Introduction
Table of Contents
Old Republic International Corporation (ORI) is an insurance holding company that offers several insurance products to small businesses and individuals across the United States. ORI operates in three segments, namely, General Insurance Group, Title Insurance Group, and the Republic Financial Indemnity Group (RFIG). The major competitors of Old Republic include American International Group Inc., Allstate Corp., Berkshire Hathaway Inc., Chubb Ltd., Hanover Insurance Group Inc., Nationwide Mutual Insurance Co., Reliance Standard Life Insurance Co. Ltd., State Farm Mutual Automobile Insurance Co.
The company mainly offers its services to the residential and commercial segments of the building industry.
Old Republic primarily offers its services to the residential and commercial segments of the building industry. The company provides insurance to individuals, businesses and other organizations, including:
- Business owners who want to protect their assets from financial loss resulting from fires, storms, theft and other hazards.
- Property owners who need protection against lawsuits if someone is injured on their property or if it causes environmental damage.
ORI is an insurance holding company that offers several insurance products to small businesses and individuals across the United States. The business operates in three segments: General Insurance Group, Title Insurance Group, and Republic Financial Indemnity Group (RFIG).
The major competitors of Old Republic include American International Group, Inc., Allstate Corp., Berkshire Hathaway Inc., Chubb Ltd., Hanover Insurance Group Inc., and Nationwide Mutual Insurance Co.
- American International Group, Inc.
- Allstate Corp.
- Berkshire Hathaway Inc.
- Chubb Ltd.
- Hanover Insurance Group Inc. (HIG) is an insurance company that provides personal property and casualty insurance products and services to businesses and individuals in the United States and internationally through independent agents, brokers, wholesalers, affinity groups and other distribution channels, including the Internet. The Company operates through three segments: Personal Property & Casualty (PPC), Surety Underwriting & Claims Services (SUCS) and Specialty Lines Operations (SLL).
Nationwide Mutual Insurance Company provides a wide range of personal auto insurance products in all 50 states through its direct business channel; sells homeowners’ policies for new homes primarily through independent agents; markets personal automobile insurance packages containing both auto liability coverage as well as uninsured motorist protection covering bodily injury or property damage sustained by customers who may sustain such losses due to another person’s negligence; underwrites motorcycle liability policies sold directly to consumers using licensed agents or direct mail solicitations; issues commercial vehicle liability policies to small businesses nationwide via licensed agents
Strengths:
Old Republic’s strength also lies in its diversified business model and strong market position. With a strong brand name and reputation in the market place, Old Republic is able to offer a wide range of insurance products that meet the needs of their customers. The company’s cost structure is also above average because it has been able to maintain an above average level of pricing discipline at all times.
Finally, Old Republic has been able to maintain its strong market position by focusing on building long-term relationships with its customers so that they feel comfortable purchasing from them again and again.
Funds diversified business model.
Old Republic has a diversified business model. This means that Old Republic is not dependent on one or two products to generate income. The company’s business model includes insurance products and services in the U.S. and internationally, as well as other financial services such as wealth management, employee benefits consulting and property and casualty insurance.
The strong market position of Old Republic gives it an advantage over its competitors in terms of pricing power since the company can charge higher premiums than others based on its brand name recognition and long-term relationships with customers who trust them with their assets. In addition to this competitive advantage, goodwill (the difference between what something would cost if new vs what you paid for it) from past acquisitions has helped make Old Republic International more valuable than its stock price reflects today at $57 per share compared with the industry average P/E ratio of 18 times earnings per share which implies an annualized earnings growth rate around 6%.
Strong market position.
Old Republic International has a strong market position in the United States. It is one of the largest insurance companies in the country, and their brand recognition has grown significantly over time. In fact, many people do not even realize that the Old Republic is an international company. They only know it as an American insurance provider.
Old Republic’s strong brand awareness stems from its long history as an industry leader, which goes back more than 100 years ago to when it was founded by an entrepreneur named A.W. Herrick who had ideas about how to improve auto coverage for drivers.
Goodwill in the marketplace.
Goodwill is a noncurrent asset that arises when the purchase price of an acquisition exceeds the fair value of net identifiable assets acquired. It arises due to factors such as:
- Overpayment for the target by the acquirer
- The presence of synergies resulting from the merger or combination.
Goodwill is recorded in an account called ‘Goodwill’ and it appears on company’s balance sheet as a long-term asset because it relates to future economic benefits and not current cash flows.
Weaknesses:
In the first quarter of 2019, Old Republic International’s net premiums earned declined by $6 million compared to the same period in 2018. This was attributed to a decline in the number of policies written and renewals made, as well as lower margins from title operations. Further, during this time frame, loss and loss adjustment expenses (LAE) as a percentage of net premiums earned increased from 27.4% to 29.3%.
Decline in net premiums earned.
One of the most important metrics for measuring a company’s financial health is net premiums earned (NPX). NPX is the total amount of money that comes in from insurance policies less what goes out in claims. An increase or decrease in NPX can show how well a company is doing, but it’s not necessarily an indicator of future performance because there are so many factors involved. For example, if you sell your house and buy another one, you’ll likely have higher expenses and lower income than before; however, it doesn’t mean that your future earnings will necessarily be lower than they were when you lived at the old house.
Similarly with insurance companies: if their NPX decreases from one year to another—say because they’re paying out more claims than usual—that might not be indicative of anything other than bad luck during those two years (or maybe even just one year).
Decline in revenues from title operations.
Revenues from title operations declined by $3.3 million, or 15.7%, to $18.6 million for the three months ended December 31, 2018, compared to $22.9 million for the three months ended December 31, 2017. The decrease was primarily due to fewer closings than in the prior year quarter driven by lower mortgage rates and a decline in home sales volume due to slower economic growth in our markets.
Increase in loss and loss adjustment expenses (LAE) as ratio of net premiums earned.
Old Republic International Corporation (ORI) is an insurance holding company that offers several insurance products to small businesses and individuals across the United States. ORI’s insurance business consists of two segments: general lines of personal lines property/casualty (P/C) insurance and economic loss reinsurance. The company provides a broad range of coverage for homes, autos, boats, recreational vehicles, motorcycles and other personal property; commercial properties such as retail stores or office buildings; personal liability claims arising from bodily injury or property damage; employee benefits claims related to work injuries; life/health coverage for individuals and families; workers’ compensation coverage for employers in selected states where state law requires this type of protection against losses due to workplace injuries caused by third parties such as employees working on behalf of their employer.
Old Republic International Corporation (ORI) is an insurance holding company that offers several insurance products to small businesses and individuals across the United States. ORI is engaged in the business of insurance in the United States.
Conclusion
Old Republic International Corporation (ORI) is an insurance holding company that offers several insurance products to small businesses and individuals across the United States. The company mainly offers its services to the residential and commercial segments of the building industry. Old Republic operates in three segments, namely, General Insurance Group, Title Insurance Group and Republic Financial Indemnity Group (RFIG). The major competitors of Old Republic include American International Group Inc., Allstate Corp., Berkshire Hathaway Inc., Chubb Ltd., Hanover Insurance Group Inc. and Nationwide Mutual Insurance Co..
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