Q2 2019 Earnings Call
This is the conference center and currently on hold for today's Old Republic International Second quarter 2019 earnings Conference call. We are meeting additional participants at this time and will be underway. Shortly we thank you for your patience. Please remain on the line.
Please standby.
Good day and welcome to the Old Republic International second quarter 2019 earnings Conference call. At this time all participants are in a listen only mode. Following the presentation. We will conduct a question and answer session and instructions will be provided at that time for you to queue up for your questions.
I would like to remind everyone that this conference is being recorded and would now like to turn the conference over to Marilynn Meek with MWW Group. Please go ahead.
Thank you good afternoon, everyone and thank you for joining us for the over a couple of conference call to discuss second quarter 2019 result. This morning, we distributed a copy of the press release and posted a separate statistical supplement, which we assume you have seen and or otherwise have access to during the call boxes of documents are available at old Republic's website, which is www dot old Republic Dot com. Please be advised that this call may involve forward looking statements as discussed in the press release and statistical supplement dated July 25, 2019 risks associated with these statements can be found in the company's latest FCC filings. This afternoon's conference call will be led by Elton Farr, Chairman and CEO of Old Republic International Corporation, and several other senior executive members as planned for this meeting at this time.
I'd like to call turn the call over to Alister Carl Please go ahead Sir.
Okay. Thank you Marilyn and.
So good and Hello to everyone and as always we we appreciate very much.
Oh, you are joining us in this conversation about the old republics latest earnings release.
Oh today is Marilyn indicated we've got a floor of our Oh, gosh, Oh engaged a call Miller or Seattle, and you provide some insights into the more important elements of the overall financial performance and and condition about company.
Oh, then Craig Smiddy, President will cover highlights of our general insurance business.
Oh, Randy Yeager executive Chairman, although title business will follow that with the comments about the recent operations of that segment.
And then I'll join in as well as the pieces come together.
He is approaching a todays discussion.
We're assuming as Merrill Lynch said that everyone is seeing a good morning.
Earnings release.
And as we've done in past conference calls will also be a recurring from time to time to to certain additional statistical information, which is included in the financial supplement that we we post each quarter on our website.
So we'll have a it looks like we're also assuming there for that everyone has access to this posting on the computer.
If we look at the the total operating picture of our business, we think that page three.
Oh, the release says it all.
Oh for the second quarter year over year comparisons over the all important onto lagging and related services parts.
Of the business or the French see it come she can shop.
Primarily for reasons that Craig will give a in a few minutes and there's always some allies.
The earnings release.
Well the other hand, a old Republic's performance through the first three months of this year combined with the second quarter did produce personally after underwriting results, which were basically flat with those of the same period of 2018.
Oh again from an overall operation standpoint, or interest and dividend income from or or roughly a 14 billion dollar investment portfolio.
It continues to be a bright spot for the company.
For the first half of the year and particularly this this income as you see was sufficiently robust as to move the needle so to speak to the green range from a pre tax operating income standpoint.
So as I said, a couple of minutes ago, why don't we turn the discussion over to you call a as you address as we've planned the highlights of the release from a pure Oh financial perspective.
So go ahead, okay I'll yeah. Thank you Oh speak briefly to the major points concerning old Republic's consolidated.
Operating results and financial condition.
You know as we show in the table at the top of page one in this mornings release the.
Market value adjustment on the equity security portfolio that.
Since the beginning of 2018 is now recorded through the income statement.
You know that's continued to produce.
Sick, well I guess, what we would consider to be significant volatility in the reported net income.
And for the reasons stated in the release, we believe that a better measure of an insurance companies operating performances are.
Income that excludes the effect of all investment gains and losses.
As al mentioned in his opening comments and you know the table on.
[noise] page three clarifies the key elements of our operating profitability into its a three component parts of that being underwriting results net investment income.
And interest and other charges.
So on that note. This morning, we announced second quarter net income.
That excludes all investment gains and losses of 136.3 million.
And that's down about 2.5% from the second quarter a year ago.
However for the first half of 2019.
