Old Republic International Corporation (ORI) Q2 2026 Earnings Report, Transcript and Summary

Well, good day, everyone, and welcome to the Old Republic International Second Quarter Earnings Conference Call. I would now like to hand the call over to Mr. Joe Calabrese. Please go ahead, sir.

Thank you, Lisa. Good afternoon, everyone. And thank you for joining us for the Old Republic Conference Call to discuss second quarter 2026 results. This morning, we distributed a copy of the press release and posted a separate financial supplement. Both of the documents are available on Old Republic's website at oldrepublic.com. Please be advised that this call may involve forward-looking statements as discussed in the press release dated July 23, 2026. Assumptions, uncertainties and risks exist that may cause results to differ materially from those set forth in these forward-looking statements. For more information on these assumptions, uncertainties and risks, please refer to the forward-looking statement discussions in the press release and the company's other recent SEC filings, and the risk factors discussed in the company's most recent Form 10 k and other recent SEC filings. We also may include references to net income excluding net investment gains, or net operating income, a non-GAAP financial measure. In our remarks and in responses to questions, GAAP reconciliations are included in the press release. Presenting on today's conference call will be Craig Richard Smiddy, President and CEO; Frank Sodaro, Chief Financial Officer; and Carolyn Jean Monroe, President and CEO of Old National Title Insurance Group. Management will make some opening remarks, and then we will open the line for your questions. At this time, I would like to turn the call over to Craig. Please go ahead, sir.

Okay, Joe. Thank you, and good afternoon. Everyone, and welcome again to Old Republic's second quarter 2026 earnings call. So in the quarter, we produced $238 million of consolidated pre tax operating income and that compares to 268 million, and our consolidated combined ratio was 95.3% and that compares to 93.6%. Our annualized operating return on beginning equity stands at 12.1%, And for the first 6 months of the year, growth in book value per share, including dividends, stands at 7.2%. Specialty insurance grew net premiums earned by 2.3% over second quarter of 2025, and produced $199 million of pretax operating income compared to $254 million Specialty's combined ratio was 95.5% compared to 90.7% In title insurance, we grew premiums and fees by 10% over the second quarter of 2025 and produced $56 million of pretax operating income compared to $24 million. Title's combined ratio was 95.1% compared to 99%. We saw some slight unfavorable prior year loss reserve development in specialty insurance. And consistent favorable prior year development in title insurance. And Frank will provide more-- more details, I should say, on that topic. So I will turn the discussion over to Frank, and then Frank will turn things back to me to cover specialty insurance followed by Carolyn who will discuss title insurance. Frank? it is all yours.

Thank you, Craig, and good afternoon, everyone. This morning, we reported net operating income of $186 million for the quarter, compared to $209 million last year. On a per share basis, comparable quarter over quarter results were $0.76 compared to $0.83. So starting with investments, Net investment income increased just over 6.0% in the quarter primarily as a result of a larger investment base from strong operating results and our debt issuance that took place in May. Our average rate on corporate bonds acquired during the quarter was 4.90% compared to the average yield rolling off of about 4.20%. The total bond portfolio book yield ended the quarter at 4.80%, which was a slight increase from year end. Turning now to loss reserves. Overall in the quarter, the consolidated combined ratio benefited slightly from favorable development compared to 2.1 points of benefit last year. This was a result of favorable development from title insurance being partially offset by unfavorable development from specialty insurance. While the primary lines of coverage for specialty insurance performed well, its runoff transactional risk business had poor claims experience, which led to reserve strengthening of $40 million in the quarter. Now as a reminder, we decided to place this business in runoff in 2024. As for the other specialty coverages, property and commercial auto had significant favorable development and both came in at levels higher than last year. Workers' comp had favorable development that was considerably lower than the large amount of favorable development experienced last year, and general liability had a moderate level of unfavorable development. Now we ended the quarter with book value per share of $25.33, which inclusive of regular dividends represented an increase of 7.2% since year end. This increase resulted primarily from solid operating earnings and higher investment valuations. In the quarter, we paid nearly $77 million in dividends and repurchased $61 million worth of our shares leaving us with about 640 million remaining in our current repurchase program. Finally, as a precursor to next quarter, we expect to report a bargain purchase gain on the ECM acquisition and for ECM's results to be accretive to earnings and book value this year. To put it into perspective, ECM reported direct premiums written in 2025 of just under $220 million, and they ended that year with GAAP equity estimated at $145 million. I will now turn the call back over to Craig for a discussion of specialty insurance.

