OLD REPUBLIC INTERNATIONAL CORP

Previous wording

Six Months Ended June 30, 2025 and 2024

Current wording

Nine Months Ended September 30, 2025 and 2024

Previous wording

This management discussion and analysis of financial condition and results of operations pertains to the consolidated accounts of Old Republic International Corporation, its subsidiaries, and any variable interest entities that meet the requirements for consolidation (collectively, "Old Republic", "ORI", or "the Company"). The Company conducts its operations primarily through a number of regulated insurance company subsidiaries organized into two segments: Specialty Insurance and Title Insurance. The Republic Financial Indemnity Group (RFIG) Run-off business through the effective date of its sale of May 31, 2024 and a small life and accident insurance business, together accounting for 0.1% of consolidated operating revenues for the six months ended June 30, 2025 and 0.4% of consolidated assets as of that date, are included within the Corporate & Other caption of this report.

Current wording

This management discussion and analysis of financial condition and results of operations pertains to the consolidated accounts of Old Republic International Corporation, its subsidiaries, and any variable interest entities that meet the requirements for consolidation (collectively, "Old Republic", "ORI", or "the Company"). The Company conducts its operations primarily through a number of regulated insurance company subsidiaries, or operating companies, organized into two segments: Specialty Insurance and Title Insurance. The Republic Financial Indemnity Group (RFIG) Run-off business through the effective date of its sale of May 31, 2024 and a small life and accident insurance business, together accounting for 0.1% of consolidated operating revenues for the nine months ended September 30, 2025 and 0.4% of consolidated assets as of that date, are included within the Corporate & Other caption of this report.

Previous wording

The insurance business is distinguished from most others in that the prices (premiums) charged for most products are set without knowing what the ultimate loss costs will be. The Company also cannot know exactly when claims will be paid, which may be many years after a policy was issued or expired. This casts Old Republic as a risk-taking enterprise managed for the long run. Old Republic therefore conducts its business with a primary focus on achieving favorable underwriting results over cycles, and on maintaining a sound financial condition to support its subsidiaries' long-term obligations to policyholders and their beneficiaries. To achieve these objectives, adherence to insurance risk management principles is stressed, and asset diversification and quality are emphasized. In addition, management engages in an ongoing assessment of operating risks that could adversely affect the Company's business and reputation.

Current wording

The insurance business is distinguished from most others in that the prices (premiums) charged for most products are set without knowing what the ultimate loss costs will be. The Company also cannot know exactly when claims will be paid, which may be many years after a policy was issued or expired. This casts Old Republic as a risk-taking enterprise managed for the long run. Old Republic therefore conducts its business with a primary focus on achieving favorable underwriting results over cycles, and on maintaining a sound financial condition to support its operating companies' long-term obligations to policyholders and their beneficiaries. To achieve these objectives, adherence to insurance risk management principles is stressed, and asset diversification and quality are emphasized. In addition, management engages in an ongoing assessment of operating risks that could adversely affect the Company's business and reputation.

Previous wording

Old Republic International Corporation reported the following consolidated results for the second quarter of 2025:

Current wording

Old Republic International Corporation reported the following results for the third quarter of 2025:

Previous wording

•Net income excluding investment gains (losses) (net operating income) of $209.2, an increase of 3.3%.

Current wording

•Net income excluding investment gains (losses) (net operating income) of $196.7, compared to $182.7 last year.

Previous wording

•Net operating income per diluted share of $0.83, compared to $0.76 last year, an increase of 9.2%.

Current wording

•Net operating income per diluted share of $0.78, compared to $0.71 last year.

Previous wording

•Consolidated net premiums and fees earned of nearly $2 billion, an increase of 11.0%.

Current wording

•Consolidated net premiums and fees earned of $2.1 billion, an increase of 8.1% over last year.

Previous wording

•Consolidated combined ratio of 93.6%, compared to 93.5% last year.

Current wording

•Consolidated combined ratio of 95.3%, compared to 95.0% last year.

