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Old Republic International (ORI) Q4 Earnings & Revenues Top

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Old Republic International Corporation (ORI - Free Report) reported fourth-quarter 2018 earnings of 45 cents per share, beating the Zacks Consensus Estimate of 42 cents by 7.1%. Also, the bottom line increased 36.4% year over year.

The quarter witnessed higher net premiums earned in commercial auto driven by continued rate increase. However, workers' compensation writings reduced. Nonetheless, net investment income increased.

Behind the Headlines

Adjusted revenues amounted to $1.6 billion, beating the Zacks Consensus Estimate by nearly 1%. Moreover, the top line rose 1.1% year over year, riding on 0.4% higher net premiums and fees earned, 6.3% increase in net investment income and 17.2% higher other income.

Total expenses increased 3.4% to $1.4 billion, driven by a 19.8% rise in claims cost. Claim ratio increased 720 basis points year over year.

Old Republic International Corporation Price, Consensus and EPS Surprise

Full Year Highlights

Operating income per share came in at $1.86, up 67.6%. The bottom line outpaced the Zacks Consensus Estimate by a cent. Adjusted revenues of $6.3 billion increased 3.4% year over year and topped the Zacks Consensus Estimate by 1.6%.

Segment Update

General Insurance: Operating revenues increased 5.5% to $953.7 million. Claim costs increased 19.3%.  Claim ratio of 75% increased 910 basis points year over year. Pretax operating income declined 31.7% year over year to $84.8 million.

Title Insurance: Operating revenues declined 3.8% to $602.2 million. Claim costs were $3.2 million compared with ($13.7) million in the year-ago quarter. Claim ratio was 0.6% in the quarter compared with (2.2%) in the year-ago quarter.  Pretax operating income declined 4.8% year over year to $61.1 million.

Financial Update

Old Republic International exited 2018 with cash and invested assets of $13.2 million, down 2.6% from the 2017-end level attributable to a decline in net unrealized investment gains and cash dividend payments, partially offset by investment additions from positive operating cash flows.

Long-term debt of $981.4 million as of Dec 31, 2018 was down 32.2% from 2017 end. Debt capitalization ratio was 16% at year-end compared with 23.4% at the end of 2017.

Book value per share was $17.23 as of Dec 31, 2018, down 2.8% year over year.

Zacks Rank

Old Republic International currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Of the insurance industry players that have reported fourth-quarter earnings so far, The Travelers Companies, Inc. TRV and RLI Corp. RLI beat the respective Zacks Consensus Estimate for earnings while The Progressive Corporation PGR missed the same.

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