Q1 2026 Old Republic Int Corp Earnings Call

April 23, 2026

Operator 2: Thank you for standing by, and welcome to the Old Republic International Q1 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I'd now like to turn the call over to Joe Calabrese with the Financial Relations Board. You may begin.

Operator: Thank you for standing by, and welcome to the Old Republic International Q1 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I'd now like to turn the call over to Joe Calabrese with the Financial Relations Board. You may begin.

Speaker #2: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one, on your telephone keypad.

Speaker #2: If you would like to withdraw your question, again, press star one. Thank you. I'd now like to turn the call over to Joe Calabrese with the Financial Relations Board.

Speaker #2: You may begin. Thank you, Rob. Good afternoon, everyone, and thank you for joining us for the Old Republic conference call to discuss first quarter 2026 results.

Joe Calabrese: Thank you, Rob. Good afternoon, everyone, and thank you for joining us for the Old Republic conference call to discuss Q1 2026 results. This morning, we distributed a copy of the press release and posted a separate financial supplement. Both of the documents are available on Old Republic's website at oldrepublic.com. Please be advised that this call may involve forward-looking statements as discussed in the press release dated 23 April 2026. Assumptions, uncertainties, and risks exist that may cause results to differ materially from those set forth in these forward-looking statements. For more information on these assumptions, uncertainties, and risks, please refer to the forward-looking statements discussion in the press release and the company's other recent SEC filings and the risk factors discussed in the company's most recent Form 10-K and other recent SEC filings.

Speaker #2: This morning, we distributed a copy of the press release and posted a separate financial supplement. Both of the documents are available on Old Republic's website at oldrepublic.com.

Speaker #2: Please be advised that this call may involve forward-looking statements, as discussed in the press release dated April 23, 2026. Assumptions, uncertainties, and risks exist that may cause the results to differ materially from those set forth in these forward-looking statements.

Speaker #2: For more information on these assumptions, uncertainties, and risks, please refer to the forward-looking statements discussion in the press release and the company's other recent SEC filings, and the risk factors discussed in the company's most recent Form 10-K and other recent SEC filings.

Speaker #2: We may also include references to net income excluding net investment gains, or net operating income, and non-GAAP financial measures, in our remarks or in response to questions.

Joe Calabrese: We may also include references to net income excluding net investment gains or net operating income, a non-GAAP financial measure, and our remarks are in response to questions. GAAP reconciliations are included in the press release. Presenting on today's conference call will be Craig R. Smiddy, President and CEO, Frank Sodaro, Chief Financial Officer, and Carolyn Monroe, President and CEO of Old Republic National Title Insurance Group. Management will make some opening remarks, and then we'll open the line for your questions. At this time, I'd like to turn the call over to Craig. Please go ahead, sir.

Joe Calabrese: We may also include references to net income excluding net investment gains or net operating income, a non-GAAP financial measure, and our remarks are in response to questions. GAAP reconciliations are included in the press release. Presenting on today's conference call will be Craig Smiddy, President and CEO, Frank Sodaro, Chief Financial Officer, and Carolyn Monroe, President and CEO of Old Republic National Title Insurance Group. Management will make some opening remarks, and then we'll open the line for your questions. At this time, I'd like to turn the call over to Craig. Please go ahead, Sir.

Speaker #2: Gap reconciliations are included in the press release. Presenting on today's conference call will be Craig Smiddy, President and CEO; Frank Sodaro, Chief Financial Officer; and Carolyn Monroe, President and CEO of Old Republic's National Title Insurance Group.

Speaker #2: Management will make some opening remarks, and then we'll open the line for your questions. At this time, I'd like to turn the call over to Craig.

Speaker #2: Please go ahead, sir.

Speaker #3: Okay, Joe. Thank you very much. Good afternoon, everyone, and welcome again to Old Republic's first quarter 2026 earnings call. In the quarter, we produced $211.5 million of consolidated pre-tax operating income, compared to $252.7 million, and our consolidated combined ratio was 96.6, compared to 93.7.

Craig R. Smiddy: Okay, Joe. Thank you very much. Good afternoon, everyone, and welcome again to Old Republic's Q1 2026 Earnings Call. In the quarter, we produced $211.5 million of consolidated pre-tax operating income, compared to $252.7 million, and our consolidated combined ratio was 96.6, compared to 93.7. For the quarter, our operating return on beginning equity was 11.5%, and growth in book value per share, including dividends, was 2.6%. Specialty insurance grew net premiums earned by 4.7% over the first quarter of 2025 and produced $209 million of pre-tax operating income compared to $260 million. Specialties' combined ratio was 94.8 compared to 89.8. Title insurance grew premiums and fees by 12% over the first quarter of 2025 and produced $16.7 million of pre-tax operating income compared to $4.3 million. Title's combined ratio was 100 compared to 102.

Craig Smiddy: Okay, Joe. Thank you very much. Good afternoon, everyone, and welcome again to Old Republic's Q1 2026 Earnings Call. In the quarter, we produced $211.5 million of consolidated pre-tax operating income, compared to $252.7 million, and our consolidated combined ratio was 96.6%, compared to 93.7%. For the quarter, our operating return on beginning equity was 11.5%, and growth in book value per share, including dividends, was 2.6%. Specialty insurance grew net premiums earned by 4.7% over the Q1 of 2025 and produced $209 million of pre-tax operating income compared to $260 million. Specialties' combined ratio was 94.8% compared to 89.8%. Title insurance grew premiums and fees by 12% over the Q1 of 2025 and produced $16.7 million of pre-tax operating income compared to $4.3 million. Title's combined ratio was 100 compared to 102.

Speaker #3: For the quarter, our operating return on beginning equity was 11.5%, and growth in book value per share, including dividends, was 2.6%. Specialty Insurance grew net premiums earned by 4.7% over the first quarter of '25, and produced $209 million of pre-tax operating income, compared to $260 million.

Speaker #3: Specialties combined ratio was 94.8, compared to 89.8. Title Insurance grew premiums and fees by 12% over the first quarter of '25, and produced $16.7 million of pre-tax operating income, compared to $4.3 million.

Speaker #3: Title's combined ratio was 100, compared to 102. Our conservative reserving practices continue to produce favorable prior-year loss development in both specialty insurance and title insurance, and Frank will provide more details on that topic.

Craig R. Smiddy: Our conservative reserving practices continue to produce favorable prior year loss development in both specialty insurance and title insurance, and Frank will provide more details on that topic. With that, Frank, I will turn the discussion over to you, and then you can turn them back to me to cover specialty insurance, and then we'll have Carolyn cover title insurance.

Craig Smiddy: Our conservative reserving practices continue to produce favorable prior year loss development in both specialty insurance and title insurance, and Frank will provide more details on that topic. With that, Frank, I will turn the discussion over to you, and then you can turn them back to me to cover specialty insurance, and then we'll have Carolyn cover title insurance.

Speaker #3: So with that, Frank, I will turn the discussion over to you, and then you can turn it back to me to cover specialty insurance, and then we'll have Carolyn cover title insurance.

Speaker #2: Thank you, Craig, and good afternoon, everyone. In this morning's release, we reported net operating income of $171 million for the quarter, compared to $202 million last year.

Frank Sodaro: Thank you, Craig, and good afternoon, everyone. In this morning's release, we reported net operating income of $171 million for the quarter, compared to $202 million last year. On a per-share basis, comparable quarter-over-quarter results were $0.68 compared to $0.81. Starting with investments, net investment income increased just over 4% in the quarter, primarily as a result of a larger investment base and higher yields on the bond portfolio. While our average rate on corporate bonds acquired during the quarter was 4.7%, compared to the average yield rolling off of about 3.8%, the total bond portfolio book yield held fairly steady with year-end at about 4.75%. With the current interest rate environment, we expect net investment income growth to remain in the low to mid-single digits throughout the rest of 2026. Turning now to loss reserves.