Previous wording

•Favorable loss reserve development of 2.1 points, compared to 2.2 points last year.

Current wording

•Favorable loss reserve development of 2.5 points, compared to 1.3 points last year.

Previous wording

•Book value per share of $25.14, inclusive of cash dividends declared, up 12.6% since year-end 2024.

Current wording

•Book value per share of $26.19, inclusive of cash dividends declared, up 18.5% since year-end 2024.

Previous wording

•Annualized operating return on equity of 14.6%.

Current wording

•Annualized operating return on equity of 14.4%.

Previous wording

•Total capital returned to shareholders of $71.8.

Current wording

•Total capital returned to shareholders of $115.

Previous wording

Old Republic's business is managed for the long run. In this context, management's key objectives are to achieve highly profitable operating results over the long term, and to ensure balance sheet strength for the insurance underwriting subsidiaries' obligations. Although Generally Accepted Accounting Principles (GAAP) uses net income as the measure of total profitability, management uses net income excluding net investments gains (losses) (net operating income), a non-GAAP financial measure, in its evaluation of periodic and long-term results.

Current wording

Old Republic's business is managed for the long run. In this context, management's key objectives are to achieve highly profitable operating results over the long term, and to ensure balance sheet strength for the operating companies' obligations. Although Generally Accepted Accounting Principles (GAAP) uses net income as the measure of total profitability, management uses net income excluding net investment gains (losses) (net operating income), a non-GAAP financial measure, in its evaluation of periodic and long-term results.

Previous wording

The information presented in the following table highlights the most meaningful indicators of Old Republic's segmented and consolidated financial performance. The information underscores the performance of the Company's insurance underwriting subsidiaries, as well as the sound investment of their capital and underwriting cash flows.

Current wording

The information presented in the following table highlights the most meaningful indicators of Old Republic's segmented and consolidated financial performance. The information underscores the performance of the Company's operating companies, as well as the sound investment of their capital and underwriting cash flows.

Previous wording

Specialty Insurance net premiums earned increased 14.6% for the quarter and 13.8% for the first six months, driven by a combination of premium rate increases, high renewal retention ratios, and new business production, including contributions from new insurance underwriting subsidiaries. Premium growth was most pronounced within commercial auto, along with smaller premium increases in property, general liability, and workers' compensation. Canadian coverages (travel, accident & health, and trucking), and to a lesser extent, public directors and officers (D&O) and home warranty premiums, declined in the quarter, largely due to market and economic conditions. Commercial auto, general liability, and property continued to achieve rate increases, while rates declined modestly in public D&O.

Current wording

Specialty Insurance net premiums earned increased 8.1% for the quarter and 11.8% for the first nine months, driven by a combination of premium rate increases, high renewal retention ratios, and new business production, including an increasing contribution from new operating companies. Premium growth was most pronounced within commercial auto, general liability, and property. Canadian premiums (travel accident and trucking) declined in the quarter, largely due to economic conditions. Commercial auto and general liability continued to achieve rate increases.

Previous wording

Together, these factors produced a profitable combined ratio and strong pretax operating income for the quarter and first six months. For Specialty Insurance, combined ratios between 90% and 95% are targeted over a full underwriting cycle, recognizing that quarterly and annual ratios and trends may deviate from this range, particularly with long-tailed lines of coverage claim payment patterns.

Current wording

Together, these factors produced a profitable combined ratio and strong pretax operating income for the quarter and first nine months. For Specialty Insurance, combined ratios between 90% and 95% are targeted over a full underwriting cycle, recognizing that quarterly and annual ratios and trends may deviate from this range, particularly with long-tailed lines of coverage claim payment patterns.

Previous wording

Title Insurance net premiums and fees earned increased 5.2% for the quarter and 7.8% for the first six months. Agency produced revenues grew 7% while directly produced revenues were relatively flat for the quarter. Both commercial and residential premiums increased for the quarter. Commercial premiums represented 23% of net premiums earned compared to 21% in the second quarter of last year. Fee revenues from direct operations decreased as a result of the previously announced sale of certain technology platforms.