Okay, Frank. Thank you. Specialty insurance net premiums written were up 1.6% in the quarter after excluding some noise from the write up to retail premium on the auto warranty business written in our auto warranty operating company. We saw strong rate increases on commercial auto and in general liability. And our overall retention ratios were consistent with what we saw in the first quarter. As I mentioned in my opening remarks, in the quarter, specialty insurance pretax operating income was $199 million, while the combined ratio was 95.5%. The loss ratio for the quarter was 65.9%, which included 0.3 percentage points of unfavorable prior year loss reserve development compared to 62.5% in the second quarter last year, which included 2.9 percentage points of favorable development. Turning to the expense ratio for the quarter. It was 29.6 compared to 28.2 in the second quarter last year, As we have talked about now for a few quarters, our continued investments in the new specialty operating companies, technology modernization, data analytics, and AI accounts for most of that difference. In the expense ratio from last year to this year. Looking specifically at commercial auto, the commercial auto net premiums written were up 3.6% in the quarter while a loss ratio came in at 69.4 that is about 1 percentage point better than the second quarter last year. And that improvement came from a higher level of favorable prior year loss reserve development partially offset by a more conservative current accident year loss ratio. Rate increases in commercial auto were in the high teens. A bit higher than the first quarter and they were greater than the current loss trends we are observing. Commercial auto retention ratios also improved in the quarter, as competitors started to catch up with implementing higher rate increases in response to higher loss trends. Turning to workers' compensation. Net premiums written were 8.4% lower in the quarter while the loss ratio came in at 60.6 compared to 48.5 in the second quarter last year, with most of that difference due to the higher level of favorable prior year loss reserve development last year. We were able to hold rates flat in the quarter and severity loss trends remained consistent. While frequency loss trends continue to decline. So while we are seeing some top line pressure stemming from generally a competitive marketplace. We remain very focused on risk-adequate rates that will continue to produce profitable combined ratios. We also expect to see continuing growth in top line contributions from our newer specialty operating companies and the ECM acquisition should contribute to top line and bottom line in the second half of the year, as Frank mentioned. We already held a town hall with all of the ECM employees, and we would like to take this opportunity to, again, welcome ECM to the Old Republic family. So with that, for specialty insurance, I will now turn the discussion over to Carolyn to report on title insurance. Carolyn?

Thank you, Craig, and good afternoon, everyone. Title reported premium and fee revenue for the quarter of $773 million This represents an increase of 11% from the second quarter of 2025. After a slow seasonal start, residential transactions improved a bit this quarter. Contributing to our revenue growth as well as strong commercial activity. Premiums produced in our direct title operations were up 9% from second quarter of last year, and agency produced premiums were up 12%. Agency made up 78% of our revenue during the quarter. Up from 77% during the same quarter of last year. Commercial premiums increased this quarter and were 25% of our premiums earned compared to 23% in second quarter of last year. During the quarter, we saw a wide mix of transactions across many segments of the commercial sector. Our loss ratio remained consistent this year compared to last year, reflecting our consistent and conservative reserving practices. Our expense ratio improved by 4 percentage points to 92.1% from 96.1% in the second quarter of 2025. About 2 points of this improvement relate to a 1 time litigation settlement expense that we disclosed in the second quarter of 2025. The rest of the improvement was driven by continued focus on operational efficiency, expense management, and the benefits of higher transaction volumes, slightly offset by higher agent commissions due to a greater weighting of agency business relative to direct. Overall, the quarter's combined ratio was 95.1%. This brought our year to date combined ratio down to 97.4% as we continue to make progress towards driving our combined below 95%. Investment income was up this quarter by 6%. Compared to second quarter of 2025, reflecting steady investment yields earned on a slightly higher invested asset base. All these items produced pretax operating income for the quarter of $56 million, up from $24 million in the second quarter of last year. As we move into the second half of 2026, we remain focused on improving operational efficiency and expanding our margins. A key part of that effort is our partnership with Qualia and the continued rollout of our new operating system. Implementation began earlier this year and will continue through the end of next year. strengthening our foundation for long-term success. And I will turn it back to Craig now.

