Old Republic Reports Continued Growth In Operating Earnings For 2002 Fourth Quarter And Year
January 28, 2003
CHICAGO, /PRNewswire-FirstCall/ -- Old Republic International Corporation (NYSE: ORI), today reported its highest ever fourth quarter and full year operating earnings. In 2002's final quarter most of the earnings progress stemmed from Old Republic's Title and General insurance lines, while overall earnings growth for 2002 was aided by the combined strength of the Company's General, Title, and Mortgage Guaranty segments.
"The solid results achieved by Old Republic's consolidated operations demonstrated once again the value of a well balanced and diversified book of business, and of the very strong financial underpinnings that enable the Company to take advantage of market opportunities as they arise," said Al Zucaro, Chairman and CEO.
Net Operating Income and Net Income
Fourth quarter 2002 net operating income, which excludes realized investment gains and losses, was $91.5 million, or 75 cents per share, versus $85.3 million, or 71 cents per share in the year-ago period. Full year net operating income was $383.8 million, or $3.16 per share in 2002, compared to $330.7 million, or $2.75 per share in 2001.
Net income for the fourth quarter of 2002 totaled $93.5 million, or 77 cents per share, compared to $88.9 million, or 74 cents per share, for the year ago-quarter. Net income rose to $392.9 million for all of 2002, or $3.23 per share, versus $346.9 million, or $2.88 per share, for 2001.
Substantially all of the growth in 2002 net operating income stemmed from greater underwriting and service income in Old Republic's three largest segments. Falling investment yields during the past twenty-four months in particular offset the benefits of strong operating cash flows on the invested asset base and resulted in relatively flat investment income trends. Lower net gains from dispositions and permanent reductions in the value of equity and fixed maturity security holdings restrained net income growth rates in both the final quarter and full year 2002 vis-a-vis 2001.
As noted below, fourth quarter 2002 results were penalized by certain mortgage guaranty segment special pretax charges of $15.7 million that reduced consolidated net operating and net income by $10.7 million, or 9 cents per share. For the year 2002, these special charges to mortgage guaranty operations aggregated $20.5 million, or $13.8 million after tax; these were substantially offset by tax and related interest recoveries of $10.9 million received by Old Republic's General Insurance segment in the second quarter of the year. The net effect of all such charges and credits was to reduce the Corporation's 2002 consolidated net operating and net income by approximately $2.9 million, or 2 cents per share.
Consolidated Revenues
Consolidated operating revenues in the fourth quarter of 2002 grew by 20.3 percent to $755.3 million from $627.9 million in the same quarter of 2001. Net premiums and fees amounted to $673.2 million in 2002's final quarter versus $546.2 million in the same year-ago period. Consolidated net investment income of $68.9 million for the fourth quarter of 2002 was basically flat with the same period of 2001.
For all of 2002, consolidated operating revenues rose by 17.0 percent to $2.74 billion when compared to the $2.34 billion registered in the preceding year. Net premiums and fees for 2002 rose to $2.42 billion, up 19.4 percent when compared to $2.02 billion posted in 2001. Consolidated net investment income for 2002 was $272.6 million, basically level with the amount earned in the preceding year. For both the fourth quarter and full year of 2002, consolidated revenue growth emanated mostly from Old Republic's General and Title Insurance segments.
Source: Old Republic InternationalCorporation
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