Current wording

Title Insurance net premiums and fees earned increased 8.3% for the quarter and 8.0% for the first nine months. Agency produced premiums grew nearly 11% while directly produced premiums grew more than 8% for the quarter. Commercial premiums represented 26% of net premiums earned compared to 20% in the third quarter of last year. Title, escrow, and other fees declined 11% as a result of the previously announced sale of certain technology platforms.

Previous wording

Together, these factors produced lower pretax operating income for the quarter and first six months. For Title Insurance, combined ratios between 90% to 95% are targeted over a full underwriting cycle, recognizing that quarterly and annual ratios and trends may deviate from this range.

Current wording

Together, these factors produced higher pretax operating income for the quarter and lower pretax operating income for the first nine months. For Title Insurance, combined ratios between 90% to 95% are targeted over a full underwriting cycle, recognizing that quarterly and annual ratios and trends may deviate from this range.

Previous wording

Corporate & Other includes a small life and accident insurance business, the RFIG Run-off business through the date of its sale of May 31, 2024, the parent holding company, and several internal corporate services subsidiaries. Corporate & Other tends to produce highly variable results stemming from volatility inherent in the lack of scale. Net investment income for both periods was significantly impacted by a lower invested asset base due to the return of capital to shareholders, including the January 2025 special cash dividend payment, and the sale of the RFIG Run-off business.

Current wording

Corporate & Other includes a small life and accident insurance business, the RFIG Run-off business through the date of its sale of May 31, 2024, the parent holding company, and several internal corporate services subsidiaries. Corporate & Other tends to produce highly variable results stemming from volatility inherent in the lack of scale. Net investment income for both 2025 periods was significantly impacted by a lower invested asset base due to the return of capital to shareholders, including the January 2025 special cash dividend payment, and the sale of the RFIG Run-off business. Operating expenses for both 2024 periods reflect additional interest costs associated with debt issued on March 31, 2024 to refinance the $400 of senior notes which matured in October 2024.

Previous wording

As of June 30, 2025, the consolidated investment portfolio reflected an allocation of approximately 84% to fixed income securities (bonds and notes) and short-term investments, and 16% to equity securities (common and preferred stocks). The investment management process remains focused on retaining quality investments that produce consistent streams of investment income, while monitoring concentration limits among the insurance underwriting subsidiaries. The fixed income portfolio continues to be the anchor for the insurance underwriting subsidiaries' obligations. The maturities of the fixed income securities are generally matched to the expected liabilities for claim payment obligations to policyholders and their beneficiaries. The equity portfolio consists of high-quality common stocks of U.S. companies with long-term records of reasonable earnings growth and steadily increasing dividends.

Current wording

As of September 30, 2025, the consolidated investment portfolio reflected an allocation of approximately 84% to fixed income securities (bonds and notes) and short-term investments, and 16% to equity securities (common and preferred stocks). The investment management process remains focused on retaining quality investments that produce consistent streams of investment income, while monitoring concentration limits among the operating companies. The fixed income portfolio continues to be the anchor for the operating companies' obligations. The maturities of the fixed income securities are generally matched to the expected liabilities for claim payment obligations to policyholders and their beneficiaries. The equity portfolio consists of high-quality common stocks of U.S. companies with long-term records of reasonable earnings growth and steadily increasing dividends.

Previous wording

Old Republic’s investment portfolio is focused on ensuring solid funding of the insurance underwriting subsidiaries' obligations to policyholders and their beneficiaries, as well as the long-term stability of the subsidiaries’ capital base. For these reasons, the investment portfolio has extremely limited exposure to high risk or illiquid asset classes such as limited partnerships, derivatives, hedge funds or private equity investments. In addition, the Company does not engage in hedging or securities lending transactions, nor does it invest in securities with values predicated on non-regulated financial instruments with unfunded counter-party risk attributes. Old Republic performs regular stress tests of the investment portfolio to gain reasonable assurance that periodic downdrafts in market prices do not undermine the Company's financial strength.