Net income again, excluding investment gains was 257.9 million.
Which reflects a year over year increase of 2.5%.
[noise] from an underwriting perspective, this year second quarter consolidated composite ratio as you see.
Oh of 95.2%.
Ticked up slightly from the second quarter of 20.
18.
And that's primarily due to lower favorable development of prior year reserves.
Consolidated expenses stayed relatively in line with premium.
Hi Fi production for both the quarter.
As well as the year to date periods.
Turning then to our financial condition.
You see the cash invested assets rose to.
Roughly $14 billion at the end of June .
And this change was driven by a combination of the investment a positive operating cash flow.
Which by the way total 313 million.
For the first half of this year.
And a couple that with substantial unrealized market appreciation in both the fixed income.
As well as the equity security.
Portfolios.
The composition of the portfolio remains relatively consistent with the prior year end.
With a fixed maturity and short term investments, making up a roughly 72% of the total.
With the remaining 28% being comprised of dividend paying.
Equity Securities.
For the second quarter and year to date period consolidated net investment income grew by slightly more than 5.5%.
To.
Primarily to growth in the investment phase.
Plus higher dividend income.
Oh, and then offset to a slight degree by lower yields on the fixed maturity portfolio.
On a consolidated basis claim reserves continue to develop favorably for all periods presented.
This morning's release, along with the pages four and five of the financial supplement that both Maryland <unk> referred to.
Disclose additional details regarding part of your claim reserve development.
On a reported claim ratios for our three.
Operating segments being you know general title and mortgage insurance.
[noise] old republics book value per share increased to $19 or 68 cents or roughly a 14% increase for the first six months of this year.
The primary drivers of this change in book value are shown on page nine.
This morning's release.
The lower debt to capitalization ratio at the end of June which has also shown at the bottom of page nine.
There is a reflective of a slightly declining debt balance.
Compounded by growth.
In a common shareholders' equity account.
We'd also like to point out that a the consolidated results for the first half of 2019.
Benefitted by the elimination of roughly 4 million interest expense that was attributable to the conversion of the remaining outstanding convertible notes.
And that occurred in the first quarter of 2018.
[noise] so.
Overall.
Old Republic, so balance sheet remains in very strong condition.
The company is.
Well capitalized.
And position for continued growth.
[noise] so on that note Craig I'm going to turn things over to you to comment on the general insurance group.
All right.
So as the release indicates the general insurance group saw continuing quarter over quarter gross and net premiums earned as well as.
Total operating revenues.
Although quarter to quarter earnings comparisons reflected the decline year to date earnings have grown by a strong 12.1% when compared to the same period in 2018.
As can be seen in the financial supplement quarter over quarter net premiums earned in commercial auto rose by 7.9%.
Reflecting the positive effect of cumulative rate increases.
Somewhat offset by a decline in the exposure base due to lower U.S. freight shipments when comparing 2019 to 2018.
That's can also be seen in the financial supplement workers' compensation experienced a 1.7% drop in net premiums earned resulting from rate decreases that correspond with lower claim frequency trends of the past few years.
Quarter over quarter, the groups overall composite ratio rose slightly to 98.1%.
While year to date it stands at a lower 96.7% compared to 97.4%.
For the same period in 2018.
The group's expense ratio came in at an elevated 26.7% for the second quarter, while the year to date rate show is relatively stable in comparison with 2018.
The higher expense ratio in the latest quarter is largely due to differences in the mix of business and differences in the timing of certain expenses.
Okay. So turning now to claim rate show showing in the financial supplement.
Our second quarter commercial auto claim ratio held relatively steady with a year to date rate show and the 2018 at year end ratio.
Even though weve been achieving strong rate increases for several years the systemic increase in claims severity trends in the U.S.
Commercial auto.
Still persists and we are prepared to continue to respond commensurately until such time these trends abate and we see that ratio.
Come into line with our target in the low seventies.
Just adding a little more color on that severity or vehicle repair costs continued to edge higher due to expensive technology components, while bodily injury settlements are higher as a result of more aggressive plaintiffs attorney tactics and ensuing litigation.