Speaker #2: On a per-share basis, comparable quarter-over-quarter results were $0.68, compared to $0.81. So, starting with investments, net investment income increased just over 4% in the quarter, primarily as a result of a larger investment base and higher yields on the bond portfolio.

Speaker #2: While our average rate on corporate bonds acquired during the quarter was 4.7%, compared to the average yield rolling off of about 3.8%, the total bond portfolio book yield held fairly steady with year-end at about 4.75%.

Speaker #2: With the current interest rate environment, we expect net investment income growth to remain in the low to mid single digits throughout the rest of 2026.

Speaker #2: Turning now to loss reserves, both Specialty and Title Insurance recognized favorable development in the quarter, leading to a 1.5-percentage-point benefit in the consolidated loss ratio, compared to 2.6 points of benefit last year.

Frank Sodaro: Both specialty and title insurance recognized favorable development in the quarter, leading to a 1.5 percentage point benefit in the consolidated loss ratio, compared to 2.6 points of benefit last year. While this level of favorable development was lower than we had experienced in recent years, it is within our expectations. For specialty insurance, property continued to have favorable development and led the way this quarter with a slightly higher level than last year. Commercial auto and workers' compensation had solid favorable development in the quarter. However, both were at lower levels than last year, and general liability had a moderate amount of unfavorable development that spanned several more recent accident years and was partially offset by favorable development in older years.

Speaker #2: While this level of favorable development was lower than we had experienced in recent years, it is within our expectations. For specialty insurance, property continued to have favorable development and led the way this quarter, with a slightly higher level than last year.

Speaker #2: Commercial auto and workers' comp had solid favorable development in the quarter. However, both were at lower levels than last year, and general liability had a moderate amount of unfavorable development that spanned several more recent accident years and was partially offset by favorable development in older years.

Speaker #2: We ended the quarter with book value per share of $24.53, which, inclusive of the regular dividend, equated to an increase of 2.6% since year-end, resulting primarily from our operating earnings.

Frank Sodaro: We ended the quarter with book value per share of $24.53, which, inclusive of the regular dividend, equated to an increase of 2.6% since year-end, resulting primarily from our operating earnings. In the quarter, we paid nearly $77 million in dividends and repurchased $161 million worth of our shares. Since the end of the quarter, we repurchased another $52 million worth of shares, which leaves us with about $640 million remaining in our current repurchase program. I'll now turn the call back over to Craig for a discussion of specialty insurance.

Speaker #2: In the quarter, we paid nearly $77 million in dividends and repurchased $161 million worth of our shares. Since the end of the quarter, we repurchased another $52 million worth of shares, which leaves us with about $640 million remaining in our current repurchase program.

Speaker #2: I'll now turn the call back over to Craig for a discussion of specialty insurance.

Speaker #3: Thanks, Frank. So specialty insurance net premiums written were up 3.4% in the quarter, coming from strong rate increases on commercial auto and general liability, some new business writings, and increasing premium in our newer specialty operating companies, partially offset by a decline in our renewal retention ratios as we continue to prioritize rate in certain lines of coverage within our portfolio.

Craig R. Smiddy: Thanks, Frank. Specialty insurance net premiums written were up 3.4% in the quarter, coming from strong rate increases on commercial auto and general liability, some new business writings, and increasing premium in our newer specialty operating companies, partially offset by a decline in our renewal retention ratios as we continue to prioritize rate in certain lines of coverage within our portfolio. We appear to be leading the market specifically within commercial auto by driving mid-teen rate increases. As mentioned in my opening remarks, in the quarter, specialty insurance pretax operating income was $209 million, while the combined ratio was 94.8. The loss ratio for the quarter was 63.6, and that included 1.6 percentage points of favorable prior year reserve development. That compares to a 61.7% loss ratio in the first quarter last year, and that included 3.3 points of favorable development.

Craig Smiddy: Thanks, Frank. Specialty insurance net premiums written were up 3.4% in the quarter, coming from strong rate increases on commercial auto and general liability, some new business writings, and increasing premium in our newer specialty operating companies, partially offset by a decline in our renewal retention ratios as we continue to prioritize rate in certain lines of coverage within our portfolio. We appear to be leading the market specifically within commercial auto by driving mid-teen rate increases. As mentioned in my opening remarks, in the quarter, specialty insurance pretax operating income was $209 million, while the combined ratio was 94.8. The loss ratio for the quarter was 63.6, and that included 1.6 percentage points of favorable prior year reserve development. That compares to a 61.7% loss ratio in the first quarter last year, and that included 3.3 points of favorable development.

Speaker #3: We appear to be leading the market, specifically within commercial auto, by driving mid-teen rate increases. As mentioned in my opening remarks, in the quarter, specialty insurance pre-tax operating income was $209 million, while the combined ratio was 94.8%.

Speaker #3: The loss ratio for the quarter was 63.6%, and that included 1.6 percentage points of favorable prior year reserve development. That compares to a 61.7% loss ratio in the first quarter last year, which included 3.3 points of favorable development.

Speaker #3: The expense ratio for the quarter was 31.2, and that compares to 28.1 in the first quarter last year. Our continued investments into new specialty operating companies, technology modernization, data and analytics, and AI placed some strain on the expense ratio this quarter, but we remain confident that all of these investments will provide significant long-term upside.

Craig R. Smiddy: The expense ratio for the quarter was 31.2%, and that compares to 28.1% in Q1 last year. Our continued investments into new specialty operating companies, technology modernization, data and analytics, and AI placed some strain on the expense ratio this quarter, but we remain confident that all of these investments will provide significant long-term upside. Turning to commercial auto. Net premiums written were up just over 1% in the quarter, while the loss ratio came in relatively flat with Q1 last year at 70.4%. As I referred earlier, rate increases remained steady with the Q4 that we reported, and that is at a 16% rate increase level, which is in line with loss trends.

Craig Smiddy: The expense ratio for the quarter was 31.2%, and that compares to 28.1% in Q1 last year. Our continued investments into new specialty operating companies, technology modernization, data and analytics, and AI placed some strain on the expense ratio this quarter, but we remain confident that all of these investments will provide significant long-term upside. Turning to commercial auto. Net premiums written were up just over 1% in the quarter, while the loss ratio came in relatively flat with Q1 last year at 70.4%. As I referred earlier, rate increases remained steady with the Q4 that we reported, and that is at a 16% rate increase level, which is in line with loss trends.

Speaker #3: Turning to commercial auto, net premiums written were up just over 1% in the quarter, while the loss ratio came in relatively flat, with the first quarter of last year at 70.4%.

Speaker #3: As I referred to earlier, rate increases remained steady with the fourth quarter that we reported, and that is at a 16% rate increase level, which is in line with loss trends.

Speaker #3: Workers' comp, on the other hand, net written premiums were also up just over 1% in the quarter, while the loss ratio came in at 62.3% compared to 58.7% in the first quarter last year, and most of that difference is due to the difference in the level of favorable prior-year loss reserve development.

Craig R. Smiddy: Workers' comp, on the other hand, net written premiums were also up just over 1% in the quarter, while the loss ratio came in at 62.3%, compared to 58.7% in Q1 last year. Most of that difference is due to the difference in the level of favorable prior year loss reserve development. Rate decreases for work comp were about 2%, and here too, that's in line with loss trends, with severity remaining relatively consistent and frequency continuing its downward trends. So while we're seeing some top-line pressure, along with some pressure on the expense ratio, we remain confident that our underwriting approach to focus on risk-adequate rates will continue to produce profitable combined ratios, which is really the foremost priority for us. We also expect to see continuing growth in top-line contributions from our newer specialty operating companies. A couple of other things.