Current wording

Old Republic’s investment portfolio is focused on ensuring solid funding of the operating companies' obligations to policyholders and their beneficiaries, as well as the long-term stability of the subsidiaries’ capital base. For these reasons, the investment portfolio has extremely limited exposure to high risk or illiquid asset classes such as limited partnerships, derivatives, hedge funds or private equity investments. In addition, the Company does not engage in hedging or securities lending transactions, nor does it invest in securities with values predicated on non-regulated financial instruments with unfunded counter-party risk attributes. Old Republic performs regular stress tests of the investment portfolio to gain reasonable assurance that periodic downdrafts in market prices do not undermine the Company's financial strength.

Previous wording

Total capital returned to shareholders during the quarter was $71.8 in dividends. For the first six months, total capital returned was $165.4, comprised of $140.2 in dividends and $25.2 in share repurchases.

Current wording

Total capital returned to shareholders during the quarter was $115, comprised of $71 in dividends and $44 in share repurchases. For the first nine months, total capital returned was $281, comprised of $212 in dividends and $69 in share repurchases.

Previous wording

Consolidated net premiums and fees earned increased 11.0% and 11.5% for the second quarter and first six months of 2025, respectively, resulting from strong growth in Specialty Insurance and modest growth in Title Insurance. For the second quarter and first six months of 2024, consolidated net premiums and fees earned were up 9.0% and 7.4%, respectively, resulting from double digit growth in Specialty Insurance and Title Insurance producing an increase for the second quarter, partially offsetting the first quarter decline.

Current wording

Consolidated net premiums and fees earned increased 8.1% and 10.3% for the third quarter and first nine months of 2025, respectively, resulting from growth in both Specialty Insurance and Title Insurance. For the third quarter and first nine months of 2024, consolidated net premiums and fees earned increased 9.6% and 8.2%, respectively, resulting from strong growth in Specialty Insurance and modest growth in Title Insurance.

Previous wording

Net investment income increased 2.4% and 3.2% for the second quarter and first six months of 2025, respectively, driven by higher investment yields, partially offset by a lower invested asset base from returning significant excess capital since the first half of 2024. Net investment income increased approximately 20.0% in both the second quarter and first six months of 2024, driven by higher investment yields. Prior periods presented were also favorably impacted by the interest rate environment.

Current wording

Net investment income increased 6.7% and 4.4% for the third quarter and first nine months of 2025, respectively, driven by higher investment yields, partially offset by a lower average invested asset base from returning significant excess capital and the repayment of $400 in senior notes since the first nine months of 2024. Net investment income increased approximately 17.3% and 18.8% for the third quarter and first nine months of 2024, respectively, driven by higher investment yields. Prior periods presented were also favorably impacted by the interest rate environment.

Previous wording

The Company's reserve for loss and loss adjustment expenses represents the accumulation of estimates of ultimate losses payable, including incurred but not reported (IBNR). The establishment of loss reserves by the Company's insurance subsidiaries is a reasonably complex and dynamic process influenced by a large variety of factors. Consequently, reserves established are a reflection of: the opinions of a large number of persons; the application and interpretation of historical precedent and trends; expectations as to future developments; and management's judgment in interpreting all such factors. At any point in time, the Company is exposed to the possibility of higher or lower than anticipated loss costs and the resulting changes in estimates are recorded in operations of the periods during which they are made.

Current wording

The Company's reserve for loss and loss adjustment expenses represents the accumulation of estimates of ultimate losses payable, including incurred but not reported (IBNR). The establishment of loss reserves by the Company's operating companies is a reasonably complex and dynamic process influenced by a large variety of factors. Consequently, reserves established are a reflection of: the opinions of a large number of persons; the application and interpretation of historical precedent and trends; expectations as to future developments; and management's judgment in interpreting all such factors. At any point in time, the Company is exposed to the possibility of higher or lower than anticipated loss costs and the resulting changes in estimates are recorded in operations of the periods during which they are made.