Moving to workers compensation, the second quarter's claim ratio declined quarter over quarter and year over year and obviously this is a continuing trend that we're very pleased with.
In the financial supplement we also show claim rate show for commercial auto workers comp and GL combined given that we typically provide these coverages together two on account.
So for these coverages combined the second quarter's claim ratio held relatively steady with again a year to date rate show and the 2018 year end ratio.
Still looking at the financial supplement we note that the financial indemnity claim ratio for the second quarter came back into line closer to our long term average. We think this reflects actions we've taken to address the higher incidence of guaranteed asset protection claims that we've seen as an indirect result of higher vehicle repair costs.
And also the higher incidence of DNL claims that weve seen stemming from a greater number of security class action lawsuit.
All of the claim ratios, where we report on our of course inclusive of favorable and unfavorable development and in the latest quarter, we saw negligible unfavorable development of <unk> 0.5.
Percentage point.
While year to date, the development was favorable by 0.4 percentage points.
So we don't see these outcomes as particularly meaningful.
Generally speaking we continue to grow the general insurance group, making investments in people products.
Technology.
We continue to proactively respond to trends we're observing.
All while remaining focused on bottom line underwriting profitability as we've always done.
So on this now I'll turn the discussion over to Rande Yeager for his comments on our title insurance group.
Correct.
Hey, Greg.
We reported this morning, Doug <unk> quarterly and year to date results.
Were really solid in spite of the market volatility so on the first half.
So the first for the fourth consecutive year really feel great that we exceeded the billion dollar Mark and total revenues as the year.
Second quarter revenues actually topped a second quarter record 2018.
As we leave out the adjustments for prior year favorable claim reserve development. The quarter's pretax profit was also a new.
<unk> second quarter.
Year to date pre tax operating income was strong at 80.8 million.
According to the mortgage bankers Association total originations were actually down by approximately 5% in the first quarter.
Sure and the second quarter forecast, which we don't have.
There's always forecast, which currently.
Giving effect to the impact of lower interest rates.
Loss should offset this decline.
And as interest rates declined in the second quarter, we realized an immediate impact with the rebound.
In our direct operations.
Purchase money transactions were up slightly about 6.5%.
Again, we expect to see a positive impact from lower interest rates and home purchases.
As we all know this last statistics.
Good for our business as home sales offer greater opportunities for premiums and fees.
And though inflationary pressures have slowed in the residential side sector. The steady increase in the housing prices is having a positive impact.
Our revenues.
Going to the mid year at midyear 2019 agency premiums are up slightly at about 2% are down 1.7% in two point.
4% in the first and second quarters, respectively.
And because agency premiums lag direct operating revenue by about three months, we should expect to see a corresponding positive effect.
The likely interest rate declines in the near term.
Direct operation revenues were up 4.2% a year to date with a strong 7.8% increase in the second quarter.
About 20% of our premiums and fees are related to the time groups commercial market afterwards and to a large extent or commercial operating.
We truly believe that our success in the commercial side of the business is primarily driven by our exceptional commercial team and to a lesser extent by the continued growth in the real estate sector.
Once again, our favorable claims reserve development benefited our earnings, albeit at the lower positive effect.
Shannon table on page five of them.
And we're optimistic that this trend will continue.
Measured way.
With respect to market share it's up.
According to the American land title Association statistics.
We get 15.9% in the first quarter and that compares.
Favorably to 15.5% in first quarter 2018.
For all of 2018, we captured 15.4% of the market for 17 that number was 15 point, though.
We're very happy with it.
Market share gains and I think it's a strong indication that our teams efforts are being recognized and rewarded by customers and the market in general.
And those are the highlights for me.
And.
Well I'm going to turn it back globally for you for discussion Okay, let's see.
Let's just take a quick look at the our hygiene run off business.
And.
As the as the release shows the mortgage guarantee and the consumer credit indemnity CCRI and.
Acronym we use parts of this.
Segment continue to reflect.
We believe a a very stable and easy as she goes a turn of events.
