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Old Republic Issues Q4 Estimates, Okays Special Dividend

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Old Republic International Corporation (ORI - Free Report) has announced to rake in $210 million as net realized investment gains for 2017 and incur $45 million as additional expense in the fourth quarter of 2017. Also, the company received a favorable regulatory approval per which, North Carolina Department of Insurance issued a final order axing its supervision of Old Republic’s mortgage guaranty insurance subsidiaries chartered in that state.

Old Republic estimates net realized investment gains of about $150 million in the ultimate quarter of 2017, substantially higher than the year-ago quarterly figure of $14.7 million and considerably higher than the gains realized in recent years. Sales of investment portfolio securities, values of which had risen to higher-than-expected levels through 2017's strong securities market, have fueled this improvement.

The insurer had re-invested about $465 million of net proceeds in common stocks drawn from the gross securities sales in the fourth quarter. This investment is expected to return reasonably higher dividend income than the securities that were sold.

Expenses of $45 million include charges from a periodic review and the resulting update of previously-established estimates of future interest rates, mortality and persistency applicable to the largely inactive life insurance products as well as employee performance bonus.

Based on a solid capital position, the board of directors of Old Republic approved a special cash dividend of $1.00 per share. Shareholders of record as of Jan 10 will get the meatier dividend on Jan 31, 2018. It is over more than a decade since the insurer paid a special dividend of 80 cents. The company noted that its capital position is strong enough to support growth initiatives and boost shareholders value.

Old Republic carries a Zacks Rank #2 (Buy). Shares of the company have increased 11.8% year to date, outperforming the industry’s 9.6% gain. We expect the company’s improving premiums in most lines of coverage, especially in commercial auto, strong retention ratios, solid underwriting and improving cash flows to continue driving the shares higher.


Other Stocks to Consider

Investors also interested in other stocks worth considering from the insurance industry may check out Cigna Corp. (CI - Free Report) , Radian Group Inc. (RDN - Free Report) and Prudential Financial, Inc. (PRU - Free Report) , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  

Cigna is one of the largest investor-owned health service organizations in the United States.The company delivered positive surprises in all the last four quarters with an average beat of 14.56%.

Radian Group offers mortgage and real estate products and services in the United States. The company pulled off positive surprises in three of the last four quarters with an average beat of 4.52%.

Prudential Financial provides insurance, investment management and other financial products and services in the United States and internationally. The company came up with positive surprises in three of the last four quarters with an average beat of 0.16%.

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