Previous wording

The consolidated loss and loss adjustment expense ratios for the periods presented above are reflective of the shift in mix with Specialty Insurance contributing more to the total in more recent periods. The 2025 current year loss ratio remained consistent with the second quarter and first six months of last year. Favorable prior year loss reserve development for Specialty Insurance increased while Title Insurance decreased, resulting in nearly flat net favorable development in the second quarter and first six months of 2025 compared to the second quarter and first six months of 2024.

Current wording

The consolidated loss and loss adjustment expense ratios for the annual periods presented above are reflective of the shift in mix with Specialty Insurance contributing more to the total in more recent periods. The 2025 current year loss ratios remained consistent with the third quarter and first nine months of 2024. Favorable prior year loss reserve development for Specialty Insurance increased while Title Insurance was consistent across periods, resulting in higher net favorable development in the third quarter and first nine months of 2025 compared to the third quarter and first nine months of 2024.

Previous wording

Variations in the Company's consolidated expense ratios generally reflect a continually changing mix of coverages sold and costs of producing business. To a significant degree, expense ratios for both the Specialty and Title Insurance segments are reflective of variable costs, such as commissions or similar charges, that rise or decline along with corresponding changes in premium and fee income and can fluctuate with line of coverage mix. General operating expenses are routinely subject to timing as well as investments in business expansion and information technology. The consolidated expense ratios for the periods presented in the table above are reflective of the shift in mix with Specialty Insurance contributing more to the total in more recent periods. The ratios are in line with expectations and reflect the benefit from scale from continued earned premium growth, offset by increased costs incurred to start-up new underwriting subsidiaries and investments in information technology.

Current wording

Variations in the Company's consolidated expense ratios generally reflect a continually changing mix of coverages sold and costs of producing business. To a significant degree, expense ratios for both the Specialty and Title Insurance segments are reflective of variable costs, such as commissions or similar charges, that rise or decline along with corresponding changes in premium and fee income and can fluctuate with line of coverage mix. General operating expenses are routinely subject to timing as well as investments in business expansion and information technology. The consolidated expense ratios for the annual periods presented in the table above are reflective of the shift in mix with Specialty Insurance contributing more to the total in more recent periods. The current periods' ratios are elevated but in line with expectations given the increased costs incurred to start-up new operating companies, investments in information technology, and Title Insurance increase in mix of agency business.

Previous wording

Dispositions of fixed income securities from scheduled maturities and early calls were 61.5% and 40.5% of total fixed income dispositions occurring in the first six months of 2025 and 2024, respectively. Realized gain (loss) activity in 2025 was related to the sale of fixed income and equity securities to fund the Company's return of capital through share repurchases and a special dividend. Realized gain (loss) activity in 2024 was primarily the result of portfolio management, including the Company's monitoring of concentration limits at the individual legal entity levels, tax planning, and interest rate environment considerations. Sales activity within the fixed income portfolio over the last few years has allowed the Company to increase its book yield on that portfolio quicker than anticipated, taking full advantage of the current interest rate environment, in a tax efficient manner.

Current wording

Dispositions of fixed income securities from scheduled maturities and early calls were 62.2% and 48.1% of total fixed income dispositions occurring in the first nine months of 2025 and 2024, respectively. Realized gain (loss) activity in 2025 was related to the sale of fixed income and equity securities to fund the Company's return of capital through share repurchases and a special dividend. Realized gain (loss) activity in 2024 was primarily the result of portfolio management, including the Company's monitoring of concentration limits at the individual legal entity levels, tax planning, and interest rate environment considerations. Sales activity within the fixed income portfolio over the last few years has allowed the Company to increase its book yield on that portfolio quicker than anticipated, taking full advantage of the current interest rate environment, in a tax efficient manner.

Previous wording

The 2023 full year impairment charge primarily reflects an estimated loss on the then pending sale of the RFIG Run-off mortgage insurance business, and to a lesser extent, impairment losses recorded on fixed income securities that the Company intended to and subsequently disposed of to facilitate certain structural changes to a deferred compensation plan, as well as a small credit loss.

