Old Republic International: EPS Misses Expectations, but Strong Revenue Growth Persists

As the financial world continues to grapple with the aftermath of the COVID-19 pandemic and the subsequent market volatility, Old Republic International (NYSE: ORI) has reported its full-year 2024 earnings. While the company's earnings per share (EPS) missed analyst estimates by 7.0%, its revenue growth of 13% from FY 2023 remains a beacon of resilience in the insurance industry.

The company's strong revenue growth can be attributed to several key factors:

1. Growth in Specialty and Title Insurance Segments: Old Republic reported robust increases in pretax operating income and net premiums, driven by strong growth in the specialty and title insurance segments. The specialty insurance segment's net premiums earned increased by 13% in the fourth quarter, with a pretax operating income of $228 million, up from $195 million last year. The title insurance segment's premiums and fees grew by 9% in the fourth quarter, achieving a pretax operating income of $55 million, an increase from $44 million in the previous year.
2. Improved Combined Ratio: The company's consolidated combined ratio improved to 92.7% from 93.3% last year, indicating better underwriting efficiency and cost management. The specialty insurance segment's combined ratio improved to 91.8% from 92% last year, while the title insurance segment's combined ratio improved to 94.4% from 95.5% last year.
3. Capital Management: Despite returning significant capital to shareholders, strong earnings have replenished the company's capital reserves. The $2 special dividend was a strategic move to quickly return capital, while share repurchases remain opportunistic, depending on market conditions and trading prices.
4. Investment Portfolio Management: The company's net investment income increased by 10% in the quarter and 16% for the full year, driven by higher yields on the bond portfolio. The average reinvestment rate on corporate bonds during the year was 4.8%, while the comparable book yield on corporate bonds disposed of was 3.5%. This effective management of the investment portfolio contributed to the overall increase in profit margin.



Despite the EPS miss, Old Republic International's strong revenue growth and operational improvements demonstrate the company's resilience and commitment to long-term profitability. As the insurance industry continues to navigate market challenges, Old Republic's focus on income excluding investment gains (losses) and its strategic initiatives have positioned it well for future growth.

In conclusion, while Old Republic International's EPS missed analyst estimates in the full year 2024, its strong revenue growth and operational improvements highlight the company's resilience and commitment to long-term profitability. As the insurance industry continues to evolve, Old Republic's strategic initiatives and focus on income excluding investment gains (losses) will be crucial for maintaining its competitive edge.