Old Republic International Aktie

Well, good day, everyone, and welcome to the Old Republic International Second Quarter Earnings Conference Call. Just a reminder that today's call is being recorded. I would now like to hand the call over to Mr. Joe Calabrese. Please go ahead, sir.

Thank you, Lisa. Good afternoon, everyone, and thank you for joining us for the Old Republic conference call to discuss second quarter 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 July 23, 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 statement 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.

We also may include references to net income, excluding net investment gains or net operating income, a non-GAAP financial measure, in our remarks or in responses 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's 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.

Okay, Joe, thank you, and good afternoon, everyone, and welcome again to Old Republic's Second Quarter 2026 Earnings Call. So in the quarter, we produced $238 million of consolidated pretax operating income, and that compares to $268 million. And our consolidated combined ratio was 95.3%, and that compares to 93.6%.

Our annualized operating return on beginning equity stands at 12.1%. And for the first 6 months of the year, growth in book value per share, including dividends, stands at 7.2%. Specialty Insurance grew net premiums earned by 2.3% over the second quarter of 2025 and produced $199 million of pretax operating income compared to $254 million. Specialty's combined ratio was 95.5% compared to 90.7%.

In Title Insurance, we grew premiums and fees by 10% over the second quarter of 2025 and produced $56 million of pretax operating income compared to $24 million. Title's combined ratio was 95.1% compared to 99%. We saw some slight unfavorable prior year loss reserve development in Specialty Insurance and consistent favorable prior year development in Title Insurance. And Frank will provide more topics -- more details, I should say, on that topic.

So I'll turn the discussion over to Frank, and then Frank will turn things back to me to cover Specialty Insurance, followed by Carolyn, who will discuss Title insurance. Frank, it's all yours.

Thank you, Craig, and good afternoon, everyone. This morning, we reported net operating income of $186 million for the quarter compared to $209 million last year. On a per share basis, comparable quarter-over-quarter results were $0.76 compared to $0.83.

So starting with investments. Net investment income increased just over 6% in the quarter, primarily as a result of a larger investment base from strong operating results and our debt issuance that took place in May. Our average rate on corporate bonds acquired during the quarter was 4.9% compared to the average yield rolling off of about 4.2%. The total bond portfolio book yield ended the quarter at 4.8%, which was a slight increase from year-end.

Turning now to loss reserves. Overall, in the quarter, the consolidated combined ratio benefited slightly from favorable development compared to 2.1 points of benefit last year. This was a result of favorable development from title insurance being partially offset by unfavorable development from Specialty Insurance.

While the primary lines of coverage for Specialty Insurance performed well, its runoff transactional risk business had poor claims experience, which led to reserve strengthening of $40 million in the quarter. Now as a reminder, we decided to place this business in runoff in 2024.

As for the other specialty coverages, property and commercial auto had significant favorable development and both came in at levels higher than last year. Workers' comp had favorable development that was considerably lower than the large amount of favorable development experienced last year, and general liability had a moderate level of unfavorable development.

Now we ended the quarter with book value per share of $25.33, which inclusive of regular dividends represented an increase of 7.2% since year-end. This increase resulted primarily from solid operating earnings and higher investment valuations. In the quarter, we paid nearly $77 million in dividends and repurchased $61 million worth of our shares, leaving us with about $640 million remaining in our current repurchase program.

Finally, as a precursor to next quarter, we expect to report a bargain purchase gain on the ECM acquisition and for ECM's results to be accretive to earnings and book value this year. To put into perspective, ECM reported direct premiums written in 2025 of just under $220 million, and they ended that year with GAAP equity estimated at $145 million.

I'll now turn the call back over to Craig for a discussion of Specialty Insurance.

Okay, Frank. Thank you. Specialty Insurance net premiums written were up 1.6% in the quarter after excluding some noise from the write-up to retail premium on the auto warranty business written in our auto warranty operating company.

We saw strong rate increases on commercial auto and in general liability and our overall retention ratios were consistent with what we saw in the first quarter. As I mentioned in my opening remarks, in the quarter, Specialty Insurance pretax operating income was $199 million, while the combined ratio was 95.5%.

The loss ratio for the quarter was 65.9%, which included 0.3 percentage points of unfavorable prior year loss reserve development compared to 62.5% in the second quarter last year, which included 2.9 percentage points of favorable development.

Turning to the expense ratio for the quarter. It was 29.6% compared to 28.2% in the second quarter last year. As we've talked about now for a few quarters, our continued investments in the new specialty operating companies, technology modernization, data analytics and AI accounts for most of that difference in the expense ratio from last year to this year.

Looking specifically at commercial auto, the commercial auto net premiums written were up 3.6% in the quarter, while the loss ratio came in at 69.4%, that's about 1 percentage point better than the second quarter last year. And that improvement came from a higher level of favorable prior year loss reserve development, partially offset by a more conservative current accident year loss ratio.

Rate increases in commercial auto were in the high teens, a bit higher than the first quarter, and they were greater than the current loss trends we're observing. Commercial auto retention ratios also improved in the quarter as competitors started to catch up with implementing higher rate increases in response to higher loss trends.

Turning to workers' compensation. Net premiums written were 8.4% lower in the quarter, while the loss ratio came in at 60.6% compared to 48.5% in the second quarter last year, with most of that difference due to the higher level of favorable prior year loss reserve development last year.

We were able to hold rates flat in the quarter and severity loss trends remained consistent while frequency loss trends continue to decline. So while we're seeing some top line pressure stemming from generally a competitive marketplace, we remain very focused on risk adequate rates that will continue to produce profitable combined ratios.

We also expect to see continuing growth in top line contributions from our newer specialty operating companies and the ECM acquisition should contribute to top line and bottom line in the second half of the year, as Frank mentioned. We already held a town hall with all of the ECM employees, and we'd like to take this opportunity to again welcome ECM to the Old Republic family.

So with that, for Specialty Insurance, I will now turn the discussion over to Carolyn to report on Title Insurance. Carolyn?

Thank you, Craig, and good afternoon, everyone. Title reported premium and fee revenue for the quarter of $773 million. This represents an increase of 11% from second quarter of 2025. After a slow seasonal start, residential transactions improved a bit this quarter, contributing to our revenue growth as well as strong commercial activity.

Premiums produced in our direct title operations were up 6% from second quarter of last year, and agency produced premiums were up 12% and made up 78% of our revenue during the quarter, up from 77% during the same quarter of last year. Commercial premiums increased this quarter and were 25% of our premiums earned compared to 23% in second quarter of last year.

During the quarter, we saw a wide mix of transactions across many segments of the commercial sector. Our loss ratio remained consistent this year compared to last year, reflecting our consistent and conservative reserving practices. Our expense ratio improved by 4 percentage points to 92.1% from 96.1% in the second quarter of 2025. About 2 points of this improvement relate to a onetime litigation settlement expense that we disclosed in the second quarter of 2025.

The rest of the improvement was driven by continued focus on operational efficiency, expense management and the benefits of higher transaction volumes, slightly offset by higher agent commissions due to a greater weighting of agency business relative to direct.

Overall, the quarter's combined ratio was 95.1%. This brought our year-to-date combined ratio down to 97.4% as we continue to make progress towards driving our combined ratio below 95%. Investment income was up this quarter by 6% compared to the second quarter of 2025, reflecting steady investment yields earned on a slightly higher invested asset base. All these items produced pretax operating income for the quarter of $56 million, up from $24 million in the second quarter of last year.

As we move into the second half of 2026, we remain focused on improving operational efficiency and expanding our margins. A key part of that effort is our partnership with Qualia and the continued rollout of our new operating system. Implementation began earlier this year and will continue through the end of next year, strengthening our foundation for a long-term success.

And I'll turn it back to Craig now.

Okay. Carolyn, thank you. So while we're seeing some top line pressure in Specialty Insurance, we continue to focus on bottom line combined ratios and the fundamentals in Specialty remain strong.

In Title Insurance, we continue to grow with some help from the real estate market and Title's combined ratio continues to improve, and that's in no small part because of Carolyn's leadership and driving operational efficiencies and cost savings. So thank you for that, Carolyn.

So with that, we're happy to answer any questions, and either I'll answer your question or I'll ask Frank or Carolyn to respond.

[Operator Instructions] .The first question comes from Greg Peters, Raymond James.

With the companies that have reported so far, there's been a number of comments about increasing intensity of price competition in the marketplace. And certainly, you commented on that as well. And what I'd like to zero in on is some of the start-up new operating companies and how they're faring in an environment, which presumably is more competitive. And particularly, I'm thinking about the E&S business and the property business, which are areas that have been highlighted by others as having some pretty dramatic price decreases.

