Old Republic International Corporation (NYSE:ORI) reported first-quarter results that came in below Wall Street expectations, with both profit and revenue missing analyst forecasts.
Shares slipped 1.21% in premarket trading following the release.
Earnings and revenue fall short
The specialty insurer posted adjusted earnings per share of $0.68, falling short of the consensus estimate of $0.80 by $0.12.
Revenue totaled $2.2 billion, below the $2.27 billion expected by analysts, although still representing a 6.7% increase from $2.06 billion in the same quarter last year.
Profitability declines
Net operating income dropped 15.4% year-on-year to $170.5 million from $201.7 million.
Meanwhile, consolidated net premiums and fees earned rose 7.1% to $1.97 billion, compared with $1.85 billion a year earlier.
The company’s combined ratio worsened to 96.6%, up from 93.7% in the prior-year period. Favorable reserve development contributed 1.5 percentage points to results, down from 2.6 points in the same quarter last year.
Management focuses on long-term strategy
“Old Republic’s business is managed for the long run,” said Craig R. Smiddy, President and Chief Executive Officer. “Management’s key objectives are to achieve highly profitable operating results over the long term, and to ensure balance sheet strength for the Company’s obligations.”
Mixed segment performance
The Specialty Insurance division, which generates the bulk of premiums, reported a 4.7% increase in net premiums earned to $1.29 billion.
However, underwriting income in this segment fell sharply by 46.7% to $67.2 million from $126.1 million, as the combined ratio rose to 94.8% from 89.8%.
The deterioration was driven by reduced favorable reserve development from prior years and higher expenses tied to investments in startups, technology upgrades, and artificial intelligence initiatives.
Title Insurance shows improvement
The Title Insurance segment performed better, with net premiums and fees earned rising 12.0% to $677.8 million.
Its combined ratio improved to 100.1% from 102.1%, supported by strong commercial activity.
Capital returns to shareholders
During the quarter, Old Republic returned $237.5 million to shareholders, including $76.7 million in dividends and $160.7 million through share repurchases.