As long as the.
As the economy as we've said before.
As long as the economy remains on the reasonably even keel.
With the good employment and generally accommodate to the interest in mortgage reach in particular, we continue to add to that too we should continue to to experience.
A continuation of this stable situation.
Mortgage guarantee margins.
We'll necessarily decline gradually.
As as our important infrastructure maintenance costs become somewhat a mis aligned with the anticipated downturn into top line.
But having said this.
We've got every expectation that posting.
Positive, though again gradually declining earnings in this.
In my business portion of the one off.
And thats going to occur and as the.
What is the ultimate burn off of policies in force.
We still think that most of this will take place should occur.
By 2022 or thereabouts.
But until then given our expectations of this reasonably a reasonable continuation of earnings.
And we think that the in my capital.
They should continue to build up.
And then as a consequence, we were very optimistic.
That will come to a very good and game.
Oh that produces the most.
A beneficial.
Long term outcome.
For all of our stakeholders.
As we've said many times before we we very much consider.
All right and my business to be a very valuable and viable franchise, which can either be reactivated.
Good advantage in appropriate to outside hands.
Or otherwise a run off to lead a very sensible.
Economic situation.
For everyone concerned.
As to the the much smaller CCRI consumer credit indemnity, a portion of the run off.
We think it will just mosey along in a in a reasonably profitable way as it also experiences a quick could mean burned off of policies in force.
So all in all we think we're we're out of the woods in regards to these or if I heard you run offs and as they say.
It can be expected to proceed going forward in a very uneven full workout.
All of its remaining contractual obligations.
So now when we join together everything under old republics umbrella.
We feel very good about our situation at all are there.
Our longer term prospects.
System wide.
Our focus on the core underwriting and related services disciplines.
As both Craig and and Randy the spoken to.
Business remains unchanged in terms of these of this focus.
And again as page three of the release shows.
The consolidated composite ratio of claims and expenses to premiums and fees of about 95.6% for the entire consolidated the book of business. So far in 2019 is also within reach of the 95% bogey for old republics long tailed.
Mix combined general and.
Title insurance businesses.
So we are well look at our business, we continue to believe that the.
The North American economy.
In which we are exclusively focused.
Oh is likely to to remain in a very moderate.
Bill, perhaps temporarily slowing growth mode or for the foreseeable future.
And and sold the reliable.
Quality services, we provide.
So to some of that economies important industry sectors.
Such as the housing in trucking and what have you that should enable us to grow the consolidated business, we think at a faster clip.
The U.S.
A GDP on gross domestic product.
We think we can do this on the on the strength of the <unk>.
Oh, the very high quality.
Oh committed intellectual talent to a lot of people.
I'm joined as it is to a very strong.
Balance sheet this call pointed out.
So all in all we think that the first half results on.
A good indicator of where over the year.
As the old who's going to own.
We ended up and by the time the January .
2019 comes along and we again.
A report in a conference call.
So on this note what are we now turn this visit to the.
Through the plant.
Question and answer period.
If you will just to address your questions.
To me and.
Okay, I'll play traffic cop, so to speak and direct them to one of the four of us.
So operator, let's move along with that.
Thank you for analysts and investors who are participating in the call on the interactive line. Please signal by pressing the star key followed by the digit one on your telephone keypad to ask a question if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
Also as you press star one earlier during todays call. Please press star one again to ensure our equipment has captured your signal well pause for just a moment to allow everyone an opportunity to signal for questions.
Well go first to Greg Peters with Raymond James.
Good afternoon.
Alan I realize that.
I realize this is probably going to be or less.
Investor call.
So well have you at all you know, Greg Lord willing I plan to stick around for a while.
Well I mean, I know these things [laughter] well there you did announce a new CEO to take and Craig I can to take over.
Anyways I, if if if it's not your last call and I look forward to hearing your voice again, but in the event that it is your last call I'd like to congratulate you on your successful career.
Thank you, Greg you're very tight [laughter].
So I'd like to pivot to you know the typical questions that I ask if you guys are falling your commentary.
