# OLD REPUBLIC INTERNATIONAL CORP (ORI) FY 2023 MD&A

Verbatim Item 7 Management's Discussion and Analysis from OLD REPUBLIC INTERNATIONAL CORP's 10-K for fiscal year 2023.

SEC filing source: https://www.sec.gov/Archives/edgar/data/74260/000007426024000021/ori-20231231.htm
Accession: 0000074260-24-000021
Filing date: 2024-02-28
Report date: 2023-12-31
Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization.
Confidence: high

Company profile: /company/ORI/
All MD&A years: /company/ORI/mda/
Previous year: /company/ORI/mda/fy2022/ (FY 2022)
Next year: /company/ORI/mda/fy2024/ (FY 2024)

Item 7 - Management Analysis of Financial Position and Results of Operations

($ in Millions, Except Share Data)

OVERVIEW

This management analysis of financial position and results of operations pertains to the consolidated accounts of Old Republic International Corporation ("Old Republic", "ORI", or "the Company"). The Company conducts its operations through a number of regulated insurance company subsidiaries organized into three segments: General Insurance (property and liability insurance), Title Insurance, and Republic Financial Indemnity Group (RFIG) Run-off. On November 11, 2023, a definitive agreement was reached to sell the RFIG Run-off mortgage insurance business to Arch U.S. MI Holdings Inc., a subsidiary of Arch Capital Group Ltd., with the sale expected to close in the first half of 2024 (see Note 2 in the Notes to Consolidated Financial Statements for further discussion). A small life and accident insurance business, accounting for 0.2% of consolidated operating revenues for the year ended December 31, 2023, and 0.4% of consolidated assets as of that date, is included within the Corporate & Other caption of this report.

The consolidated accounts are presented in conformity with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) of accounting principles generally accepted in the United States of America (GAAP). As a publicly held company, Old Republic utilizes GAAP to comply with the financial reporting requirements of the Securities and Exchange Commission (SEC). From time to time the FASB and the SEC issue various releases, most of which require additional financial statement disclosures and provide related application guidance. Recent guidance issued by the FASB is summarized further in the Notes to Consolidated Financial Statements where applicable.

As a state regulated financial institution vested with the public interest, however, business of the Company's insurance subsidiaries is managed pursuant to the laws, regulations, and accounting practices of the various states in the U.S. and those of a small number of other jurisdictions outside the U.S. in which they operate. In comparison with GAAP, the statutory accounting practices generally reflect greater conservatism and comparability among insurers and are intended to address the primary financial security interests of policyholders and their beneficiaries. Additionally, these practices also affect a significant number of important factors such as product pricing, risk bearing capacity and capital adequacy, the determination of Federal income taxes payable currently among ORI's tax-consolidated entities, and the upstreaming of dividends and payment of interest and principal on surplus notes by insurance subsidiaries to the parent holding company. The major differences between these statutory accounting practices and GAAP are summarized in Note 1 in the Notes to Consolidated Financial Statements.

The insurance business is distinguished from most others in that the prices (premiums) charged for most products are set without knowing what the ultimate loss costs will be. The Company also cannot know exactly when claims will be paid, which may be many years after a policy was issued or expired. This casts Old Republic as a risk-taking enterprise managed for the long run. Old Republic therefore conducts its business with a primary focus on achieving favorable underwriting results over cycles, and on maintaining a sound financial condition to support its subsidiaries' long-term obligations to policyholders and their beneficiaries. To achieve these objectives, adherence to insurance risk management principles is stressed, and asset diversification and quality are emphasized. In addition, management engages in an ongoing assessment of operating risks, such as cybersecurity risks, that could adversely affect the Company's business and reputation.

In addition to income arising from Old Republic's basic underwriting and related services functions, significant investment income is earned from invested funds generated by those functions and from capital required to support the risk of the underlying business. Investment management aims for stability of income from interest and dividends, protection of capital, and for sufficiency of liquidity to meet insurance underwriting and other obligations as they become payable in the future. Securities trading and the realization of capital gains are not primary objectives. The investment philosophy is therefore best characterized as emphasizing value, credit quality, and relatively long-term holding periods. The Company's ability to hold both fixed income and equity securities for long periods of time is enabled by the scheduling of maturities in contemplation of an appropriate matching of assets and liabilities, and by investments in dividend paying, publicly traded, large capitalization, highly liquid equity securities.

In light of the above factors, the Company is managed for the long run and with little regard for quarterly or even annual reporting periods. These time frames are too short. Management believes results are best evaluated by looking at underwriting and overall operating performance trends over 10-year intervals. These likely include one or two economic and/or underwriting cycles. This provides enough time for these cycles to run their course, for premium rate changes and subsequent underwriting results to be reflected in financial statements, and for reserved loss costs to be quantified with greater certainty.

This management analysis should be read in conjunction with the consolidated financial statements and the footnotes appended to them.

24

EXECUTIVE SUMMARY

Commentary within this Executive Summary provides management’s high level overview with a focus on current period results as compared to the immediately preceding year. For additional detail on these trends and all comparative year periods presented, refer to the detailed management analysis that follows.

