CHICAGO, Oct. 26,
2023 /PRNewswire/ --
OVERALL
RESULTS
|
|
|
|
|
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2023
|
|
2022
|
|
% Change
|
|
2023
|
|
2022
|
|
% Change
|
Pretax income
(loss)
|
|
$ 63.9
|
|
$ (119.6)
|
|
|
|
$
510.0
|
|
$
208.3
|
|
|
Pretax investment
losses
|
|
(186.9)
|
|
(377.1)
|
|
|
|
(191.1)
|
|
(549.5)
|
|
|
Pretax income (loss)
excluding investment losses
|
|
$
250.8
|
|
$
257.5
|
|
(2.6) %
|
|
$
701.2
|
|
$
757.9
|
|
(7.5) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$ 52.6
|
|
$
(91.7)
|
|
|
|
$
408.0
|
|
$
174.3
|
|
|
Net of tax investment
losses
|
|
(147.6)
|
|
(297.9)
|
|
|
|
(151.0)
|
|
(433.8)
|
|
|
Net income (loss)
excluding investment losses
|
|
$
200.2
|
|
$
206.1
|
|
(2.9) %
|
|
$
559.0
|
|
$
608.1
|
|
(8.1) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined
ratio
|
|
91.9 %
|
|
91.4 %
|
|
|
|
92.4 %
|
|
91.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER DILUTED
SHARE
|
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|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2023
|
|
2022
|
|
% Change
|
|
2023
|
|
2022
|
|
% Change
|
Net income
(loss)
|
|
$ 0.19
|
|
$
(0.31)
|
|
|
|
$ 1.42
|
|
$ 0.57
|
|
|
Net of tax investment
losses
|
|
(0.53)
|
|
(0.99)
|
|
|
|
(0.53)
|
|
(1.42)
|
|
|
Net income (loss)
excluding investment losses
|
|
$ 0.72
|
|
$ 0.68
|
|
5.9 %
|
|
$ 1.95
|
|
$ 1.99
|
|
(2.0) %
|
|
|
|
|
|
|
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|
|
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SHAREHOLDERS' EQUITY
(BOOK VALUE)
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Sep. 30,
|
|
Dec. 31,
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
% Change
|
Total
|
|
|
|
|
|
|
|
$
5,915.6
|
|
$
6,173.2
|
|
(4.2) %
|
Per Common
Share
|
|
|
|
|
|
|
|
$
21.37
|
|
$
21.07
|
|
1.4 %
|
________
All amounts in this report are stated in millions except
where noted, common stock data and percentages.
Old Republic International Corporation (NYSE: ORI) today
reported pretax income, excluding investment losses, of
$250.8 for the quarter and
$701.2 for the first nine months of
2023. Title Insurance results declined in both periods, affected by
higher mortgage interest rates. General Insurance pretax operating
income rose 28.6% for the quarter and 32.3% for the first nine
months, driven by solid underwriting income and higher net
investment income. The consolidated combined ratio was 91.9% for
the quarter and 92.4% for the first nine months.
Consolidated net premiums and fees earned were down 9.4% for the
quarter and 15.1% for the first nine months. Title Insurance
dropped as a result of lower revenues in both direct and agency
operations, while General Insurance grew by 10.6% for the quarter
and 7.3% for the first nine months. Net investment income increased
significantly in the quarter and the first nine months, primarily
due to higher investment yields earned on fixed income
securities.
During the quarter, the Company returned total capital to
shareholders of approximately $192,
comprised of $68 in dividends, and
$124 of share repurchases (4.7
million shares at an average price of $26.31 per share). For the first nine months,
this results in total capital returned of approximately
$684, including $209 in dividends and nearly $475 of share repurchases (18.8 million shares at
an average price of $25.44 per
share). Following the close of the quarter, the Company repurchased
$52 of additional shares (1.9 million
shares at an average price of $27.12
per share), leaving approximately $90
remaining under the most recent authorization approved by the
Company's Board of Directors in May
2023.
Book value per share grew from $21.07 at year-end 2022 to $21.37 as of September 30, 2023, primarily
reflecting the addition of operating earnings less unrealized
investment losses and shareholder dividends. With the addition of
dividends declared during the first nine months, book value per
share increased 4.9% (6.6% annualized) over year-end 2022.
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 primary needs of the insurance
subsidiaries' underwriting and related services business. In this
view, the evaluation of periodic and long-term results excludes
consideration of all investment gains (losses). Under Generally
Accepted Accounting Principles (GAAP), however, net income,
inclusive of investment gains (losses), is the measure of total
profitability.
In management's opinion, the focus on income excluding
investment gains (losses), also described herein as segment pretax
operating income, provides a better way to analyze, evaluate,
and establish accountability for the results of the insurance
operations. The inclusion of realized investment gains (losses) in
net income can mask trends in operating results, because such
realizations are often highly discretionary. Similarly, the
inclusion of unrealized investment gains (losses) in equity
securities can further distort such operating results with
significant period-to-period fluctuations.
