AM Best Affirms Credit Ratings of Subsidiaries of Old Republic International Corporation; Revises Outlook to Positive for Old Republic Life Insurance Company

Rhea-AI Summary

AM Best affirms Old Republic Insurance Companies' strong financial ratings and positive outlooks, with stable and excellent credit ratings across its subsidiaries. The group's expertise in commercial lines insurance, solid profitability, and strong risk management contribute to its success.

Insights

Insurance Industry Analyst

The affirmation of the Financial Strength Rating (FSR) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) for the members of Old Republic Insurance Companies, including Old Republic Title Insurance Group and Old Republic Insurance Company of Canada, indicates a stable and robust financial position. This stability is particularly significant given the volatility in the insurance industry, which can be affected by a myriad of factors including economic downturns, natural disasters and regulatory changes. The strong ratings suggest that Old Republic has a solid balance sheet and is well-positioned to meet its ongoing insurance obligations.

For stakeholders, the stable outlook provides confidence in the company's ability to manage risk effectively and maintain profitability. This is further reinforced by Old Republic's focus on commercial lines insurance carriers and its expansion beyond traditional business lines. The positive outlook revision for Old Republic Life Insurance Company (ORL) suggests an expected continuation of favorable performance, which could be an indicator of strategic growth and operational efficiency within the company.

Financial Market Analyst

The ratings and outlooks provided by AM Best are critical indicators of a company's creditworthiness and are closely watched by investors. For Old Republic International Corporation (NYSE: ORI), the parent company of the subsidiaries mentioned, these affirmed and stable ratings could influence investor perception and stock performance. In the short term, this news may reassure investors of the company's financial health and lead to increased investor confidence.

In the long term, the ratings affirmations and positive outlook for ORL may attract more conservative investors looking for stable returns and low volatility. However, it's important to note that while ratings provide a snapshot of financial stability, they are not the sole factor in investment decision-making. Investors should also consider broader market conditions, the company's strategic initiatives and sector-specific challenges when evaluating the potential impact on stock performance.

Risk Management Consultant

The emphasis on Old Republic's balance sheet strength, strong operating performance and appropriate enterprise risk management (ERM) practices suggests that the company has effective risk management strategies in place. These strategies are important for mitigating potential losses and ensuring the company's resilience against financial and operational risks. The ratings also reflect the company's expertise in the alternative risk transfer market and specialty commercial segments, which can be complex areas requiring specialized risk assessment and management.

For businesses considering insurance services from Old Republic, the ratings are indicative of a reliable partner capable of delivering on claims and maintaining a stable financial outlook. The company's modest exposure to asbestos liabilities, which have historically been a significant concern in the insurance industry, further underscores its prudent risk management approach and could be a deciding factor for businesses with similar liability concerns.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “aa-” (Superior) of the members of Old Republic Insurance Companies (Old Republic). Concurrently, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) of Old Republic National Title Insurance Company (Tampa, FL) and American Guaranty Title Insurance Company (Oklahoma City, OK) (collectively referred to as Old Republic Title Insurance Group [ORTIG]). At the same time, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of Old Republic Insurance Company of Canada (Old Republic Canada) (Hamilton, Ontario). The outlook of these Credit Ratings (ratings) is stable. In addition, AM Best has revised the outlooks to positive from stable and affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Old Republic Life Insurance Company (ORL) (Chicago, IL). All companies are subsidiaries of Old Republic International Corporation (ORI) [NYSE: ORI]. (See below for a detailed listing of the companies and ratings for the members of Old Republic.)

The ratings of Old Republic, which is considered the lead rating unit in the ORI enterprise, reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

Old Republic is the flagship group for the Old Republic Insurance enterprise and one of the top 50 property/casualty insurers in the United States. The group is made up of commercial lines insurance carriers that focus on specific sectors of the North American economy. Its largest lines of business include commercial auto and workers’ compensation; however, the group continues to expand its product capabilities beyond the traditional focus within these lines. Old Republic benefits from its expertise within the alternative risk transfer market and specialty commercial segments, as well as historically solid profitability, expertise in its respective individual business specialties and well-recognized franchises. The organization continues to have very modest exposure to asbestos liabilities.