Sure, Greg. I'd be happy to comment on that. And I think I think you're right from everything that I've seen as well, most of the discussion centers around property and particularly catastrophic exposed property.

And as you know, catastrophic exposed property is not a big portion of our portfolio. So when it comes to property rates for us, they've not seen the type of decrease that others have perhaps seen.

In total, property, we were down about 7.5% in rate. So when it comes to the newer entities, Old Republic property has not begun to write premium. So -- and our marching orders are to build the platform to build it right. And there is no incentive whatsoever in the first 3 years to put any premium on the books.

So with that, we're not impacted at all because of not writing any premium and perhaps the timing will be better by the time we are up and operational.

In E&S, again, not focused on catastrophic E&S type of business and writing mostly packaged types of business, and we're able to maintain property rates there much more so than we are or -- than the marketplace is on the catastrophic business.

So generally, that goes for our other companies as well that are writing property. They're writing it with other lines of coverage and not seeing a big drop-off in rate like you are on property cat.

Got it. And pivoting to the expense side, your expense ratio, as you previewed last quarter is trending higher this year due to investments. Maybe you could spend a second and just talk to us about how you're measuring the ROI on those investments in technology and what the benchmarks you're looking for in terms of whether they're going to yield the success you're hoping for?

Sure. I would tell you that when it comes to the expense ratio this quarter compared to the expense ratio last quarter, about a full percentage point of that is being driven by IT systems investments, data and analytic investments and AI investments.

And when it comes to the ROI, I think it's very clear, and we've already are experiencing it even in Title, maybe even especially in Title with our Qualia risk partnership, where we're able to drive out significant amounts of hours to produce transactions with the use of modern technology that's AI-enabled. So there's no question that we have to make these investments in AI.

And I've said it in the past, in order to leverage AI, you have to have data and analytics. And in order to have good data and analytics, you've got to have modern IT systems. So -- and frankly, some of the investments we're making in IT systems are ones that we just don't have a choice of. They're operating on mainframe platforms that we just have to replace and modernize.

So the -- I think the ROI is just very clear that it's there. We don't have a specific number for you, but there's just no choice that we have to modernize our systems. in order to be able to leverage data and analytics. And we've seen where we have leveraged data and analytics. We're able to perfect pricing to a much greater degree, and we're able to do things with managing claims and losses with that data and analytics.

And then, of course, to leverage the ever-changing rapid environment of AI, you have to lay that on top of your data and analytics and your systems. So that's how we're looking at it, Greg.

Got it. I guess just pivoting to the Title business. Just watching with interest the growth in your commercial book. Maybe you can just give us a sense of how that is looking for the balance of the year, especially in the context of all these big data center infrastructure projects, et cetera?

Carolyn, I'll let you speak to that one, if you would?

Sure. Greg, we really expect to see commercial continue as it has already this year. Data centers are pretty big, but with the data centers, it takes all the Title companies. We're all on all of those, and we all have a piece of them. But what we're seeing a lot of our agents are just really a mix of other industrial projects, hospitality. It's been a real mix. So that gives us pause to think that this will just continue through the end of the year since it's not one thing that's going strong right now.

Next up is Paul Newsome from Piper Sandler.

A couple, 3 questions. One is, looking at the reserves a little bit, I noted that you had releases in commercial auto, but you also had a higher accident year. Maybe you could parse that away so that we -- because oftentimes, you don't see them going in opposite directions like that. Could you parse out on how that would work in terms of the overall reserves?

Yes. Sure, Paul. So at the end of last year, you'll recall, we raised the 2025 accident year loss pick in the fourth quarter, even though we were putting up favorable prior year development because of our conservative approach. Recall, we saw trends -- loss severity trends specifically, through our case reserves increasing. So we took a conservative view and raised the 2025 accident year. So hand-in-hand with that, when we went into '26, we said, well, we're going to take the same approach and put up a bit of a higher accident year loss pick for '26 because we saw those trends emerging through at the end of the year. And so we did that.

We -- so if you look at where we were at the beginning of '25 when we put up the accident year pick, and then we ended up increasing it a bit by the end of the year. When we got to '26, we said, okay, let's just be conservative and put up a bit of a higher loss pick for '26 as we go in. And as we move forward, as you know, we hold our loss picks once we put them up for 2 or 3 years on commercial auto, longer on workers' comp and general liability. But those prior years are developing favorably, indicating that the picks we've put up are coming in line with what we want to happen, and that is, on average, produced a couple of points of favorable prior year loss reserve development.

That makes sense. It's a different topic. I ask a little bit about capital management and the cadence of stock repurchases. It looks like you may have paused a little bit after April maybe. Anything to read into that? Or any thoughts you can have about sort of how we should think about the pace of stock repurchases and other capital management efforts?

Yes, sure. So I'll start and then hand it to Frank as well. We're still looking at share repurchases as a way to return capital to shareholders. And we're still in the process of repurchasing shares. And throughout the year, we would expect to continue to do that. Again, we're opportunistic. We look at where we're trading, and we're very mindful of being dilutive to book value per share when we make those repurchases. So opportunistically, we will continue to make repurchases with those factors in mind. And then, as always, we get toward the end of the year and we look at where our capital position is. And if we're still in a position where we think we have excess capital, we'll still consider issuing a special dividend.

And Paul, the only thing I would add to that is this quarter had a little nuance that we were issuing shares related to the ECM acquisition. So we were staying out of the market while that was taking place. So that was another wrinkle in the quarter.

That makes sense. And actually, one more question, I'll try to squeeze in here. ECM, as we think about modeling it prospectively, will it have a different underwriting profile either from a pure underwriting profitability perspective than the rest of the specialty business and/or is there maybe some other nuances about expense ratio and loss ratio that we should be mindful of on the margin once the ECM business gets included with the rest of the specialty business?

Yes. So Paul, I'm happy to hopefully fill in a little bit of that. The -- Frank talked about the direct written premium, about $220 million last year. And ECM has the exact same combined ratio targets that we have for every one of our other companies, and that is somewhere between a 90% and a 95%. And I can tell you the first 2 quarters of this year, they have produced very strong combined ratios, stronger than the prior year. So our expectation of ECM will be that they produce combined ratios between 90% and 95% over the course of time.

And as far as the overall growth in premium, they had a quota share in place, so their net premiums were a lot less than the direct, which is why we mentioned the direct premiums. So we're currently working on including ECM and to our corporate treaties, and we will eliminate the external quota share, or already have effective July 1. So hopefully, that gives you a little bit of color on how we're thinking about ECM when it comes to top line and bottom line.

[Operator Instructions] Up next is Matt Carletti, Citizens.

Craig, since we last spoke, I think the Supreme Court kind of issued an opinion on liability for freight brokers, which is an area that we don't focus on much, quite honestly, don't know much about. I believe Great West at least has some size business there. And I was hoping that you might be able to shed a little color on kind of the impact that, that case might have on that market, and how big, if any, it is for Great West, kind of what you're seeing there?

Yes. The ruling obviously put more burden on freight brokers and the freight brokers, therefore, have more liability exposure than they had in the past. We insure the truckers, the long-haul truckers, not the freight brokers. So to the extent that the freight brokers will try to work with higher-quality companies given that they now have liability exposure, we think that might bode well for us in that we think that the truckers and the companies we have in the Great West portfolio are a higher caliber. And so to that extent, freight brokers trying to work with insureds that look more like our insureds, we think could be a good thing. Of course, freight brokers will -- on the flip side, they're going to try to transfer as much of that liability as they can. But for us, we're -- it's not the freight brokers that we're insuring.

Got you. That's helpful. And then maybe just a numbers question. You talked -- you touched on a little bit kind of the auto warranty, kind of the benefit it had in the quarter, the markup to retail, which, if I'm doing the math right, maybe like 7 points of growth in specialty, $90 million, $95 million. Is that -- do we expect that to repeat? Just a little more color on what's happening there? And is it kind of a seasonal kind of Q2 thing? Or should we kind of expect ongoing impact in some future quarters?

Yes. Great question, and then I'm actually very happy you asked it. The answer is yes. You should expect it to continue. And that's good news. We have a couple of large significant partnerships that are -- that we're growing with. And that's why we tried to take out some of the noise around that growth. We didn't want to try to overstate the growth in net written premiums because of that nuance with that business. So that's why we gave the -- referred to the 1.6% number if you take that noise out. But that will continue to be there as we grow.

