ladies and gentlemen thank you for standing by my name is abby and i will be your conference operator today at this time i would like to welcome everyone to the old republic international first quarter 2025 earnings conference call all lines have been placed on mute to prevent any background noise after the speaker's remarks there will be a question and answer session if you would like to ask a question during that time simply press star followed by the number one on your telephone keypad if you would like to withdraw your question press star one a second time thank you and i would now like to turn the conference over to joe calabrese with the financial relations board you may begin thank you good afternoon everyone and thank you for joining

us for the old republic conference call to discuss first quarter 2025 results this morning you We distribute a copy of the press release and posted a separate financial supplement. Both of the documents are available on Old Republic's website at www.oldrepublic.com. Please be advised that this call may involve forward-looking statements as discussed in the press release and financial supplement dated April 24, 2025. Risk associated with these statements can be found in the company's latest SEC filing. Presenting on today's conference call will be Craig Smitty, President and CEO, Frank Sudara, Chief Financial Officer, and Carolyn Monroe, President and CEO of Old Republic's National Title Insurance Group. Management will make some opening remarks, and then we'll open the line for your questions. At this time, I would like to turn the call over to Craig. Please go ahead, sir.

Well, thank you very much, and good afternoon, and welcome again to Old Republic. first quarter 2025 earnings call well Old Republic started the new year much like we finished last year with the continuation of an upbeat story of growth and profitability during the first quarter we produced 252.7 million of consolidated pre-tax operating income that's up from 231.5 million in the first quarter of 2024. Our consolidated combined ratio was 93.7 and that compares to 94.3 in the first quarter last year. Specialty insurance grew net premiums earned by 13% in the first quarter and produced 260 million of pre-tax operating income. That's up from 220 million last year and the specialty insurance combined ratio was 89.8 in the quarter compared to 90.3 last year. In title, despite the continuation of higher mortgage interest rates and a tight real estate market, the title insurance folks grew premiums and fees by 11% in the first quarter and produced 4.3 million of pre-tax operating income which is up 2.3 million from last year. The title insurance combined ratio was 102.1 in the quarter compared to 102.5 last year. Our conservative reserving practices that we talk about continue to produce favorable prior year loss reserve development in both specialty insurance and title insurance and frank will provide a little more detail on that later our balance sheet remains strong even as we've returned capital to shareholders through both dividends and share repurchases and here too frank will provide a little more color around that that all happens while we continue to return excess capital to shareholders and and invest in new specialty underwriting subsidiaries technology and talent I will now turn the discussion over to Frank for some more color and details around those comments and then Frank will turn things back to me to cover specialty insurance. And that'll be followed by Carolyn who'll discuss title, and then we'll open up for some conversation and Q&A. So, Frank, with that, I will hand it over to you.

All right. Thank you, Craig, and good afternoon, everyone. This morning, we reported net operating income of $202 million for the quarter compared to 185 million last year on a per share basis comparable year over year results for 81 cents compared to 67 cents a 21 improvement net investment income increased four percent as a result of higher yields on the bond portfolio partially offset by a lower invested asset base from returning excess capital our average reinvestment rate on corporate bonds during the quarter was 5.1 percent. The total bond portfolio book yield now stands at 4.6 percent compared to 4.5 percent at the end of last year. The value of our total investment portfolio increased by nearly 200 million. Our equity portfolio which is focused on high quality value stocks and makes up 16 percent of the total investment portfolio was up nearly 60 million in the quarter. Turning now to loss reserves, both specialty insurance and title insurance recognized favorable development in the quarter leading to a benefit in the consolidated loss ratio of 2.6 percentage points with no significant unfavorable development to speak of. This compares to 2.3 points of favorable development last year. I'll now go a little deeper into specialty insurance coverages. Workers' comp continued to have strong favorable development, albeit less than last year. Both commercial auto and property experienced favorable development that was considerably higher than last year, and general liability had a very small amount of unfavorable development compared to a more meaningful level of unfavorable development last year. We ended the quarter with book value per share of $24.19, which inclusive of the regular dividend equated to an increase of just over 7%, and that resulted primarily from our strong operating earnings and higher investment valuations. In the quarter, we paid approximately $500 million for the special dividend declared late last year. In addition, we paid $68 million in regular dividends and repurchase 25 million worth of our shares we did not repurchase additional shares since the end of the quarter so that leaves us with just over 200 million remaining in our current repurchase program i'll now turn the call back over to craig for a discussion of specialty insurance okay thanks for that frank specialty insurance net premium written was up 10 percent in the first quarter, and that came from strong renewal retention ratios, rate increases on most of the lines of coverage, solid new business writings, and increasing premium production