Old Republic International Corporation reported the following consolidated results:

[[GREPCENT_TABLE]]
[["OVERALL RESULTS"],["Years Ended December 31:","","","2023","","2022","","2021"],["Pretax income","","","$","747.4","","","$","857.4","","","$","1,922.1"],["Pretax investment gains (losses)","","","(190.9)","","","(201.1)","","","758.0"],["Pretax income excluding investment gains (losses)","","","$","938.4","","","$","1,058.6","","","$","1,164.0"],["Net income","","","$","598.6","","","$","686.4","","","$","1,534.3"],["Net of tax investment gains (losses)","","","(150.8)","","","(158.6)","","","598.4"],["Net income excluding investment gains (losses)","","","$","749.5","","","$","845.1","","","$","935.9"],["Combined ratio","","","92.6","%","","91.0","%","","89.9","%"],["PER DILUTED SHARE"],["Years Ended December 31:","","","2023","","2022","","2021"],["Net income","","","$","2.10","","","$","2.26","","","$","5.05"],["Net of tax investment gains (losses)","","","(0.53)","","","(0.53)","","","1.97"],["Net income excluding investment gains (losses)","","","$","2.63","","","$","2.79","","","$","3.08"],["SHAREHOLDERS' EQUITY (BOOK VALUE)"],["December 31:","","","","","2023","","2022"],["Total","","","","","$","6,410.7","","","$","6,173.2"],["Per Common Share","","","","","$","23.31","","","$","21.07"]]
[[/GREPCENT_TABLE]]

The Company reported pretax income, excluding investment losses (pretax operating income), of $938.4 for 2023. Title Insurance pretax operating income declined for the full year, while General Insurance pretax operating income was higher.

Results for the year ended December 31, 2023 are summarized as follows:

•The consolidated combined ratio was 92.6%.

•Consolidated net premiums and fees earned decreased 12.6%. The continued decline in Title Insurance net premiums and fees earned was partially offset by strong growth in General Insurance.

•Net investment income increased 25.8% driven by higher investment yields earned.

•Favorable loss reserve development improved the combined ratio by 4.6 percentage points.

•Total capital returned to shareholders was $806, comprised of $276 in dividends, and $530 of share repurchases.

•Book value per share grew to $23.31, a 15.3% increase, inclusive of dividends.

25

Old Republic's business is managed for the long run. In this context management's key objectives are to achieve highly profitable operating results over the long term, and to ensure balance sheet strength for the insurance underwriting subsidiaries' obligations. Therefore, the evaluation of periodic and long-term results excludes consideration of all investment gains (losses). Under GAAP, however, net income, inclusive of investment gains (losses), is the measure of total profitability.

In management's opinion, the focus on income excluding investment gains (losses), also described herein as segment pretax operating income, provides a better way to analyze, evaluate, and establish accountability for the results of the insurance operations. The inclusion of realized investment gains (losses) in net income can mask trends in operating results, because such realizations are often highly discretionary. Similarly, the inclusion of unrealized investment gains (losses) in equity securities can further distort such operating results with significant period-to-period fluctuations.

[[GREPCENT_TABLE]]
[["FINANCIAL HIGHLIGHTS"],["","","","% Change"],["","","","","","","","2023","","2022"],["Years Ended December 31:","2023","","2022","","2021","","vs. 2022","","vs. 2021"],["SUMMARY INCOME STATEMENTS:"],["Revenues:"],["Net premiums and fees earned","$","6,707.7","","","$","7,675.3","","","$","8,003.6","","","(12.6)","%","","(4.1)","%"],["Net investment income","578.3","","","459.5","","","434.3","","","25.8","","","5.8"],["Other income","163.1","","","149.9","","","145.6","","","8.8","","","3.0"],["Total operating revenues","7,449.3","","","8,284.9","","","8,583.5","","","(10.1)","","","(3.5)"],["Investment gains (losses):"],["Realized from actual transactions and impairments","(21.4)","","","62.2","","","6.9"],["Realized from pending sale of mortgage insurance business","(45.6)","","","\u2014","","","\u2014"],["Unrealized from changes in fair value of equity securities","(123.9)","","","(263.4)","","","751.1"],["Total investment gains (losses)","(190.9)","","","(201.1)","","","758.0"],["Total revenues","7,258.3","","","8,083.7","","","9,341.6"],["Operating expenses:"],["Loss and loss adjustment expenses","2,596.6","","","2,440.2","","","2,420.9","","","6.4","","","0.8"],["Sales and general expenses","3,843.6","","","4,719.2","","","4,942.3","","","(18.6)","","","(4.5)"],["Interest and other charges","70.5","","","66.7","","","56.2","","","5.7","","","18.7"],["Total operating expenses","6,510.8","","","7,226.3","","","7,419.5","","","(9.9)","%","","(2.6)","%"],["Pretax income","747.4","","","857.4","","","1,922.1"],["Income taxes","148.7","","","170.9","","","387.7"],["Net income","$","598.6","","","$","686.4","","","$","1,534.3"],["COMMON STOCK STATISTICS:"],["Components of net income per share:"],["Basic net income excluding investment gains (losses)","$","2.65","","","$","2.80","","","$","3.10","","","(5.4)","%","","(9.7)","%"],["Net investment gains (losses):"],["Realized investment gains (losses)","(0.19)","","","0.17","","","0.02"],["Unrealized from changes in fair value of equity securities","(0.34)","","","(0.69)","","","1.96"],["Basic net income","$","2.12","","","$","2.28","","","$","5.08"],["Diluted net income excluding investment gains (losses)","$","2.63","","","$","2.79","","","$","3.08","","","(5.7)","%","","(9.4)","%"],["Net investment gains (losses):"],["Realized investment gains (losses)","(0.19)","","","0.16","","","0.02"],["Unrealized from changes in fair value of equity securities","(0.34)","","","(0.69)","","","1.95"],["Diluted net income","$","2.10","","","$","2.26","","","$","5.05"],["Cash dividends on common stock","$","0.980","","","$","1.920","","","$","2.380"]]
[[/GREPCENT_TABLE]]