Craig Smiddy: Workers' comp, on the other hand, net written premiums were also up just over 1% in the quarter, while the loss ratio came in at 62.3%, compared to 58.7% in Q1 last year. Most of that difference is due to the difference in the level of favorable prior year loss reserve development. Rate decreases for work comp were about 2%, and here too, that's in line with loss trends, with severity remaining relatively consistent and frequency continuing its downward trends. So while we're seeing some top-line pressure, along with some pressure on the expense ratio, we remain confident that our underwriting approach to focus on risk-adequate rates will continue to produce profitable combined ratios, which is really the foremost priority for us. We also expect to see continuing growth in top-line contributions from our newer specialty operating companies. A couple of other things.

Speaker #3: Rate decreases for work comp were about 2%, and here too, that's in line with loss trends, with severity remaining relatively consistent and frequency continuing its downward trend.

Speaker #3: So, while we're seeing some top-line pressure along with some pressure on the expense ratio, we remain confident that our underwriting approach to focus on risk-adequate rates will continue to produce profitable combined ratios, which is really the foremost priority for us.

Speaker #3: We also expect to see continuing growth in top-line contributions from our newer specialty operating companies. A couple of other things. Additionally, in the quarter, we announced the formation of another new operating company.

Craig R. Smiddy: Additionally, in the quarter, we announced the formation of another new operating company, Old Republic Property, led by Patrick Hagerty, who has assembled a highly respected team of underwriters that will specialize in very selective property placements. Just this week, the executive team here at the holding company in Chicago met with Patrick and his team, and they're currently focused on building out their operating platform. Ultimately, we expect this new venture to produce solid underwriting profits, very similar to what Old Republic Inland Marine has delivered over the last couple of years. We also announced the rebranded Lodestar Claims & Risk Services, which is now set up as a separate standalone operating company focused on growing fee income for our portfolio.

Craig Smiddy: Additionally, in the quarter, we announced the formation of another new operating company, Old Republic Property, led by Patrick Hagerty, who has assembled a highly respected team of underwriters that will specialize in very selective property placements. Just this week, the executive team here at the holding company in Chicago met with Patrick and his team, and they're currently focused on building out their operating platform. Ultimately, we expect this new venture to produce solid underwriting profits, very similar to what Old Republic Inland Marine has delivered over the last couple of years. We also announced the rebranded Lodestar Claims & Risk Services, which is now set up as a separate standalone operating company focused on growing fee income for our portfolio.

Speaker #3: Old Republic Property, led by Patrick Haggerty, has assembled a highly respected team of underwriters that will specialize in very selective property placements. Just this week, the executive team here at the holding company in Chicago met with Patrick and his team, and they're currently focused on building out their operating platform. Ultimately, we expect this new venture to produce solid underwriting profits, very similar to what Old Republic Inland Marine has delivered over the last couple of years.

Speaker #3: We also announced the rebranded Loadstar Claims and Risk Services, which is now set up as a separate, standalone operating company focused on growing fee income for our portfolio.

Speaker #3: And finally, as we mentioned in the release, we expect to close on the ECM acquisition around July 1st, which will also contribute to the top line and bottom line in the second half of this year.

Craig R. Smiddy: Finally, as we mentioned in the release, we expect to close on the ECM acquisition around 1 July, which will also contribute to top line and bottom line in H2 of this year. That concludes my comments for specialty, and I'll now turn the discussion over to Carolyn to report on title.

Craig Smiddy: Finally, as we mentioned in the release, we expect to close on the ECM acquisition around 1 July, which will also contribute to top line and bottom line in H2 of this year. That concludes my comments for specialty, and I'll now turn the discussion over to Carolyn to report on title.

Speaker #3: So that concludes my comments for Specialty, and I'll now turn the discussion over to Carolyn to report on Title.

Speaker #2: Thank you, Craig, and good afternoon. Title Insurance reported premium and fee revenue for the quarter of $678 million. This represents an increase of 12% from the first quarter of last year.

Carolyn Monroe: Thank you, Craig, and good afternoon. Title Insurance reported premium and fee revenue for the quarter of $678 million. This represents an increase of 12% from Q1 of last year. So far in 2026, we have seen continued strong commercial activity. Consistent with prior years, Q1 is seasonally slow in the residential market. The start of the 2026 home buying season was marked by higher inventory levels, lower interest rates, and moderating price growth compared to 2025. While interest rates spiked during the last month of the quarter due to uncertainty and inflation concerns, they did ease slightly in April. The premiums produced in our direct title operations were up 6% from this time last year.

Speaker #2: So far, in 2026, we have seen continued strong commercial activity. Consistent with prior years, the first quarter is seasonally slow in the residential market.

Speaker #2: The start of the 2026 home buying season was marked by higher inventory levels, lower interest rates, and moderating price growth compared to 2025. While interest rates spiked during the last month of the quarter due to uncertainty and inflation concerns, they did ease slightly in April.

Speaker #2: The premiums reduced in our direct title operations were up 6% from this time last year. Our agency-produced premiums were up 14% and made up nearly 80% of our revenues during the quarter, which is up from 78% in the first quarter of last year.

Carolyn Monroe: Our agency-produced premiums were up 14% and made up nearly 80% of our revenues during the quarter, which is up from 78% in Q1 of last year. Commercial premiums increased this quarter and were 27% of our earned premiums this quarter, compared to 24% in Q1 of last year. During the quarter, we entered into a new excess of loss reinsurance agreement that will expand our capacity to underwrite large commercial deals. Investment income was also up this quarter by 4% compared to Q1 of 2025, driven by a higher invested asset base and higher investment yields. Our loss ratio improved to 2.6% this quarter, including 1.1 percentage points of favorable prior year loss reserve development, compared to 2.7% in Q1 of 2025. That included 0.8 percentage points of favorable development.

Speaker #2: Commercial premiums increased this quarter and were 27% of our earned premiums this quarter, compared to 24% in the first quarter of last year. During the quarter, we entered into a new excess of loss reinsurance agreement that will expand our capacity to underwrite large commercial deals.

Speaker #2: Investment income was also up this quarter by 4% compared to the first quarter of '25, driven by a higher invested asset base and higher investment yields.

Speaker #2: Our loss ratio improved to 2.6% this quarter, including 1.1 percentage points of favorable prior year loss reserve development, compared to 2.7% in the first quarter of '25, which included 0.8 percentage points of favorable development.

Speaker #2: Our expense ratio improved nearly 2 percentage points to 97.5% from 99.4% in the first quarter of '25. While our combined ratio of 100% is still elevated, the improvement reflects increased revenues and the margin expansion efforts we have been working on.

Carolyn Monroe: Our expense ratio improved nearly two percentage points to 97.5% from 99.4% in Q1 2025. While our combined ratio of 100% is still elevated, the improvement reflects increased revenues and the margin expansion efforts we have been working on. Our pre-tax operating income increased to $16.7 million this quarter, compared to $4.3 million in Q1 2025. As we look forward to some long-awaited improvement in the residential housing market, we remain focused on operational efficiency and efforts to expand our margins. We're committed to equipping our agents with the latest fraud prevention tools and other technological solutions to help them succeed in all market conditions. Internally, we are busy continuing to execute on the rollout of our new operating platform across the title operations.

Speaker #2: Our pre-tax operating income increased to $16.7 million this quarter, compared to $4.3 million in the first quarter of '25. As we look forward to some long-awaited improvement in the residential housing market, we remain focused on operational efficiency and efforts to expand our margins.