in our new specialty underwriting subsidiaries. Our specialty growth continues to expand our ENF presence with seven of our underwriting subsidiaries utilizing Old Republic's ENF platform. Our E&S direct premiums written, we're up 13% this quarter. As mentioned in my opening remarks, in the first quarter, specialty insurance pre-tax operating income was $260 million, and the combined ratio was 89.8. So given these top line and bottom line results, we continue on our journey of profitable growth within specialty insurance. Getting a little more into the details, the loss ratio for the first quarter was 61.7, including 3.3 percentage points of favorable prior year loss reserve development, compared to 62.7 last year that included 2.5 points of favorable development the expense ratio was 28.1 in the first quarter compared to 27.6 last year right in line with expectations turn to some comments on property catastrophe losses that have impacted the industry as a result of the LA wildfires. During our last quarter's earnings call, you might recall that we indicated we had estimated our ultimate LA wildfire losses to be between 10 and 15 million, and currently we've reduced that estimate to less than 10 million. Now to give you some details on commercial auto Auto and workers' compensation are two largest lines of coverage. Commercial auto net premiums written grew 9% in the first quarter, while the loss ratio came in at 70.3 compared to 71.9 last year. Rate increases were approximately 11%, and consistent with comments we've made in previous quarters, that is commensurate with the loss trends that we're observing in commercial Workers' compensation net premiums written were 3% higher in the first quarter, while the loss ratio came in at 58.7 compared to 47 last year. Loss frequency trend continues to decline, while the loss severity trend remains stable. So given higher wage trend within payroll, which is of course our rating base, declining loss frequency trend, stable loss severity trend, combined with rate decreases that are in the low single digits, we think our rate levels in this line of coverage remain adequate. We expect solid growth and profitability and especially insurance to continue throughout 25, which we think reflects the success of our strategy and our operational excellence initiatives. And we also expect to continue to see growing contributions from our newest specialty underwriting subsidiaries. So that'll end it for specialty insurance for now, and I'll hand it over to you, Carolyn, to give us some color and comments on title insurance.

Thank you, Craig. Title insurance reported premium and fee revenue for the quarter of $605 million. This represents an increase of just under 11% from the first quarter of 2024. While we are pleased with our performance, conditions in the real estate and mortgage industries continue to be less than favorable in the seasonally weak first quarter. Our directly produced premium and fees were up 6% from the first quarter of last year, while agency produced premiums were up 12%. Commercial premiums increased 27% this quarter compared to first quarter 2024. Commercial premiums were 24% of our earned premiums this quarter compared to 21% in the first quarter of last year. Agency premiums made up 78% of our revenue during the quarter, up from 77% during first quarter of last year. Investment income was also up this quarter around 7% compared to first quarter of 2024, reflecting higher investment yields earned. Our overall loss ratio increased to 2.7% this quarter compared to 2.2% in the first quarter of 2024. Although prior policy years continued to develop favorably, the amount of favorable development in first quarter 2025 was less than the first quarter of 2024. Our pre-tax operating income increased to $4 million this quarter compared to $2 million in the first quarter of last year, and our combined ratio of 102.1% is slightly lower than the first quarter of 2024. Our elevated combined ratio continues to reflect market conditions, which we are managing through. Our expense ratio improved to 99.4% from 100.3% in the first quarter of 2024, an improvement of nearly 1%. Technology continues to be paramount to ensuring smooth and secure real estate transactions. In our previous fourth quarter call, we emphasized the importance of refocusing our technological efforts to streamline business operations. In the first quarter, we proudly announced our strategic partnership with Qualia, which saw Qualia acquiring our settlement and production software platforms, RamQuest and eClosing. By leveraging Qualia's expertise in advanced infrastructure, providing a modern digital transaction, we will be able to equip our direct offices and title agents with cutting-edge tools and solutions. This partnership also allows our internal tech teams to reallocate our focus and resources toward developing other crucial technologies that will help us thrive in a competitive market. It is necessary for our internal systems such as remittance, policy issuance, CPLs, and RAID engines to work seamlessly with all closing and production platforms. Additionally, integrating fraud prevention systems and AI technologies is of utmost importance to strengthen our security measures and enhance operational efficiencies. As we continue to be agency-focused, we understand the unique challenges and opportunities that our title agents encounter daily. And we are dedicated to providing them with innovative technological solutions required to maintain a competitive edge. And with that, I'll turn it back to Craig.