|
FINANCIAL
HIGHLIGHTS
|
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|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
SUMMARY INCOME
STATEMENTS:
|
2023
|
|
2022
|
|
% Change
|
|
2023
|
|
2022
|
|
% Change
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums and fees
earned
|
$
1,760.1
|
|
$
1,943.3
|
|
(9.4) %
|
|
$
4,964.1
|
|
$
5,844.6
|
|
(15.1) %
|
|
|
Net investment
income
|
145.9
|
|
115.1
|
|
26.7
|
|
423.1
|
|
329.2
|
|
28.5
|
|
|
Other
income
|
40.9
|
|
39.7
|
|
3.0
|
|
121.0
|
|
113.7
|
|
6.4
|
|
|
Total operating
revenues
|
1,947.0
|
|
2,098.2
|
|
(7.2)
|
|
5,508.4
|
|
6,287.7
|
|
(12.4)
|
|
|
Investment gains
(losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized from actual
transactions and impairments
|
(43.5)
|
|
(26.2)
|
|
|
|
(13.1)
|
|
92.3
|
|
|
|
|
Unrealized from
changes in fair value of equity securities
|
(143.3)
|
|
(350.8)
|
|
|
|
(178.0)
|
|
(641.8)
|
|
|
|
|
Total investment
losses
|
(186.9)
|
|
(377.1)
|
|
|
|
(191.1)
|
|
(549.5)
|
|
|
|
|
Total
revenues
|
1,760.1
|
|
1,721.0
|
|
|
|
5,317.2
|
|
5,738.1
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and loss
adjustment expenses
|
663.4
|
|
628.6
|
|
5.5
|
|
1,885.2
|
|
1,875.2
|
|
0.5
|
|
|
Sales and general
expenses
|
1,016.3
|
|
1,195.8
|
|
(15.0)
|
|
2,867.9
|
|
3,604.5
|
|
(20.4)
|
|
|
Interest and other
charges
|
16.4
|
|
16.3
|
|
0.6
|
|
54.0
|
|
49.9
|
|
8.2
|
|
|
Total operating
expenses
|
1,696.2
|
|
1,840.7
|
|
(7.9) %
|
|
4,807.2
|
|
5,529.7
|
|
(13.1) %
|
|
|
Pretax income
(loss)
|
63.9
|
|
(119.6)
|
|
|
|
510.0
|
|
208.3
|
|
|
|
|
Income taxes
(credits)
|
11.3
|
|
(27.8)
|
|
|
|
102.0
|
|
34.0
|
|
|
|
|
Net income
(loss)
|
$
52.6
|
|
$ (91.7)
|
|
|
|
$ 408.0
|
|
$ 174.3
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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|
COMMON STOCK
STATISTICS:
|
|
|
|
|
|
|
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|
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|
|
Components of net
income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net
income (loss) excluding investment gains (losses)
|
$
0.72
|
|
$
0.68
|
|
5.9 %
|
|
$
1.96
|
|
$
2.00
|
|
(2.0) %
|
|
|
Net investment gains
(losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized from actual
transactions and impairments
|
(0.12)
|
|
(0.07)
|
|
|
|
(0.04)
|
|
0.24
|
|
|
|
|
Unrealized from
changes in fair value of equity securities
|
(0.41)
|
|
(0.92)
|
|
|
|
(0.49)
|
|
(1.67)
|
|
|
|
|
Basic net income
(loss)
|
$
0.19
|
|
$ (0.31)
|
|
|
|
$
1.43
|
|
$
0.57
|
|
|
|
|
Diluted net
income (loss) excluding investment gains (losses)
|
$
0.72
|
|
$
0.68
|
|
5.9 %
|
|
$
1.95
|
|
$
1.99
|
|
(2.0) %
|
|
|
Net investment gains
(losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized from actual
transactions and impairments
|
(0.12)
|
|
(0.07)
|
|
|
|
(0.04)
|
|
0.24
|
|
|
|
|
Unrealized from
changes in fair value of equity securities
|
(0.41)
|
|
(0.92)
|
|
|
|
(0.49)
|
|
(1.66)
|
|
|
|
|
Diluted net income
(loss)
|
$
0.19
|
|
$ (0.31)
|
|
|
|
$
1.42
|
|
$
0.57
|
|
|
|
|
Cash dividends on
common stock
|
$ 0.245
|
|
$ 1.230
|
|
|
|
$ 0.735
|
|
$ 1.690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We believe the information presented in the following table
highlights the most meaningful indicators of ORI's segmented and
consolidated financial performance. The information underscores the
performance of our underwriting subsidiaries, as well as our sound
investment of their capital and underwriting cash flows.
Sources of
Consolidated Income
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
% Change
|
|
2023
|
|
2022
|
|
% Change
|
Net premiums and
fees earned:
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$ 1,069.6
|
|
$
967.3
|
|
10.6 %
|
|
$ 3,027.7
|
|
$ 2,821.8
|
|
7.3 %
|
Title
insurance
|
684.4
|
|
968.1
|
|
(29.3)
|
|
1,917.3
|
|
2,997.3
|
|
(36.0)
|
RFIG
run-off
|
3.8
|
|
5.5
|
|
(30.7)
|
|
12.8
|
|
18.1
|
|
(29.4)
|
Corporate &
other
|
2.2
|
|
2.3
|
|
(4.5)
|
|
6.2
|
|
7.2
|
|
(13.7)
|
Consolidated
|
$ 1,760.1
|
|
$ 1,943.3
|
|
(9.4) %
|
|
$ 4,964.1
|
|
$ 5,844.6
|
|
(15.1) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting and
related services income (loss):
|
|
|
|
|
|
|
|
|
General
insurance
|
$
117.5
|
|
$ 96.2
|
|
22.2 %
|
|
$
318.5
|
|
$
243.6
|
|
30.8 %
|
Title
insurance
|
22.9
|
|
61.1
|
|
(62.4)
|
|
46.7
|
|
230.0
|
|
(79.7)
|
RFIG
run-off
|
3.1
|
|
7.6
|
|
(58.5)
|
|
14.4
|
|
26.1
|
|
(44.6)
|
Corporate &
other
|
(22.3)
|
|
(6.3)
|
|
N/M
|
|
(47.6)
|
|
(21.2)
|
|
(124.7)
|
Consolidated
|
$
121.3
|
|
$
158.6
|
|
(23.5) %
|
|
$
332.1
|
|
$
478.6
|
|
(30.6) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
underwriting ratio:
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio:
|
|
|
|
|
|
|
|
|
|
|
|
Current
year
|
42.2 %
|
|
35.7 %
|
|
|
|
42.5 %
|
|
34.7 %