The information presented in the following table highlights the most meaningful indicators of ORI's segmented and consolidated financial performance. The information underscores the performance of the Company's underwriting subsidiaries, as well as the sound investment of their capital and underwriting cash flows.

26

[[GREPCENT_TABLE]]
[["","","","Sources of Consolidated Income"],["","","","","","2023","","2022"],["Years Ended December 31:","","","2023","","2022","","2021","","vs. 2022","","vs. 2021"],["Net premiums and fees earned:"],["General Insurance","","","$","4,119.2","","","$","3,808.6","","","$","3,555.5","","","8.2","%","","7.1","%"],["Title Insurance","","","2,562.8","","","3,833.8","","","4,404.3","","","(33.2)","","","(13.0)"],["RFIG Run-off","","","16.4","","","23.2","","","32.6","","","(29.2)","","","(28.9)"],["Corporate & Other","","","9.1","","","9.6","","","11.0","","","(4.9)","","","(12.3)"],["Consolidated","","","$","6,707.7","","","$","7,675.3","","","$","8,003.6","","","(12.6)","%","","(4.1)","%"],["Underwriting and related services income (loss):"],["General Insurance","","","$","406.0","","","$","400.9","","","$","311.4","","","1.3","%","","28.7","%"],["Title Insurance","","","75.4","","","261.3","","","474.0","","","(71.1)","","","(44.9)"],["RFIG Run-off","","","14.9","","","28.4","","","21.3","","","(47.7)","","","33.3"],["Corporate & Other","","","(65.8)","","","(24.9)","","","(20.9)","","","(163.2)","","","(19.3)"],["Consolidated","","","$","430.6","","","$","665.8","","","$","785.9","","","(35.3)","%","","(15.3)","%"],["Consolidated underwriting ratio:"],["Loss ratio:"],["Current year","","","43.3","%","","35.5","%","","32.9","%"],["Prior years","","","(4.6)","","","(3.7)","","","(2.7)"],["Total","","","38.7","","","31.8","","","30.2"],["Expense ratio","","","53.9","","","59.2","","","59.7"],["Combined ratio","","","92.6","%","","91.0","%","","89.9","%"],["Net investment income:"],["General Insurance","","","$","462.7","","","$","358.0","","","$","342.4","","","29.3","%","","4.5","%"],["Title Insurance","","","57.0","","","47.9","","","43.8","","","18.9","","","9.4"],["RFIG Run-off","","","6.3","","","6.7","","","11.4","","","(6.8)","","","(41.1)"],["Corporate & Other","","","52.2","","","46.8","","","36.5","","","11.5","","","28.1"],["Consolidated","","","$","578.3","","","$","459.5","","","$","434.3","","","25.8","%","","5.8","%"],["Interest and other charges (credits):"],["General Insurance","","","$","80.9","","","$","69.1","","","$","64.2"],["Title Insurance","","","(1.0)","","","0.4","","","2.1"],["Corporate & Other (a)","","","(9.3)","","","(2.8)","","","(10.1)"],["Consolidated","","","$","70.5","","","$","66.7","","","$","56.2","","","5.7","%","","18.7","%"],["Segmented and consolidated pretax income"],["(loss) excluding investment gains (losses):"],["General Insurance","","","$","787.8","","","$","689.8","","","$","589.6","","","14.2","%","","17.0","%"],["Title Insurance","","","133.5","","","308.8","","","515.7","","","(56.7)","","","(40.1)"],["RFIG Run-off","","","21.2","","","35.2","","","32.8","","","(39.9)","","","7.3"],["Corporate & Other","","","(4.2)","","","24.6","","","25.7","","","(117.3)","","","(4.3)"],["Consolidated","","","938.4","","","1,058.6","","","1,164.0","","","(11.4)","%","","(9.1)","%"],["Income taxes on above","","","188.8","","","213.4","","","228.1"],["Net income excluding investment"],["gains (losses)","","","749.5","","","845.1","","","935.9","","","(11.3)","%","","(9.7)","%"],["Consolidated pretax investment gains (losses):"],["Realized from actual transactions and impairments","","(21.4)","","","62.2","","","6.9"],["Realized from pending sale of mortgage insurance business","","(45.6)","","","\u2014","","","\u2014"],["Unrealized from changes in fair value of equity securities","","(123.9)","","","(263.4)","","","751.1"],["Total","","(190.9)","","","(201.1)","","","758.0"],["Income taxes (credits) on above","","(40.0)","","","(42.5)","","","159.6"],["Net of tax investment gains (losses)","","","(150.8)","","","(158.6)","","","598.4"],["Net income","","","$","598.6","","","$","686.4","","","$","1,534.3"]]
[[/GREPCENT_TABLE]]

(a) Includes consolidation/elimination entries.