We are very happy about these new partnerships. Auto warranty, as you can tell from our supplement, performs very well for us, and it's a business that with the ability to increase scale as we are, it will be a very profitable segment for us. But it's going to create a little bit of noise. And frankly, we're having some discussions about as that grows, is there anything else we can do to make sure we're being as transparent as possible on that business and not confusing the numbers with its inclusion, but it will continue.

[Operator Instructions] And at this time, no one else has signaled, I hand the conference back to management for additional or closing remarks.

Okay. Well, just very brief closing. We want to thank everybody for participating. We want to wish everybody a happy summer, and we feel good about the prospects for the third and fourth quarter this year. As I said, fundamentals are very solid in Specialty Insurance and prospects are looking brighter in Title Insurance. So we'll see you back here after the third quarter and update you again. Thank you very much.

Once again, ladies and gentlemen, that does conclude today's conference. Thank you all for your participation. You may now disconnect.

Thank you for standing by, and welcome to the Old Republic International First Quarter 2026 Earnings Conference Call.

[Operator Instructions]

I'd now like to turn the call over to Joe Calabrese with the Financial Relations Board. 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. This morning, we distributed a copy press release and posted a separate financial supplement. Both of the documents are available on Old Republic's website at www.oldrepublic.com.

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 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. We may also include references to net income, excluding net investment gains or net operating income, a non-GAAP financial measure, in our remarks or 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; Francis Sodaro, Chief Financial Officer; and Carolyn Monroe, President and CEO of Old Republic's National Title Insurance Group. Management will make some operating 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.

Okay. Joe, thank you very much. Good afternoon, everyone. Welcome again to Old Republic's First Quarter 2026 Earnings Call. In the quarter, we produced $211.5 million of consolidated pretax 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 '25 and produced $209 million of pretax operating income compared to $260 million. Specialty's 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 pretax operating income compared to $4.3 million. 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.

So 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 we'll have Carolyn cover Title Insurance.

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.

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. While our average rate on corporate bonds acquired during the quarter was 4.7% and 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. Both Specialty and title insurance recognized favorable development in the quarter, leading to a 1.5 percentage point benefit on 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' comp, a 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 spans several more recent accident years. It was partially offset by favorable development in older years.

We ended the quarter with book value per share of $24.53 and 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.

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. 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. And that compares to a 61.7% loss ratio in the first quarter last year, and that included 3.3 points of favorable development. 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.

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

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. 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, they're at the holding company in Chicago, met with Patrick and his team, and they are currently focused on building out their operating platform. And 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 and Risk Services, which is now set up as a separate, stand-alone operating company focused on growing fee income for our portfolio. And finally, as we mentioned in the release, we expect to close on the ECM acquisition around July 1, which will also contribute to top line and bottom line in the second half of this year. So that concludes my comments for Specialty and I'll now turn the discussion over to Carolyn to report on Title.

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 first quarter of last year. 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. 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 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. 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.

Investment income was also up this quarter by 4% compared to first quarter of '25, 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 first quarter of '25 that included a 0.8 percentage points of favorable development. 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.

Our pretax 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. 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. 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.

And with that, I'll give it back to Craig.

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 remained very strong, and the investments we're making will contribute to continued profitable growth. 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.

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. So we'll open it up for questions.

[Operator Instructions] Your first question comes from the line of Paul Newsome from Piper Sandler.

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, in a meaningful way that we'll see in the results?

Yes, Paul. And thank you for the question. Happy to respond. Really, there's 2 main drivers that we referenced in the release, and that is the start-up operating company expenses. And then what I'll throw into a second category, even though there's 3 subsets and that is information technology with systems modernization, coupled with data and analytics, coupled with AI. So I'll speak first to the new start-up operating companies.

There's about 8 of the companies that we would put into the category of new, of which 3 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 new companies that have yet to produce premium. And the nature of the start-up businesses, of course, is the initial people that you're hiring are the new leaders of those companies and with that comes a higher level of compensation, of course. And therefore, it's a matter of time for all of the companies to get to scale.

So 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. So that's the dynamics around the start-up company expenses. It's a matter of where we will be at the end of the day. And again, the 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 may know, accounting rules are such that initial expenses need to be expensed immediately. And then so we're -- 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. Then in the midterm, we'll hit a point where we're able to capitalize certain costs and that happens when the system is ready for production. And at that point, we'll capitalize those costs and amortize those over a period of -- Frank, 10 years.

10 years on the core systems.

Yes. So that's what's happening there on data analytics. We build out a pretty significant team there. 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. So a lot of moving pieces. I know hard to put it all together. But it will take a little bit of time for it all to get to, what I would call, a run rate that will be an expense ratio less than 30.

So I guess to put this all together, you had almost a 35% expense ratio in the first quarter, I think, 31% as you adjusted. Is that a kind of a good starting point for the following quarters? And then we should see some other efforts kick in over time, and it kind of goes away? Or is there anything on timing in there that should be -- we should consider?

Yes. 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. If we had a -- we can 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. And 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.

So premiums, the wild card here. But with respect to just 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 the first quarter is reasonable.

Your next question comes from the line of [ David Smart ] from Citizens.

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

Yes. And David, just so get to 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. So the current accident -- last quarter last year, right? Okay. Are you comparing it to the full year?

Yes. Yes.

Okay. Thank you. I now understand your question.

Sorry about that.

No. It's perfect sense. Yes. So it's a bit lower in the first quarter than it was for the full year of '25. But as you can tell by comparing first quarter to first quarter, it's actually 0.2% up. So as we get through the year, it could be closer to where the full year '25 was. But 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. And on the other hand, on workers' comp, we've given up, frankly, less rate than trends would suggest we could give up.

So even if it were to stay at 65.2% for the rest of the year, coming in at 1.5 points better than where we were in the last couple of years, that is -- would be the rationale behind why that would make sense. And 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. 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 on the -- if you're talking about work comp through our very measured level of rate decreases.

[Operator Instructions] Your next question comes from the line of Greg Peters from Raymond James.

I'm going to focus on the commercial auto segment for my first question. And specifically, you talked about the continuing progress on rate increases in that line of business 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. So maybe you could give some perspective on what's going on, on the competitive front? Are you losing business? We hear anecdotally stories about MGA is getting more active in the space. We hear other carriers becoming more interested in the space. So just curious about how you see your top line results in commercial auto? And how you see the competitive outlook going forward?

Yes, Greg, great question. In my comments, in the release itself, we talked about the challenges that we're having with our retention ratios. I mean we're -- for us, what we call a challenge is probably for others, routine. But we've been able to maintain 85% to 90% retention ratios. That has slipped 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. And that's also ticks and ties to my comments that we're -- 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. And if top line is more muted than so be it.

But 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 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. And we're going out, and we have to get rate increases that are in that same range.

So competitors, there's -- MGAs, we're not competing with so much. So 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. But there's a lot of other competitors. And I know I've talked about this on previous earnings calls, 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. And especially if they're relying on ISO data and ISOs not going to be as current as we are, and there are competitors out there that we think are willing to write commercial auto at levels that will ultimately be unprofitable.

And the proofs in the pudding, we've prided ourselves that we've been an outlier for the last 3 years or so putting up favorable development on commercial auto, while our competitors are putting up unfavorable development, a lot of them. And -- so 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 rate they need to keep up with the trend. 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.

And 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. And 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. But we have to deal with it, and we have to get the rate that is needed to pay for that abuse.

As I think about what you're talking about to has come to mind, you talked 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 -- is there any spillover consequence to your company?

And then 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 on -- speaking on the commercial auto piece.

Yes. So I'll answer the last part first. Yes, it is not our risk management, [ oleic ] risk management business. It's -- the majority of is coming from where we write most of our commercial auto, which is [ Great-West ]. And then we do write commercial auto in several of our other businesses as well. And similarly, there had to have challenges as well, trying to get the rate they need relative to the trend.

With regard to trucking, there's -- 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. 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 cost and gasoline costs.

And I don't know if that -- 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, but there's some indications so 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, and we have to get more for our product as well. So it does create a challenge on the top line.

Yes. I've taken up more than my first 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. 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.

Carolyn, I'll be happy to kick it off and then let you fill in. So we are seeing a large amount of opportunity on data centers, on energy production facilities, large accounts that actually require more than 1 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 statements. And that was a good reason behind why we decided to write, to put in place a reinsurance treaty to give us leak at night coverage, so to speak, to go ahead and write more large limit accounts. Because, again, the frequency at which we're seeing these opportunities has just continued to grow over the last 2 years.