Current wording

During 2023, the Company continued to rebalance the investment portfolio. The 2023 full year impairment charge primarily reflects an estimated loss on the then pending sale of the RFIG Run-off mortgage insurance business, and to a lesser extent, impairment losses recorded on fixed income securities that the Company intended to and subsequently disposed of to facilitate certain structural changes to a deferred compensation plan, as well as a small credit loss.

Previous wording

During 2022, the Company rebalanced the investment portfolio by reducing equity security holdings and increasing fixed income holdings as reinvestment rates began to materially improve. Additionally, 2022 includes investment impairment charges of $123.5 on fixed income securities, which management intended to and subsequently disposed of during the year, driven primarily by tax planning considerations.

Current wording

During 2022, the Company began to rebalance the investment portfolio by reducing equity security holdings and increasing fixed income holdings as reinvestment rates began to materially improve. Additionally, 2022 includes investment impairment charges of $123.5 on fixed income securities, which management intended to and subsequently disposed of during the year, driven primarily by tax planning considerations.

Previous wording

The effective consolidated income tax rate was 19.9% and 20.0% in the second quarter and first six months of 2025, respectively, compared to 19.0% and 20.2% in the second quarter and first six months of 2024, respectively. The rates for each period reflect primarily the varying proportions of pretax operating income derived from partially tax preferred investment income (principally tax-exempt interest and dividend income).

Current wording

The effective consolidated income tax rate was 20.6% and 20.2% in the third quarter and first nine months of 2025, respectively, compared to 20.6% and 20.4% in the third quarter and first nine months of 2024, respectively. The rates for each period reflect primarily the varying proportions of pretax operating income derived from partially tax preferred investment income (principally tax-exempt interest and dividend income).

Previous wording

Specialty Insurance continued to produce growth and profitability, reflecting the success of the Company’s specialty strategy and operational excellence initiatives. Growth included increasing contributions from new specialty underwriting subsidiaries. In addition, the Company continues to expand its writings of excess & surplus lines business, written on Old Republic Union paper. Seven Specialty Insurance operating companies utilize Old Republic Union for property, general liability, and financial indemnity solutions. Some of the new operating companies target the wholesale distribution channel, where excess & surplus solutions are prevalent.

Current wording

Specialty Insurance continued to produce growth and profitability, reflecting the success of the Company’s specialty strategy and operational excellence initiatives. Growth included increasing contributions from new specialty operating companies. In addition, the Company continues to expand its writings of excess & surplus lines business, written on Old Republic Union paper. Seven Specialty Insurance operating companies utilize Old Republic Union for property, general liability, and financial indemnity solutions. Some of the new operating companies target the wholesale distribution channel, where excess & surplus solutions are prevalent.

Previous wording

Specialty Insurance net premiums earned increased 13.8% and 13.4% for the second quarter and first six months of 2024, respectively, driven by a combination of premium rate increases, high renewal retention ratios, and new business production, including contributions from recently established underwriting subsidiaries. Premium growth occurred across most lines of coverage, but was most pronounced within commercial auto, property, and general liability. There were small declines in public D&O and home warranty, largely reflecting market conditions. While commercial auto, general liability, and property continued to achieve strong rate increases, rate declines continued in public D&O and workers' compensation.

Current wording

Specialty Insurance net premiums earned increased 13.9% and 13.6% for the third quarter and first nine months of 2024, respectively, driven by a combination of premium rate increases, high renewal retention ratios, and new business production, including contributions from recently established operating companies. Premium growth occurred across most lines of coverage, but was most pronounced within commercial auto, property, and general liability. Largely reflecting market conditions, there were declines in public D&O and transactional risk coverages (both included in financial indemnity) and, to a lesser extent, home warranty. The decline in home warranty coverages (included within home and auto warranty) was more than offset in both 2024 periods by growth in a new auto warranty program. While commercial auto, general liability, and property continued to achieve strong rate increases, rate declines continued in public D&O and workers' compensation.