27

General Insurance Segment Operating Results

[[GREPCENT_TABLE]]
[["","","","","","","","","","% Change"],["","","","","","","","","","2023","","2022"],["Years Ended December 31:","","2023","","2022","","2021","","vs. 2022","","vs. 2021"],["Net premiums written","","$","4,356.3","","","$","3,978.2","","","$","3,680.9","","","9.5","%","","8.1","%"],["Net premiums earned","","4,119.2","","","3,808.6","","","3,555.5","","","8.2","","","7.1"],["Net investment income","","462.7","","","358.0","","","342.4","","","29.3","","","4.5"],["Other income","","162.2","","","148.9","","","144.5","","","8.9","","","3.1"],["Operating revenues","","4,744.3","","","4,315.6","","","4,042.5","","","9.9","","","6.8"],["Loss and loss adjustment expenses","","2,553.3","","","2,364.6","","","2,303.1","","","8.0","","","2.7"],["Sales and general expenses","","1,322.2","","","1,192.0","","","1,085.4","","","10.9","","","9.8"],["Interest and other costs","","80.9","","","69.1","","","64.2","","","17.0","","","7.7"],["Operating expenses","","3,956.4","","","3,625.8","","","3,452.8","","","9.1","","","5.0"],["Segment pretax operating income","","$","787.8","","","$","689.8","","","$","589.6","","","14.2","%","","17.0","%"],["Loss ratio:"],["","Current year","","67.7","%","","67.2","%","","68.6","%"],["","Prior years","","(5.7)","","","(5.1)","","","(3.8)"],["","Total","","62.0","","","62.1","","","64.8"],["Expense ratio","","28.2","","","27.4","","","26.5"],["","Combined ratio","","90.2","%","","89.5","%","","91.3","%"]]
[[/GREPCENT_TABLE]]

General Insurance net premiums earned increased 8.2% in 2023, driven by a combination of premium rate increases, high renewal retention ratios, and new business production, including contributions from recently established underwriting subsidiaries. Premium growth occurred across most lines of coverage and was most pronounced within commercial auto, property and general liability, partially offset by declines in public D&O (included within financial indemnity) and home warranty. Commercial auto, general liability and property achieved strong rate increases while there were rate declines in public D&O and workers' compensation. Net investment income increased significantly for the year, driven largely by higher investment yields earned, and to a lesser extent, a higher invested asset base.

The reported loss ratio for General Insurance remained consistent in 2023 as compared to the prior year. Favorable development came predominantly from workers' compensation and commercial auto, partially offset by unfavorable development within general liability. Overall, the longer term trends in current year loss and expense ratios reflect a shift in the line of coverage mix. Investments in new products and geographies in recent years have diversified the General Insurance business, resulting in a shift in the line of coverage mix toward lines with lower current period loss ratios and higher expense ratios.

Together, these factors produced highly profitable combined ratios and strong pretax operating income for the periods reported. For General Insurance, we target combined ratios between 90% and 95% over a full underwriting cycle, recognizing that quarterly and annual ratios and trends may deviate from this range, particularly given the long claim payment patterns associated with the business.

28

Title Insurance Segment Operating Results

[[GREPCENT_TABLE]]
[["","","","","","","","","% Change"],["","","","","","","","","2023","","2022"],["Years Ended December 31:","2023","","2022","","2021","","vs. 2022","","vs. 2021"],["Net premiums and fees earned","$","2,562.8","","","$","3,833.8","","","$","4,404.3","","","(33.2)","%","","(13.0)","%"],["Net investment income","57.0","","","47.9","","","43.8","","","18.9","","","9.4"],["Other income","0.7","","","0.9","","","1.1","","","(15.4)","","","(18.2)"],["Operating revenues","2,620.6","","","3,882.7","","","4,449.3","","","(32.5)","","","(12.7)"],["Loss and loss adjustment expenses","48.7","","","89.1","","","112.9","","","(45.3)","","","(21.1)"],["Sales and general expenses","2,439.3","","","3,484.2","","","3,818.4","","","(30.0)","","","(8.8)"],["Interest and other costs","(1.0)","","","0.4","","","2.1","","","N/M","","(80.2)"],["Operating expenses","2,487.0","","","3,573.8","","","3,933.5","","","(30.4)","","","(9.1)"],["Segment pretax operating income","$","133.5","","","$","308.8","","","$","515.7","","","(56.7)","%","","(40.1)","%"],["Loss ratio:"],["","Current year","3.7","%","","3.6","%","","3.6","%"],["","Prior years","(1.8)","","","(1.3)","","","(1.0)"],["","Total","1.9","","","2.3","","","2.6"],["Expense ratio","95.2","","","90.9","","","86.7"],["","Combined ratio","97.1","%","","93.2","%","","89.3","%"]]
[[/GREPCENT_TABLE]]

Title Insurance net premiums and fees earned decreased by 33.2% in 2023. Both directly produced and agency produced revenues declined, driven by a continued drop in mortgage originations attributable to higher mortgage interest rates. Commercial premiums decreased commensurately, and represent 22% of premiums earned in 2023. Net investment income increased, reflecting higher investment yields earned partially offset by a lower invested asset base.