Okay, Carolyn. Thank you. So while we are seeing some top line pressure in specialty insurance, we continue to focus on bottom line combined ratios. And the fundamentals in specialty remain strong. In title insurance, we continue to grow with some help from the real estate market. And title's combined ratio continues to improve and that is in no small part because of Carolyn's leadership and driving operational efficiencies and cost savings. So thank you for that, Carolyn. So with that, we are happy to answer any questions, and either I will answer your question or I will ask Frank or Carolyn to respond.

Thank you, sir. And once again, if you have a question, please press 1. The first question comes from Gregory Peters from Raymond James.

Hey, good afternoon. I, you know, with the companies that have reported so far, there is been a number of comments about increasing intensity of price competition in the marketplace. And certainly, you commented on that as well. And what I would like to zero in on is some of the start up new operating companies and how they are faring in an environment which presumably is more competitive. And particularly, I am thinking about the E and S business and the property business. which are areas that have been highlighted by others as having some pretty dramatic price decreases. Sure, Gregory.

I would be happy to comment on that. And I think I think you are right. From everything that I have seen as well. Most of the discussion centers around property. and particularly catastrophe-exposed property And as you know, catastrophe-exposed property is not a big portion of our portfolio. So, you know, when it comes to property rates for us, they have not seen the type of decrease that others have perhaps seen In total property, we were down about 7.5% in rate. So it comes to the newer entities, Old Republic property, has not begun to write premium and their marching orders are to build the platform, to build it right, and, there is no incentive whatsoever in the first 3 years to put any premium on the books. So you know, with that, we are not impacted at all because of not writing any premium. And perhaps the timing will be better by the time we are up in operational. In E and S, again, not focused on catastrophic E and S type of business and writing mostly package types of business, and we are able to maintain property rates there much more so than we are, or than the marketplace is on the catastrophic business. So generally, that goes for our other companies as well that are writing property. They are writing it with other lines of coverage and not seeing a big drop off in rate like you are on property cat. Got it.

And, you know, pivoting to the expense side, you know, your expense ratio as you previewed last quarter is trending higher this year. Due to investments Maybe you could spend a second and just talk to us about how you are measuring the ROI on those investments in technology and what the benchmarks you are looking for in terms of whether they are going to yield the success you are hoping for?

Sure. I would tell you that when it comes to the expense ratio this quarter compared to the expense ratio last quarter, about a full percentage point of that is being driven by IT systems, and investments, data and analytic investments, and AI investments. And, when it comes to the ROI, you know, I think it is it is very clear and we have already experiencing it even in title, maybe even especially in title, with our Qualia partnership where we are able to drive out significant amounts of hours to produce transactions with the use of modern technology that is AI-enabled. So there is no question that we have to make these investments in AI. it is And I have said it in the past. In order to leverage AI, you have to have data and analytics In order to have good data and analytics, you have got to have modern IT systems. So and, frankly, some of the investments we are making in IT systems are ones that we just do not have a choice of. They are operating on main frame platforms that we just have to replace and modernize. So I think the ROI is just very clear that it is there. I do not have a specific number for you, but there is just no choice that we have we have to modernize our systems. In order to be able to leverage data and analytics we have seen we have leveraged data and analytics. We are able to perfect pricing to a much greater degree and we are able to do things with managing claims and losses, with that data and analytics. And then, of course, to leverage the ever changing rapid environment of AI you have to lay that on top of your data and analytics and your systems. So that is how we are looking at it. Got it.

