriting income declined and Corporate & Other reported an operating loss Consolidated Income Statement Analysis Total operating revenues increased by 10.1% for the quarter and 10.7% for the first six months, primarily driven by higher net premiums and fees earned. Pretax income saw a substantial increase, while net investment gains/losses fluctuated significantly Consolidated Income Statement Highlights | Metric | Q2 2025 ($M) | Q2 2024 ($M) | % Change | 6M 2025 ($M) | 6M 2024 ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net premiums and fees earned | 1,994.6 | 1,797.4 | 11.0 % | 3,835.7 | 3,440.1 | 11.5 % | | Total operating revenues | 2,215.8 | 2,012.2 | 10.1 % | 4,274.9 | 3,861.0 | 10.7 % | | Total net investment gains (losses) | (7.3) | (140.5) | - | 47.7 | 26.6 | - | | Pretax income | 260.1 | 113.3 | - | 567.9 | 512.1 | - | | Net income to shareholders | 204.4 | 91.8 | - | 449.5 | 408.6 | - | Diluted Per Share Financials | Metric | Q2 2025 ($) | Q2 2024 ($) | % Change | 6M 2025 ($) | 6M 2024 ($) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Diluted net income excluding investment gains (losses) | 0.83 | 0.76 | 9.2% | 1.64 | 1.43 | 14.7% | | Diluted net income | 0.81 | 0.35 | - | 1.79 | 1.51 | - | | Cash dividends declared on common stock | 0.290 | 0.265 | 9.4% | 0.580 | 0.530 | 9.4% | Segment Performance Overview The Specialty Insurance segment demonstrated strong growth in premiums and underwriting income, while the Title Insurance segment experienced a decline in underwriting income despite revenue growth. The Corporate & Other segment reported an operating loss due to reduced investment income Net Premiums and Fees Earned by Segment | Segment | Q2 2025 Net Premiums & Fees Earned ($M) | Q2 2024 Net Premiums & Fees Earned ($M) | % Change | | :--- | :--- | :--- | :--- | | Specialty Insurance | 1,294.5 | 1,129.6 | 14.6 % | | Title Insurance | 697.8 | 663.4 | 5.2 % | | Corporate & Other | 2.3 | 4.3 | (46.6)% | | Consolidated | 1,994.6 | 1,797.4 | 11.0 % | Underwriting Income by Segment | Segment | Q2 2025 Underwriting Income (Loss) ($M) | Q2 2024 Underwriting Income (Loss) ($M) | % Change | | :--- | :--- | :--- | :--- | | Specialty Insurance | 119.9 | 85.1 | 40.9 % | | Title Insurance | 6.9 | 30.2 | (76.9)% | | Corporate & Other | (13.3) | (6.6) | (98.9)% | | Consolidated | 113.6 | 108.6 | 4.6 % | Specialty Insurance Segment Specialty Insurance Segment Performance | Metric | Q2 2025 ($M) | Q2 2024 ($M) | % Change | 6M 2025 ($M) | 6M 2024 ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net premiums earned | 1,294.5 | 1,129.6 | 14.6 % | 2,528.1 | 2,221.3 | 13.8 % | | Net investment income | 149.9 | 132.9 | 12.8 % | 299.9 | 264.0 | 13.6 % | | Segment pretax operating income | 253.7 | 202.5 | 25.3 % | 513.9 | 422.9 | 21.5 % | | Combined ratio | 90.7 % | 92.4 % | - | 90.2 % | 91.4 % | - | - Premium growth was driven by rate increases, high renewal retention, and new business production, with commercial auto showing the most pronounced growth[12] - The 2025 loss ratios reflect slightly higher levels of favorable prior year loss reserve development and improved current year loss ratios, primarily from workers' compensation and short-tailed lines[14] Title Insurance Segment Title Insurance Segment Performance | Metric | Q2 2025 ($M) | Q2 2024 ($M) | % Change | 6M 2025 ($M) | 6M 2024 ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net premiums and fees earned | 697.8 | 663.4 | 5.2 % | 1,302.9 | 1,208.8 | 7.8 % | | Net investment income | 17.3 | 15.5 | 11.8 % | 34.0 | 31.2 | 9.2 % | | Segment pretax operating income | 24.2 | 46.0 | (47.2)% | 28.6 | 48.4 | (40.8)% | | Combined ratio | 99.0 % | 95.4 % | - | 100.4 % | 98.6 % | - | - Agency-produced revenues grew 7%, and commercial premiums represented 23% of net premiums earned, up from 21% in Q2 2024[16] - The loss ratio increased due to a lower level of favorable prior year loss reserve development, and expense ratios included approximately $15 million in litigation settlement expenses and higher agent commissions[17] Corporate & Other Segment Corporate & Other Segment Performance | Metric | Q2 2025 ($M) | Q2 2024 ($M) | % Change | 6M 2025 ($M) | 6M 2024 ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net premiums earned | 2.3 | 4.3 | (46.6)% | 4.6 | 9.9 | (53.5)% | | Net investment income | 4.2 | 19.0 | (77.5)% | 8.2 | 36.4 | (77.4)% | | Corporate & Other pretax operating income (loss) | (10.5) | 5.2 | N/M | (22.3) | 14.0 | N/M | - Net investment income was significantly impacted by a lower invested