Speaker #2: We're committed to equipping our agents with the latest fraud prevention tools and other technological solutions to help them succeed in all market conditions. Internally, we are busy continuing to execute on the rollout of our new operating platform across the title operations.

Speaker #2: We are also progressing with ongoing enhancements to our commercial structure and enhancing our ability to service the elevated level of commercial transactions taking place in the market.

Carolyn Monroe: We are also progressing with ongoing enhancements to our commercial structure and enhancing our ability to service the elevated level of commercial transactions taking place in the market. With that, I'll give it back to Craig.

Speaker #2: And with that, I'll give it back to Craig.

Speaker #3: Okay, Carolyn. Thank you. Well, that concludes our prepared remarks. So, while we're seeing some top-line pressure along with some expense pressure in specialty insurance, the fundamentals in specialty remain very strong, and the investments we're making will contribute to continued profitable growth.

Craig R. Smiddy: Okay, Carolyn. Thank you. Well, that concludes our prepared remarks. While we're seeing some top-line pressure along with some expense pressure in specialty insurance, the fundamentals in specialty remain very strong, and the investments we're making will contribute to continued profitable growth. In title, we're well-positioned for a turn in the residential real estate market while we continue to reduce expenses in the short term. With that, we're happy to answer questions, and either I'll answer your questions or I'll ask Frank or Carolyn to help me answer the question. We'll open it up for questions.

Craig Smiddy: Okay, Carolyn. Thank you. Well, that concludes our prepared remarks. While we're seeing some top-line pressure along with some expense pressure in specialty insurance, the fundamentals in specialty remain very strong, and the investments we're making will contribute to continued profitable growth. In title, we're well-positioned for a turn in the residential real estate market while we continue to reduce expenses in the short term. With that, we're happy to answer questions, and either I'll answer your questions or I'll ask Frank or Carolyn to help me answer the question. We'll open it up for questions.

Speaker #3: And in Title, we're well positioned for a turn in the residential real estate market, while we continue to reduce expenses in the short term.

Speaker #3: So with that, we're happy to answer questions, and either I'll answer your questions or I'll ask Frank or Carolyn to help me answer the question.

Speaker #3: So, we'll open it up for questions.

Speaker #4: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad.

Operator 2: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Your first question comes from the line of Paul Newsome from Piper Sandler. Your line is open.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Your first question comes from the line of Paul Newsome from Piper Sandler. Your line is open.

Speaker #4: If you would like to withdraw your question, simply press star one again. Your first question comes from the line of Paul Newsom from Piper Sandler.

Speaker #4: Your line is open.

Paul Newsome: Good afternoon. Thanks for the call. Maybe just a little bit more color on the expense drag. Do you have any thoughts about when some of these new efforts will be able to directionally impact the expense ratio in a positive way? Is it something that we should expect to happen very gradually, or is there some sort of moment when you think some of the stuff will kick in a meaningful way that we'll see in the results?

Speaker #5: Good afternoon. Thanks for the call. Maybe just a little bit more color on the expense drag. Do you have any thoughts about when some of these new efforts will be able to directionally impact the expense ratio in a positive way?

Speaker #5: Is it something that we should expect to happen very gradually, or is there some sort of moment when you think some of this stuff will kick in in a meaningful way that we'll see in the results?

Craig R. Smiddy: Yeah, Paul. Hello, and thank you for the question. I'm happy to respond. Really, there's two main drivers that we referenced in the release, and that is the startup operating company expenses, and then what I'll throw into a second category, even though there's three subsets, and that is information technology with systems modernization, coupled with data and analytics, coupled with AI. I'll speak first to the new startup operating companies. There's about eight of the companies that we would put into the category of new, of which three of them are at a maturity level that we consider to be at scale. Then on the other end of the spectrum, we have three new companies that have yet to produce premium. The nature of these startup businesses, of course, is the initial people that you're hiring are the new leaders of those companies.

Craig Smiddy: Yeah, Paul. Hello, and thank you for the question. I'm happy to respond. Really, there's two main drivers that we referenced in the release, and that is the startup operating company expenses, and then what I'll throw into a second category, even though there's three subsets, and that is information technology with systems modernization, coupled with data and analytics, coupled with AI. I'll speak first to the new startup operating companies. There's about eight of the companies that we would put into the category of new, of which three of them are at a maturity level that we consider to be at scale. Then on the other end of the spectrum, we have three new companies that have yet to produce premium. The nature of these startup businesses, of course, is the initial people that you're hiring are the new leaders of those companies.

Speaker #3: Yeah, Paul. Hello and thank you for the question. I'm happy to respond. Really, there are two main drivers that we referenced in the release, and that is the startup operating company expenses and then what I'll throw into a second category, even though there are three subsets, and that is information technology with systems modernization, coupled with data and analytics, coupled with

Speaker #1: With a I , so I'll speak first to the . The new start up operating companies . There's . There's about eight of the companies that we would put into the category of new .

Speaker #1: Of those, three of them are at a maturity level that we consider to be at scale. And then, on the other end of the spectrum, we have three new companies that have yet to produce premium.

Speaker #1: And the nature of the start up business is , of course , is you . The initial you're hiring are the new leaders of those companies .

Speaker #1: And with that comes , you know , a higher level of compensation . Of course . And therefore , it's a matter of time for all of the companies to get to scale .

Craig R. Smiddy: With that comes a higher level of compensation, of course. Therefore, it's a matter of time for all of the companies to get to scale. Some in the middle will be reaching scale in the next year to 2 years, and then the latter 3 that haven't produced any premium yet, it's still 2 to 3 years out before they get to scale. That's the dynamics around the startup company expenses. It's a matter of where we'll be at the end of the day. Again, we think profitable businesses will be the end result. When it comes to information technology, data analytics, AI, to give you some feel for that, about half of our 20 companies within the specialty insurance group are in the process of core system modernization.

Craig Smiddy: With that comes a higher level of compensation, of course. Therefore, it's a matter of time for all of the companies to get to scale. Some in the middle will be reaching scale in the next year to 2 years, and then the latter 3 that haven't produced any premium yet, it's still 2 to 3 years out before they get to scale. That's the dynamics around the startup company expenses. It's a matter of where we'll be at the end of the day. Again, we think profitable businesses will be the end result. When it comes to information technology, data analytics, AI, to give you some feel for that, about half of our 20 companies within the specialty insurance group are in the process of core system modernization.

Speaker #1: So some, some in the middle will be reaching scale in the next year to two years. And then, and then the latter three that haven't produced any premium yet.

Speaker #1: It's still two to three years out before they get to scale. So that's the dynamics around the startup company expenses.

Speaker #1: You know , it's a matter of where we'll be at at the end of the day . And again , we think profitable businesses will be the end result when it comes to information technology , data analytics , AI to give you some feel for that , about half of our 20 companies within the specialty insurance group are in the process of core system modernization and as you as you may know , accounting rules are such that initial expenses need need to be expensed immediately and then .

Craig R. Smiddy: As you may know, accounting rules are such that initial expenses need to be expensed immediately. We're at the beginning stages in a lot of these core system modernization efforts. A lot of the costs are falling directly to expense. In the midterm, we'll hit a point where we're able to capitalize certain costs. That happens when the system's ready for production. At that point, we'll capitalize those costs and amortize those over a period of, Frank, 10 years, approximately?

Craig Smiddy: As you may know, accounting rules are such that initial expenses need to be expensed immediately. We're at the beginning stages in a lot of these core system modernization efforts. A lot of the costs are falling directly to expense. In the midterm, we'll hit a point where we're able to capitalize certain costs. That happens when the system's ready for production. At that point, we'll capitalize those costs and amortize those over a period of, Frank, 10 years, approximately?

