Old Republic Beats on Q4 Earnings, Revs - Analyst Blog

Old Republic International Corporation ( ORI ) reported its fourth-quarter 2013 operating net income of 33 cents per share, which outpaced the Zacks Consensus Estimate of 18 cents by 83.3%. The results also bounced back from the prior-year quarter's operating net loss of 9 cents a share.

Bottom-line growth was primarily driven by improved underwriting results across most of the active and run-off operations of Old Republic.

Including $0.9 million of net realized investment gains, Old Republic reported net income of $94.7 million rebounding from $20.2 million of net loss reported in the year-ago quarter.

Operational Update

Total revenue of Old Republic in the reported quarter amounted to $1.33 billion, surpassing the Zacks Consensus Estimate by 1.3%. Results also improved 3.8% year over year. Top-line growth came on the back of better results at Old Republic's General Insurance segment.

Net premiums and fees earned went up 4.8% year over year to $1.22 billion in the quarter.

On the other hand, total expense at Old Republic decreased 9.9% year over year to $1.19 billion. The improvement resulted mainly from reduced benefits and claims expenses.

Top-line growth coupled with expense reduction led to an operating margin improvement for Old Republic. Currently, the operating margin stands at 7%.

Segment Results

General Insurance Segment

This segment at Old Republic reported total operating revenue of $740.9 million that increased 7.9% year over year. The increase was driven by better premium trends across general liability, worker's compensation and other general insurance coverage. Moreover, better underwriting results at major fields like construction, aviation, energy, trucking, home warranty and large account risk management drove 2013 top-line growth further in this segment.

Net investment income for this segment declined during the fourth quarter. However, cash flow from operations was positive and accretive to the invested asset base.

Title Insurance Segment

This segment reported total operating revenues of $490.7 million that improved 2.5% year over year. The improvement came on the back of favorable market conditions.

Corporate and Other Operations

Total operating revenue generated from Corporate and other operations of Old Republic amounted to $16.3 million that inched up 1.9% year over year.

Full Year 2013 Highlights

For full year 2013, Old Republic's operating net income totaled $351.6 million, rebounding from operating loss of $99.7 million reported in 2012.

Including net realized investment gains of $96.2 million, Old Republic reported 2013 net income of $447.8 million which also substantially improved from net loss of $68.6 million reported in 2012.

Total revenue at the company grossed $5.44 billion increasing 9.5% over 2012.

Total expense for 2013 stood at $4.77 billion, declining 6.4% from the 2012 figure.

Financial Update

Total Assets Of Old Republic as of end-2013 stood at $16.53 billion increasing 1.9% from the 2012-end level.

Cash and invested assets of Old Republic also increased 2.8% from the 2012-end level to $11.10 billion.

Zacks Rank

Old Republic presently carries a Zacks Rank #2 (Buy). Other top-ranked multi line insurers that are worth reckoning include CNO Financial Group, Inc. ( CNO ), FBL Financial Group Inc. ( FFG ) and Prudential plc ( PUK ). All these stocks sport a Zacks Rank #1 (Strong Buy).

CNO FINL GRP (CNO): Free Stock Analysis Report

FBL FINL GRP-A (FFG): Free Stock Analysis Report

OLD REP INTL (ORI): Free Stock Analysis Report

PRUDENTIAL PLC (PUK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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