asset base due to the return of capital to shareholders (including a special cash dividend) and the sale of the RFIG Run-off business[20] Financial Position & Capital Management Total assets and shareholders' equity increased, supported by a conservative investment portfolio, while the company returned significant capital to shareholders Consolidated Balance Sheet Total assets increased to $29.26 billion as of June 30, 2025, with a corresponding increase in total liabilities and shareholders' equity, reflecting growth in loss and loss adjustment expense reserves and unearned premiums Consolidated Balance Sheet Highlights | Metric | June 30, 2025 ($M) | December 31, 2024 ($M) | | :--- | :--- | :--- | | Total assets | 29,255.7 | 27,843.1 | | Loss and loss adjustment expense reserves | 14,356.4 | 13,727.7 | | Unearned premiums | 4,018.5 | 3,505.4 | | Total liabilities | 23,052.1 | 22,224.1 | | Total shareholders' equity | 6,185.6 | 5,618.9 | Investment Portfolio Strategy The investment portfolio is primarily allocated to fixed income securities (84%) and equity securities (16%), focusing on quality investments that generate consistent income and ensure the funding of insurance obligations, with limited exposure to high-risk or illiquid assets - The consolidated investment portfolio is allocated approximately 84% to fixed income securities and short-term investments, and 16% to equity securities[22] - The investment management process focuses on retaining quality investments for consistent income and ensuring solid funding of insurance obligations, with extremely limited exposure to high-risk or illiquid asset classes[22][23] Shareholders' Equity and Capital Actions Shareholders' equity per share increased by 10.1% for the first six months of 2025, driven by net operating income and net investment gains, partially offset by cash dividends declared. The company returned $165.4 million in capital to shareholders during the first half Shareholders' Equity Per Share Movement | Metric | Q2 2025 ($) | 6M 2025 ($) | 6M 2024 ($) | FY 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | Beginning balance | 24.19 | 22.84 | 23.31 | 23.31 | | Net income excluding net investment gains (losses) | 0.85 | 1.68 | 1.45 | 3.09 | | Total net of tax realized and unrealized investment gains | 0.27 | 0.91 | (0.14) | 0.33 | | Cash dividends declared | (0.29) | (0.58) | (0.53) | (3.06) | | Ending balance | 25.14 | 25.14 | 23.59 | 22.84 | | Change for the period, inclusive of cash dividends declared | 5.1 % | 12.6 % | 3.5 % | 11.1 % | - Total capital returned to shareholders during the quarter was $71.8 million in dividends. For the first six months, total capital returned was $165.4 million, comprised of $140.2 million in dividends and $25.2 million in share repurchases[25] Corporate Information & Outlook Old Republic, a Fortune 500 insurer, provided Q2 2025 conference call details and outlined forward-looking statements and key risk factors Company Profile Old Republic International Corporation, founded in 1923, is a Fortune 500 specialty insurer operating diverse property & casualty and title insurance companies, providing underwriting and risk management services across the US and Canada - Old Republic is a leading specialty insurer, founded in 1923 and a member of the Fortune 500, operating diverse property & casualty and title insurance companies across the United States and Canada[26] Conference Call Details Old Republic scheduled a conference call on July 24, 2025, at 3:00 p.m. ET to discuss Q2 2025 performance, with live access and replay available via their website or dial-in - A conference call was scheduled for July 24, 2025, at 3:00 p.m. ET to discuss second quarter 2025 performance and review major operating trends and business developments[27] Forward-Looking Statements & Risk Factors The report contains forward-looking statements subject to assumptions, uncertainties, and risks, including market competition, economic conditions, claim patterns, and technology breaches, which may affect future performance across its Specialty, Title, and Life & Accident insurance segments - Statements in the report may constitute "forward-looking statements" involving assumptions, uncertainties, and risks that may affect the Company's future performance[29] - Key risk factors include market competition, general economic conditions, changes in claim frequency and severity patterns, adequacy of reinsurance, and technology and security breaches, particularly for Specialty and Title Insurance segments[31]