The Title Insurance loss ratio decreased reflecting higher levels of favorable development as a percentage of premium.

Expense ratios reflect the impact of a $17.2 state sales tax assessment paid and expensed in the fourth quarter of 2022 and subsequently recovered and taken into income in 2023. The assessment increased the 2022 expense ratio by 0.5 percentage points, and its recovery reduced the 2023 expense ratio by 0.7 percentage points. Excluding the impacts of the sales tax assessment, the expense ratio remain elevated, generally reflecting lower directly produced revenues that carry higher fixed expenses.

Together, these factors produced lower pretax operating income for the periods reported.

29

RFIG Run-off Segment Operating Results - Mortgage Insurance

[[GREPCENT_TABLE]]
[["","","","","","","","","","% Change"],["","","","","","","","","","2023","","2022"],["Years Ended December 31:","","2023","","2022","","2021","","vs. 2022","","vs. 2021"],["Net premiums earned","","$","16.4","","","$","23.2","","","$","32.6","","","(29.2)","%","","(28.9)","%"],["Net investment income","","6.3","","","6.7","","","11.4","","","(6.8)","","","(41.1)"],["Loss and loss adjustment expenses","","(11.0)","","","(17.5)","","","(1.7)","","","37.2","","N/M"],["Pretax operating income","","$","21.2","","","$","35.2","","","$","32.8","","","(39.9)","%","","7.3","%"],["Loss ratio:"],["","Current year","","91.4","%","","80.8","%","","62.2","%"],["","Prior years","","(158.3)","","","(156.3)","","","(67.5)"],["","Total","","(66.9)","","","(75.5)","","","(5.3)"],["Expense ratio","","76.5","","","53.0","","","39.9"],["","Combined ratio","","9.6","%","","(22.5)","%","","34.6","%"]]
[[/GREPCENT_TABLE]]

Given the volatility inherent with a lack of scale, RFIG Run-off is susceptible to produce highly variable results which have recently benefited significantly from favorable loss reserve development. Pretax operating income reflects the continuing drop in net earned premiums offset by favorable loss reserve development from higher levels of cure rates on reported defaults. Extraordinary dividends of $110.0 were paid to the parent company during 2023.

During the fourth quarter, a definitive agreement was reached to sell the mortgage insurance business to Arch U.S. MI Holdings Inc., a subsidiary of Arch Capital Group Ltd. The transaction is subject to regulatory approval and is expected to close in the first half of 2024. An estimated loss on the pending sale, inclusive of transaction costs, totaling $45.6 was reflected as a realized investment loss during the fourth quarter. See Note 2 in the Notes to Consolidated Financial Statements for further discussion.

30

Corporate & Other Operating Results

[[GREPCENT_TABLE]]
[["","","","","","","","","","% Change"],["","","","","","","","","","2023","","2022"],["Years Ended December 31:","","2023","","2022","","2021","","vs. 2022","","vs. 2021"],["Net life and accident premiums earned","","$","9.1","","","$","9.6","","","$","11.0","","","(4.9)","%","","(12.3)","%"],["Net investment income","","52.2","","","46.8","","","36.5","","","11.5","","","28.1"],["Operating revenues","","61.4","","","56.5","","","47.5","","","8.7","","","19.0"],["Benefits and loss and loss adjustment expenses","5.5","","","4.0","","","6.5","","","36.7","","","(38.1)"],["Insurance expenses","","3.5","","","3.3","","","3.4","","","5.7","","","(4.1)"],["Corporate, interest and other expenses - net","","56.6","","","24.4","","","11.6","","","131.7","","109.7"],["Operating expenses","","65.7","","","31.8","","","21.7","","","106.3","","46.6"],["Corporate & Other pretax operating income (loss)","$","(4.2)","","","$","24.6","","","$","25.7","","","(117.3)","%","","(4.3)","%"]]
[[/GREPCENT_TABLE]]

This segment includes a small life and accident insurance business and the net costs associated with the parent holding company and several internal corporate services subsidiaries. The segment tends to produce highly variable results stemming from volatility inherent from the lack of scale. Investment income in both 2023 and 2022 reflects the impact of higher investment yields earned. Whereas the average invested asset base was lower in 2023 due to the return of capital to shareholders, the 2022 invested asset base was higher, reflecting the proceeds from the $650 debt issuance in late 2021. Corporate net operating expenses in 2023 reflect higher personnel related costs and a one-time charge of $10.7 relating to changes in the structure of a company benefit plan. Interest expense in both 2023 and 2022 increased over 2021 due to the aforementioned debt issuance.