Speaker #1: So as we're at the beginning stages in a lot of these core system modernization efforts, a lot of the costs are falling directly to expense.

Speaker #1: Then, in the midterm, we'll hit a point where we're able to capitalize certain costs, and that happens when the system's ready for production.

Speaker #1: And at that point, we'll capitalize those costs and amortize those over a period of, frankly, ten years, approximately.

Frank Sodaro: About 10 years usually on the core systems.

Speaker #2: About ten years, usually on the core systems.

Speaker #1: Yeah . So so that's , that's what's happening there on , on data analytics , we've built out a pretty significant team there .

Craig R. Smiddy: Yeah. That's what's happening there on data analytics. We've built out a pretty significant team there. I think we have most of the staff in place. AI, we're still building out that team. There'll be more cost there to come. A lot of moving pieces, I know. Hard to put it all together, but it'll take a little bit of time for it all to get to what I would call a run rate that'll be an expense ratio less than 30.

Craig Smiddy: Yeah. That's what's happening there on data analytics. We've built out a pretty significant team there. I think we have most of the staff in place. AI, we're still building out that team. There'll be more cost there to come. A lot of moving pieces, I know. Hard to put it all together, but it'll take a little bit of time for it all to get to what I would call a run rate that'll be an expense ratio less than 30.

Speaker #1: So, I think we have most of the staff in place. AI, we're still building out that team, and there'll be more cost there to come.

Speaker #1: So a lot of moving pieces , I know hard to to put it all together , but it'll take it'll take a little bit of time for it all to get to what I would call a run rate .

Speaker #1: That'll be an expense ratio less than 30.

Speaker #3: So I guess pulling this all together , you had Almost a 35% expense ratio in the first quarter . I think . Well , 31 , as you adjust it , is that is that a kind of a good starting point for the following quarters ?

Paul Newsome: I guess pulling this all together, you had almost a 35% expense ratio in Q1, I think. Well, 31 as you adjust it. Is that a good starting point for the following quarters? Then we should see some of these other efforts kick in over time, and it kind of goes away? Or is there anything worth noting in there that we should consider?

Speaker #3: And then we should see some of these other efforts kick in over time . And it kind of goes away or is there anything one timing in there that that should be we should consider ?

Speaker #1: Yeah , I follow your your question , Paul . I think , you know , unfortunately , it's a hard one to answer because so much is also dependent on what's happening with premium .

Craig R. Smiddy: Yeah. I follow your question, Paul. I think, unfortunately, it's a hard one to answer because so much is also dependent on what's happening with premium. We could give a much more firm answer if we knew what exactly was going to happen with premium. But as you saw, and as I mentioned a couple of times in my comments, while we still have some growth, if you look at net premiums written, they're coming in a bit lower than net premiums earned, which is, of course, a leading indicator. If you compare those growth rates to last year, their growth rates are lower than the robust growth rates we've had over the last couple of years. Premiums, the wild card here.

Craig Smiddy: Yeah. I follow your question, Paul. I think, unfortunately, it's a hard one to answer because so much is also dependent on what's happening with premium. We could give a much more firm answer if we knew what exactly was going to happen with premium. But as you saw, and as I mentioned a couple of times in my comments, while we still have some growth, if you look at net premiums written, they're coming in a bit lower than net premiums earned, which is, of course, a leading indicator. If you compare those growth rates to last year, their growth rates are lower than the robust growth rates we've had over the last couple of years. Premiums, the wild card here.

Speaker #1: You know , if we had a , we could give a , a much more firm answer . If we knew what exactly was going to happen with , with premium .

Speaker #1: But as you saw , and as I mentioned a couple of times in my comments , while we still have some growth , if you look at at net premiums written , they're coming in a bit lower than net premiums earned , which is , of course , a leading indicator .

Speaker #1: And if you compare those growth rates to last year , you know , there's their growth rates are , are lower than the robust growth rates we've had over the last couple of years .

Speaker #1: So , so , you know , premiums , the wild card here , but with respect to just thinking about the expense ratio , if we can continue to grow at at , say , a 3 to 5% clip for the rest of the year , I would think that an expense ratio that is at or below where we came in the first quarter is reasonable

Craig R. Smiddy: With respect to just the thinking about the expense ratio, if we can continue to grow at, say, a 3% to 5% clip for the rest of the year, I would think that an expense ratio that is at or below where we came in Q1 is reasonable.

Craig Smiddy: With respect to just the thinking about the expense ratio, if we can continue to grow at, say, a 3% to 5% clip for the rest of the year, I would think that an expense ratio that is at or below where we came in Q1 is reasonable.

Speaker #3: Well, that's—thank you very much. Appreciate the help, as always. I'll let some other folks ask questions.

Paul Newsome: Well, that's better. Thank you. Much appreciate the help as always. I'll let some other folks ask questions.

Speaker #4: Your next question comes from the line of David Samar from Citizens. Your line is open.

Operator 2: Your next question comes from the line of David Samar from Citizens. Your line is open.

Operator: Your next question comes from the line of David Samar from Citizens. Your line is open.

Speaker #5: Hi . Thank you for taking my question . This is David on for Matt . Hey , just a question on the accident year loss ratio .

David Samar: Hi. Thank you for taking my question. This is David on for Matt.

Craig R. Smiddy: Hi, David.

Craig Smiddy: Hi, David.

David Samar: Hey. Just a question on the accident year loss ratio. It looks like it was booked in Q1. It was a couple points lower. Can you help us kind of understand how you got to that and any pieces to think about within that?

Speaker #5: It looks like it was booked in Q1. It was a couple of points lower. Can you help us kind of understand how you got to that and any pieces to think about within that?

Speaker #1: Yeah . And David , just so that I make sure I answer your question correctly when you're looking at the current accident , your loss ratio for specialty , and I'm looking at page two of the supplement , we're at a 65.2 .

Craig R. Smiddy: Yeah. David, just so that I make sure I answer your question correctly, when you're looking at the current accident year loss ratio for specialty, and I'm looking at page 2 of the supplement, we're at a 65.2 compared to a 65 last year. The current-

Craig Smiddy: Yeah. David, just so that I make sure I answer your question correctly, when you're looking at the current accident year loss ratio for specialty, and I'm looking at page 2 of the supplement, we're at a 65.2 compared to a 65 last year. The current-

Speaker #1: Compared to a 65 last year, so the current—

David Samar: Last quarter, was it?

Speaker #5: Or last quarter was it

Craig R. Smiddy: Last quarter last year. Right. Okay. Are you comparing it to the full year?

Craig Smiddy: Last quarter last year. Right. Okay. Are you comparing it to the full year?

Speaker #1: Last quarter , last year . Right . Okay . Are you comparing it to the full year ?

David Samar: Yes. Yeah.

Speaker #5: Yes . Yeah .

Craig R. Smiddy: Okay. Thank you. I now understand your-

Craig Smiddy: Okay. Thank you. I now understand your-

Speaker #1: Okay. Thank you. I now understand your point.

David Samar: Sorry about that. Yeah.

Craig R. Smiddy: your question.

Craig Smiddy: your question.

Speaker #5: Sorry about that. Yeah. More to your question. Sorry about that.

David Samar: Yeah, sorry about that.

Craig R. Smiddy: Nope. Makes perfect sense. Yeah, it's a bit lower in Q1 than it was for the full year of 2025. As you can tell by comparing Q1 to Q1, it's actually 0.2 up. As we get through the year, it could be closer to where the full year 2025 was. Starting with where it's at, even if we were to assume it stays at 65.2, it's a bit better than it was. We've had cumulative compounded rate increases in numerous lines of business. On the other hand, on workers' compensation, we've given up, frankly, less rate than trends would suggest we could give up.