|
|
|
Prior years
|
(4.5)
|
|
(3.4)
|
|
|
|
(4.5)
|
|
(2.6)
|
|
|
Total
|
37.7
|
|
32.3
|
|
|
|
38.0
|
|
32.1
|
|
|
Expense
ratio
|
54.2
|
|
59.1
|
|
|
|
54.4
|
|
59.3
|
|
|
Combined
ratio
|
91.9 %
|
|
91.4 %
|
|
|
|
92.4 %
|
|
91.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income:
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
117.9
|
|
$ 88.8
|
|
32.8 %
|
|
$
338.1
|
|
$
254.8
|
|
32.6 %
|
Title
insurance
|
14.1
|
|
11.8
|
|
19.4
|
|
42.1
|
|
34.2
|
|
22.8
|
RFIG
run-off
|
1.3
|
|
1.5
|
|
(12.2)
|
|
4.3
|
|
5.2
|
|
(16.7)
|
Corporate &
other
|
12.4
|
|
12.9
|
|
(3.4)
|
|
38.6
|
|
34.8
|
|
10.7
|
Consolidated
|
$
145.9
|
|
$
115.1
|
|
26.7 %
|
|
$
423.1
|
|
$
329.2
|
|
28.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other
charges (credits):
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$ 19.9
|
|
$ 17.3
|
|
|
|
$ 63.6
|
|
$ 50.3
|
|
|
Title
insurance
|
(0.3)
|
|
(0.3)
|
|
|
|
(0.8)
|
|
0.5
|
|
|
Corporate & other
(a)
|
(3.1)
|
|
(0.7)
|
|
|
|
(8.7)
|
|
(0.9)
|
|
|
Consolidated
|
$ 16.4
|
|
$ 16.3
|
|
0.6 %
|
|
$ 54.0
|
|
$ 49.9
|
|
8.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmented and
consolidated pretax income
|
|
|
|
|
|
|
|
|
|
|
|
(loss) excluding
investment gains (losses):
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
215.5
|
|
$
167.6
|
|
28.6 %
|
|
$
593.0
|
|
$
448.1
|
|
32.3 %
|
Title
insurance
|
37.4
|
|
73.3
|
|
(48.9)
|
|
89.6
|
|
263.8
|
|
(66.0)
|
RFIG
run-off
|
4.5
|
|
9.2
|
|
(50.6)
|
|
18.8
|
|
31.3
|
|
(40.0)
|
Corporate &
other
|
(6.7)
|
|
7.2
|
|
(192.5)
|
|
(0.2)
|
|
14.6
|
|
(102.0)
|
Consolidated
|
250.8
|
|
257.5
|
|
(2.6) %
|
|
701.2
|
|
757.9
|
|
(7.5) %
|
Income taxes on
above
|
50.6
|
|
51.3
|
|
|
|
142.1
|
|
149.7
|
|
|
Net income (loss)
excluding investment
|
|
|
|
|
|
|
|
|
|
|
|
gains
(losses)
|
200.2
|
|
206.1
|
|
(2.9) %
|
|
559.0
|
|
608.1
|
|
(8.1) %
|
Consolidated pretax
investment gains (losses):
|
Realized from actual
transactions
|
|
|
|
|
|
|
|
|
|
|
|
and
impairments
|
(43.5)
|
|
(26.2)
|
|
|
|
(13.1)
|
|
92.3
|
|
|
Unrealized from
changes in
|
|
|
|
|
|
|
|
|
|
|
|
fair value of equity
securities
|
(143.3)
|
|
(350.8)
|
|
|
|
(178.0)
|
|
(641.8)
|
|
|
Total
|
(186.9)
|
|
(377.1)
|
|
|
|
(191.1)
|
|
(549.5)
|
|
|
Income tax credits on
above
|
(39.2)
|
|
(79.2)
|
|
|
|
(40.1)
|
|
(115.6)
|
|
|
Net of tax investment
losses
|
(147.6)
|
|
(297.9)
|
|
|
|
(151.0)
|
|
(433.8)
|
|
|
Net income
(loss)
|
$ 52.6
|
|
$
(91.7)
|
|
|
|
$
408.0
|
|
$
174.3
|
|
|
Consolidated
operating cash flow
|
$
349.7
|
|
$
500.1
|
|
|
|
$
597.0
|
|
$
903.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes
consolidation/elimination entries.
|
|
|
|
|
|
|
|
|
|
|
|
|
General Insurance
Segment Operating Results
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
% Change
|
|
2023
|
|
2022
|
|
% Change
|
Net premiums
written
|
$ 1,193.9
|
|
$ 1,066.3
|
|
12.0 %
|
|
$ 3,289.0
|
|
$ 3,029.4
|
|
8.6 %
|
Net premiums
earned
|
1,069.6
|
|
967.3
|
|
10.6
|
|
3,027.7
|
|
2,821.8
|
|
7.3
|
Net investment
income
|
117.9
|
|
88.8
|
|
32.8
|
|
338.1
|
|
254.8
|
|
32.6
|
Other income
|
40.6
|
|
39.5
|
|
2.9
|
|
120.3
|
|
112.9
|
|
6.6
|
Operating
revenues
|
1,228.2
|
|
1,095.6
|
|
12.1
|
|
3,486.2
|
|
3,189.7
|
|
9.3
|
Loss and loss
adjustment expenses
|
645.8
|
|
606.6
|
|
6.5
|
|
1,842.7
|
|
1,804.9
|
|
2.1
|
Sales and general
expenses
|
346.9
|
|
304.0
|
|
14.1
|
|
986.8
|
|
886.2
|
|
11.3
|
Interest and other
charges
|
19.9
|
|
17.3
|
|
14.6
|
|
63.6
|
|
50.3
|
|
26.3
|
Operating
expenses
|
1,012.7
|
|
928.0
|
|
9.1
|
|
2,893.1
|
|
2,741.5
|
|
5.5
|
Segment pretax
operating income
|
$
215.5
|
|
$
167.6
|
|
28.6 %
|
|
$
593.0
|
|
$
448.1
|
|
32.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio:
|
|
|
|
|
|
|
|
|
|
|
|
Current
year
|
66.5 %
|
|
67.4 %
|
|
|
|
66.8 %
|
|
67.3 %
|
|
|
Prior years
|
(6.1)
|
|
(4.7)
|
|
|
|
(5.9)
|
|
(3.3)
|
|
|
Total
|
60.4
|
|
62.7
|
|
|
|
60.9
|
|
64.0
|
|
|
Expense
ratio
|
28.6
|
|
27.3
|
|
|
|
28.6
|
|
27.4
|
|
|
Combined
ratio
|
89.0 %
|
|
90.0 %
|
|
|
|
89.5 %
|
|
91.4 %
|
|
|
General Insurance net premiums earned increased 10.6% and 7.3%
for the quarter and first nine months of 2023, 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 was
experienced across most lines of coverage and was most pronounced
within commercial auto, property and general liability, partially
offset by declines experienced in public D&O (included within
financial indemnity), workers' compensation and home warranty
products. Commercial auto and general liability achieved strong
rate increases while rate declines were experienced within public
D&O and workers' compensation coverages. Net investment income
increased significantly in both 2023 periods, driven largely by
higher investment yields earned, and to a lesser extent, a slightly
higher invested asset base.