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

Sure. Yes, Greg, there are 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 with 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. 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 and really the 1.5 years coming out of that and commercial properties, something has to happen with them over 5 to 7 years. 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 now knowing that we have the reinsurance.

And there are no further questions. I will now turn the call back over to management for closing remarks.

Okay. Well, we're happy to have provided these comments and updates relative to the first quarter. We've got 3 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. So we look forward to seeing you at the end of the second quarter and give you another update and have another discussion. Thank you all very much. Have a good day.

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

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Old Republic International Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Joe Calabrese with MWW. Please go ahead.

Thank you, Regina. Good afternoon, everyone, and thank you for joining us for the Old Republic conference call to discuss fourth quarter 2025 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 www.oldrepublic.com.

Please be advised that this call may involve forward-looking statements as discussed in the press release dated January 22, 2026. Assumptions, uncertainties and risks [indiscernible] 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 discussed 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.

We may also reference -- references to net income, excluding net investment gains, or net operating income, a non-GAAP financial measure in our remarks, or in our responses 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.

All right. Joe, thank you very much. Well, good afternoon, everyone, and welcome again to Old Republic's Fourth Quarter and Full Year 2025 earnings call.

In the fourth quarter, we produced $236 million of consolidated pretax operating income compared to $285 million, and our consolidated combined ratio was 96% compared to 92.7%. For the full year, we produced $1 billion of consolidated pretax operating income, and our consolidated combined ratio was [ 94.7% ]. Some other information on 2025. Our operating return on beginning equity was 14.1%, and growth in book value per share, including dividends, was 22%. And we think this reflects our strong operating earnings, our higher investment valuations and our sound capital management strategy.

In the fourth quarter, specialty insurance grew net premiums earned by 8.3% over the fourth quarter of '24. And for the full year, grew net premiums earned by 10.9%, and we eclipsed the $5 billion mark for the first time. In the fourth quarter, Specialty produced $178 million of pretax operating income, compared to $228 million, and Specialty's combined ratio was 97.3% compared to 91.8%. For the full year, Specialty produced $900 million of pretax operating income, another all-time high for us, and Specialty's combined ratio was 93.2%.

In the fourth quarter, Title grew premium and fees by 12.4% over the fourth quarter of '24. And for the full year, Title grew premium and fees by 9.1%. In the fourth quarter, Title also produced $65 million of pretax operating income, compared to $55.4 million, and Title's combined ratio was 94% compared to 94.4%. For the full year, Title produced $140 million of pretax operating income and Title's combined ratio was 97.6%.

Our conservative reserving practices where we're slow to release prior year reserves, but we react very quickly to increase reserves. We continue to produce favorable prior year loss reserve development in both Specialty Insurance and Title Insurance, and Frank will give you a little more color around that topic.

So with that, Frank, I'll go ahead and turn the discussion over to you. And then please turn things back to me. I'll discuss Specialty Insurance, and then I'll turn things over to Carolyn, who will discuss title, and then we'll wrap up and open it up for Q&A. So Frank?

Thank you, Craig, and good afternoon, everyone. This morning, we reported net operating income of $185 million for the quarter, compared to $227 million last year. On a per share basis, comparable quarter-over-quarter results were $0.74 compared to $0.90.

Starting with investments. Net investment income increased 7.9% in the quarter, primarily as a result of higher yields on the bond portfolio and to a lesser degree, a larger investment base. Our average reinvestment rate on corporate bonds acquired during the quarter was 4.6%, compared to the average yield rolling off of about 4.2%. The total bond portfolio book yield stands at 4.75%, compared to 4.5% at the end of last year. Now given the portfolio actions taken over the last few years that allowed us to accelerate improvement in the bond portfolio yield, our return of capital initiatives and the current interest rate environment, we expect net investment income growth to slow in 2026.

Turning now to loss reserves. Both Specialty Insurance and Title Insurance recognized favorable development in the quarter leading to a 2.4 percentage point benefit in the consolidated loss ratio, compared to 2.9 points last year. Within Specialty Insurance, Workers' comp prior year reserve development was slightly unfavorable in the quarter as a strong favorable development throughout the book was offset by a prior year reserve increase related to a credit loss on a single large deductible program. Commercial auto, general liability and property all had solid favorable development in the quarter.

Now for the full year, the Specialty Insurance loss ratio had a benefit of 2.9 points from favorable development, and there were no large pockets of unfavorable development to report. We ended the quarter with book value per share of $24.21, which inclusive of the regular and special dividends, equated to an increase of 22% for the full year, resulting primarily from our strong operating earnings and higher investment valuations. In the quarter, we declared nearly $700 million in dividends and repurchased $56 million worth of our shares. This brings total capital return this year to just over $1 billion, and it leaves us with about $850 million remaining in our current repurchase program.

I'll now turn the call back over to Craig for a discussion of Specialty Insurance.

Okay. Frank, thanks for that summary. Specialty Insurance net premiums written were up 6.1% in the quarter with strong rate increases on commercial auto and general liability, we also had solid renewal retention ratios, new business writings and increasing premium in our new Specialty operating companies. As a matter of fact, these new companies contributed over $300 million in net premium written in 2025 and collectively delivered positive operating income.

As I mentioned in my opening remarks, in the quarter, Specialty Insurance pretax operating income was $178 million, and the full year was $900 million, while the fourth quarter combined ratio was [ 97.3% ], and the full year was [ 93.2 ]. The loss ratio for the quarter was 67.6%, and that included 2.2 percentage points of favorable prior year loss reserve development. And that compares to 64.1% in the fourth quarter last year, which included 2.4 points of favorable development. The full year loss ratio was 63.9%, including 2.9 points of favorable development.

Moving to the expense ratio. For the quarter was 29.7%, compared to 27.7% in the fourth quarter last year. The full year expense ratio was 29.3% in line with expectations. And our continued investment into Specialty operating companies that we have recently launched, as well as in the technology modernization, data and analytics and AI does place some short-term strain on the expense ratio, but we're confident these investments will provide significant long-term upside potential.

Turning to commercial auto, net premiums written grew 6.4% in the quarter, while the loss ratio came in at 80%, compared to 77.9% in the fourth quarter last year. As we noted in the release, we increased the current accident year loss ratio by 3 percentage points, which for the year added 12 percentage points for the quarter, I should say. This action is consistent with what we've regularly communicated and that is that we reserve conservatively, and we're quick to react to increases in loss trends that we are observing. And those loss trends for commercial auto are now coming in a bit higher than we were observing earlier in 2025. And as such, as noted in the release, rate increases accelerated in the fourth quarter to 16% for commercial auto. And again, this would be in line with our philosophy of loss trends that are commensurate with rate increases.

Workers' comp net premiums written was 6% lower in the quarter while the loss ratio came in at 65.2%, compared to 35.5% in the fourth quarter last year. The big difference here is that the vast majority in the fourth quarter of '25 vis-a-vis the fourth quarter of 2024 is the significant difference in level of prior year favorable development. Rate decreases in work comp were about 3%. Here, too, in line with loss trends we're observing where severities remained very consistent and loss frequency continues its decline. So given positive wage trend that we apply our rates to relatively stable severity trend, and a declining loss frequency trend, we think our rates remain adequate even with a small level of rate decreases.

I'll also touch on property here. We had net premiums written, which increased 21% in the quarter, bringing the full year property writings to $750 million. The property loss ratio was 55% in the quarter, and that included some favorable prior year loss reserve development. It's of note that our property writings are diverse and often written on an E&S basis, particularly at our new Specialty operating companies.

So we expect solid growth and profitability in Specialty Insurance to continue through 2026, reflecting the growing contributions from our new Specialty operating companies, and also reflecting our commitment to underwriting excellence within all of our Specialty companies, including a keen focus on pricing discipline and cycle management. It's also noteworthy that our Specialty portfolio is now more diversified than it's ever been, which also helps set us up to successfully manage market cycles.

So I will now turn it over to you, Carolyn, to report on Title Insurance.

Thank you, Craig. Title reported premium and fee revenue for the quarter of $789 million. This represents an increase of 12% from fourth quarter of last year. The fourth quarter was our strongest of the year and is a continuation of the market story that we have been reporting all year. Seeing strong activity in the commercial sector and softness in the residential market, driven by persistent price and some affordability challenges still.