Okay, thanks, Carolyn. So profitable growth continues in specialty insurance, and in title insurance, we remain focused on profitability in a challenging marketplace. And on a final note, operating return on equity improved to an annualized rate of 14.4% compared to 11.5% in the first quarter last year, which you might have noticed in the supplement. And that's happening as we continue to thoughtfully manage capital, returning excess capital to shareholders. So that'll conclude our prepared remarks and we'll now open up the discussion to Q&A where I'll answer your questions or I'll ask Frank or Carolyn to help me out and respond.

And ladies and gentlemen, we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. if you would like to withdraw your question press star one a second time if you are called upon to ask your question and are listening via speakerphone on your device please pick up your handset and ensure that your phone is not on mute when asking your question again it is star one if you would like to join the queue and your first question comes from the line of greg peters with raymond James. Your line is open.

Good afternoon, everyone.

Hi, Greg.

Hello. So, hey, let's go to the specialty insurance business. And, you know, as we go through and evaluate your top line performance in the first quarter, can you give us a sense of how much of the top line is a function of rate versus actually new business produced? Because I imagine it's going to vary by segment.

Well, that's right, Greg. It does indeed vary by segment. As we mentioned in the release, we're seeing rate decreases in the public directors and officers business, as well as, of course, workers' compensation, some slight decreases there. But on the other hand, as I mentioned in my earlier comments, we're getting strong rate increases still on our commercial auto business, and we're also getting strong rate increases on our general liability business as well. So it really is a mixed bag. I would say that our new underwriting subsidiaries are providing a pretty substantial lift here beyond just rates and retention and new business in the organic segments of our business. So as we indicated last year, we were optimistic that as the newest underwriting subsidiaries came online, that we were going to continue to see greater and greater contributions throughout 25, and that's happening. And we expect it to happen going forward. So it's a combination of a lot of things that are driving rate versus growth in organic business versus contributions from new underwriting subsidiaries. Right.

Maybe on the new business initiatives, because you don't have a lot of historical data inside the company regarding claim patterns, et cetera. How do you approach the reserving on these ventures? And how do you approach loss picks, et cetera? Sure.

Well, we approach it exactly as we approach all of our other businesses. But to your point on the longer tail lines of businesses, we do look at industry data. We look at our own data, and to the extent that those lines of business are the same, we're deriving lost patterns from our existing business. The other thing I would point out is that a lot of the new underwriting subsidiaries are shorter tail lines. As mentioned previously, we're trying to diversify the line of coverage mix, And I think we've done a pretty good job of that over the last five years, diversifying away from being so concentrated in just workers' compensation and auto, commercial auto. And through that diversification, we've added a considerable amount of short tail lines. So reserving there is less of an issue. So, for instance, inland marine coverages, while we have history on inland marine experience that we could look at, it's so short tail, it's a year anyway. So, you know, there's not a lot of tail risk there. And similarly, that would go for our A&H business. It's a very short tail, a year to two years. And then I'll use another example, our new lawyer's professional liability business. Well, we've written professional liability business and even written lawyer's professional liability business. So we do have a history there and rely on that. And then I'll just stop with if you look at our ENS business, you know, they're writing general liability, they're writing auto, some auto liability, some property, again, the property short tail, and we have the experience that we look to when we're looking at trends on general liability and auto liability. So, to sum it up, again, either we have the experience, we might supplement that with some industry experience, or it's so short-tail that it comes out very, very quickly.