The reported loss ratio for General Insurance improved
considerably in both periods. Favorable development of
approximately 6% for both the quarter and first nine months came
predominantly from the workers' compensation and commercial auto
lines of coverage, partially offset by unfavorable development
experienced within general liability. The trends in current period
loss and expense ratios mostly reflect a shift in the line of
coverage mix. Investments in new products and geographies in recent
years have diversified the General Insurance business, resulting in
shifts in the lines of coverage mix toward lines with lower current
period loss ratios and higher expense ratios.
Together, these factors produced highly profitable combined
ratios and greater pretax operating income for the periods
reported. For General Insurance, we target combined ratios between
90% and 95% over a full underwriting cycle, recognizing that
quarterly and annual ratios and trends may deviate from this range,
particularly given the long claim payment patterns associated with
the business.
The following table shows recent annual and interim periods'
loss ratios and the effects of loss development trends:
|
|
|
|
|
Effect of Prior
Periods'
|
|
|
|
|
|
|
|
|
|
(Favorable)/
|
|
Loss Ratio
Excluding
|
|
Reported
|
|
Unfavorable
Loss
|
|
Prior Periods'
Loss
|
|
Loss Ratio
|
|
Reserves
Development
|
|
Reserves
Development
|
2018
|
|
72.2 %
|
|
|
|
— %
|
|
|
|
72.2 %
|
|
2019
|
|
71.8
|
|
|
|
0.4
|
|
|
|
71.4
|
|
2020
|
|
69.9
|
|
|
|
(0.8)
|
|
|
|
70.7
|
|
2021
|
|
64.8
|
|
|
|
(3.8)
|
|
|
|
68.6
|
|
2022
|
|
62.1 %
|
|
|
|
(5.1) %
|
|
|
|
67.2 %
|
|
3rd Quarter
2022
|
|
62.7 %
|
|
|
|
(4.7) %
|
|
|
|
67.4 %
|
|
3rd Quarter
2023
|
|
60.4 %
|
|
|
|
(6.1) %
|
|
|
|
66.5 %
|
|
1st Nine Months
2022
|
|
64.0 %
|
|
|
|
(3.3) %
|
|
|
|
67.3 %
|
|
1st Nine Months
2023
|
|
60.9 %
|
|
|
|
(5.9) %
|
|
|
|
66.8 %
|
|
|
Title Insurance
Segment Operating Results
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
% Change
|
|
2023
|
|
2022
|
|
% Change
|
Net premiums and fees
earned
|
$
684.4
|
|
$
968.1
|
|
(29.3) %
|
|
$ 1,917.3
|
|
$ 2,997.3
|
|
(36.0) %
|
Net investment
income
|
14.1
|
|
11.8
|
|
19.4
|
|
42.1
|
|
34.2
|
|
22.8
|
Other income
|
0.2
|
|
0.2
|
|
17.2
|
|
0.6
|
|
0.7
|
|
(18.6)
|
Operating
revenues
|
698.8
|
|
980.1
|
|
(28.7)
|
|
1,960.0
|
|
3,032.3
|
|
(35.4)
|
Loss and loss
adjustment expenses
|
18.2
|
|
26.2
|
|
(30.6)
|
|
49.8
|
|
84.6
|
|
(41.1)
|
Sales and general
expenses
|
643.4
|
|
880.9
|
|
(27.0)
|
|
1,821.3
|
|
2,683.3
|
|
(32.1)
|
Interest and other
charges
|
(0.3)
|
|
(0.3)
|
|
(16.0)
|
|
(0.8)
|
|
0.5
|
|
N/M
|
Operating
expenses
|
661.3
|
|
906.8
|
|
(27.1)
|
|
1,870.4
|
|
2,768.5
|
|
(32.4)
|
Segment pretax
operating income
|
$ 37.4
|
|
$ 73.3
|
|
(48.9) %
|
|
$ 89.6
|
|
$
263.8
|
|
(66.0) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio:
|
|
|
|
|
|
|
|
|
|
|
|
Current
year
|
3.8 %
|
|
3.6 %
|
|
|
|
3.8 %
|
|
3.6 %
|
|
|
Prior years
|
(1.1)
|
|
(0.9)
|
|
|
|
(1.2)
|
|
(0.8)
|
|
|
Total
|
2.7
|
|
2.7
|
|
|
|
2.6
|
|
2.8
|
|
|
Expense
ratio
|
94.0
|
|
91.0
|
|
|
|
95.0
|
|
89.5
|
|
|
Combined
ratio
|
96.7 %
|
|
93.7 %
|
|
|
|
97.6 %
|
|
92.3 %
|
|
|
Title Insurance net premiums and fees earned decreased by 29.3%
and 36.0% for the quarter and first nine months of 2023,
respectively. Both directly produced and agency produced revenues
declined, driven by a continued drop in mortgage originations
attributable to higher mortgage interest rates. Commercial premiums
decreased commensurately, and represent 22% of premiums earned in
the third quarter of 2023 versus 21% in 2022. Despite the downward
trends experienced when compared to the prior year, third quarter
Title Insurance pretax operating income increased compared to the
first two quarters of 2023, primarily due to higher net premium and
fees earned. Net investment income increased in both 2023 periods,
reflecting higher investment yields earned partially offset by a
lower invested asset base.
