Old Republic International Corporation (ORI - Free Report) is poised for long-term growth on the back of solid segmental performances, improving housing market fundamentals and solid capital position. The company has a favorable Growth Score of B. This style score analyzes the growth prospects of a company.
Recently, the company reported its fourth quarter and full year 2018 results. Premiums in 2018 increased 5.3% year over year. Premiums have been benefiting from sustained economic growth, strong renewal retention ratios and new business growth. The company has been witnessing rate increase in its commercial auto. Premiums and fees continue surpassed the $2 billion mark for four consecutive years. The title group exceeded $200 million in pretax operating earnings for three straight years.
However, 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.
Shares of this Zacks Rank #3 (Hold) insurer have lost 9.4% in a year compared with the industry’s 21.2% decrease.
Given improving real estate market fundamentals, increasing home sales should continue to support premiums and fees improvement. Housing price inflation should help the company witness increased revenues. The company noted that home prices have gone up in the last three years, driving premiums higher.
A sound financial position helps the company keep its balance sheet low levered by avoiding excess debt. Its debt to equity ratio of 18.5 is lower than the industry average of 48.5.
Old Republic International has a strong capital management policy in place. The company has a track record of posting at least 25 straight years of annual dividend growth. Its dividend yield of 3.9% betters the industry average of 2.4%.
This insurance underwriter carries an impressive VGM Score of A. VGM Score helps identify stock with the most attractive value, best growth, and most promising momentum.
The Zacks Consensus Estimate for 2019 earnings is pegged at $2.74, indicating 5.4% year-over-year increase on 0.3% higher revenues. The company has outperformed earnings expectations in three consecutive quarters.
Stocks to Consider
Some other top-ranked multiline insurers are Radian Group Inc. (RDN - Free Report) , Cigna Corp. (CI - Free Report) and MGIC Investment Corp. (MTG - Free Report) .
Radian Group provides mortgage and real estate products and services in the United States. It came up with a 12.70% positive surprise in the last reported quarter. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cigna provides health services such as medical, dental, behavioral health, pharmacy, vision, supplemental benefits, among others. The company delivered 11.30% positive earnings surprise in the last reported quarter. The stock carries a Zacks Rank #2.
MGIC Investment provides private mortgage insurance and ancillary services to lenders and government sponsored entities in the United States. The company delivered 13.51% positive earnings surprise in the last reported quarter. The stock carries a Zacks Rank #2.
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