AM Best Affirms Credit Ratings of Subsidiaries of Old Republic International Corporation; Revises Outlook to Positive for Old Republic Life Insurance Company

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “aa-” (Superior) of the members of Old Republic Insurance Companies (Old Republic). Concurrently, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) of Old Republic National Title Insurance Company (Tampa, FL) and American Guaranty Title Insurance Company (Oklahoma City, OK) (collectively referred to as Old Republic Title Insurance Group [ORTIG]). At the same time, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of Old Republic Insurance Company of Canada (Old Republic Canada) (Hamilton, Ontario). The outlook of these Credit Ratings (ratings) is stable. In addition, AM Best has revised the outlooks to positive from stable and affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Old Republic Life Insurance Company (ORL) (Chicago, IL). All companies are subsidiaries of Old Republic International Corporation (ORI) [NYSE: ORI]. (See below for a detailed listing of the companies and ratings for the members of Old Republic.)

The ratings of Old Republic, which is considered the lead rating unit in the ORI enterprise, reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

Old Republic is the flagship group for the Old Republic Insurance enterprise and one of the top 50 property/casualty insurers in the United States. The group is made up of commercial lines insurance carriers that focus on specific sectors of the North American economy. Its largest lines of business include commercial auto and workers’ compensation; however, the group continues to expand its product capabilities beyond the traditional focus within these lines. Old Republic benefits from its expertise within the alternative risk transfer market and specialty commercial segments, as well as historically solid profitability, expertise in its respective individual business specialties and well-recognized franchises. The organization continues to have very modest exposure to asbestos liabilities.

The ratings of ORTIG reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings of ORTIG also reflect the implicit support the group receives from its position in the Old Republic enterprise and its strategic role within the organization.

The ratings of ORTIG recognize its strong reserving practices and continued profitability. With a majority of ORTIG’s premiums and fees generated through independent agents, a significant portion of its expenses are variable. This enables ORTIG to manage down cycles better, as fixed costs generally are lower for that distribution channel. AM Best expects that ORTIG will continue to generate underwriting and operating results that are in line with its title competitors, despite the impact of higher mortgage interest rates, which has led to a steep drop in mortgage originations and refinance activity. AM Best expects that ORTIG will remain a significant contributor to the overall profitability of the ORI enterprise, while maintaining the strongest level of risk-adjusted capitalization in the intermediate term, as measured by Best’s Capital Adequacy Ratio (BCAR). ORTIG continues to be integral to the overall organization, with common branding and talent synergies, as well as complementary ERM programs.

The ratings of Old Republic Canada reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings of Old Republic Canada also reflect its strategic importance within the Old Republic enterprise.

The ratings of Old Republic Canada recognize the synergies it gains as an affiliate of Great West Casualty Company, as well as its accident and sickness businesses. Partially offsetting these positive rating factors are the company’s limited product offering and the challenging market environment in Canada.

The ratings of ORL reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate ERM. The positive outlooks for ORL reflect the expectation that the company will continue to exhibit favorable operating performance over the intermediate term, while maintaining its overall balance sheet strength assessment.

The ratings of ORL recognize its risk-adjusted capitalization, which is assessed at the strongest level, as measured by BCAR. Invested asset holdings are of good credit quality, as the portfolio is designed to minimize credit default risk rather than maximizing yield. Earnings have been positive in recent years. Premiums have declined over the last several years, as closed term premiums run off and as occupational accident premiums have trended lower. The company’s business profile consists of a closed block of term life insurance and the actively marketed occupational accident line. Despite its modest size, ORL is important strategically to the Old Republic organization.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) have been affirmed, with stable outlooks, for the following members of the Old Republic Insurance Companies:

• BITCO General Insurance Corporation
• BITCO National Insurance Company
• Great West Casualty Company
• Manufacturers Alliance Insurance Company
• Old Republic General Insurance Corporation
• Old Republic Insurance Company
• Old Republic Surety Company
• Old Republic Union Insurance Company
• Pennsylvania Manufacturers Indemnity Company
• Pennsylvania Manufacturers’ Association Insurance Company

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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