AM Best Affirms Credit Ratings of Subsidiaries of Old Republic International Corporation - Seite 2

The ratings of ORTIG recognize its strong reserving practices. 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 Old Republic International Corporation enterprise, while maintaining the strongest level of risk-adjusted capitalization in the intermediate term, as measured by Best’s Capital Adequacy Ratio (BCAR). The title group 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 recognize the synergies it gains as an affiliate of Great West Casualty Company, as well as its accident and sickness business. Partially offsetting these positive rating factors are the company’s limited product offering and 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 ratings of ORL also reflect 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. Due to the small size of the ORL’s reserves, any increase in claims or mortality could cause a material change to ORL’s earnings, but should not materially impact ORI. Premiums have declined over the past several years, as the closed-term block premiums run off, and the occupational accident premiums trend 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.