Summary Consolidated Balance Sheet

[[GREPCENT_TABLE]]
[["","","","December 31,"],["","","","2023","","2022"],["Assets:"],["Cash and fixed income securities","","","$","13,375.4","","","$","12,688.7"],["Equity securities","","","2,660.8","","","3,220.9"],["Other","","","151.3","","","138.0"],["Total investments, cash and accrued investment income","","16,187.6","","","16,047.7"],["Accounts and notes receivable","","","2,201.4","","","1,927.5"],["Federal income tax assets","","","21.8","","","15.7"],["Reinsurance recoverable","","","5,951.4","","","5,588.0"],["Deferred policy acquisition costs","","","417.8","","","382.5"],["Other assets","","","1,721.2","","","1,197.9"],["Total assets","","","$","26,501.4","","","$","25,159.4"],["Liabilities and Shareholders' Equity:"],["Policy liabilities","","","$","3,193.1","","","$","2,970.0"],["Loss and loss adjustment expense reserves","","","12,538.2","","","12,221.5"],["Federal income tax liabilities","","","105.6","","","42.7"],["Reinsurance balances and funds held","","","1,380.9","","","1,079.4"],["Debt","","","1,591.2","","","1,597.0"],["Other liabilities","","","1,281.4","","","1,075.3"],["Total liabilities","","","20,090.7","","","18,986.2"],["Shareholders' equity","","","6,410.7","","","6,173.2"],["Total liabilities and shareholders' equity","","","$","26,501.4","","","$","25,159.4"]]
[[/GREPCENT_TABLE]]

31

Cash, Invested Assets, and Shareholders' Equity

[[GREPCENT_TABLE]]
[["","","","","","","","","","","% Change"],["","","","","December 31,","","Dec. 2023 /","","Dec. 2022 /"],["As of December 31:","2023","","2022","","2021","","Dec. 2022","","Dec. 2021"],["Cash and invested assets:"],["","Cash, fixed income securities, and other","$","13,526.7","","","$","12,826.7","","","$","11,516.1","","","5.5","%","","11.4","%"],["","Equity securities","2,660.8","","","3,220.9","","","5,302.8","","","(17.4)","","","(39.3)"],["","Total per balance sheet","$","16,187.6","","","$","16,047.7","","","$","16,818.9","","","0.9","%","","(4.6)","%"],["","Total at cost","$","15,164.4","","","$","15,365.7","","","$","15,045.8","","","(1.3)","%","","2.1","%"],["Composition of shareholders' equity per share:"],["","Equity before items below","$","20.51","","","$","19.43","","","$","18.51","","","5.6","%","","5.0","%"],["","Unrealized investment gains (losses) and other"],["","","accumulated comprehensive income (loss)","2.80","","","1.64","","","4.26"],["","","","Total","$","23.31","","","$","21.07","","","$","22.77","","","10.6","%","","(7.5)","%"],["Segmented composition of"],["shareholders' equity per share:"],["","Excluding RFIG Run-off segment","$","22.72","","","$","20.17","","","$","21.48","","","12.6","%","","(6.1)","%"],["","RFIG Run-off segment","0.59","","","0.90","","","1.29"],["","","","Consolidated total","$","23.31","","","$","21.07","","","$","22.77","","","10.6","%","","(7.5)","%"]]
[[/GREPCENT_TABLE]]

As of December 31, 2023, the consolidated investment portfolio reflected an allocation of approximately 83% to fixed income (bonds and notes) and short-term investments, and 17% to equity securities (common stock). Our investment management process remains focused on retaining quality investments that produce consistent streams of investment income, and we continue to evaluate the investment portfolio mix in light of the current interest rate environment. During 2022, management rebalanced the investment portfolio, thereby reducing its equity holdings and reinvesting the proceeds in fixed income securities. The fixed income portfolio continues to be the anchor for the insurance underwriting subsidiaries' obligations. The maturities of our fixed income assets are matched to the expected liabilities for claim payment obligations to policyholders and their beneficiaries. Our equity portfolio consists of high-quality common stocks of U.S. companies with long-term records of reasonable earnings growth and steadily increasing dividends.

Old Republic's investment portfolio is directed in consideration of enterprise-wide risk management objectives, intended to ensure solid funding of our insurance underwriting subsidiaries' obligations to policyholders and their beneficiaries, as well as the long-term stability of these subsidiaries’ capital base. For these reasons, the investment portfolio does not contain high risk or illiquid asset classes and has extremely limited exposure to collateralized debt obligations (CDO), credit default and interest rate swaps, hybrid securities, asset-backed securities (ABS), guaranteed investment contracts (GIC), structured investment vehicles (SIV), auction rate variable short-term securities, limited partnerships, derivatives, hedge funds or private equity investments. Moreover, the Company does not engage in hedging or securities lending transactions, nor does it invest in securities whose values are predicated on non-regulated financial instruments exhibiting amorphous or unfunded counter-party risk attributes. Pursuant to our enterprise risk management guidelines and controls, we perform regular stress tests of our investment portfolio to gain reasonable assurance that periodic downdrafts in market prices do not seriously undermine our financial strength and the long-term continuity and prospects of our insurance underwriting subsidiaries.

32

Changes in shareholders' equity per share are reflected in the following table. As shown, these resulted mostly from net income excluding net investment gains (losses), realized and unrealized investment gains (losses), and dividend payments to shareholders.

