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Spirits remain high as income drops at Old Republic

Second quarter results are firm’s fifth best on record

Despite drops in revenue and income in the second quarter, Old Republic International Corp. executives remained positive during their earnings call with investors Thursday afternoon.

“While we are reporting decreases in revenue and pretax operating income for this quarter, it is important to keep in perspective that these comparisons are to a year that saw record-setting demand for housing and investments in the real estate market,” Old Republic Title President Carolyn Monroe told investors. “Our reported second quarter results for both revenue and pretax operating income rank fifth in terms of all-time highs, trailing only the fourth quarter of 2020, and the second, third and fourth quarter of 2021.”

Overall, the company recorded a second quarter net income, excluding investment gains, of $210.2 million, dropping 4.8% year over year. With the inclusion of investment income, the firm saw a net income loss of $40.1 million.

As the market has become more volatile, executives said, the company has shifted from investing in stocks to investing in bonds.

While Old Republic Title certainly faced headwinds during the second quarter due to rising interest rates and a slowdown in homebuying demand, it still managed to generate $1.03 billion in title net premiums and fees, just 7.1% below its second quarter 2021 level. However, the segment’s pretax income was down 21.1% year over year to $109.5 million.

Like its “Big Four” counterparts, Old Republic’s commercial title sector had a strong quarter, with premiums rising 45% year over year. Overall, however, direct title volume was down 24% compared to a year ago. Executives said they expect volumes to remain at a lower level throughout the rest of the year as interest rates continue to rise and home prices remain firm.

“We will continue to manage and align our expense structure accordingly, as rising interest rates are expected to soften commercial activity, as well as residential markets,” Monroe said.

She continued, saying despite the decline in title volumes compared to last year, premium volume is still roughly 60% higher than it was in 2019, prior to the COVID-19 pandemic.

“We remain very pleased with our strong levels of profitability in both general insurance and title insurance,” Craig Smiddy, Old Republic’s CEO, told investors. “Our diversified specialty strategy should continue to produce stable, profitable results and value for our shareholders.”

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