OLD REPUBLIC INTERNATIONAL CORP

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 business through a number of operating companies, which utilize one or more insurance company subsidiaries to issue their policies, and is organized into two segments: Specialty Insurance and Title Insurance. A small life and accident insurance business, accounting for 0.1% of consolidated operating revenues for the quarter ended March 31, 2026 and 0.4% of consolidated assets as of that date, is 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" or "the Company"). The Company conducts its business through a number of operating companies, which utilize one or more insurance company subsidiaries to issue their policies, and is organized into two segments: Specialty Insurance and Title Insurance. A small life and accident insurance business, accounting for 0.1% of consolidated operating revenues for the six months ended June 30, 2026 and 0.3% of consolidated assets as of that date, is included within the Corporate & Other caption of this report.

Previous wording

As a state-regulated financial institution vested with the public interest, however, business of the Company's insurance subsidiaries is managed pursuant to the laws, regulations, and accounting practices of the various states in the U.S. and those of a small number of other jurisdictions outside the U.S. in which they operate. In comparison with GAAP, the statutory accounting practices generally reflect greater conservatism and comparability among insurers and are intended to address the primary financial security interests of policyholders and their beneficiaries. Additionally, these practices also affect a significant number of important factors such as product pricing, risk bearing capacity and capital adequacy, the determination of federal income taxes payable currently among ORI's tax-consolidated entities, and the upstreaming of dividends and payment of interest and principal on surplus notes by insurance subsidiaries to the parent holding company. The major differences between these statutory accounting practices and GAAP are summarized in Note 1 in the Notes to Consolidated Financial Statements included in Old Republic's 2025 Annual Report on Form 10-K.

Current wording

As a state-regulated financial institution vested with the public interest, however, business of the Company's insurance subsidiaries is managed pursuant to the laws, regulations, and accounting practices of the various states in the U.S. and those of a small number of other jurisdictions outside the U.S. in which they operate. In comparison with GAAP, the statutory accounting practices generally reflect greater conservatism and comparability among insurers and are intended to address the primary financial security interests of policyholders and their beneficiaries. Additionally, these practices also affect a significant number of important factors such as product pricing, risk bearing capacity and capital adequacy, the determination of federal income taxes payable currently among Old Republic's tax-consolidated entities, and the upstreaming of dividends and payment of interest and principal on surplus notes by insurance subsidiaries to the parent holding company. The major differences between these statutory accounting practices and GAAP are summarized in Note 1 in the Notes to Consolidated Financial Statements included in Old Republic's 2025 Annual Report on Form 10-K.

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Old Republic International Corporation reported the following results for the first quarter 2026:

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Old Republic International Corporation reported the following results for the second quarter 2026:

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•Net income excluding investment gains (net operating income) of $170.5, compared to $201.7 last year.

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•Net income excluding investment gains (net operating income) of $186.0, compared to $209.2 last year.

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•Net operating income per diluted share of $0.68, compared to $0.81 last year.

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

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•Consolidated net premiums and fees earned of $1.97 billion, compared to nearly $1.85 billion last year.

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•Consolidated net premiums and fees earned of nearly $2.1 billion, compared to nearly $2.0 billion last year.

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•Consolidated combined ratio of 96.6%, compared to 93.7% last year.

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•Consolidated combined ratio of 95.3%, compared to 93.6% last year.

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•Favorable loss reserve development of 1.5 points, compared to 2.6 points last year.

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•Favorable loss reserve development of 0.1 points, compared to 2.1 points last year.

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•Book value per share of $24.53, inclusive of dividends declared, up 2.6% since year-end 2025.

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•Book value per share of $25.33, inclusive of dividends declared, up 7.2% since year-end 2025.

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•Annualized operating return on equity of 11.5%.

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•Annualized operating return on equity of 12.1%.

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•Total capital returned to shareholders of $237.5.

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•Total capital returned to shareholders of $137.4.

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Specialty Insurance net premiums earned increased 4.7%. Growth was driven by a combination of premium rate increases and new business production, including an increasing contribution from new operating companies, partially offset by a decline in renewal retention ratios. Retention ratios were affected by the continued prioritization of rate, in particular within commercial auto and general liability lines where significant rate increases were achieved. Premium growth was most pronounced within commercial auto, property, accident & health, and general liability coverages while the most notable decline came from Canadian travel accident and trucking.

