Chicago-based insurance holding company, Old Republic International Corporation, reported improved earnings for this year’s third quarter and first nine months. All of this growth was due to higher profits in each of the company’s major segments.
Net income for this year’s third quarter totaled $82.4 million, or 69 cents per share, vs. $80.0 million, or 67 cents per share, for the year-ago quarter. Net operating income, which excludes realized investment gains or losses, was $84.8 million, or 71 cents per share, compared to $75.4 million, or 63 cents per share in the year-ago period.
For the first nine months of 2001, net income was $257.9 million, or $2.14 per share, vs. $204.8 million, or $1.71 per share, for the first nine months of 2000. Net operating income for the first nine months of 2001 was $245.3 million, or $2.04 per share, compared to $199.6 million, or $1.66 per share, in the same year-to-date period of 2000.
Old Republic’s mix of coverages, industries served, and long-standing objective of assuring wide dispersion of risks to selected geographical areas, have likely minimized claim exposures related to the Sept. 11 terrorist attack on America. The income statements for the quarter and nine months ended Sept. 30 nonetheless include precautionary charges aggregating $4.0 million to cover the possibility of isolated property, workers’ compensation, trip delay, and life insurance claims.
Of this total, pretax claim provisions of $3.0 million and $1.0 million have been charged to the General and Life insurance segments, respectively. Possible reinsurance recoveries contemplated in these reserve provisions are negligible. The resulting aggregate post tax charge of $2.6 million reduced consolidated net income 2 cents per share for the third quarter and first nine months of 2001.
Old Republic’s property and liability insurance business registered pretax operating income of $36.1 million in this year’s third quarter; this compares to $29.7 million earned in the same period of 2000. Net premiums earned in the latest quarterly period rose by 21.9 percent to $257.7 million, compared to $211.3 million a year ago. The statutory composite underwriting ratio for this year’s third quarter dropped to 100.3 percent from 105.2 percent in the same quarter one year ago.
Improved general insurance underwriting performance in this year’s third quarter and year-to-date periods resulted largely from the beneficial effect of a continued rise in premium rates for most of the insurance coverages provided by this segment of the company’s business.
While Old Republic expects a continuation of high claims severity as well as inflation-driven increases in the cost of medical care and repairs pertaining to most of its commercial insurance coverages, it believes that further strengthening of underwriting standards and premium rates should provide a greater offsetting benefit.
Topics Profit Loss
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