I guess just pivoting to the title business Just, you know, watching with interest the growth in your commercial book Maybe you can just give us a sense of how that is looking for the balance of the year, especially in the context of you know, with all these big data center infrastructure projects, etcetera.

Carolyn, I will let you speak to that 1 if you would.

Sure. Gregory, we really expect to see commercial, continue as it has already this year. You know, data centers are pretty big, but, you know, with the data centers, it takes all the title companies. We are all on all of those, and we all have a piece of them. But what we are seeing of a lot of our agents are just really a mix of other industrial projects, you know, hospitality. it is been a real mix, so that gives us you know, pause to think that this will just continue through the end of the year. Since it is not 1 thing that is going strong right now. Fair enough. Thanks for the detail. Thanks, Gregory.

Next up is Paul Newsome with Piper Sandler.

Jeffrey Yu. Thanks for your call. Hi, Tom. A couple of questions. looking at the reserves a little bit. You noted that you had releases in commercial auto, but you also had a higher accident year. Maybe you could parse that away so that we know, because oftentimes, you do not see them going in opposite directions like that. Can you parse out kind of how that would work in terms of the overall reserves?

Yeah. Sure. Sure, Paul. So at the end of last year, you will recall, we raised the 2025 accident year loss pick in the fourth quarter. Even though we were putting up favorable prior year development because of our conservative approach. Recall we saw trend, loss severity trends specifically through our case reserves increasing. So we took a conservative view and raised the 2025 accident year. So hand in hand with that, when we went in to 2026, we said, well, you know, we were going to take the same approach. And put up a bit of a higher accident year loss pick for 2026 because we saw those trends emerging through at the end of the year and we did that. So if you look at where we were at the beginning of 2025 when we put up the accident year pick, and then we ended up increasing it a bit by the end of the year When we got to 2026, we said, okay. Let's just be conservative and put up a bit of a higher loss pick for 2026. As we go in. And as we move forward, as you know, we hold our loss picks once we put them up. 2 or 3 years. On commercial auto, longer on workers' comp and general liability. But those prior years are developing favorably, indicating that, you know, the picks we have put up are coming in line with what we want to happen, and that is on average produce a couple points of favorable prior year loss reserve development. That makes sense.

that is a different topic. We will ask a little bit about capital management. And the cadence of stock repurchases. Looks like you may have paused a little bit after April maybe? Anything to re-read into that or any thoughts you can have about sort of how we should think about the pace of stock repurchases and other capital management efforts.

Yes, sure. So I will start and then hand it to Frank as well. We are still looking at share repurchases as a way to return capital to shareholders And we are still in the process of repurchasing shares. And throughout the year, we would expect to continue to do that. Again, we are we are opportunistic. We look at where we are trading and we are very mindful of being dilutive to book value per share when we make those repurchases. So, opportunistically, we will continue to make repurchases. With those factors in mind. And then as always, we get toward the end of the year, and we look at where our capital position is. And if we are still in a position where we think we have excess capital, we will still consider issuing a special dividend.

And, Paul, the only thing I would add to that is this quarter had a little nuance that we were issuing shares related to the ECM acquisition. So we were staying out of the market while that was taking place. So that was another wrinkle in the quarter.

Well, that makes sense. And that is actually 1 more question I will try to squeeze in here. ECM, as we think about modeling it, prospectively, will it have a different underwriting profile either from a pure underwriting profitability perspective than the rest of the specialty business and or, you know, is there maybe some other nuances about, you know, expense ratio and loss ratio that we should be mindful of on the margin once the ECM business gets included with the rest of the specialists. Yeah.