The Title Insurance loss ratio decreased slightly for the first
nine months reflecting higher levels of favorable development as a
percentage of premium. Both period's expense ratios were elevated
compared to last year, generally reflecting lower directly produced
revenues that carry higher fixed expenses. In addition, the first
nine months 2023 expense ratio reflects the recovery of the
$17.2 (0.9 percentage points) state
sales tax assessment paid in the fourth quarter of last year.
Together, these factors produced a higher combined ratio and
lower pretax operating income for the periods reported.
The following table shows recent annual and interim periods'
loss ratios and the effects of loss development trends:
|
|
|
|
|
Effect of Prior
Periods'
|
|
|
|
|
|
|
|
|
|
(Favorable)/
|
|
Loss Ratio
Excluding
|
|
Reported
|
|
Unfavorable
Loss
|
|
Prior Periods'
Loss
|
|
Loss Ratio
|
|
Reserves
Development
|
|
Reserves
Development
|
2018
|
|
1.9 %
|
|
|
|
(1.8) %
|
|
|
|
3.7 %
|
|
2019
|
|
2.5
|
|
|
|
(1.2)
|
|
|
|
3.7
|
|
2020
|
|
2.3
|
|
|
|
(1.3)
|
|
|
|
3.6
|
|
2021
|
|
2.6
|
|
|
|
(1.0)
|
|
|
|
3.6
|
|
2022
|
|
2.3 %
|
|
|
|
(1.3) %
|
|
|
|
3.6 %
|
|
3rd Quarter
2022
|
|
2.7 %
|
|
|
|
(0.9) %
|
|
|
|
3.6 %
|
|
3rd Quarter
2023
|
|
2.7 %
|
|
|
|
(1.1) %
|
|
|
|
3.8 %
|
|
1st Nine Months
2022
|
|
2.8 %
|
|
|
|
(0.8) %
|
|
|
|
3.6 %
|
|
1st Nine Months
2023
|
|
2.6 %
|
|
|
|
(1.2) %
|
|
|
|
3.8 %
|
|
|
RFIG Run-off Segment
Operating Results - Mortgage Insurance
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
% Change
|
|
2023
|
|
2022
|
|
% Change
|
Net premiums
earned
|
$
3.8
|
|
$
5.5
|
|
(30.7) %
|
|
$ 12.8
|
|
$ 18.1
|
|
(29.4) %
|
Net investment
income
|
1.3
|
|
1.5
|
|
(12.2)
|
|
4.3
|
|
5.2
|
|
(16.7)
|
Loss and loss
adjustment expenses
|
(2.2)
|
|
(5.2)
|
|
55.9
|
|
(11.3)
|
|
(17.5)
|
|
35.5
|
Pretax operating
income
|
$
4.5
|
|
$
9.2
|
|
(50.6) %
|
|
$ 18.8
|
|
$ 31.3
|
|
(40.0) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio:
|
|
|
|
|
|
|
|
|
|
|
|
Current
year
|
104.6 %
|
|
93.5 %
|
|
|
|
85.2 %
|
|
73.2 %
|
|
|
Prior years
|
(164.0)
|
|
(186.8)
|
|
|
|
(173.4)
|
|
(169.7)
|
|
|
Total
|
(59.4)
|
|
(93.3)
|
|
|
|
(88.2)
|
|
(96.5)
|
|
|
Expense
ratio
|
76.7
|
|
55.3
|
|
|
|
75.4
|
|
52.7
|
|
|
Combined
ratio
|
17.3 %
|
|
(38.0) %
|
|
|
|
(12.8) %
|
|
(43.8) %
|
|
|
Given the volatility inherent with a lack of scale, RFIG
Run-off is expected to produce highly variable results which have
recently benefitted significantly from favorable loss reserve
development. Pretax operating income reflects the continuing drop
in net earned premiums offset by favorable loss reserve development
from improved cure rates on reported defaults. Net investment
income decreased due to a declining invested asset base partially
offset by higher investment yields earned. Extraordinary dividends
of $25.0 and $85.0 were paid to the parent company during the
third quarter and first nine months of 2023, respectively.