[[GREPCENT_TABLE]]
[["","Shareholders' Equity Per Share"],["","December 31,"],["","2023","","2022","","2021"],["Beginning balance","$","21.07","","","$","22.77","","","$","20.76"],["Changes in shareholders' equity:"],["Net income excluding net investment gains (losses)","2.65","","","2.80","","","3.10"],["Net of tax realized investment gains (losses)","(0.19)","","","0.17","","","0.02"],["Net of tax unrealized investment gains (losses):"],["Fixed income securities","1.31","","","(2.18)","","","(0.97)"],["Equity securities","(0.34)","","","(0.69)","","","1.96"],["Total net of tax realized and unrealized"],["investment gains (losses)","0.78","","","(2.70)","","","1.01"],["Cash dividends","(0.98)","","","(1.92)","","","(2.38)"],["Other - net","(0.21)","","","0.12","","","0.28"],["Net change","2.24","","","(1.70)","","","2.01"],["Ending balance","$","23.31","","","$","21.07","","","$","22.77"],["Percentage change for the period","10.6","%","","(7.5)","%","","9.7","%"],["Percentage change for the period, inclusive of cash dividends","15.3","%","","1.0","%","","21.1","%"]]
[[/GREPCENT_TABLE]]

33

DETAILED MANAGEMENT ANALYSIS

This section of the Management Analysis of Financial Position and Results of Operations is additive to and should be read in conjunction with the Executive Summary which precedes it.

RESULTS OF OPERATIONS

Consolidated Overview

Premiums & Fees

The major sources of Old Republic's consolidated earned premiums and fees for the periods shown were as follows:

[[GREPCENT_TABLE]]
[["","","Net Earned Premiums and Fees"],["Years Ended December 31:","","2023","","2022","","2021"],["General Insurance","","$","4,119.2","","","$","3,808.6","","","$","3,555.5"],["Title Insurance","","2,562.8","","","3,833.8","","","4,404.3"],["RFIG Run-off","","16.4","","","23.2","","","32.6"],["Corporate & Other","","9.1","","","9.6","","","11.0"],["Total","","$","6,707.7","","","$","7,675.3","","","$","8,003.6"],["Percentage change from prior period","","(12.6)","%","","(4.1)","%","","18.8","%"]]
[[/GREPCENT_TABLE]]

For 2023, consolidated net premiums and fees earned declined 12.6%. The continued decline in Title Insurance net premiums and fees was partially offset by strong growth in General Insurance. For 2022, consolidated net premiums and fees earned declined 4.1%, reflecting a decrease in Title Insurance of 13.0%, offset by growth in General Insurance of 7.1%.

Net Investment Income

The following tables reflect the invested asset bases as of the indicated dates, the investment income earned and resulting yields on such assets. Because the Company can exercise little control over fair values, management evaluates yields on the basis of investment income earned in relation to the cost of the underlying invested assets.

[[GREPCENT_TABLE]]
[["","Invested Assets at Cost","","Fair Value Adjust- ment","","Invested Assets at Fair Value"],["","General Insurance","","Title Insurance","","RFIG Run-off (a)","","Corporate & Other","","Total"],["As of December 31:"],["2022","$","11,825.2","","","$","1,512.4","","","$","341.6","","","$","1,500.1","","","$","15,179.4","","","$","680.4","","","$","15,859.9"],["2023","$","12,030.5","","","$","1,350.2","","","$","25.2","","","$","1,438.5","","","$","14,844.5","","","$","1,023.1","","","$","15,867.7"]]
[[/GREPCENT_TABLE]]

__________

(a)    At December 31, 2023, the Company classified its RFIG Run-off mortgage insurance business as held-for-sale in its consolidated balance sheet. See Note 2 in the Notes to Consolidated Financial Statements for further discussion.

[[GREPCENT_TABLE]]
[["","Net Investment Income","","Yield at"],["","General Insurance","","Title Insurance","","RFIG Run-off","","Corporate & Other","","Total","","Cost","","Fair Value"],["Years Ended"],["December 31:"],["2021","$","342.4","","","$","43.8","","","$","11.4","","","$","36.5","","","$","434.3","","","3.02","%","","2.72","%"],["2022","358.0","","","47.9","","","6.7","","","46.8","","","459.5","","","3.07","","","2.83"],["2023","$","462.7","","","$","57.0","","","$","6.3","","","$","52.2","","","$","578.3","","","3.82","%","","3.62","%"]]
[[/GREPCENT_TABLE]]

Net investment income increased 25.8% in 2023, driven by higher investment yields earned. Net investment income increased by 5.8% in 2022, reflecting growth in the invested asset base and higher investment yields earned.

34

Loss and Loss Adjustment Expenses

Total loss costs are affected by the amount of paid claims and the adequacy of reserve estimates established for current and prior years' claim occurrences at each balance sheet date.

The following table shows a breakdown of gross and net of reinsurance loss reserve estimates for major types of insurance coverages as of December 31, 2023 and 2022:

[[GREPCENT_TABLE]]
[["","","","","","Loss and Loss Adjustment Expense Reserves"],["December 31:","","2023","","2022"],["","","","","","Gross","","Net","","Gross","","Net"],["Workers' compensation","","$","4,723.5","","","$","2,725.3","","","$","4,855.2","","","$","2,879.6"],["Commercial auto","","3,492.8","","","1,808.4","","","3,233.9","","","1,747.3"],["General liability","","1,518.8","","","705.5","","","1,427.3","","","641.9"],["Other coverages","","1,890.3","","","1,412.5","","","1,707.8","","","1,260.0"],["Unallocated loss adjustment expense reserves","","303.3","","","303.3","","","296.9","","","295.8"],["","","Total general insurance reserves","","11,928.9","","","6,955.2","","","11,521.2","","","6,824.8"],["Title","","598.5","","","598.5","","","612.8","","","612.8"],["RFIG Run-off (a)","","\u2014","","","\u2014","","","77.9","","","77.9"],["Life and accident","","10.7","","","6.6","","","9.4","","","6.3"],["","","Total loss and loss adjustment expense reserves","","$","12,538.2","","","$","7,560.4","","","$","12,221.5","","","$","7,521.9"],["Asbestosis and environmental loss reserves included"],["","in the above general insurance reserves:"],["","","Amount","","$","130.6","","","$","87.5","","","$","121.3","","","$","84.0"],["","","% of total general insurance reserves","","1.1","%","","1.3","%","","1.1","%","","1.2","%"]]
[[/GREPCENT_TABLE]]