Current wording

Net premiums earned increased 2.3% for the quarter and 3.5% for the first six months. Growth in the quarter was driven by a combination of premium rate increases and new business production, including an increasing contribution from new operating companies, partially offset by a decline in renewal retention ratios compared to last year. Commercial auto renewal retention improved slightly compared to the first quarter of 2026, while Specialty Insurance continued to prioritize rate. Earned premium growth was most pronounced within commercial auto, accident & health, general liability, property, and auto warranty coverages while workers' compensation and Canadian travel accident and trucking declined.

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The net investment income increase was driven by a higher invested asset base, along with higher investment yields earned.

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The increase in net investment income was primarily driven by a higher invested asset base.

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The Specialty Insurance loss ratio is higher due to lower levels of favorable prior year loss reserve development while the current year loss ratio remained consistent. Favorable prior year development came predominately from commercial auto, workers' compensation, and property, partially offset by modest unfavorable development in general liability. The expense ratio is elevated due to continued investments in start-up operating companies which are not at scale, information technology modernization, data analytics, and artificial intelligence, including the additional personnel costs to manage all of these key initiatives. Several of the information technology modernization efforts are entering a phase in which costs are being amortized while the systems being replaced are not yet decommissioned.

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The expense ratio remains elevated due to continued investments in start-up operating companies which are not at scale, information technology modernization, data and analytics, and artificial intelligence, including the additional personnel costs to manage all of these key initiatives. Several of the information technology modernization efforts are entering a phase in which costs are being amortized while the systems being replaced are not yet decommissioned.

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Together, these factors produced a profitable combined ratio and strong pretax operating income. 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.

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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.

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Old Republic’s previously announced proposed acquisition of Everett Cash Mutual Insurance Co. (ECM) and affiliated companies following its conversion to a stock company in a sponsored demutualization transaction has received regulatory approval, and is expected to close early in the third quarter 2026 upon receipt of policyholder approval and completion of all customary and regulatory closing conditions. Upon closing, ECM will be reported within the Specialty Insurance segment operating results.

Current wording

Old Republic’s previously announced acquisition of Everett Cash Mutual Insurance Co. (ECM) and affiliated companies following its conversion to a stock company in a sponsored demutualization transaction closed effective July 1, 2026. ECM will be included in the Specialty Insurance segment beginning in the third quarter of 2026. Specialty Insurance expects to report a gain on the acquisition of approximately $125 subject to final valuations as of the closing date, and for the business to be accretive to earnings in 2026.

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Title Insurance net premiums and fees earned increased 12.0% for the quarter. Both agency and directly produced premiums experienced solid growth and strong commercial business production. Commercial premiums represented 27% of net premiums earned compared to 24% in the first quarter of last year. Title, escrow, and other fees were up slightly, as the decrease in fees from the sale of certain technology platforms in the first quarter 2025 was offset by growth in escrow and closing service fees.

Current wording

Title Insurance net premiums and fees earned increased 10.7% for the quarter and 11.3% for the first six months. Both agency and directly produced premiums experienced solid growth and continued strong commercial business production. Commercial premiums represented 25.4% of net premiums earned compared to 23.0% in the second quarter of last year.

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Net investment income increased primarily due to higher investment yields earned on a slightly higher invested asset base.

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Net investment income increased, reflecting a slightly higher invested asset base.

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The Title Insurance loss ratio remained consistent with last year, reflecting a higher level of favorable prior year loss reserve development offset by slightly higher current year losses. The expense ratio continues to benefit from expense management and scale, partially offset by a higher amount of agent commissions primarily due to greater amounts of agency business compared to the direct operation.

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The Title Insurance loss ratio remained consistent with last year, reflecting a slightly higher level of favorable prior year loss reserve development offset by slightly higher current year losses. The second quarter and first half of 2025 expense ratios included approximately $15 (2.1 and 1.1 points, respectively) in litigation settlement expenses. Excluding that impact, the expense ratios for both 2026 periods improved as a result of expense management and scale, partially offset by a higher amount of agent commissions as a result of increased agency business compared to the direct operation.

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Together, these factors produced higher pretax operating income. 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. Although Title Insurance has been navigating a difficult real estate environment over the last few years resulting in ratios in excess of this range, they continue to strive to come into range in the near term.