The following table shows recent annual and interim periods'
loss ratios and the effects of loss development trends:
|
|
|
|
|
Effect of Prior
Periods'
|
|
|
|
|
|
|
|
|
|
(Favorable)/
|
|
Loss Ratio
Excluding
|
|
Reported
|
|
Unfavorable
Loss
|
|
Prior Periods'
Loss
|
|
Loss Ratio
|
|
Reserves
Development
|
|
Reserves
Development
|
2018
|
|
43.2 %
|
|
|
|
(27.0) %
|
|
|
|
70.2 %
|
|
2019
|
|
55.0
|
|
|
|
(12.5)
|
|
|
|
67.5
|
|
2020
|
|
81.7
|
|
|
|
(26.5)
|
|
|
|
108.2
|
|
2021
|
|
(5.3)
|
|
|
|
(67.5)
|
|
|
|
62.2
|
|
2022
|
|
(75.5) %
|
|
|
|
(156.3) %
|
|
|
|
80.8 %
|
|
3rd Quarter
2022
|
|
(93.3) %
|
|
|
|
(186.8) %
|
|
|
|
93.5 %
|
|
3rd Quarter
2023
|
|
(59.4) %
|
|
|
|
(164.0) %
|
|
|
|
104.6 %
|
|
1st Nine Months
2022
|
|
(96.5) %
|
|
|
|
(169.7) %
|
|
|
|
73.2 %
|
|
1st Nine Months
2023
|
|
(88.2) %
|
|
|
|
(173.4) %
|
|
|
|
85.2 %
|
|
|
Corporate &
Other Operating Results
|
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2023
|
|
2022
|
|
% Change
|
|
2023
|
|
2022
|
|
% Change
|
Net life and accident
premiums earned
|
|
$
2.2
|
|
$
2.3
|
|
(4.5) %
|
|
$
6.2
|
|
$
7.2
|
|
(13.7) %
|
Net investment
income
|
|
12.4
|
|
12.9
|
|
(3.4)
|
|
38.6
|
|
34.8
|
|
10.7
|
Other operating
income
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Operating
revenues
|
|
14.7
|
|
15.2
|
|
(3.4)
|
|
44.9
|
|
42.2
|
|
6.5
|
Benefits and loss and
loss adjustment expenses
|
|
1.7
|
|
0.9
|
|
83.4
|
|
3.9
|
|
3.1
|
|
25.8
|
Insurance
expenses
|
|
0.7
|
|
0.7
|
|
9.3
|
|
2.6
|
|
2.4
|
|
5.7
|
Corporate, interest and
other expenses - net
|
|
18.9
|
|
6.3
|
|
200.9
|
|
38.7
|
|
22.0
|
|
75.9
|
Operating
expenses
|
|
21.4
|
|
7.9
|
|
169.9
|
|
45.2
|
|
27.6
|
|
64.0
|
Corporate & other
pretax operating income (loss)
|
|
$
(6.7)
|
|
$
7.2
|
|
(192.5) %
|
|
$
(0.2)
|
|
$
14.6
|
|
(102.0) %
|
This segment includes a small life and accident insurance
business and the net costs associated with the parent holding
company and several internal corporate services subsidiaries. The
segment tends to produce highly variable results stemming from
volatility inherent from the lack of scale. Investment income in
both periods reflects a lower invested asset base, particularly for
the quarter, attributable to the return of capital to shareholders,
offset by higher investment yields earned. Corporate net operating
expenses in both 2023 periods reflect a one-time charge of
$10.7 relating to changes in the
structure of a company benefit plan.
|
Summary Consolidated
Balance Sheet
|
|
|
September
30,
|
|
December 31,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2022
|
Assets:
|
|
|
|
|
|
Cash and fixed income
securities
|
$
12,845.9
|
|
$
12,688.7
|
|
$
12,315.8
|
Equity
securities
|
2,685.6
|
|
3,220.9
|
|
3,045.4
|
Other invested
assets
|
150.4
|
|
138.0
|
|
130.6
|
Cash and invested
assets
|
15,681.9
|
|
16,047.7
|
|
15,491.8
|
Accounts and premiums
receivable
|
2,356.3
|
|
1,927.5
|
|
2,096.9
|
Federal income tax
assets
|
25.7
|
|
15.7
|
|
125.5
|
Reinsurance balances
recoverable
|
6,323.3
|
|
5,588.0
|
|
5,679.7
|
Deferred policy
acquisition costs
|
418.7
|
|
382.5
|
|
386.7
|
Other assets
|
1,594.3
|
|
1,197.9
|
|
1,164.2
|
Total
assets
|
$
26,400.5
|
|
$
25,159.4
|
|
$
24,945.1
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity:
|
|
|
|
|
|
Policy
liabilities
|
$
3,383.0
|
|
$
2,970.0
|
|
$
3,173.5
|
Loss and loss
adjustment expense reserves
|
12,811.2
|
|
12,221.5
|
|
12,174.7
|
Federal income tax
liabilities
|
—
|
|
42.7
|
|
2.0
|
Reinsurance balances
and funds
|
1,467.9
|
|
1,079.4
|
|
1,154.3
|
Debt
|
1,590.9
|
|
1,597.0
|
|
1,596.6
|
Other
liabilities
|
1,231.7
|
|
1,075.3
|
|
1,158.5
|
Total
liabilities
|
20,484.8
|
|
18,986.2
|
|
19,259.7
|
Shareholders'
equity
|
5,915.6
|
|
6,173.2
|
|
5,685.3
|
Total liabilities and
shareholders' equity
|
$
26,400.5
|
|
$
25,159.4
|
|
$
24,945.1
|
|
Cash, Invested
Assets, and Shareholders' Equity
|
|
|
|
|
|
|
|
|
% Change
|
|
Sep. 30,
|
|
Dec. 31,
|
|
Sep. 30,
|
|
Sep. '23/
|
|
Sep. '23/
|
|
2023
|
|
2022
|
|
2022
|
|
Dec. '22
|
|
Sep. '22
|
Cash and invested
assets:
|
|
|
|
|
|
|
|
|
|
Fixed income securities, cash and other invested
assets
|
$
12,996.3
|
|
$
12,826.7
|
|
$
12,446.4
|
|
1.3 %
|
|
4.4 %
|
Equity securities
|
2,685.6
|
|
3,220.9
|
|
3,045.4
|
|
(16.6)
|
|
(11.8)
|
Total per balance sheet
|
$
15,681.9
|
|
$
16,047.7
|
|
$
15,491.8
|
|
(2.3) %
|
|
1.2 %
|
Total at cost for all
|
$
15,228.1
|
|
$
15,365.7
|
|
$
15,363.6
|
|
(0.9) %
|
|
(0.9) %
|
|
|
|
|
|
|
|
|
|
|
Composition of
shareholders' equity per share:
|
|
|
|
|
|
|
|
|
|
Equity before items below
|
$
20.26
|
|
$
19.43
|
|
$
19.02
|
|
4.3 %
|
|
6.5 %
|
Unrealized investment gains (losses) and other
|
|
|
|
|
|
|
|
|
|
accumulated comprehensive income
(loss)
|
1.11
|
|
1.64
|
|
(0.08)
|
|
|
|
|
Total
|
$
21.37
|
|
$
21.07
|
|
$
18.94
|
|
1.4 %
|
|
12.8 %
|
|
|
|
|
|
|
|
|
|
|
Segmented
composition of
|
|
|
|
|
|
|
|
|
|
shareholders'
equity per share:
|
|
|
|
|
|
|
|
|
|
Excluding RFIG run-off segment