Craig Smiddy: Nope. Makes perfect sense. Yeah, it's a bit lower in Q1 than it was for the full year of 2025. As you can tell by comparing Q1 to Q1, it's actually 0.2 up. As we get through the year, it could be closer to where the full year 2025 was. Starting with where it's at, even if we were to assume it stays at 65.2, it's a bit better than it was. We've had cumulative compounded rate increases in numerous lines of business. On the other hand, on workers' compensation, we've given up, frankly, less rate than trends would suggest we could give up.

Speaker #1: Nope. Makes perfect sense. Yeah. So, it's a bit lower in the first quarter than it was for the full year of '25.

Speaker #1: But as you can tell by comparing first quarter to first quarter , it's actually , you know , 0.2 up . So as we get through the year , it could be closer to where the full year 25 was .

Speaker #1: But starting with where it is, even if we were to assume it stays at a 652, it's a bit better than it was. You know, we've had cumulative, compounded rate increases in numerous lines of business.

Speaker #1: We've . And on the other hand , on worker's comp , we've given up Frankly , less rate than trends would suggest . We could give up .

Craig R. Smiddy: Even if it were to stay at a 65.2 for the rest of the year, coming in at 1.5 better than where we were in the last couple of years, that would be the rationale behind why that would make sense. Again, sticking to our underwriting discipline, we're willing to give up top line to maintain loss ratios. We're going out and pushing rate, particularly on commercial auto, and general liability, where we know we need it, even though a lot of others in the marketplace are still looking in the rearview mirror and not obtaining the rate that we know is necessary.

Craig Smiddy: Even if it were to stay at a 65.2 for the rest of the year, coming in at 1.5 better than where we were in the last couple of years, that would be the rationale behind why that would make sense. Again, sticking to our underwriting discipline, we're willing to give up top line to maintain loss ratios. We're going out and pushing rate, particularly on commercial auto, and general liability, where we know we need it, even though a lot of others in the marketplace are still looking in the rearview mirror and not obtaining the rate that we know is necessary.

Speaker #1: So even if it were to stay , you know , at a , a 652 for the rest of the year , coming in a point and a half better than where we were in the last couple of years , that that is would be the rationale behind why that would make sense .

Speaker #1: And again , sticking to our underwriting discipline , we're we're willing to give up top line to maintain , you know , loss ratios were going out and pushing Rate , particularly on commercial auto and and general liability where we know we need it , even though a lot of others in the marketplace are still looking in the rearview mirror and , and not Obtaining the , the rate that we know is , is necessary .

Craig R. Smiddy: We're going to continue to get the rate we need relative to the trends that we're observing in order to maintain the loss ratios that we've been able to get to through our compounded rate increases or, if you're talking about work comp, through our very measured level of rate decreases.

Craig Smiddy: We're going to continue to get the rate we need relative to the trends that we're observing in order to maintain the loss ratios that we've been able to get to through our compounded rate increases or, if you're talking about work comp, through our very measured level of rate decreases.

Speaker #1: So, we're going to continue to get the rate we need, relative to the trends that we're observing, in order to maintain the loss ratios that we've been able to get to through our compounded rate increases, or, if you're talking about work comp, through our very measured level of rate decreases.

David Samar: Great. That is helpful. Thank you very much.

Operator 2: Again, if you would like to ask a question, press star one on your telephone keypad. Your next question comes from the line of Gregory Peters from Raymond James. Your line is open.

Operator: Again, if you would like to ask a question, press star one on your telephone keypad. Your next question comes from the line of Gregory Peters from Raymond James. Your line is open.

Speaker #5: That is helpful. Thank you very much.

Speaker #4: And again, if you would like to ask a question, press star one on your telephone keypad. Your next question comes from the line of Greg Peters from Raymond James.

Gregory Peters: Good afternoon. I'm going to focus on the commercial auto segment for my first question. Specifically, you talked about the continuing progress on rate increases in that line of business being in the double-digit range. If I look at the written growth and the earned growth on a quarter-over-quarter basis, it doesn't seem to square with what seems to be strong pricing conditions for that line. Maybe you could give some perspective on what's going on on the competitive front. Are you losing business? We hear anecdotal stories about MGAs getting more active in the space. We hear other carriers becoming more interested in the space. Just curious about how you see your top-line results in commercial auto and how you see the competitive outlook going forward.

Greg Peters: Good afternoon. I'm going to focus on the commercial auto segment for my first question. Specifically, you talked about the continuing progress on rate increases in that line of business being in the double-digit range. If I look at the written growth and the earned growth on a quarter-over-quarter basis, it doesn't seem to square with what seems to be strong pricing conditions for that line. Maybe you could give some perspective on what's going on on the competitive front. Are you losing business? We hear anecdotal stories about MGAs getting more active in the space. We hear other carriers becoming more interested in the space. Just curious about how you see your top-line results in commercial auto and how you see the competitive outlook going forward.

Speaker #4: Your line is open .

Speaker #5: Oh, good afternoon. I'm going to focus on the commercial auto segment for my first question, and specifically talk about the continuing progress on rate increases in that line of business.

Speaker #5: Being in the double digit range . And if I look at the written growth and the earned growth on a quarter over quarter basis , it doesn't seem to square with what seems to be strong pricing conditions for that line .

Speaker #5: So maybe you could give some perspective on what's going on , on the competitive front . Are you losing business ? You know , we hear anecdotally stories about Mgas getting more active in the space We hear other carriers becoming more interested in the space .

Speaker #5: So, just curious about how you see your top-line results in commercial auto, and how you see the competitive outlook going forward.

Craig R. Smiddy: Yeah, Greg. Great question. In my comments in the release itself, we talked about the challenges that we're having with our retention ratios. For us, what we call a challenge is probably for others routine. We've been able to maintain 85% to 90% retention ratios. That has slipped this quarter for sure. By only growing the net written by 1% in commercial auto is a reflection of that lower retention ratio. That also ticks and ties to my comments that our MO is to require the rate increases needed to keep up with the severity trends that we're seeing, and be disciplined underwriters and focus on bottom line, focus on loss ratio. If top line is more muted, then so be it.

Craig Smiddy: Yeah, Greg. Great question. In my comments in the release itself, we talked about the challenges that we're having with our retention ratios. For us, what we call a challenge is probably for others routine. We've been able to maintain 85% to 90% retention ratios. That has slipped this quarter for sure. By only growing the net written by 1% in commercial auto is a reflection of that lower retention ratio. That also ticks and ties to my comments that our MO is to require the rate increases needed to keep up with the severity trends that we're seeing, and be disciplined underwriters and focus on bottom line, focus on loss ratio. If top line is more muted, then so be it.

Speaker #1: Yeah . Greg , great question . In a , you know , in my comments in the release itself , we talked about the challenges that we're having with our retention ratios .

Speaker #1: I mean , we're , for us , what we call a challenge . Is , is probably for others routine . But , you know , we've been able to maintain 85 to 90% retention ratios .

Speaker #1: That has slipped this this quarter , for sure . So we are by only growing the net , written by 1% in commercial auto is a reflection of that lower retention ratio .

Speaker #1: And that's also . Tics and ties to my comments that we're our M.O. is to require the rate increases needed to keep up with the severity trends that we're seeing , and be disciplined underwriters and , and focus on bottom line , focus on loss ratio .

Craig R. Smiddy: We think that there's competitors that, as I mentioned a little bit ago, I think look in the rearview mirror and aren't looking forward as best you can look forward. If you observe for us where we saw severity trends last quarter and where we see them this quarter, they are almost identical, in the 15% range. We're going out, and we have to get rate increases that are in that same range. Competitors. MGAs, we're not competing with so much. I know there is a lot of talk out there about MGAs. I wouldn't say that MGAs are a reason for our lower retention ratio. There's just a lot of other competitors, and I know I've talked about this on previous earnings calls.