First.
In the general insurance business.
I noted with interest the results that you posted particularly in the commercial auto and and in the general liability pieces, where.
The claims ratio.
You know is elevated relative to the year over year comparison.
At least you know for the quarter and for the six months in commercial auto and just for the quarter and general liability and.
I thought I'd give you an opportunity to.
Give us some more color around what's going on there I know in the commercial auto you've talked about.
Ultimately getting to them a lower claim ratio and it seems like we're on several years of success of rate increases and we're just not getting there. So perhaps an updated view on that would be appropriate.
Yeah, why don't you take that Greg.
Sure.
So Greg as I am.
That in my.
Earlier comment.
You know the severity that the entire industry.
He is seeing in commercial auto is.
It's still there, it's it's not abating and I mentioned, where it's coming from.
And.
We have as you duly noted.
Been achieving significant rate increases for several years that we think are commensurate with.
What we're seeing in that in that severity trends.
So we're going to keep doing the same thing on tell that ratio comes back down into the low seventys as I said.
It's a systemic problem.
And.
Mostly driven by as I said earlier the.
Plaintiffs attorney tactics.
Good that are driving up the cost of a bodily injury.
Settlements.
Even those that don't get.
Two litigation has it has a knock on effect there.
You may have heard of litigation financing and.
And.
The other things that the plaintiffs attorneys are doing is leveraging technology to share tactics on how to approach claims sharing information on on various insurance carriers and their practices, so as to to be able to more effectively leverage.
The insurers.
And a lot of them are.
Playing to the bad faith card and making policy limits demands.
Threatening bad faith, and that's a that's escalated as well so like I say its a.
A variety of different tactics that are driving up bodily injury costs and.
And we're responding and.
We eventually think this the task to abate and until then we'll focus on risk selection and pricing.
Can you is a follow up to that.
Give us an indication on what the pure price or rate changes you expect to get 19, and how that compares with what the rate change or price increase you got in 2018 for commercial auto in particular.
Sure Greg work getting strong rate increases in the mid teens.
And.
That is.
A little bit better than than what we've had in the last couple of years, but.
But in line.
With the last few years as well.
So.
You know those.
Rate increases.
Again our.
Commensurate with the severity trends that we're seeing in a in the commercial auto.
Sector of the business.
So with that type of rates.
And if I look at just the pure growth of net premiums earned and your commercial auto business. It suggests that your.
As you're applying rate, you're also pruning or re underwriting <unk> your portfolio of risks is that a fair assessment.
Well that's true risk selection is certainly part of the equation when we're.
Underwriting our business, but as that.
I commented on earlier, Greg in my comments.
You know the the.
Freight shipments in the U.S. and 2019 have been considerably less than what they were in 2017 and 18.
2018 in particular was an extremely strong year for the trucking industry and freight shipments and then in 2019.
That has has turned the other direction and it's created a lot of pressure on the trucking industry in 19, now even though there have been some reports of of.
Smaller trucker trucking companies having.
Problems. There is also a recent reports that.
Perhaps we've turned the corner so what that all means for US is that we have a an exposure base that is lower in 19 than it was in an 18 because of that dynamic in the freight shipments within the trucking industry. So there's more than just risk selection.
In pruning that is is.
Driving the overall premium it's also the exposure base.
Got it that was very early let me into effect into let me and let me add something you had to add to what and reiterate something that Craig said before it's something that we've said.
Consistently over the years I think you also need to put all of this input into perspective, the underwriting we performed for the vast majority of our customers, which is that we wage.
Overall liability trucking operation business together with content together with GL more often than not and therefore, that's why we keep.
Pointing to.
Looking at the.
At the loss ratios that are developing for the composite of deals three coverages and the vets.
That's an important part of what we do from an underwriting standpoint.
Mixing and matching coverages for from a diversification standpoint, both again from a coverage standpoint, as well as from an industry standpoint, and so when we look at those trends they are not too bad.
For the three coverages combined as I say I'm, just reiterating something that.
Craig I said before and as we've said, but I think it's an important point to remember.