So, Paul, I am happy to hopefully fill in a little bit of that. You know, Frank talked about the direct written premium of about $220 million last year. and ECM has the exact same combined ratio targets that we have for every 1 of our other companies, and that is somewhere between a 90 and a 95. And I can tell you that the first 2 quarters of this year they have produced very strong combined ratios stronger than the prior year. So our expectation of ECM will be that they produce combined ratios between 90 and 95. Over the course of time. And, you know, as far as the overall growth and premium They had a quota share in place. So their net premiums were a lot less than the direct. Which is, why we mentioned the direct premiums. So we are currently working on including ECM into our corporate treaties and we will eliminate the external quota share or already have effective July 1st. So hopefully, that gives you a little bit of color on how we are thinking about ECM when it comes to top line and bottom line.

that is great. Appreciate the help as always. Thank you.

Thanks, Paul.

As a reminder, everyone, if you have a question, please press 1 on your telephone keypad. Up next is Matt Carletti from JMP Securities.

Thanks. Good afternoon. Hi, Matt. Craig, since we last spoke, I think the Supreme Court kind of issued an opinion on liability for freight brokers. Which is an area that, we do not focus on much quite honestly, do not know much about. I believe Great West at least has some size business there, and I was hoping that you might be able to shed a little color on the kind of the impact that case might have on that market and how big, if any, it is for Great West and kind of what you are seeing there?

Yeah. The ruling, obviously, put more burden on freight brokers And the freight brokers therefore have more liability exposure than they had in the past. We insure the truckers, long-haul truckers, not the freight brokers, So you know, to the extent that the freight brokers will try to work with higher quality companies given that they now have liability exposure. We think that might bode well for us. in that-- We think that the truckers and the companies we have in the Great West portfolio are higher caliber. And so to that extent, freight brokers trying to work with insureds that look more like our insureds. We think could be a good thing Of course, freight brokers will on the flip side, you know, they are going to try to transfer as much of that liability as they can. But for us, we are-- yeah, it is not the freight brokers that we are insuring. Gotcha. that is helpful. Thank you.

And then maybe just a numbers question. You touched on a little bit kind of the auto warranty kind of the benefit it had in the quarter, the markup to retail, which if I am doing the math right, maybe, like, 7 points of growth in specialty, $90 million to $95 million. Is that-- do we expect that to repeat? Just a little more color on what is happening there, and is it kind of a seasonal kind of Q2 thing, or should we kind of expect ongoing impact in some future quarters?

Yeah. Great question, and I am actually very happy you asked it. The answer is yes. You should expect it to continue and that is good news. We have a couple of large significant partnerships that we are growing with. And that is why we tried to take out some of the noise around that growth. We did not wanna try to overstate the growth in net written premiums because of that nuance with that business. Mhmm. So that is why we, you know, referred to the 1.6 number if you take that noise out. But that will continue to be there as we grow We are very happy about these new partnerships Auto warranty, as you can tell from our supplement, performs very well for us. And it is a business that with the ability to increase scale as we are it will be a very profitable set segment for us. But it is gonna create a little bit of noise. And, frankly, we are having some discussions about as that grows, is there anything else we can do to make sure we are being as transparent as possible on that business and not confusing the numbers with its inclusion, but it will continue.

Gotcha. Okay. that is very helpful. Just looking here. Yeah. I think that is it. I think Paul and Gregory covered everything else for me. So thank you very much.

Thank you.

And as a reminder, everyone, if you have a question today, please press 1. We will pause for just a moment. And at this time, no 1 else has signaled I will hand the conference back to management for additional or closing remarks.

Okay. Well, just in very brief closing, we want to thank everybody for participating. We want to wish everybody a happy summer, and we feel good about the prospects for the third and fourth quarter this year. As I said, fundamentals are very solid in specialty insurance. And prospects are looking brighter in title insurance. So we will see you back here after the third quarter and update you again. Thank you very much.

Once again, ladies and gentlemen, that does conclude today's conference. Thank you all for your participation. You may now disconnect.