The ratings of ORTIG reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings of ORTIG also reflect the implicit support the group receives from its position in the Old Republic enterprise and its strategic role within the organization.

The ratings of ORTIG recognize its strong reserving practices and continued profitability. With a majority of ORTIG’s premiums and fees generated through independent agents, a significant portion of its expenses are variable. This enables ORTIG to manage down cycles better, as fixed costs generally are lower for that distribution channel. AM Best expects that ORTIG will continue to generate underwriting and operating results that are in line with its title competitors, despite the impact of higher mortgage interest rates, which has led to a steep drop in mortgage originations and refinance activity. AM Best expects that ORTIG will remain a significant contributor to the overall profitability of the ORI enterprise, while maintaining the strongest level of risk-adjusted capitalization in the intermediate term, as measured by Best’s Capital Adequacy Ratio (BCAR). ORTIG continues to be integral to the overall organization, with common branding and talent synergies, as well as complementary ERM programs.

The ratings of Old Republic Canada reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings of Old Republic Canada also reflect its strategic importance within the Old Republic enterprise.

The ratings of Old Republic Canada recognize the synergies it gains as an affiliate of Great West Casualty Company, as well as its accident and sickness businesses. Partially offsetting these positive rating factors are the company’s limited product offering and the challenging market environment in Canada.

The ratings of ORL reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate ERM. The positive outlooks for ORL reflect the expectation that the company will continue to exhibit favorable operating performance over the intermediate term, while maintaining its overall balance sheet strength assessment.

The ratings of ORL recognize its risk-adjusted capitalization, which is assessed at the strongest level, as measured by BCAR. Invested asset holdings are of good credit quality, as the portfolio is designed to minimize credit default risk rather than maximizing yield. Earnings have been positive in recent years. Premiums have declined over the last several years, as closed term premiums run off and as occupational accident premiums have trended lower. The company’s business profile consists of a closed block of term life insurance and the actively marketed occupational accident line. Despite its modest size, ORL is important strategically to the Old Republic organization.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) have been affirmed, with stable outlooks, for the following members of the Old Republic Insurance Companies:

• BITCO General Insurance Corporation
• BITCO National Insurance Company
• Great West Casualty Company
• Manufacturers Alliance Insurance Company
• Old Republic General Insurance Corporation
• Old Republic Insurance Company
• Old Republic Surety Company
• Old Republic Union Insurance Company
• Pennsylvania Manufacturers Indemnity Company
• Pennsylvania Manufacturers’ Association Insurance Company

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240405412612/en/

Robert Valenta, CPCU

Senior Financial Analyst

+1 908 882 2407

robert.valenta@ambest.com

Christopher Sharkey

Associate Director, Public Relations

+1 908 882 2310

christopher.sharkey@ambest.com

Erik Miller

Director

+1 908 882 2120

erik.miller@ambest.com

Al Slavin

Senior Public Relations Specialist

+1 908 882 2318, ext. 5098

al.slavin@ambest.com

Source: AM Best

FAQ

What are the Financial Strength Rating and Long-Term Issuer Credit Ratings of Old Republic Insurance Companies?

AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of 'aa-' (Superior) for Old Republic Insurance Companies.

Which subsidiaries of Old Republic Insurance Companies are mentioned in the press release?

The subsidiaries mentioned are Old Republic National Title Insurance Company, American Guaranty Title Insurance Company, Old Republic Insurance Company of Canada, and Old Republic Life Insurance Company.

What is the outlook for the Credit Ratings of Old Republic Insurance Companies?

The outlook for the Credit Ratings of Old Republic Insurance Companies is stable, with positive outlooks for Old Republic Life Insurance Company.

What is the ticker symbol for Old Republic International ?

The ticker symbol for Old Republic International is 'ORI' on the NYSE.

What factors contribute to Old Republic Insurance Companies' success?

The group's success is attributed to its balance sheet strength, strong operating performance, favorable business profile, and appropriate enterprise risk management.