Thank you.
I just have two two more questions.
The the first would be around the general insurance expense ratio.
If I look at the quarter over quarter result, or.
The six month results, either while the quarter over quarter or so much higher.
Just a little bit higher on a six month basis.
But still in the context of your 10 year average.
Above that can you provide us some context of what's going on with the expense ratio and how we should think about that going forward.
Craig you want to.
Continue with it.
Sure sure I'd be happy to so.
Greg again I have to refer back to my earlier comments you know in the.
In the second quarter the expense ratio was elevated because.
We did have some mix of business change quarter to quarter.
But it was also elevated because.
It's.
There are.
Items in there that.
Werent in there in the second quarter of last year.
And.
That's that's driving to quarter two year to date.
Again, we think that expense ratio was 26.1% is well in line with where we were at last year at at this time in 18, you see we're at 25.9.
And I would point out to you that.
Last year by year end as you can see in the 2018 column, we got down to.
25, which is is in our in our target so.
There are more expenses in the front end.
Typically and by the by the end of the year, we would hope to see a similar trend as well as what we saw last year.
Great. Thank you for that additional color.
And then Randy.
Can you just go through I know Youve talked several quarters several years about the growing commercial business.
Does the loss and expense ratio of your commercial title business.
Vary from how works for the regular ordinary title business that you guys.
Oh underwrite.
Yes, the simple answer is that we exercise the same.
Collection underwriting commercial deals in residential deals.
But we have so many eyes looking at commercial deals on both.
On the customer side in the company. So I did it they just.
Sure.
When you do business.
On it's going to get extra scrutiny and as a result.
You know looking at those deals so closely.
The losses tend to be much lower than what you might experience in other segments.
So.
Yes.
The loss ratios on commercial are very low and of course, that's benefited the company over the years.
Because our commercial businesses grow we're about 20% of our premium basis commercial.
And commercial marketplace has grown a little bit, but I think it's our efforts as Dan indicated.
In the earnings release discussion.
That we've really grown that business really benefit company.
Got it thanks for your answers.
Sure.
Did you find that your question has been answered you may remove yourself from the queue bypassing the snarky followed by the digit too.
And next we'll go to Matthew Carletti with JMP investment Bank.
Hi, good afternoon.
Al I got two questions one's once a little higher level. One just numbers question. So I'll start with the bigger picture. One you mentioned a little bit your comments about kind of still having the debt.
At least a couple options with them I run off book, one just to let it play out an earn out and tend to be substantially done in a few years and the other for there to maybe be a transaction that that makes sense sooner and my question is you know, it's it's been a little while since you.
Little over a year, maybe since you kind of started thinking about alternate arrangements.
As they're just not been interest has there been interest in it just hasn't been at what you would view as the right return or the right long term outcome for the company and any color you can give there S. There on kind of the.
Where you sit on those two pass would be helpful.
Well.
There's not been interest.
That would accommodate or.
Expectations.
For that business and those expectations.
Or colored by our view of.
What the business can produce.
If it's just left alone too.
Oh, it to the extinction of of the in force.
So from that standpoint.
There's no other way to say it but the interest whatever interest there is been has not been there.
Pat workable.
To us Okay. That's that's helpful.
And my other quick question just on the other income line, a $34 million in the quarter that some of the strongest it's been in a number of years actually I got it I might be the strongest ever.
Just any color on is there anything kind of one time in there or is that are we approaching a new kind of higher run rate for that line.
Oh I think the I believe we've explained Matt.
What's in that line and that's primarily.
Stemming from the service aspects of our business.
What was it in title and the and some in.
General insurance business, where.
We have a.
Claims TP operation there so that's growing.
Reasonably nicely for us and so it's a combination of those two elements in title in general insurance at all.
Cropping up.
On that one.
Great. Thank you and I'll be doing Gregs comment new look good.
Yeah, Yeah go ahead.
And it goes.
Mm.
Sorry go ahead, [laughter] Oh, okay.
We do look to that line to you know to grow gradually over the next for the foreseeable future because.