Premiums reduced in our direct Title operations were up 18% from this time last year. Our agency produced premiums were up 13%, and made up 77% of our revenue during the quarter, which is consistent with fourth quarter of last year. Commercial premiums increased this quarter and were 29% of our earned premiums compared to 23% in the fourth quarter of last year. For the year, our commercial premiums made up 26% of our earned premium, compared to 22% in 2024.

Investment income was also up this quarter by nearly 12% compared to the fourth quarter of 2024, primarily from higher investment yields. Our combined ratio improved to 94% this quarter, compared to 94.4% in the fourth quarter of last year. During the quarter, our continued expense management efforts and increased revenues resulted in a decrease in our operating expenses of 1.2%, relative to premium and fees. Our loss ratio increased to 0.8%. Although prior policy years continued to develop favorably, the amount of favorable development in the fourth quarter this year was less than in the fourth quarter of 2024.

Our pretax operating income this quarter was $66 million, compared to $55 million in the fourth quarter of last year. This 18% increase during the quarter brings our full year pretax income to $140 million for 2025. As we start 2026, the cornerstone of our business continues to be our Title agents. We remain focused on providing our agents with the innovative technological solutions required to maintain a competitive edge. Operationally, we will continue our margin expansion efforts to ensure that our structure efficiently serves our agents. We remain focused on maximizing efficiencies and implementing the [ Quala ] operating platform across the title operations during 2026, as well as continuing our initiatives to service the large commercial transactions we are seeing in the market.

And thank you. And with that, I'll turn it back to Craig.

Okay. Carolyn, thank you. So that concludes our prepared remarks, and we will now open up to the discussion to Q&A. And I'll either answer your question, or I'll ask Frank or Carolyn to chime in and help me out.

[Operator Instructions] Our first question will come from the line of Gregory Peters with Raymond James.

I guess starting just at the high level. I know in the past, you've talked about sort of what do you think the Specialty Insurance target combined ratios should look like over a course of a year. And I guess in the context of understanding those moving pieces, can you, kind of, provide us some perspective of how you think the budgeting is coming along, and where you think the combined ratio targets might be for 2026?

Sure, Greg. Yes. So ending the year at a combined ratio in Specialty of [ 93.2% ] feels pretty good to us. We're hopefully over time, be a bit better than that. But I think where we're at in the P&C cycle, that feels pretty good. And relative to next year, our plan is to produce something around the same level.

It depends by -- we have 20 different operating companies. Depending on the operating company, that varies. If it's longer tail lines of business, it might be a little bit higher. If it's shorter tail lines of business, it's probably lower. So all the businesses have a unique plan, and they have targets that they set relative to those plans. So I would say 2026, we're looking for a very consistent year. Obviously, there's talk of pricing pressure in the marketplace. But we're going to maintain our discipline.

As I mentioned in my opening comments, we're keenly focused on pricing discipline, underwriting discipline. Every company is focused on combined ratio over top line. And even in our incentive compensation plans, when we have soft pockets of business where pricing is too aggressive in the marketplace, we will remove any kind of growth or retention goal and make compensation based on -- strictly on combined ratio. So it's all about bottom line for us, and that's really driven by the combined ratio.

Right. And I guess the other two questions I had on the Specialty Insurance side, One is just going back to just some more background and what led to the higher loss pick? Because you said it wasn't reflected in, yet, in the paid claim data. So I'm just curious what you're seeing, and I do recognize your approach to case and loss -- case reserves and loss picks.

So -- and then the other question I had just -- so we just get a model on the table there for you is, I think, Frank mentioned a credit loss on one of the large deductible programs. Just some background on that as well.

Sure, Greg. I'll take both of those. Yes. So we start the beginning of the year with what we believe to be a conservative loss pick. And from there, as we go through each week, we study what's happening with case reserves, and also what's happening with paid losses. And we take those into consideration and look at what trend we think that, that implies. We take a close look at severity. We take a close look at frequency and come up with an overall trend.

So what we saw in commercial auto this year, for the better part of the year was trends. We said, I think, on prior calls, we were seeing trends in the low teens and that we were obtaining rate increases that we're at least commensurate with those trends, and that was the case. As we got towards the end of the year, while we did not notice any paid claim difference, we did notice that case reserves were higher. And as we communicate, we're conservative. And if we see case reserves at a higher level, we'll react. We did that, I think, a couple of years ago. Same exact thing where trends, all of a sudden, moved a bit higher than what we were seeing earlier in the year. And as such, trends now look to be rather than in the low teens, the mid-teens. And as such, the 3 percentage point increase to the accident year loss ratio. We'd rather be conservative and go with what we're seeing in case reserves, as opposed to being relaxed and relying on paid losses.

So I'd just point out, it's not something we missed. It's -- and to give everyone a little more color around that, loss trends move. They're volatile. We follow them regularly [indiscernible] daily, weekly, monthly, quarterly. And it's always a moving target. It's impossible to instantaneously know what today or tomorrow's loss trend is. No one has a crystal ball. And the best anyone can do is make a projection based on current observations. And that's exactly what we do. We make a projection based on what we're seeing, and it's usually a conservative projection. In this case, a conservative projection around what we're -- what we saw in the movement between case reserves in the beginning of the year as opposed to case reserves more toward the end of the year.

And just to underscore this a little bit more when I make the statement that it's impossible to precisely and instantaneously know what your trend is going to be, it takes time from the first notice of loss to the time that an adjuster is able to set ultimate case reserves. At the time of first notice of loss, the ultimate number of bodily injuries, the severity of the injuries, whether or not there's attorney representation. Those are all things that are not usually immediately known, and it takes time for that to play out. And that's why it's impossible to instantaneously know what your severity is until you get that kind of information and the year progresses and it comes through in your case reserves.

So hopefully, that provides a little more color around what we saw, how we reacted. And it's really 100% consistent with what we've communicated to all of our investors and analysts. When we observe higher loss trends, we immediately react by adjusting the loss ratio. And as you saw in the fourth quarter, as I mentioned in my comments, we immediately react with rate and rate increases in commercial auto accelerated in the fourth quarter and now are upwards of 16% compared to -- I think we were at 14% last quarter. So -- and we'll keep doing exactly that.

So I'll move on to your second question regarding the $17.5 million offset we had on workers' comp favorable development. And that came from -- as we said in the release, a large deductible program where the losses from prior years had developed. And in this case, there was a credit risk exposure. So we ended up with insufficient collateral, and on [ large deductible ] programs when that happens, that's something that then falls to us. And accordingly, we have to put up the reserves ourselves. So that's what happened in this quarter.

And you've been following us long enough to know that those kind of losses are somewhat unique. And certainly in our [ 45-year ] history, that's a pretty big number for us relative to past experience. And 99 out of 100 times, we have enough collateral to take care of things, even if losses do develop unfavorably in prior years. But in this one instance, there was insufficient collateral.

Well, that's excellent detail. So it's appreciated. Mindful that others might be asking questions. So I just close out. Carolyn, if you could just provide your crystal ball view on what 2026 might look for the Title business. I feel like your pick might be as good as anybody's out there. So just curious about your perspective on that.

Sure. In all of kind of the research that we do from people that report on that, it's still showing that commercial should have about a 15% to 20% improvement over this year, which was a wonderful year for commercial. But they see a single-digit increase in residential for next year, less than 10%. So somewhere -- there's -- it goes between 3% and 7% depending on who you look at. So I think it's going to be another year like this year, with some improvement, especially if commercial does improve like it did. So we're looking forward to 2026.

When you say next year, both you and Craig, I presume you mean '26.

Yes, I do.

Right. Right. Yes. We're [indiscernible] fourth quarter full year '25 mode right now.

[Operator Instructions] Our next question will come from the line of Paul Newsome with Piper Sandler.

Maybe just a follow-up on the case reserves, and I apologize if I missed this because I had a little technical issues myself during the call. The case reserve increases, were there any sort of geographic or patterns within the case reserves that stood out, or would suggest other than just pure sort of overall loss trend that might give us a hint as to what might be happening under the hood?

Yes. Paul, that's a great question. The what -- and we've looked at it in great detail. I can't say geographically, there's anything we've detected. But there are a few things we do know. And that is that the number of people making bodily injury claims relative to the number of accidents that we have is higher. And the percentage of bodily injury claims with attorney representation is higher. And the percentage of claims that end up in litigation in our -- is higher as well.

So a bit of an opinion section here. And that is our view is that litigation system abuse is accounting for these increases. And that includes the ongoing proliferation of attorney advertising where plaintiff attorneys are attempting to vilify insurance companies and you only need to turn on the television, or drive down the interstate and see the billboards. And it's amazing. The number of advertisements on television, on billboards, is just continuing to proliferate. And to us, it's clear that plaintiff attorneys have come to the conclusion that there's a return on these investments. So I think there's industry studies out there from some good industry associations that we're part of and they are coming to the same conclusion.