That's good detail. Thanks. I guess the last question, I'll pivot to Caroline's business, and I guess ultimately, you know, the expense ratio improved but still running higher um you know and i don't want to get too hung up on the first quarter um but maybe give us some thoughts about how the expense ratio could improve over the course of the year relative to the prior year um and and any thoughts you might have on that carolyn i i would be happy to kick it off so um We mentioned last quarter, and then Carolyn mentioned again in her comments, the example where we sold our closing platforms and refocused our technology development efforts on other tools.

And we think we're partnering with a vendor there that's going to provide even better technologies. And that alone will help the bottom line as we move throughout this year. It will gradually help the bottom line. And as we move into next year, we should see probably about a $4 million per quarter improvement in the bottom line. because we were incurring expenses there that were greater than the fees that we were taking in. Carolyn, I'll turn it to you. I know there's other things that we're doing as well to manage. And then, Greg, before I hand it to Carolyn, I would just underscore that I agree with you completely. I wouldn't – if you look at last year where we started, it's a similar position, but we ended up, you know, the year in a better place because of that first quarter being a quarter that is traditionally very low in transactions. So, Carolyn, I'll turn it to you.

Okay. Thank you, Craig. Greg, you know, we continue to manage our expenses to the market, but, Greg, it's really going to be based on our top-line revenue. You know, we've got to see the market turn more for us to really have a large effect on our expense ratio, but it doesn't stop us. I mean, we're constantly monitoring what we're doing, what we're spending, and, you know, how we can change that. So I do see it improving, though, throughout the year because, you know, we also feel like we're going to see an improved market as we get to this summer.

Does that help? Yeah, it does. On the technology piece that is part of your answer or part of Craig's answer, that was principally in the direct operations, right, that you're going to get the savings or was that also agency too?

So our – this was just – our platforms were totally separate. They actually only served a small piece of our direct operations. They were – RamQuest and eClosing were software platforms that were used out in the market by independent title agents. So – but they just rolled up under our whole title operation. They were operated as separate companies that we combined into our financials. So it's not really a function of direct or agency. They were separate companies.

Got it. Thanks for the answers.

Thank you, Greg.

And as a reminder, it is star one if you would like to ask a question. And your next question comes from the line of Matt Carletti with Citizens. Your line is open.

Okay, thank you. Good afternoon, Matt. I want to ask you a question on kind of a high-level question, But just, you know, there's been a lot of, obviously, focus and discussion on uncertainty in the markets related to the economy and tariffs and all that sort of thing since, call it, you know, April 2nd. And have you seen anything even anecdotally in your book of business, whether it be, you know, on the specialty side, just projects or, you know, clients kind of taking a pause before making decisions? Or, you know, there have been some, again, probably anecdotal articles, but about the housing market and how people have kind of stopped and kind of reassessing maybe a move or buying a house. You know, have you seen any changes in volumes on even on the title side since then?

Right. Well, you know, it's hard to really know if what we're seeing in the way of top line is a result of tariffs or is it some other economic variable. I would say probably an area that you could take some credence from is the reduction in our Canadian business. Of course, exchange rates there have some impact, and you can attribute some of the reduction to just exchange rates alone but given that a large amount of our business on the trucking side is north-south type of travel and we've seen a reduction there I would think some of that is tariff related and then And I feel even more confident saying that our accident business up there, the reductions that we're seeing up there are probably some fallout from the tariff discussions because what our travel accident business does up there, we have the incoming business where you have visitors into Canada and students coming into Canada. And then we also have business where Canadians are – the so-called snowbirds are heading down into the United States. And there's been a lot of media coverage where they're not – a lot of Canadians are not deciding to come here and go somewhere else. So we've seen a pretty steep drop-off in our travel and accident business. We've seen some drop-offs in the commercial trucking business. So I think that's an area where it's probably the easiest to surmise that it's probably related to tariffs or at least the ensuing behaviors after the tariffs. So, and then I would just add, you know, from a, we haven't seen anything from a lost cost standpoint. We're keeping our eyes open on the workers' compensation side of things. Tariffs down the line could have an impact on pharmaceuticals, could have an impact on medical devices. On the commercial auto side of things, tariffs could have an impact on vehicle parts and replacement vehicles, but as you know, what we do for a living is monitor in as real time as possible what's going on in severity and frequency trends, and to the extent that those tariffs start to have an impact on severity trends, we're going to spot it, and we're going to do what we always do and react accordingly, just as we have done when there have been inflationary trends in the past. Again, for us, that's what we do is part of our underwriting excellence proposition is making sure that we have a complete understanding of changes to exposure trends, frequency trends, severity trends, and we'll be following that very closely. And right now, those are the couple of areas in work comp and couple of areas in commercial auto that we know we have to keep an eye on. Great. Thank you for the color. I appreciate it.