Current wording

Together, these factors produced higher 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. Although Title Insurance has been navigating a difficult real estate environment over the last few years resulting in ratios in excess of this range, they continue to strive to come into range in the near term.

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Corporate & Other includes a small life and accident insurance business, the parent holding company, and several internal corporate services subsidiaries. Net investment income was impacted by a lower invested asset base due to the return of capital to shareholders, including the January 2026 special dividend payment.

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Corporate & Other includes a small life and accident insurance business, the parent holding company, and several internal corporate services subsidiaries. Net investment income was impacted by a lower portfolio yield and invested asset base due to the return of capital to shareholders, partially offset by proceeds from the May 2026 debt issuance. The Company issued $700 in Senior Notes in anticipation of the August 2026 maturity of the existing $550 Senior Notes. Operating expenses for both 2026 periods reflect the increased interest costs associated with the debt issuance.

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As of March 31, 2026, the consolidated investment portfolio reflected an allocation of approximately 85% to fixed income securities (bonds and notes) and short-term investments, and 15% 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 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 June 30, 2026, 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 equity portfolio consists of high-quality common stocks of U.S. companies with long-term records of reasonable earnings growth and steadily increasing dividends.

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Total capital returned to shareholders during the quarter was $237.5, comprised of $76.7 in dividends and $160.7 in share repurchases.

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Total capital returned to shareholders during the quarter was $137.4, comprised of $76.6 in dividends and $60.7 in share repurchases. For the first six months, total capital returned was $374.9, comprised of $153.3 in dividends and $221.5 in share repurchases.

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The Company has little control over fair values, therefore management evaluates yields on the basis of investment income earned in relation to the book value of the underlying invested assets. Net investment income increased 4.3% for the first quarter 2026 driven by a higher average invested asset base in spite of returning significant excess capital, along with slightly higher investment yields earned. During the first quarter 2026, the Company reinvested in corporate fixed income securities with an average yield of 4.7% compared to an average book yield on disposals of 3.8%. The total fixed income portfolio book yield ended the first quarter 2026 at 4.75%, consistent with the end of 2025.

Current wording

The Company has little control over fair values, therefore management evaluates yields on the basis of investment income earned in relation to the book value of the underlying invested assets. Net investment income increased 6.1% and 5.2% for the second quarter and first six months of 2026, respectively, driven by a higher average invested asset base as a result of strong operating results and proceeds from the May 2026 debt issuance. While the portfolio yield was flat in the quarter, there was a notable shift. Short-term investments increased considerably while the yields on those investments dropped, offsetting the yields earned on long-term fixed income securities. The total fixed income portfolio book yield ended the second quarter 2026 at 4.79%, up slightly from the end of 2025.

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During the first quarter 2026, the Company purchased $672.8 of investment grade corporate bonds with an average maturity of 6.8 years and an average yield of 4.71%. In addition, the Company purchased $115.7 of government securities (primarily U.S. Treasury Notes) with an average yield of 4.02% and $22.2 of blue-chip equities with a dividend yield of 3.32%. The Company primarily owns U.S. Treasury Notes to place on deposit with the states its insurance companies are licensed to conduct business.

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During the second quarter 2026, the Company purchased $393.7 of investment grade corporate bonds with an average maturity of 6.5 years and an average yield of 4.89%. In addition, the Company purchased $9.9 of government securities (primarily U.S. Treasury Notes) with an average yield of 3.77% and $46.3 of blue-chip equities with a dividend yield of 3.42%. The Company primarily owns U.S. Treasury Notes to place on deposit with the states its insurance companies are licensed to conduct business.

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The following table shows a breakdown of gross and net of reinsurance loss reserve estimates for major types of insurance coverages as of March 31, 2026 and December 31, 2025:

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The following table shows gross and net of reinsurance loss reserve estimates for major types of insurance coverages as of June 30, 2026 and December 31, 2025:

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Changes to the consolidated loss ratios tend to be driven by mix changes between Specialty Insurance (with loss ratios in the mid- to low-60% range) and Title Insurance (with loss ratios in the 2% range). In the first quarter 2026, the consolidated loss ratio included an amount of favorable development that was lower than 2025 but remained within the range of management's expectation.