Obviously, if we can grow the known on claims exposed portion of our business.
That's always a good.
A good thing for us to do.
Absolutely and I was just going to say echo Greg's comments and congratulations on the retirement.
Okay. Thank you.
At this time, we have one question remaining in the queue once again for analysts and investors for participating in this call and the interactive line. Please signal by pressing the star key followed by the digit one on your telephone keypad. If you have a question or if you have a follow up question.
Well take our next question from Nicholas Karzon with Franklin Templeton.
Hi, good afternoon.
Yes, Sir.
And I'm going to follow up on Matts question asked a little bit differently, but can you help us understand your thought process around that potential optionality of maintaining the mortgage insurance business and a run off it seems that the roughly $480 million of capital dedicated to this segment, that's only generating a mid single digit return and declining it seems capital efficient to retain at even if it's marginally profitable versus finding a way to accelerate that return of capital or finding a way to redeploy that capital more accretive way.
Yeah, well it for us it's basically on cash in bank owned which were earning as you pointed out.
A relatively small safe return.
And it's a matter of time I mean as you know.
As you May know in the insurance business, we do have to do year to two regulations and we're going to proceed according to.
To sum up to a significant degree and we're going to proceed along the lines of what the regulatory.
Requirements, along in terms of reducing our capital commitment.
To that business and the clean as shock is going to be or could be.
A simple reinsurance of the remaining risk in force with the quality mortgage guarantee insurer, which would then free up the company on and.
Enable us to liquefy that capital.
That's the way we look at it.
Okay. Thanks, and then as a follow up to that how would you cap how do you prioritize the capital redeployment opportunities or return on that capital is ultimately released.
Well as we said when we have a different options.
One of which always is whether it's that capital or any other capital we have which is to return it to loan to all of our shareholders by a special dividend and so thats certainly one of the options we have down the down the road with respect as I say to not just that capital, but any other.
Excess capital that we may be.
Though we may benefit from as a result of the continuing profitability and growth of our business.
Thanks, and then switching gears, a little bit last one but.
On a net basis adverse reserve development was relatively low in the quarter, but can you give us any additional color on the development by coverage to the extent that there were some outliers that netted out so that relatively low number.
Well our call.
Moving to take that one I mean, my my recollection.
Is that.
It listen.
Every line of business does not act in the same fashion, particularly in our general insurance business. Okay.
In some quarters or years, we have issues, we may have issues or we may have benefits from developments on workers comp, which are offset by charges, let's say in a general liability line, which tends to be very volatility, which saw a small this line of the three lines are long focus.
Sometimes you have the things such as happened refresh my memory Craig.
Was it last year third quarter, when we had some issues with.
Automobile warranties gap insurance by virtue of of or.
Rainstorms and what have you, which you know propped up that that loss ratio on so I don't mean to evade the question, but Oh, we do have a diversified book of business, which is expected to not.
In tandem.
Such that the overall results are very palatable as if we come to us from a loss on development standpoint. The last several years. We we are experiencing very good results and then I might add not to take the picture, but when you look at general insurance loss developments in particular.
As you may know the workers comp reserves or discounted.
Among other lines of business and the effect of the discount on on the on development.
Can be palatable and can in fact create the a vision so to speak of a adverse development when in fact.
No one is really occurring okay. So I'd throw all of that up in the air to make the point that you just it's difficult for us to pinpoint to any one line of insurance coverage type of coverage as being a good.
As as being as having the major responsibility for whatever action is picking up in the in the loss development area.
That's the best answer we can give you.
Okay. Thanks, so much.
It appears there are no further questions at this time Mr. Zucaro I'd like to turn the conference back to you for any additional or closing remarks.
Okay, well I think we've exhausted comments that we've made all the comments that we thought.
Were important to make at this juncture and again, we appreciate everyone's interest in in the in the in the old Republic, and we look forward to our next visit.
Yes, sometimes in January of next year.
Having said that we wish everyone a good afternoon.
And that does conclude today's conference call. Thank you everyone for your participation you may now disconnect.