So those are the only observations. Again, if you have an accident, and you have a property damage claim. We track both bodily injury and property damage, third-party property damage separately. Third-party property damage frequency isn't going up. But bodily injury frequencies going up. Well, how can that be other than just more people willing to make bodily injury claims. And so, again, it comes back to the only conclusion that we can come to is that this litigation system abuse and proliferation of attorney advertising continues to rear its head, and we'll have to see where it goes. But that is what we would attribute a good portion of this, too.

Were the trends any different? Like I know you cited long-haul trucking, Were the trends any different in other portions of what you do in commercial auto? Obviously, trucking big piece, but I think you do some other stuff as well. Was it just consistent across anything [indiscernible] to do with commercial auto?

Another great question because on our other commercial auto, other than long-haul trucking, the trends are there, but they're not as pronounced as they are on long-haul trucking. I think coming back to litigation abuse, a lot of these plaintiff attorneys try to target insurance -- trucking companies and vilify insurance trucking companies and insurance companies and side. And usually, trucking -- long-haul trucking, in particular, has larger limit policies and plaintiff attorneys know that. So there's more of a target on their back, so to speak. So there is a little bit more rearing its head on long-haul trucking as opposed to other commercial auto.

So I know in the past, you've been with [indiscernible] last question [indiscernible] ask it. I know in the past, you guys have been very disciplined about hitting a loss trend with rate. And I'm going to assume that that's the plan prospectively as well. Are there other things that you're considering in terms of reacting to the loss trend change in terms of condition, or areas [indiscernible] or anything else sort of non-rate actions? Or is this going to be just a matter of hit it with rate, whatever you think is happening from a loss trend perspective?

Yes. So we are -- out of all of our 20 companies, our most sophisticated data and analytics area is within our long-haul trucking company. And we slice and dice the data and analytics in a very robust and sophisticated fashion, which helps us with targeting rate to those customers that elevate higher propensity for lots. And so part of that is risk selection as well. It helps us with risk selection and being able to not broad brush rate, but target rate to the insureds that require more rate. And then also continually refine our risk selection so that we're selecting what we think are the best risks and making it very punitive, or not providing quotes at all to those risks that we deem too high.

With respect to terms and conditions. There's not -- there's -- while in other of our businesses, terms and conditions are key -- really key to the business, the Specialty business they're in. Long-haul trucking, there's not a lot you can do with terms and condition on commercial auto. So I wouldn't say that there's a lot we're doing with terms and conditions. But we react with rate. We make sure our overall portfolio rate increase is reflective of the trends that we're observing.

And we -- when I answered Greg's question, I explained that understanding what the trend is, is not instantaneous, but we use a conservative approach. We assume trend is going to -- if it's going up, we assume it's going to continue to either be where it's at or continue to go up. And until we have clear evidence it's going down, we're not adjusting rates downward. We adjust the rates upward. And just in 1 quarter, 200 or 300 basis points, and we'll have to keep our foot on the pedal on that, assuming that we -- our goal is to stay ahead of trend, which we will continue to do.

I would also just point out that as far as what this means for 2026 are, because we do that, our expectations for 2026 are not different from where we're at now with respect to loss ratio. We assume we're going to keep up with trend. You may recall from a couple of years ago, we had similar kinds of observations back at the end of 2023. And we -- for the fourth quarter of 2023, we bumped up that accident year loss pick. And if you look at how that year has played out, you can look at the financial supplement, things after 2023 were -- remained pretty steady. And into '24 and '25 with 72% loss ratios, following a 71.5% loss ratio in '23. So we would expect the same to happen here again. We're not changing our view on how 2026 looks.

Our next question is a follow-up from the line of Gregory Peters with Raymond James.

One of the things I just wanted to touch upon [indiscernible] to close out the capital position of the company. I mean, you've been -- your record of special dividends alongside your regular dividends, pretty interesting. And I'm just curious how you view, in light of the $2.50 dividend that I guess, is paid out and -- was paid out already in January here. How you view the capital of the company at this point in time? And what are the metrics we should be watching for to determine whether there's still excess capital, et cetera?

Sure, Greg. I'll be happy to do that. So part of our regular planning cycle is to head into our February Board meetings and present our plan for 2026, which includes a complete analysis of our capital position and our projected capital position. We still think we have plenty of capital. So we think that will put us in a position to, again, recommend to the Board a regular dividend increase, somewhere in line with what we've been doing over the last couple of years.

And in the meantime, we also have $850 million still remaining on our share repurchase program, and we'll put that to work. Especially when there's opportunity, we said all along that we like having both tools in our tool chest, the share repurchase tool, as well as the special dividend and regular dividend tool. And to the extent that we think there's a buying opportunity, we've said we'll be opportunistic. And to the extent that markets react or overreact, it gives us a buying opportunity to repurchase more shares.

So we have that $850 million. We believe that if the opportunity presented itself, we could put most of that to good use throughout the year, and we would do that. And then as we get further along in the year, again, take a look at where we're at with that capital position, what we've been able to do with share repurchases. And if we -- as we did at the end of last year in December, if we think we are ending the year with more capital, again, we'll reset it with a special dividend.

This concludes our question-and-answer session. I will hand the call back to management for any closing comments.

Okay. Well, thank you. We appreciate the Q&A. We appreciate the opportunity to share our prepared remarks in addition to the earnings release and wrap up 2025 for the year. It was another very good solid year. And we think we're set up for a very good '26. We realize market conditions are in question, but we'll focus on bottom line, and profitability, and continue with our underwriting excellence initiatives, and our pricing discipline, and continue to produce growth, particularly as our new Specialty operating companies are producing more and more premium. And we feel very good about where we're heading in '26. So thank you all for your interest and participation, and we will talk to you all again next quarter. Thank you.

This concludes today's call. Thank you all for joining. You may now disconnect.

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Old Republic International Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

It is now my pleasure to turn the call over to Joe Calabrese with MWW.

Thank you, Tina. Good afternoon, everyone, and thank you for joining us for the Old Republic conference call to discuss third quarter 2025 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 www.oldrepublic.com.

Please be advised that this call may involve forward-looking statements as discussed in the press release dated October 23, 2025. 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 statement 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.

We may also include references to net income, excluding net investment gains or net operating income, a non-GAAP financial measure, in our remarks or in responses 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's 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.

Okay. Thank you, Joe. Good afternoon, everyone, and welcome again to Old Republic's third quarter 2025 earnings call. In addition to our earnings release, we also issued a separate news release this morning regarding our agreement to purchase Everett Cash Mutual through a sponsored demutualization. We think this is reflective of our commitment to continue to pursue profitable growth of our specialty insurance business.

ECM, as it's referred, is a leading insurer of farm and agricultural operations nationwide, writing $237 million of direct premium in 2024. We also added a new slide on ECM to the appendix of our investor presentation on our website. So there's more there for you to see if you're so interested.

Strategically, ECM fits very nicely into our specialty insurance portfolio given our close cultural alignment and their narrow and deep focus on farm and ag specialty. ECM provides for further product diversification within our existing specialty insurance business. And we will not compete with any of ECM's current offerings or vice versa.

So once the transaction closes, we expect ECM to be very well positioned from a capital and product perspective to pursue profitable growth geographically and through new product offerings. So we're very happy to have the ECM folks join the Old Republic family.

So now turning to the earnings release. Our story of solid growth and profitability continued through the third quarter as we produced $248.2 million of consolidated pretax operating income. That's up from $229.2 million in the third quarter of '24. Our consolidated combined ratio was 95.3%, and that compares to 95% in the third quarter of last year.

On our balance sheet, it remains strong, while we continue to invest in new specialty operating companies, make ongoing technology investments and also invest in talent across the organization.

Our annualized operating return on beginning equity improved to an annualized rate of 14.4%, and that compares to 11.9% in the third quarter last year, which we think reflects our strong operating earnings and thoughtful management of capital.

In specialty insurance, we grew net premiums earned by 8.1% compared to the third quarter of '24 when we produced $207 million of pretax operating income, up from $197.3 million in the third quarter last year. The specialty insurance combined ratio was at 94.8% in the quarter, compared to 94% in the third quarter last year.