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Changes to the consolidated loss ratios tend to be driven by mix changes between Specialty Insurance (with loss ratios in the mid- to low-60% range) and Title Insurance (with loss ratios in the 2% range). In the second quarter 2026, the consolidated loss ratio included an amount of favorable development that was lower than 2025, with net favorable development from Title Insurance offset by a small amount of net unfavorable development from Specialty Insurance.

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The combined ratios of the above summarized net loss and loss adjustment expenses and underwriting expenses are as follows:

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The combined ratios resulting from the above summarized net loss and loss adjustment expenses and underwriting expenses are as follows:

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Dispositions of fixed income securities from scheduled maturities and early calls were 70.7% and 71.9% of total fixed income dispositions occurring in the first three months of 2026 and 2025, respectively. Realized gain (loss) activity in 2026 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, as well as portfolio management.

Current wording

Dispositions of fixed income securities from scheduled maturities and early calls were 47.8% and 61.5% of total fixed income dispositions occurring in the first six months of 2026 and 2025, respectively. Realized gain (loss) activity in 2026 was primarily 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, as well as routine portfolio management.

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The effective consolidated income tax rate was 20.3% in the first quarter 2026, compared to 20.0% in the first quarter 2025. Changes in the effective tax rate reflect primarily the varying proportions of pretax operating income derived from partially tax-preferred investment income (principally dividend income).

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The effective consolidated income tax rate was 20.9% and 20.6% in the second quarter and first six months of 2026, respectively, compared to 19.9% and 20.0% in the second quarter and first six months of 2025, respectively. Changes in the effective tax rate reflect primarily the varying proportions of pretax operating income derived from partially tax-preferred investment income (principally dividend income).

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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, seven Specialty Insurance operating companies continue to expand their writings of surplus lines business 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. Recently, a number of the Specialty Insurance lines of coverage have experienced elevated loss costs, requiring an increase in premium rates. Consistent with management's philosophy of managing for the long run, Specialty Insurance expects top line and the expense ratio to be pressured while the focus is on rate adequacy.

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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. Additionally, on April 6, 2026, the Company announced the formation of its new property insurance company that will underwrite specialized property insurance products through a national retail broker distribution network. Seven Specialty Insurance operating companies continue to expand their writings of surplus lines business for property, general liability, and financial indemnity solutions. Several of the new operating companies also target the wholesale distribution channel, where excess & surplus solutions are prevalent.

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Specialty Insurance net premiums earned increased 4.7% for the first quarter 2026. Growth was driven by a combination of premium rate increases and new business production, including an increasing contribution from new operating companies, partially offset by a decline in renewal retention ratios. Retention ratios were affected by the continued prioritization of rate, in particular within commercial auto and general liability lines where significant rate increases were achieved. Premium growth was most pronounced within commercial auto, property, accident & health, and general liability coverages while the most notable decline came from Canadian travel accident and trucking. The decline in financial indemnity relates to the previously announced exit of transactional liability coverages.

Current wording

Specialty Insurance net premiums earned increased 2.3% and 3.5% for the second quarter and first six months of 2026, respectively. Growth was driven by a combination of premium rate increases and new business production, including an increasing contribution from new operating companies, partially offset by a decline in renewal retention ratios compared to last year. Commercial auto renewal retention improved slightly compared to the first quarter of 2026, while Specialty Insurance continued to prioritize rate, an indication that competitors started to implement higher rate increases. Earned premium growth was most pronounced within commercial auto, accident & health, general liability, property, and auto warranty coverages while workers' compensation and Canadian travel accident and trucking declined. Commercial auto and general liability continued to achieve rate increases.

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•Workers’ compensation with favorable development in most years outside of the hold periods (predominantly from accident years 2016 through 2022), partially offset by unfavorable development from a few large losses in older accident years and a few in more recent years within the hold periods (2023 through 2025). The reserving fundamentals are solid but there is always the possibility of an isolated large loss emerging in a given quarter.

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•Workers’ compensation with favorable development in most years outside of the hold periods (predominantly from accident years 2018 through 2021), partially offset by unfavorable development in more recent years within the hold periods (primarily 2022 and 2025). While the reserving fundamentals remain solid, there is always the possibility of an isolated large loss emerging in a given quarter.