|
$
20.66
|
|
$
20.17
|
|
$
17.96
|
|
2.4 %
|
|
15.0 %
|
RFIG run-off segment
|
0.71
|
|
0.90
|
|
0.98
|
|
|
|
|
Consolidated total
|
$
21.37
|
|
$
21.07
|
|
$
18.94
|
|
1.4 %
|
|
12.8 %
|
As of September 30, 2023, the
consolidated investment portfolio reflected an allocation of
approximately 83% to fixed income (bonds and notes) and short-term
investments, and 17% to equity securities (common stock). Our
investment management process remains focused on retaining quality
investments that produce consistent streams of investment income,
and we continue to evaluate the investment portfolio mix in light
of the current interest rate environment. The fixed income
portfolio continues to be the anchor for the insurance underwriting
subsidiaries' obligations. The maturities of our fixed income
assets are matched to the expected liabilities for claim payment
obligations to policyholders and their beneficiaries. Our equity
portfolio consists of high-quality common stocks of U.S. companies
with long-term records of reasonable earnings growth and steadily
increasing dividends.
Old Republic's investment portfolio is directed in consideration
of enterprise-wide risk management objectives, intended to ensure
solid funding of our underwriting subsidiaries' long-term claim
payment obligations to policyholders and their beneficiaries, as
well as the long-term stability of the subsidiaries' capital base.
For these reasons, the investment portfolio does not contain high
risk or illiquid asset classes and has zero or extremely limited
exposure to, collateralized debt obligations (CDO's), credit
default and interest rate swaps, hybrid securities, asset-backed
securities (ABS), guaranteed investment contracts (GIC), structured
investment vehicles (SIV), auction rate variable short-term
securities, limited partnerships, derivatives, hedge funds or
private equity investments. Moreover, the Company does not engage
in hedging or securities lending transactions, nor does it invest
in securities whose values are predicated on non-regulated
financial instruments exhibiting amorphous or unfunded
counter-party risk attributes. Pursuant to our enterprise risk
management guidelines and controls, we perform regular stress tests
of our investment portfolio to gain reasonable assurance that
periodic downdrafts in market prices do not seriously undermine our
financial strength and the long-term continuity and prospects of
our underwriting subsidiaries.
Changes in shareholders' equity per share are reflected in the
following table. As shown, these resulted mostly from net income
excluding net investment gains (losses), realized and unrealized
investment gains (losses), and dividend payments to
shareholders.
|
Shareholders' Equity
Per Share
|
|
|
Quarter
|
|
|
|
|
|
Year
|
|
Ended
|
|
|
|
Ended
|
|
Sep. 30,
|
|
Nine Months Ended Sep.
30,
|
|
Dec. 31,
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
Beginning
balance
|
$
21.78
|
|
$
21.07
|
|
$
22.77
|
|
$
22.77
|
Changes in
shareholders' equity:
|
|
|
|
|
|
|
|
Net income excluding
net investment gains (losses)
|
0.72
|
|
1.96
|
|
2.00
|
|
2.80
|
Net of tax realized
investment gains (losses)
|
(0.12)
|
|
(0.04)
|
|
0.24
|
|
0.17
|
Net of tax unrealized
investment gains (losses):
|
|
|
|
|
|
|
|
Fixed income
securities
|
(0.28)
|
|
(0.12)
|
|
(2.62)
|
|
(2.18)
|
Equity
securities
|
(0.41)
|
|
(0.49)
|
|
(1.67)
|
|
(0.69)
|
Total net of tax
realized and unrealized
|
|
|
|
|
|
|
|
investment gains
(losses)
|
(0.81)
|
|
(0.65)
|
|
(4.05)
|
|
(2.70)
|
Cash
dividends
|
(0.245)
|
|
(0.735)
|
|
(1.690)
|
|
(1.920)
|
Other
|
(0.08)
|
|
(0.27)
|
|
(0.09)
|
|
0.12
|
Net change
|
(0.41)
|
|
0.30
|
|
(3.83)
|
|
(1.70)
|
Ending
balance
|
$
21.37
|
|
$
21.37
|
|
$
18.94
|
|
$
21.07
|
Percentage change for
the period
|
(1.9) %
|
|
1.4 %
|
|
(16.8) %
|
|
(7.5) %
|
|
Capitalization
|
|
|
September
30,
|
|
December 31,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2022
|
Debt:
|
|
|
|
|
|
4.875% Senior Notes
due 2024
|
$
399.4
|
|
$
399.0
|
|
$
398.8
|
3.875% Senior Notes
due 2026
|
548.3
|
|
547.9
|
|
547.8
|
3.850% Senior Notes
due 2051
|
643.1
|
|
642.9
|
|
642.8
|
Other miscellaneous
debt
|
—
|
|
7.1
|
|
7.1
|
Total debt
|
1,590.9
|
|
1,597.0
|
|
1,596.6
|
Common shareholders'
equity
|
5,915.6
|
|
6,173.2
|
|
5,685.3
|
Total
capitalization
|
$
7,506.5
|
|
$
7,770.2
|
|
$
7,282.0
|
|
|
|
|
|
|
Capitalization
ratios:
|
|
|
|
|
|
Debt
|
21.2 %
|
|
20.6 %
|
|
21.9 %
|
Common shareholders'
equity
|
78.8
|
|
79.4
|
|
78.1
|
Total
|
100.0 %
|
|
100.0 %
|
|
100.0 %
|
|
|
|
|
|
|
Managing Old
Republic's Insurance Business for the Long-Run
|
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. We also can't 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 the business with a primary focus on achieving
favorable underwriting results over cycles, and on maintaining a
sound financial condition to support our subsidiaries' long-term
obligations to policyholders and their beneficiaries.