Craig Smiddy: We think that there's competitors that, as I mentioned a little bit ago, I think look in the rearview mirror and aren't looking forward as best you can look forward. If you observe for us where we saw severity trends last quarter and where we see them this quarter, they are almost identical, in the 15% range. We're going out, and we have to get rate increases that are in that same range. Competitors. MGAs, we're not competing with so much. I know there is a lot of talk out there about MGAs. I wouldn't say that MGAs are a reason for our lower retention ratio. There's just a lot of other competitors, and I know I've talked about this on previous earnings calls.

Speaker #1: And if top line is more muted , then so be it . But we think the that there's competitors that as I mentioned , a little bit ago , I think look in the rearview mirror and aren't looking forward as best you can .

Speaker #1: Look forward . But if you observe , you know , for us where we saw severity trends last quarter and where we see them this quarter , they are almost identical .

Speaker #1: You know, in the 15% range. And we're going out, and we have to get rate increases that are in that same range.

Speaker #1: So competitors , there's , you know , Mgas , we're not competing with so much . So I , I know there is a lot of talk out there about Mgas .

Speaker #1: I wouldn't say , you know , that Mgas are n r a reason for our lower retention ratio , but there's just a lot of other competitors .

Craig R. Smiddy: We pride ourselves on pricing precision and making sure we're on top of trends and reacting quickly, and others just frankly aren't as good at that. Especially if they're relying on ISO data, and ISO is not going to be as current as we are. There are competitors out there that we think are willing to write commercial auto at levels that will ultimately be unprofitable. The proof's in the pudding. We've prided ourselves that we've been an outlier for the last three years or so, putting up favorable development on commercial auto while our competitors are putting up unfavorable development, a lot of them. If you then take what I'm saying about where we sit today in the competitive environment, they're going to continue to put up unfavorable development because they're not getting the rates they need to keep up with the trend.

Craig Smiddy: We pride ourselves on pricing precision and making sure we're on top of trends and reacting quickly, and others just frankly aren't as good at that. Especially if they're relying on ISO data, and ISO is not going to be as current as we are. There are competitors out there that we think are willing to write commercial auto at levels that will ultimately be unprofitable. The proof's in the pudding. We've prided ourselves that we've been an outlier for the last three years or so, putting up favorable development on commercial auto while our competitors are putting up unfavorable development, a lot of them. If you then take what I'm saying about where we sit today in the competitive environment, they're going to continue to put up unfavorable development because they're not getting the rates they need to keep up with the trend.

Speaker #1: And I know I've talked about this on previous earnings calls . You know , we pride ourselves on pricing precision and , and making sure we're on top of trends and reacting quickly .

Speaker #1: And others just frankly aren't as good at that. And especially if they're relying on ISO data, and ISO's not going to be as current as we are.

Speaker #1: And there are competitors out there that we think are willing to write commercial auto at levels that will ultimately be unprofitable . And , you know , the proof's in the pudding , you know , we've prided ourselves that we've been an outlier for the last three years or so , putting up favorable development on commercial auto while our competitors are putting up unfavorable development .

Speaker #1: A lot of them, and so if you then take what I'm saying about where we sit today and the competitive environment, they're going to continue to put up unfavorable development because they're not getting the rate they need to keep up with the trend.

Craig R. Smiddy: It is competitive. It does not help that the trucking industry has been under pressure for the last several years when it comes to their margins. They're under pressure, and the continued need for rate is difficult for them. At the end of the day, it's all about legal system abuse, which we've talked about on prior calls. The industry is very focused on it. I know we're working with the III, the Chamber of Commerce, to educate the public that the plaintiff attorneys and the litigation system abuse is costing everybody at the end of the day. We have to deal with it, and we have to get the rate that is needed to pay for that abuse.

Craig Smiddy: It is competitive. It does not help that the trucking industry has been under pressure for the last several years when it comes to their margins. They're under pressure, and the continued need for rate is difficult for them. At the end of the day, it's all about legal system abuse, which we've talked about on prior calls. The industry is very focused on it. I know we're working with the III, the Chamber of Commerce, to educate the public that the plaintiff attorneys and the litigation system abuse is costing everybody at the end of the day. We have to deal with it, and we have to get the rate that is needed to pay for that abuse.

Speaker #1: So, it is competitive. It does not help that the trucking industry has been under pressure for the last several years when it comes to their margins.

Speaker #1: And , you know , so they're under pressure and the continued need for rate is difficult for them . At the end of the day , it's all about legal system abuse , which we've talked about on prior calls .

Speaker #1: And , you know , the industry is very focused on it . I know we're working with the triple I , the Chamber of Commerce to educate the public that the plaintiff attorneys and the the litigation system abuse is , is costing everybody at the end of the day .

Speaker #1: But we have to deal with it . And we have to get the rate that is , is needed to , to pay for for that abuse

Gregory Peters: Thanks for that color. As I think about what you're talking about, two things come to mind. You talk about profitability pressures for the trucking business. I'm just curious if you have a perspective, given the recent jump up in gasoline and diesel prices, is there any spillover consequence to your company? Secondly, on the competition side, is it risk management or that's being affected where you're losing share, or is it the traditional risk transfer one, speaking on the commercial auto piece?

Greg Peters: Thanks for that color. As I think about what you're talking about, two things come to mind. You talk about profitability pressures for the trucking business. I'm just curious if you have a perspective, given the recent jump up in gasoline and diesel prices, is there any spillover consequence to your company? Secondly, on the competition side, is it risk management or that's being affected where you're losing share, or is it the traditional risk transfer one, speaking on the commercial auto piece?

Speaker #5: Thank thanks for that color You know , I , as I , as I think about what you're talking about , two things come to mind .

Speaker #5: You talk about profitability pressures for the trucking business . I'm just curious if you have a perspective . Given the recent jump up in gasoline and diesel prices , if that's if there any spillover consequence to your company .

Speaker #5: And then secondly , on the competition side is it is it risk management or , or that's being affected by you're losing share or is it the traditional risk transfer when speaking on the commercial auto piece ?

Craig R. Smiddy: Yeah. I'll answer the last part first. Yeah, it is our risk management, overall risk management business. The majority of it is coming from where we write most of our commercial auto, which is Great West. We do write commercial auto in several of our other businesses as well, and similarly, they have challenges as well trying to get the rate they need, relative to the trend. With regard to trucking, we're also very closely aligned with the trucking associations and industry, and there was some reports that spot rates were improving, and for the first time, maybe some indication that for them as an industry, maybe they had bottomed out. As you pointed out, you turn around and add on top of that increased cost for them relative to higher diesel fuel cost and gasoline cost.

Craig Smiddy: Yeah. I'll answer the last part first. Yeah, it is our risk management, overall risk management business. The majority of it is coming from where we write most of our commercial auto, which is Great West. We do write commercial auto in several of our other businesses as well, and similarly, they have challenges as well trying to get the rate they need, relative to the trend. With regard to trucking, we're also very closely aligned with the trucking associations and industry, and there was some reports that spot rates were improving, and for the first time, maybe some indication that for them as an industry, maybe they had bottomed out. As you pointed out, you turn around and add on top of that increased cost for them relative to higher diesel fuel cost and gasoline cost.

Speaker #1: Yeah . So I'll answer the last part first . Yeah , it is not our risk management old republic risk management business . It's the majority of it is coming from where we write most of our commercial auto , which is great West .

Speaker #1: And then we do right commercial auto in several of our other businesses as well . And similarly , they're they have challenges as well , trying to get the rate they need relative to , to the trend with regard to trucking , you know , there's , we're also very closely aligned with the trucking associations and industry and there was some reports that that spot rates were improving and , and for the first time , maybe some indication that for them as , as an industry , maybe they , they had bottomed out .