Previous wording

Overall, the loss ratios for Specialty Insurance in the second quarter and first six months of 2025 reflect slightly higher levels of favorable prior year loss reserve development and improved current year loss ratios. Favorable prior year loss reserve development increased slightly for both periods, but remained lower than the historically high levels experienced in 2023 and 2022.

Current wording

Overall, the loss ratios for Specialty Insurance in the third quarter and first nine months of 2025 reflect higher levels of favorable prior year loss reserve development and consistent current year loss ratios. Favorable prior year loss reserve development increased for both periods, but remained lower than the historically high levels experienced in 2023 and 2022.

Previous wording

•Workers’ compensation (favorable development predominantly from accident years 2020 and prior, partially offset by unfavorable development from accident years 2021 to 2023);

Current wording

•Workers’ compensation (favorable development predominantly from accident years 2021 and prior, partially offset by unfavorable development from accident years 2022 through 2024);

Previous wording

•Commercial auto (favorable development predominantly from accident years 2017 to 2020 and 2022, partially offset by unfavorable development from 2023 and 2024); and

Current wording

•General liability (favorable development predominantly from accident years 2020, 2023, and 2024, partially offset by unfavorable development from accident years 2021 and 2022); and

Previous wording

•Property, which includes commercial multi-peril (favorable development predominantly from accident years 2021 to 2024).

Current wording

•Property, which includes commercial multi-peril (favorable development predominantly from accident years 2017 and 2024).

Previous wording

Net unfavorable reserve development came primarily from:

Current wording

In the third quarter of 2024, transactional risk (included in financial indemnity) experienced net unfavorable reserve development. As previously disclosed, the Company exited this business in 2024.

Previous wording

The reported expense ratios for the current periods are in line with expectations and include start-up costs of new underwriting subsidiaries and investments in information technology, partially offset by the benefit of scale from continued earned premium growth. Specialty Insurance has started up four new underwriting subsidiaries in the last four years. Depending on the subsidiary, it can take three to five years before scale is achieved, and the subsidiary becomes accretive to earnings. In addition, Specialty Insurance is investing in modernizing core systems (policy administration, claims, billing, and data warehouse) at several subsidiaries. Additional information technology investments are also being made in data and analytics and artificial intelligence initiatives.

Current wording

The reported expense ratios for the current periods are elevated but in line with expectations and include start-up costs of new operating companies and investments in information technology, partially offset by the benefit of scale from continued earned premium growth. The quarter included a true up to certain ceding commissions that elevated the expense ratio by approximately one percentage point. Specialty Insurance has started up five new operating companies in the last four years that are not operating at full scale. Depending on the operating company, it can take three to five years before scale is achieved, and the operating company becomes accretive to earnings. In addition, Specialty Insurance is investing in modernizing core systems (policy administration, claims, billing, and data warehouse) at several operating companies. Some of these modernization projects have reached the point where the new core system has been put into production while the system being replaced remains in service for some period of time. The Company expects some level of these redundant costs to exist over the next few years, at which time expenses should decrease as the old systems are fully decommissioned. Additional information technology investments are also being made in data and analytics and artificial intelligence initiatives.

Previous wording

Title Insurance net premiums and fees earned increased 5.2% and 7.8% for the second quarter and first six months of 2025, respectively, with agency produced revenues growing 7% and directly produced revenues relatively flat. Both commercial premiums and residential premiums increased. Commercial premiums represented 23% of net premiums earned in the second quarter 2025 compared to 21% in the second quarter 2024. Fee revenues in direct operations decreased as a result of the previously announced sale of certain technology platforms.

Current wording

Title Insurance net premiums and fees earned increased 8.3% and 8.0% for the third quarter and first nine months of 2025, respectively, continuing to reflect strong activity in the commercial sector and a modest uptick in refinance activity. Agency produced premiums grew nearly 11% and directly produced premiums grew more than 8% for the third quarter. Commercial premiums represented 26% of net premiums earned in the third quarter 2025 compared to 20% in the third quarter 2024. Title, escrow, and other fees declined 11% as a result of the previously announced sale of certain technology platforms.