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•Commercial auto with favorable development predominantly from accident years 2019 through 2021 and 2025, partially offset by unfavorable development from accident years 2022 through 2024. The reserves set for the liability portion of long-haul trucking for accident year 2025 are holding, as paid claims and case reserve development were within expectations.

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•Commercial auto with favorable development predominantly from accident years 2020 through 2023, partially offset by unfavorable development from accident year 2024 from non-trucking exposures. The reserves set for the liability portion of long-haul trucking for accident year 2025 are holding as paid claims and case reserve development were within expectations.

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The current period expense ratio is elevated primarily due to continued investments in start-up operating companies which are not at scale, information technology modernization, D&A, and AI, including the additional personnel costs to manage all of these key initiatives. Specialty Insurance has started up six new operating companies in the last five years that are not yet 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.

Current wording

The current period expense ratio remains elevated due to continued investments in start-up operating companies which are not at scale, information technology modernization, D&A, and AI, including the additional personnel costs to manage all of these key initiatives. Specialty Insurance has started up seven new operating companies in the last five years that are not yet 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.

Previous wording

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 modules of the new core system have been put into production while the system being replaced remains in service for a period of transition. 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. To give perspective, over half of Old Republic’s mature operating companies have modernization efforts underway for their core IT systems. These are all multi-year, complex projects that introduce a relatively unique situation where the ultimate cost, timing of expense recognition, and length of the project are extremely difficult to determine.

Current wording

In addition, Specialty Insurance is investing in modernizing core systems (policy administration, claims, billing, and data warehouse) at several operating companies. Several of these information technology modernization efforts are entering a phase in which costs are being amortized while the systems being replaced are not yet decommissioned. 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. To give perspective, over half of Old Republic’s mature operating companies have modernization efforts underway for their core IT systems. These are all multi-year, complex projects that introduce a relatively unique situation where the ultimate cost, timing of expense recognition, and length of the project are extremely difficult to determine.

Previous wording

Finally, Old Republic continues to make significant investments in D&A and AI. D&A is a more mature initiative, however, that investment has been increasing recently. AI is in the beginning stages of having dedicated resources that are orchestrating a meaningful company-wide approach. To date, the Company has invested significant executive time creating an AI strategy, and several projects are just beginning.

Current wording

Old Republic continues to make significant investments in D&A and AI. D&A is a more mature initiative, however, that investment has been increasing recently. AI is in the beginning stages of having dedicated resources that are orchestrating a meaningful company-wide approach. To date, the Company has invested significant executive time creating an AI strategy, and several projects are just beginning.

Previous wording

Title Insurance net premiums and fees earned increased 12.0% for the first quarter 2026, continuing to reflect strong activity in the commercial sector and an increase in refinance activity. Both agency and directly produced premiums experienced solid growth and strong commercial business production. Commercial premiums represented 27% of net premiums earned compared to 24% in the first quarter 2025. Title, escrow, and other fees were up slightly, as the decrease in fees from the sale of certain technology platforms in the first quarter 2025 was offset by growth in escrow and closing service fees.

Current wording

Title Insurance net premiums and fees earned increased 10.7% and 11.3% for the second quarter and first six months of 2026, respectively, continuing to reflect strong activity across many segments of the commercial sector and an increase in refinance activity. Both agency and directly produced premiums experienced solid growth and strong commercial business production. Commercial premiums represented 25% of net premiums earned in the second quarter 2026 compared to 23% in the second quarter 2025. Whereas data centers have resulted in commercial premium growth, a mix of several other industries have also contributed.

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Title Insurance loss ratios have remained in the low single digits for a number of years due to a continuation of favorable trends in claims frequency and severity. The loss ratio for Title Insurance in the first quarter 2026 remained consistent with last year, reflecting a higher level of favorable prior year loss reserve development offset by slightly higher current year losses. The favorable development in the first quarter 2026, primarily from years 2019 through 2023, was partially offset by unfavorable development from 2024.

Current wording

Title Insurance loss ratios have remained in the low single digits for a number of years due to a continuation of favorable trends in claims frequency and severity. The loss ratios for Title Insurance in the second quarter and first six months of 2026 remained consistent with last year, reflecting a slightly higher level of favorable prior year loss reserve development offset by slightly higher current year losses. The favorable development in the second quarter 2026, primarily from years 2019, 2021, and 2022, was partially offset by unfavorable development from 2020 and 2024.