Despite the continuation of a slow real estate market, title insurance grew premium and fees by 8.3% compared to the third quarter last year, and produced $45.7 million of pretax operating income, and that's up from $40.2 million in the third quarter last year. The title insurance combined ratio was -- or excuse me, 96.4% in the quarter, and that compares to 96.7% in the third quarter last year.

Our conservative reserving practices continue to produce favorable prior year loss reserve development in both specialty insurance and title insurance, and Frank will provide more details around that topic. So with that, I'll turn the discussion over to Frank. And then Frank will turn things back to me to discuss specialty insurance, followed by Carolyn, who will discuss title insurance. And then as the operator says, we will open it up for Q&A.

So Frank?

Thank you, Craig, and good afternoon, everyone. This morning, we reported net operating income of $197 million for the quarter, compared to $183 million last year. On a per share basis, comparable quarter-over-quarter results were $0.78, compared to $0.71, a 10% increase.

Net investment income increased 6.7%, primarily as a result of higher yields on the bond portfolio. Our average reinvestment rate on corporate bonds acquired during the quarter was 4.7%, compared to the average yield rolling off of about 4.1%. The total bond portfolio book yield stands at 4.7%, compared to 4.5% at the end of last year.

Turning now to loss reserves. Both Specialty Insurance and Title Insurance recognized favorable development in the quarter, leading to a benefit in the consolidated loss ratio of 2.5 percentage points, compared to 1.3 points of favorable development last year. Within Specialty Insurance, workers' comp continued to have significant favorable development and accounted for the majority of the group's total favorable development. Commercial auto, general liability and property all had favorable development in the quarter.

As we have mentioned in the past, general liability is a relatively small but growing line that does have some quarter-to-quarter volatility. This quarter, GL had favorable development and the year-to-date impact was negligible on the Specialty Insurance loss ratio.

We ended the quarter with book value per share of $26.19, which, inclusive of the regular dividend, equated to an increase of 18.5% year-to-date. That resulted primarily from our strong operating earnings and higher investment valuations.

In the quarter, we paid $71 million in regular cash dividends and repurchased $44 million worth of our shares. We did not repurchase additional shares since the end of the quarter, leaving us with just over $910 million remaining on our current repurchase program.

The recently launched operating companies and the ECM acquisition do not materially hinder our ability to return capital. So as usual, we will be discussing with our Board of Directors the most efficient way to return capital by the end of the year.

I'll now turn the call back over to Craig for a discussion of Specialty Insurance.

Okay. Frank, thanks for that summary. Specialty Insurance net written premiums were up 6.9% in the third quarter, with strong rate increases on commercial auto and general liability, that I'll talk about momentarily. We had solid renewal retentions, strong new business writings and an increasing amount of premium in our new specialty operating companies.

As mentioned in my opening remarks, in the third quarter, Specialty Insurance pretax operating income was $207.7 million, and the combined ratio was 94.8%. The loss ratio for the third quarter was 63.5%. That included 3.4 percentage points of favorable prior year loss reserve development, compared to 65.2% in the third quarter last year, which included 1.7 points of favorable development.

The expense ratio was 31.3% in the third quarter compared to 28.8% last year, primarily reflecting higher personnel expenses, including those within our newest specialty operating companies not yet producing premium, and ongoing investments in technology. For note, the year-to-date expense ratio and loss ratio tend to be better indications of run rates, and they also reflect changes in our mix of business toward lower loss ratios and higher commission ratios.

Now to give you some details around our 2 largest lines of business: commercial auto and workers' compensation. Commercial auto, net premiums written grew 7% in the third quarter, while the loss ratio came in at 68.3% compared to 67.1% last year. Rate increases remained at the 14% level, which is the same we saw in the second quarter, and that's commensurate with the loss severity trend we're observing.

Switching to workers' compensation. Net premiums written grew 6.7% in the third quarter, while the loss ratio came in at 63.8%, compared to 58.8% last year. Rates continued to remain relatively flat. And here too, that's consistent with what we observed in the second quarter. Loss frequency trend continues to decline, more than offsetting the increase in loss severity trend. So given the positive wage trend within payroll, and again, that's what we apply our rates to, a declining loss frequency trend and a relatively stable loss severity trend, we think our rate levels continue to remain adequate.

So we expect solid growth and profitability in Specialty Insurance to continue, reflecting the success of our specialty strategy and our growing contributions from our new specialty operating companies. Our operational excellence initiatives continue to contribute to this profitable growth by leveraging Old Republic's collective knowledge and expertise. And we also here too included a new slide on these initiatives in the appendix of our investor presentation on our website.

So that concludes my remarks on Specialty Insurance, and I'll now turn the discussion over to you, Carolyn, to report on Title Insurance.

Thank you, Craig, and good afternoon, everyone. Title reported premium and fee revenue for the quarter of $767 million. This represents an increase of 8% from third quarter of last year. The third quarter market story is a continuation of what we reported last quarter. We still see strong activity in the commercial sector, a modest uptick in refinance activity and a softness in the residential purchase market driven by persistent price and affordability challenges. Overall, we are pleased with our revenue improvement during the year.

Premiums from our direct title operations were up 8% from third quarter of last year. Agency produced premiums were up 11% and made up nearly 80% of our revenue during the quarter, up from 78% during third quarter of 2024. Commercial premiums increased this quarter and were 26% of our earned premiums, compared to 20% in the third quarter of last year.

Investment income was also up this quarter, by nearly 11%, compared to third quarter 2024, primarily reflecting higher investment yields earned. Our overall loss ratio decreased to 2.7% this quarter, compared to 2.8% in the third quarter of 2024. The slight improvement relates to continued favorable development in prior policy years.

Agency premiums accounted for a larger share of our revenue this quarter, raising agent commissions and increasing our expense ratio by 1.9%. The remainder of our expenses decreased by 2.1% relative to premiums and fees. These changes led to a combined ratio of 96.4% for this quarter, an improvement over both last quarter and the 96.7% reported in the third quarter of 2024.

Pretax operating income this quarter was $46 million, compared to $40 million in third quarter of last year. During the quarter, we continued progressing with the advancement of digital transaction tools and solutions for our direct operations and title agents through our strategic partnerships. We remain focused on the importance of providing our agents with the innovative technological solutions required to maintain a competitive edge.

Thank you. And with that, I will turn it back to Craig.

Okay. Thank you, Carolyn. Well, that concludes our prepared remarks. So we'll now open up the discussion to Q&A where I'll try to answer your questions or I'll ask Frank or Carolyn for some help.

[Operator Instructions] And our first question comes from the line of Gregory Peters with Raymond James.

For my first question, I want to go back to Frank's comments on capital. And I guess what I'm looking for is just how you are measuring excess capital, because it seems like there's a shift. Or maybe put it a different way, maybe your -- there's been a strategic decision not to hold as much excess capital. But either way, I'm just looking for how you're measuring capital right now. Is it reserves -- based on reserves, or what the ratios you're looking at and how you're thinking about excess capital in the context of what Frank was saying in the fourth quarter?

Yes, Greg, I'll start, and Frank has anything to add, he can add it. Last year, when we declared the $2 special dividend, we made note that we had this nice problem of continuing to have operating income retained earnings that were building faster than we could return capital to shareholders either through share repurchases or dividends. And so we issued a special dividend.

When we contemplate that and discuss that with our Board, we look at several different enterprise risk management measures. And one of those is certainly the amount of capital we hold relative to the reserves. But there's been no major shift at all. It's really just a matter of, again, having a nice problem where we continue to just build capital faster than we could deploy it.

So as we sit here this year, the same kind of thing has happened. We have built up capital again, and we have done so faster than we're able to return it through share repurchases or ordinary dividends. So as Frank indicated, it's a matter that, as we always do, we'll take up with our Board and suggest the best ways to return that to shareholders in a way that is most productive for the shareholders.

So that's, again, no shift. We continue to look at multiple different metrics when we look at capital and we manage it thoughtfully, as I indicated in my comments, and do a significant amount of analysis and make recommendations accordingly to our Board.

Great. And I was looking over your slide on Everett, and just curious if you could tell us a little bit more about this entity. You highlighted that there's not a lot of crossover in terms of product. So I'm just curious how you're thinking about this business and how it's going to sit inside over public. And when -- more importantly, I know you've got these start-up operating companies, the 5 that you've outlined, does this become #6 as you branch off into some other types of businesses. So just some more color there would be helpful.

Sure, sure. So I'll start with the latter part of your question, and that is we definitely look at it as a new operating company within our existing portfolio of operating companies. I think that would take us up to 18 companies within our Specialty Insurance, and then, of course, our Title Insurance being our 19th.