And your next question comes from the line of Paul Newsom with Piper Sandler. Your line is open.

I got a couple of questions here. First, let me start off with a competitive environment question. But one of the things that this quarter has been softest as you get into larger markets as opposed to middle and maybe small. Are you also seeing that in your book?

You know, Paul, that's a hard one for us to answer. Most of our business is small and mid-commercial business. And if I understood your question, are we seeing a difference between softness and hardness in the small and mid versus the large? On the large, what we do there through our older public risk management subsidiary is is business whereby the insureds are taking the preponderance of the risk, either through large deductibles or captives, and that business is very sticky for us, and our rates there are not so much subject to the types of rates you might experience on other kinds of large commercial risk transfer business. This is risk retention business, less rate sensitive. So I can't say anything that we've seen in our portfolio is suggesting a difference between our book of small commercial, middle market commercial, and large commercial business.

And now a capital markets question, or capital management question, pardon me. So the buybacks slowed or stopped at a certain point. I'm curious if there's a reason for that, and maybe you could just talk about sort of the outlook for stock-free purchases, prospectively, giving a pause.

Sure, so yeah, as I think we discussed last quarter, we made the decision based upon our analysis of our capital position to evaluate both special dividends and share repurchases. And as I think I commented on, we had the very nice problem of continuing to carry too much capital because as quickly as we could return excess capital and reinvest it, which comes first into our business, we kept replenishing at a faster pace than we could return it. And we made the decision at the end of the year to go ahead and issue a special dividend, as Frank commented on, about $500 million through a $2 special dividend, because We felt that that enabled us to reset that level or level set that capital base to a more appropriate level without continuing to retain excess capital. And as we commented on, we did have some share repurchases in the first quarter as well. as we go forward there's a lot of variables at play here you know as we entertain new other new specialty underwriting subsidiaries as we entertain the possibility of acquisitions those require capital and we still have an outstanding authorization under our existing repurchase and we'll continue to execute on that as we go forward and we'll see where where things are and do what we always do which is at a point in time where management believes we're continuing or that we have excess capital we need to return to shareholders we will take that matter up with our board and decide the best way to return it, whether that's through share repurchases, special dividend, or a combination of the two.

And then maybe one final question. Corporate expense levels look like they jumped a bit in the quarter, and the commentary on the press release suggests maybe they're somewhat sustainable, but at these high levels is that the way to think about it, or is there some other way to think about sort of how the corporate expenses would be? Obviously, that's a huge piece of your business, but we took a little bit in the first quarter.

Sure, I'll comment, and then Frank can fill in where he might see appropriate. So on corporate expenses, this quarter, as we noted in the release, you have a lot of moving pieces with It's a lower level of interest income because of the lower invested asset base. You've got the RFIG runoff moving out of that piece of the business as well, and the $500 million special cash dividend payment. And on the expense side of things, a lot of that is related to executive compensation expenses, which were higher. And that's their higher as a result of mostly as a result of performance. A lot of that is variable in nature related to our performance, and we've had very strong performance. So as a result, higher executive compensation levels, nice problem to have because of the very good performance, we have a higher expense there. So on a go forward basis, with the reduced level of capital, highly variable income and expenses, I think you can suggest that the bottom line type of loss within corporate is probably going to continue throughout the remainder of the year.

Thank you for the help. We appreciate it.

And that concludes our question and answer session. I will now turn the conference back over to management for closing remarks.

Okay. Well, we have one quarter under the belt, and it feels pretty good thus far. We're very proud of the results we've been able to deliver to shareholders, and we thank all of our associates and business partners that have helped us achieve that. uh obviously uh the economy is a question mark a lot of volatility a lot of question marks remain and uh we'll have to see how the rest of the year goes but so far so good for old republic so thank you very much we appreciate your time and interest and ladies and gentlemen this concludes today's call and we thank you for your participation you may now disconnect