Speaker #1: But then , as you pointed out , then you turn around and add on top of that increased cost for them relative to higher diesel fuel costs and gasoline costs and I don't know if that I don't know enough to tell you if , if the , the better rates that they might be getting are offsetting the higher fuel costs they have or not , but You know , there's some indications that maybe that industry will be better , but as I said in my earlier comments , it's not helpful when our clients are under pressures of their own .

Craig R. Smiddy: I don't know enough to tell you if the better rates that they might be getting are offsetting the higher fuel costs they have or not. There's some indications, so that maybe that industry will be better. As I said in my earlier comments, it's not helpful when our clients are under pressures of their own, and we have to get more for our product as well. It does create a challenge on the top line.

Craig Smiddy: I don't know enough to tell you if the better rates that they might be getting are offsetting the higher fuel costs they have or not. There's some indications, so that maybe that industry will be better. As I said in my earlier comments, it's not helpful when our clients are under pressures of their own, and we have to get more for our product as well. It does create a challenge on the top line.

Speaker #1: And we have to get more for our product as well. So it, it, it does create a challenge on the top line.

Gregory Peters: Yep. Thanks for that detail. To pivot just for a second, I've taken up more than my fair share of time. Carolyn, I certainly want to ask you about your comments on commercial, and you highlighted the excess of loss reinsurance arrangement and the opportunity set for writing larger commercial accounts. Can you size that up for us as we think about the growth of your commercial business over the next 12 months? Or provide, just give us some ideas of what you're thinking about when you talk about larger account opportunities.

Greg Peters: Yep. Thanks for that detail. To pivot just for a second, I've taken up more than my fair share of time. Carolyn, I certainly want to ask you about your comments on commercial, and you highlighted the excess of loss reinsurance arrangement and the opportunity set for writing larger commercial accounts. Can you size that up for us as we think about the growth of your commercial business over the next 12 months? Or provide, just give us some ideas of what you're thinking about when you talk about larger account opportunities.

Speaker #5: Yep . Thanks . Thanks for that detail . I pivot just for a second . I've taken up more than my fair share of time , but Carolyn certainly want to ask you about your comments on commercial and you highlighted the excess of loss reinsurance arrangement and the opportunity set for writing larger commercial accounts .

Speaker #5: Can you size that up for us as we think about the growth of your commercial business over the next 12 months, or just give us some ideas of what you're thinking about when you talk about larger account opportunities.

Craig R. Smiddy: Carolyn, I'll be happy to kick it off and then let you fill in. We are seeing a large amount of opportunity on data centers, on energy production facilities, large accounts that actually require more than one title insurance company to co-insure the risk. We wanted to be in a position to comfortably deploy limits that made us a significant contributor and participant on those placements. That was a good reason behind why we decided to put in place a reinsurance treaty to give us sleep-at-night coverage, so to speak, to go ahead and write more large limit accounts. Because, again, the frequency at which we were seeing these opportunities has just continued to grow over the last two years. Carolyn, I'll turn it over to you to provide the details on what's happening there.

Craig Smiddy: Carolyn, I'll be happy to kick it off and then let you fill in. We are seeing a large amount of opportunity on data centers, on energy production facilities, large accounts that actually require more than one title insurance company to co-insure the risk. We wanted to be in a position to comfortably deploy limits that made us a significant contributor and participant on those placements. That was a good reason behind why we decided to put in place a reinsurance treaty to give us sleep-at-night coverage, so to speak, to go ahead and write more large limit accounts. Because, again, the frequency at which we were seeing these opportunities has just continued to grow over the last two years. Carolyn, I'll turn it over to you to provide the details on what's happening there.

Speaker #1: Carolyn . I'll be happy to kick it off . And then let let you fill in . So , you know , we are seeing a large amount of opportunity on data centers on energy production facilities , large , large accounts that actually require more than one title insurance company to co insure the risk and we wanted to be in a position to comfortably deploy limits that made us a significant contributor and participant on those placements , and that was a good reason behind why we decided to write to put in place a reinsurance treaty , to give us sleep at night coverage , so to speak , to go ahead and write more large limit accounts because again , the frequency at which we were seeing these opportunities has has just continued to grow over the two years .

Speaker #1: And Carolyn, I'll turn it over to you to provide the details on what's happening there.

Carolyn Monroe: Sure. Yeah, Greg, there's some states that tell us what our limit can be, but there's a lot of states that it's really just up to us, and that was a lot of the discussion behind getting this was just feeling a little more comfortable. We've spent a number of years growing our commercial presence, and it just became a time that it would really help us elevate what we were able to do in the commercial market. We just really see commercial continuing to grow because if you think about it, there wasn't a lot of commercial during the pandemic years and really the year and a half coming out of that. Commercial properties, something has to happen with them over 5 to 7 years.

Speaker #6: Sure . Yeah . Greg , there's some states that , you know , tell us what our limit can be , but there's a lot of states that it's it's really just up to us .

Speaker #6: And that was a lot of the discussion behind getting this, was just feeling a little more comfortable. You know, we've spent a number of years growing our commercial presence.

Speaker #6: And it just became a time that it would really help us elevate, you know, what we were able to do in the commercial market.

Speaker #6: And we just really see commercial continuing to grow. Because if you think about it, there wasn't a lot of commercial during the pandemic years.

Speaker #6: And really, the year and a half coming out of that, and commercial properties, something has to happen with them over five to seven years.

Carolyn Monroe: We're starting to see a lot of portfolio projects come through, not just the data centers like Craig talked about, but a lot of other large projects that we just are a lot more comfortable taking on the risk now knowing that we have the reinsurance.

Speaker #6: And so we're starting to see a lot of portfolio projects come through, not just the data centers like Craig talked about, but a lot of other large projects that we just are a lot more comfortable taking on the risk.

Gregory Peters: Fair enough. Thanks for the answers.

Greg Peters: Fair enough. Thanks for the answers.

Speaker #6: Now, knowing that we have the reinsurance,

Craig R. Smiddy: Thank you, Greg.

Craig Smiddy: Thank you, Greg.

Operator 1: There are no further questions, so I will now turn the call back over to management for closing remarks.

Operator: There are no further questions, so I will now turn the call back over to management for closing remarks.

Speaker #5: Fair enough. Thanks for the answers.

Speaker #1: Thank you . Greg

Craig R. Smiddy: Okay. Well, we're happy to have provided these comments and updates relative to Q1. We've got three more quarters to go for the year, so we're optimistic that things will continue to progress along as planned, and we'll continue to deliver solid profitability to our shareholders. We look forward to seeing you at the end of Q2 and give you another update and have another discussion. Thank you all very much. Have a good day.

Craig Smiddy: Okay. Well, we're happy to have provided these comments and updates relative to Q1. We've got three more quarters to go for the year, so we're optimistic that things will continue to progress along as planned, and we'll continue to deliver solid profitability to our shareholders. We look forward to seeing you at the end of Q2 and give you another update and have another discussion. Thank you all very much. Have a good day.

Speaker #4: And there are no further questions, so I will now turn the call back over to management for closing remarks.

Speaker #1: Okay . Well , we're happy to to have provided these comments and updates relative to the first quarter . We've got three more quarters to go for the year .

Speaker #1: So we're optimistic that things will continue to progress along as planned. And we'll continue to deliver solid profitability to our shareholders. So we look forward to seeing you at the end of the second quarter and giving you another update and having another discussion.

Operator 1: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker #1: Thank you all very much. Have a good day.

Q1 2026 Old Republic Int Corp Earnings Call

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