So one of the things that was very, I think, attractive to ECM was that decentralized model and the degree of independence and accountability that we give to each of those operating companies. And as I mentioned as well, just a strong cultural alignment of integrity and transparency and the other components of our cultural tenets that we share.

So as far as the business itself, we, again, are thinking that it is very complementary, doesn't compete with our existing segments. It's a specialty segment in the marketplace. And that is the sole focus of Everett, which is exactly what our strategy is, and that is for our each of those 18 different operating companies to be an inch wide, mile deep in their specialty focus very narrowly on what they do and do it better than anybody else. And ECM checks every one of those boxes.

So I guess getting into more of the technicals, as I mentioned, ECM focuses on farm and ag business. And in that portfolio, farm owners and commercial, multiperil make up 70% of their coverages with inland marine and commercial auto each making up about 9% of their coverages. And another important attractive note is that their business skews more toward short-tail lines of coverage, which a lot of the new companies that we've added lately to diversify our portfolio have been, which is a short tail kind of line. So you have a much faster understanding of how the business is performing.

And again, we intend to give ECM the capital necessary to continue to drive expansion of their business. We expect they'll do that through geographic expansion. They started some geographic expansion by making an acquisition in late 2022 when they made an acquisition that allowed them to expand westward. And I think another attribute that is shared is they compete on the basis of expertise, relationships, ease of doing business around their specialty niche just like all of our specialties. So again, their profile is very consistent with the profile of our existing specialty companies. And as such, we just think it's a perfect fit.

Excellent. And just pivot to the Title business, just my final question. Hope springs eternal that things -- market will turn on the residential side. In the interim, I know you addressed this last conference call, in Texas, there was some challenges on some rate rollbacks. I'm wondering if you're seeing any other regulatory pressures build up in any other states? Or is it just normal operating status everywhere else?

Yes. I think it's been fairly consistent, nothing significant has emerged. But Carolyn, you're much closer to the action than I am. So I'll turn it to you to maybe add any color you might have.

Greg, no, it's been fairly quiet on the regulatory front, nothing out of the ordinary. Still waiting on the Texas -- it was appealed. There was supposed to be a hearing in December, but really no word on that yet. But that's the only thing that's out there brewing right now.

And our next question comes from the line of Paul Newsome with Piper Sandler.

I want to beat on the ECM dead horse a little bit more. The -- and I don't know if you will actually get more precise numbers, but I'd like to know how this fits in with -- a little bit better with how it fits into the capital decisions that you're going to be making in the near future. I mean I would imagine ECM is going to cost at least the statutory capital for you, folks. And then it sounds like -- again, correct me if I'm wrong in these assumptions, that there's an intention to put more capital into ECM. And then, I guess, on top of that, you have whatever is left in your view of excess capital.

And so I guess the questions are, are those the right pieces I should be looking at? And then can we talk about sort of like potential timing for those things? It sounds like ECM is going to close sometime in '26. I don't know if that means you hold on to capital a little bit longer this time around and some of the more speedy things you've done in the past at year-end? It's about 5 questions in there, I apologize.

Yes. I think we follow, though. Well, as we indicated in the release, we expect this to be accretive to book value per share. So you can infer from there that it is not -- will not be at least the amount of their statutory capital. And that is because of the structure of a sponsored demutualization.

So from a high-level standpoint, the sponsored demutualization is not going to affect our view of capital as we get to that analysis with our Board and look at things -- how things look at the end of the year. There's really no consideration in that analysis of capital needs in order to follow through on the sponsored demutualization. Through that sponsored demutualization, ECM will end up with additional capital and that is what will enable them to pursue growth opportunities. As you know, Mutual has a limited amount of ability to raise capital. And under our umbrella here at Old Republic, we will have that capital if they need it.

But just through the sponsored demutualization itself, they will end up with more capital to pursue those goals. And again, on top of that, we don't plan on contributing additional capital beyond that. So long story short, it is -- really doesn't move the needle at all when it comes to how we're looking at our capital position and the recommendations we'll be making with regard to returning capital to shareholders going forward.

Okay. That's great. Now a follow-up question on a different horse, beat-up horse. Yesterday night last night, we had some not-so-happy news [ as selective ] about commercial audio insurance [ brewing ] an additional problem for them. And I don't know if you can respond to that directly, but obviously, you are a big commercial auto writer. It's a different business, I recognize that. But maybe some thoughts on what you think is going on in the commercial auto business and why you may or not be ahead of the game there.

Sure. I'd be happy to talk about that again. We're quite proud of where we stand relative to the industry. As I think I've mentioned in prior quarters, we continue to put up favorable loss reserve development on commercial auto, while many of our peers over the course of the last few years have been putting up unfavorable development.

And there's a lot of components that account for why we're in such a strong position. Again, I would point to, just first and foremost, the starting point of identifying the severity trend and then getting the commensurate rate that you need. And now we're going back 6 or 7 years where we identified it a lot earlier than a lot of our peers and responded with rate increases to offset those trends we were seeing. I mentioned in my opening comments, we -- it's still a problem for the industry in that we think the trend is running somewhere in the low teens and we're getting rate increases on commercial auto of 14%.

So that's been our MO for the last 6 or 7 years. We spot the trend. We get rate increase commensurate with that trend, once you have a good starting point. And I think a lot of our peers didn't have a good starting point because they didn't recognize it as quickly, maybe weren't getting the rate increases early enough and -- or not getting as strong as rate increases as necessary to keep up with that trend.

And then there's other things just about the way we think about things and do business that are important. One of the things, Great West is our trucking business, and they do one thing and one thing only: long-haul trucking. They have a team of statisticians, analysts that are relying on data and analytics to adjust their rates in real-time fashion. They don't rely on ISO. A lot of our competitors rely on ISO. And if you're going to write commercial auto, long-haul trucking, you're relying on ISO, you're already probably behind the game.

So we're real time. We have our own team. We have our own proprietary rate filings in every state. Those rate filings we have, we have 42 tiers built within our proprietary rate filings, so that we can segment our business and analyze it and apply the appropriate rate, the appropriate risk, and do that, again, in a fashion that is very responsive to what we're seeing on trend.

On the claims side, again, inch wide, mile deep. All we do is long-haul trucking claims. We have -- our folks are -- we have a catastrophic team, 5 airplanes that immediately get out of catastrophic events, immediately try to get our arms around the catastrophic losses that can certainly cause significant severity in the results. Our team in claims, they have relationships with all the EPA folks within all the states. So if you have a spill on -- a cargo spill or something like that, we know immediately how to handle it, immediately who to talk to mitigate the amount of damage from those kinds of instances. And I could go on about just, again, how specialized we are in that space.

And then lastly, I would just say it's about reserving. It starts with case reserving. Great West is terrific at getting case reserves set to ultimate as quickly as possible. As a matter of fact, when they get those case reserves set, unlike many in the industry, our case reserves actually run off a little bit redundant, which is unheard of. So the only IBNR we really need is for true IBNR where we actually don't know of an incident yet. But when we know of an incident, our case reserves are set to ultimate and set there very quickly. We don't stair-step, as it's so-called in the industry, like many like many do.

And then when it comes to our IBNR reserving, we've talked about that [ on all ] of our lines, but we have a very conservative approach on our IBNR reserves whereby [indiscernible] loss pick at the beginning of the year. Auto liability, we're holding that loss pick at what we set it at, even if we see results come in that look better than expected. If we see results that come in and we think it's a little bit hotter than we expected, we will raise that initial loss pick. But we will not lower that initial loss pick until we get at least 3, 4 years out on commercial auto, 5 years out on workers' compensation.

So those long-tail lines, we are very conservative in how we manage IBNR, in addition to on all of our lines of business, our new Chief Claims Officer, new being he's been here a couple of years, came in at exactly the right time to help us address the legal system abuse issue, the severity issue, plaintiff attorney tactics, and he's helped in that regard. But one of his main charges is to ensure all of our companies are getting case reserves set to ultimate as quickly as possible on every one of our lines of business so that we can know what we have and ultimately respond and produce the kind of results we have, and have -- achieve our goal of having a couple of points of favorable development on average over time on every line of business.

[Operator Instructions] With no further questions in queue, I will now turn the call back over to management for closing remarks.

Okay. Well, we appreciate the interest. We appreciate the questions. And again, we look forward to welcoming the ECM stakeholders to the Old Republic family. And we also are looking forward to producing the strong profitable growth for our shareholders and all other stakeholders as well. And we look forward to reporting our year-end results next time we talk to you. So thank you very much.

Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.