The Company is managed for the long run and with little regard
for quarterly or even annual reporting periods. These time frames
are too short. Management believes results are best evaluated by
looking at underwriting and overall operating performance trends
over 10-year intervals. These likely include one or two economic
and/or underwriting cycles. This provides enough time for these
cycles to run their course, for underwriting and premium rate
changes to appear in financial results, and for reserved loss costs
to be quantified with greater certainty.
Accompanying Financial Data and Other Information:
- About Old Republic
- Conference Call Information
- Safe Harbor Statement
Financial Supplement:
- A financial supplement to this news release is available on the
Company's website: www.oldrepublic.com
About Old Republic
Chicago-based Old Republic
International Corporation is one of the nation's 50 largest
shareholder-owned insurance businesses. It is a member of the
Fortune 500 listing of America's largest companies. The
Company is organized as an insurance holding company whose
subsidiaries actively market, underwrite, and provide risk
management services for a wide variety of coverages mostly in the
general and title insurance fields. Old Republic's general
insurance business ranks among the nation's 50 largest, while its
title insurance business is the third largest in its industry.
Conference Call Information
Old Republic has scheduled a conference call at 3:00 p.m. ET (2:00 p.m.
CT) today to discuss its third quarter 2023 performance and
to review major operating trends and business developments. The
call can be accessed live on Old Republic's website at
www.oldrepublic.com or by dialing 1-888-510-2411, passcode 4060501.
Interested parties may also listen to a replay of the call through
November 2, 2023 by dialing
1-800-770-2030, passcode 4060501, or by accessing it on Old
Republic International's website.
Safe Harbor Statement
Historical data pertaining to the operating results, liquidity,
and other performance indicators applicable to an insurance
enterprise such as Old Republic are not necessarily indicative of
results to be achieved in succeeding years. In addition to the
factors cited below, the long-term nature of the insurance
business, seasonal and annual patterns in premium production and
incidence of claims, changes in yields obtained on invested assets,
changes in government policies and free markets affecting inflation
rates and general economic conditions, and changes in legal
precedents or the application of law affecting the settlement of
disputed and other claims can have a bearing on period-to-period
comparisons and future operating results.
Some of the oral or written statements made in the Company's
reports, press releases, and conference calls following earnings
releases, can constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Any such forward-looking statements involve assumptions,
uncertainties, and risks that may affect the Company's future
performance. With regard to Old Republic's General Insurance
segment, its results can be particularly affected by the level of
market competition, which is typically a function of available
capital and expected returns on such capital among competitors, the
levels of investment yields and inflation rates, and periodic
changes in claim frequency and severity patterns caused by natural
disasters, weather conditions, accidents, illnesses, work-related
injuries, and unanticipated external events. Title Insurance and
RFIG Run-off results can be affected by similar factors, and by
changes in national and regional housing demand and values, the
availability and cost of mortgage loans, employment trends, and
default rates on mortgage loans. Life and accident insurance
earnings can be affected by the levels of employment and consumer
spending, changes in mortality and health trends, and alterations
in policy lapsation rates. At the parent holding company level,
operating earnings or losses are generally reflective of the amount
of debt outstanding and its cost, interest income on temporary
holdings of short-term investments, and period-to-period variations
in the costs of administering the Company's widespread
operations.
General Insurance, Title Insurance, Corporate & Other, and
RFIG Run-off maintain customer information and rely upon technology
platforms to conduct their business. As a result, each of them and
the Company are exposed to cyber risk. Many of the Company's
operating subsidiaries maintain separate IT systems which are
deemed to reduce enterprise-wide risks of potential cybersecurity
incidents. However, given the potential magnitude of a significant
breach, the Company continually evaluates on an enterprise-wide
basis its IT hardware, security infrastructure and business
practices to respond to these risks and to detect and remediate in
a timely manner significant cybersecurity incidents or business
process interruptions.
A more detailed listing and discussion of the risks and other
factors which affect the Company's risk-taking insurance business
are included in Part I, Item 1A - Risk Factors, of the Company's
2022 Form 10-K Annual Report filing to the Securities and Exchange
Commission, which is specifically incorporated herein by
reference.
Any forward-looking statements or commentaries speak only as of
their dates. Old Republic undertakes no obligation to publicly
update or revise any and all such comments, whether as a result of
new information, future events or otherwise, and accordingly they
may not be unduly relied upon.
For Old Republic's
latest news releases and other corporate documents:
Please visit us at
www.oldrepublic.com
|
|
|
|
|
|
|
Alternatively,
please write or call:
|
|
|
Investor
Relations
|
|
Old Republic
International Corporation
|
307 North Michigan
Avenue, Chicago, IL 60601
|
(312)
346-8100
|
|
|
|
At Old
Republic:
|
At Financial
Relations Board:
|
|
|
Craig R. Smiddy,
President and CEO
|
Analysts/Investors: Joe
Calabrese 212/827-3772
|
|
|
View original
content:https://www.prnewswire.com/news-releases/old-republic-reports-results-for-the-third-quarter-and-first-nine-months-2023-301968174.html
SOURCE Old Republic International Corporation