Old Republic International (ORI)

Insurance conglomerate Old Republic International (NYSE:ORI) announced better-than-expected revenue in Q3 CY2025, with sales up 3.5% year on year to $2.42 billion. Its GAAP profit of $0.78 per share was 7.6% above analysts’ consensus estimates.

Company Overview

Founded during the Roaring Twenties in 1923 and weathering nearly a century of economic cycles, Old Republic International (NYSE:ORI) is a diversified insurance holding company that provides property, liability, title, and mortgage guaranty insurance through its various subsidiaries.

Property & Casualty (P&C) insurers protect individuals and businesses against financial loss from damage to property or from legal liability. This is a cyclical industry, and the sector benefits when there is 'hard market', characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a 'soft market'. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. On the other hand, P&C insurers face a major secular headwind from the increasing frequency and severity of catastrophe losses due to climate change. Furthermore, the liability side of the business is pressured by 'social inflation'—the trend of rising litigation costs and larger jury awards.

Old Republic's competitors in the property and casualty insurance space include The Travelers Companies (NYSE:TRV), Chubb Limited (NYSE:CB), and The Hartford Financial Services Group (NYSE:HIG). In the title insurance segment, it competes with First American Financial (NYSE:FAF), Fidelity National Financial (NYSE:FNF), and Stewart Information Services (NYSE:STC).

Insurance companies generate revenue three ways. The first is the core insurance business itself, represented in the income statement as premiums earned. The second source is investment income from investing the “float” (premiums collected but not yet paid out as claims) in assets such as fixed-income assets and equities. The third is fees from policy administration, annuities, and other value-added services. Unfortunately, Old Republic International’s 7.3% annualized revenue growth over the last five years was mediocre. This fell short of our benchmark for the insurance sector and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Old Republic International’s annualized revenue growth of 6.9% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Old Republic International reported modest year-on-year revenue growth of 3.5% but beat Wall Street’s estimates by 6.5%.

Net premiums earned made up 85.5% of the company’s total revenue during the last five years, meaning Old Republic International barely relies on non-insurance activities to drive its overall growth.

While insurers generate revenue from multiple sources, investors view net premiums earned as the cornerstone - its direct link to core operations stands in sharp contrast to the unpredictability of investment returns and fees.

When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are therefore net of what’s ceded to reinsurers as a risk mitigation and transfer strategy.

Old Republic International’s net premiums earned has grown at a 4.9% annualized rate over the last five years, worse than the broader insurance industry and slower than its total revenue.

When analyzing Old Republic International’s net premiums earned over the last two years, we can see that growth accelerated to 8.4% annually. Since two-year net premiums earned grew faster than total revenue over this period, it's implied that other line items such as investment income grew at a slower rate. These additional streams do play a key role in the bottom line, but their impact can vary. While some firms have excelled in consistently investing their float, sudden shifts in the fixed income and equity markets can heavily sway short-term performance.

In Q3, Old Republic International produced $2.09 billion of net premiums earned, up a hearty 12.5% year on year and topping Wall Street Consensus estimates by 2.5%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For insurance companies, we look at the combined ratio rather than the operating expenses and margins that define sectors such as consumer, tech, and industrials.

Combined ratio sums operating costs (salaries, commissions, overhead) with what is paid out in claims (losses) and divides this by net premiums earned. Combined ratios under 100% means profits while ones over 100% mean losses on its core operations of selling insurance policies.

Given the calculation, a lower expense ratio is better. Over the last five years, Old Republic International’s combined ratio couldn’t build momentum, hanging around 94.2%. It has also worsened by 1.8 percentage points on a two-year basis, showing its expenses have recently increased at a faster rate than revenue. This usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

Old Republic International’s combined ratio came in at 95.3% this quarter, beating analysts’ expectations by 290 basis points (100 basis points = 1 percentage point). This result was in line with the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Old Republic International’s EPS grew at a spectacular 23% compounded annual growth rate over the last five years, higher than its 7.3% annualized revenue growth. However, we take this with a grain of salt because its combined ratio didn’t improve and it didn’t repurchase its shares, meaning the delta came from factors we consider non-core or less sustainable over the long term.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Old Republic International, its two-year annual EPS declines of 1.9% mark a reversal from its (seemingly) healthy five-year trend. We hope Old Republic International can return to earnings growth in the future.

In Q3, Old Republic International reported EPS of $0.78, down from $1.32 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 7.6%. Over the next 12 months, Wall Street expects Old Republic International’s full-year EPS of $3.02 to grow 10.4%.

Insurance companies are balance sheet businesses, collecting premiums upfront and paying out claims over time. The float – premiums collected but not yet paid out – are invested, creating an asset base supported by a liability structure. Book value captures this dynamic by measuring:

• Assets (investment portfolio, cash, reinsurance recoverables) - liabilities (claim reserves, debt, future policy benefits)

BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality because it reflects long-term capital growth and is harder to manipulate than more commonly-used metrics like EPS.

Old Republic International’s BVPS grew at a tepid 5.1% annual clip over the last five years. However, BVPS growth has accelerated recently, growing by 10.7% annually over the last two years from $21.36 to $26.19 per share.

Over the next 12 months, Consensus estimates call for Old Republic International’s BVPS to shrink by 2.1% to $24.35, a sour projection.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Old Republic International currently has $1.59 billion of debt and $6.42 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.3×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 1.0× for an insurance business. Anything below 0.5× is a bonus.

Return on equity (ROE) is a crucial yardstick for insurance companies, measuring their ability to generate returns on the capital provided by shareholders. Insurers that consistently deliver superior ROE tend to create more value for their investors over time through strategic capital allocation and shareholder-friendly policies.

Over the last five years, Old Republic International has averaged an ROE of 15.6%, impressive for a company operating in a sector where the average shakes out around 12.5% and those putting up 20%+ are greatly admired. This is a bright spot for Old Republic International.

We were impressed by how significantly Old Republic International blew past analysts’ book value per share expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The market seemed to be hoping for more, and the stock traded down 2.4% to $41 immediately following the results.

Updated: December 4, 2025 at 11:36 PM EST

Are you wondering whether to buy Old Republic International or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

Old Republic International’s business quality ultimately falls short of our standards. For starters, its revenue growth was uninspiring over the last five years. And while its solid ROE suggests it has grown profitably in the past, the downside is its estimated sales for the next 12 months are weak. On top of that, its projected EPS for the next year is lacking.

Old Republic International’s P/B ratio based on the next 12 months is 1.7x. Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $46.50 on the company (compared to the current share price of $43.66).