__________

(a)    RFIG Run-off loss and loss adjustment expense reserves of $54.9 on both a gross and net basis have been classified as held-for-sale as of December 31, 2023. See Note 2 in the Notes to Consolidated Financial Statements for further discussion.

A summary of changes in aggregate reserves for loss and loss adjustment expenses is included in Note 5 in the Notes to Consolidated Financial Statements.

The percentage of net loss and loss adjustment expenses incurred as a percentage of premiums and related fee revenues of the Company's three reportable segments and for consolidated operations were as follows:

[[GREPCENT_TABLE]]
[["Years Ended December 31:","","2023","","2022","","2021"],["General Insurance","","62.0","%","","62.1","%","","64.8","%"],["Title Insurance","","1.9","","","2.3","","","2.6"],["RFIG Run-off","","(66.9)","","","(75.5)","","","(5.3)"],["Consolidated loss ratio","","38.7","%","","31.8","%","","30.2","%"],["Reconciliation of consolidated loss ratio:"],["Provision for insured events of the current year","","43.3","%","","35.5","%","","32.9","%"],["Change in provision for insured events of prior years:"],["Net favorable development","","(4.6)","","","(3.7)","","","(2.7)"],["Consolidated loss ratio","","38.7","%","","31.8","%","","30.2","%"]]
[[/GREPCENT_TABLE]]

The consolidated loss ratio reflects the changing contributions of each segment to consolidated results, and this ratio's variances within each segment. The increase in the 2023 consolidated loss and loss adjustment expense ratio is primarily due to a change in mix commensurate with the drop in Title Insurance premiums which carry lower loss and loss adjustment expense ratios.

For the three most recent calendar years, the above table indicates that the one-year development of consolidated reserves at the beginning of each year produced favorable developments in 2023, 2022, and 2021, which on average decreased the consolidated loss ratio by 3.7% percentage points. Both General Insurance and Title Insurance experienced increased levels of favorable development in relation to earned premiums in 2023. Favorable development in General Insurance continued to be experienced within workers’ compensation and commercial auto lines of coverage. The increase in favorable development as a percentage of net premiums and fees earned experienced within Title Insurance was impacted by declining premium levels in 2023.

35

Management believes that its overall reserving practices have been consistently applied over many years, and that its aggregate net reserves have generally resulted in reasonable approximations of the ultimate net costs of losses incurred. Management maintains hold periods that vary primarily by line of business. However, reserves may be increased within a holding period when the initial expected loss ratio is believed to be inadequate. Conversely, in certain cases, reserves may be released within a holding period when the redundancies are expected to exceed the upper end of the actuarially determined range. No representation is made nor is any guaranty given that ultimate net losses and related costs will not develop in future years to be significantly greater or lower than currently established reserve estimates. In management's opinion, such changes in net losses and related costs are not likely to have a material effect on the Company's consolidated financial position, although it could materially affect its consolidated results of operations for any one annual or interim reporting period. See further discussion in this Annual Report on Form 10-K under Item 1A - Risk Factors.

Underwriting Acquisition and Other Expenses

The following table sets forth the expense ratios registered by each business segment and in consolidation for the periods shown:

[[GREPCENT_TABLE]]
[["Years Ended December 31:","","2023","","2022","","2021"],["General Insurance","","28.2","%","","27.4","%","","26.5","%"],["Title Insurance","","95.2","","","90.9","","","86.7"],["RFIG Run-off","","76.5","","","53.0","","","39.9"],["Consolidated","","53.9","%","","59.2","%","","59.7","%"]]
[[/GREPCENT_TABLE]]

Variations in the Company's consolidated expense ratios reflect a continually changing mix of coverages sold and costs of producing business. To a significant degree, expense ratios for both the General and Title Insurance segments are mostly reflective of variable costs, such as commissions or similar charges, that rise or decline along with corresponding changes in premium and fee income. General operating expenses are routinely subject to timing, and can fluctuate with line of coverage mix, as well as investments in business expansion and information technology. The decrease in the 2023 consolidated expense ratio is primarily due to a change in mix commensurate with the drop in Title Insurance premiums which carry a higher expense ratio. The long term trends in the General Insurance expense ratio reflect a shift in line of coverage mix. Investments in new products and geographies in recent years have diversified the General Insurance business, resulting in a shift in the line of coverage mix toward lines with lower current period loss ratios and higher expense ratios. The 2023 and 2022 Title Insurance expense ratios were elevated compared to 2021, generally reflecting lower directly produced revenues that carry higher fixed expenses.

Combined Ratios

The combined ratios of the above summarized net loss and loss adjustment expenses and underwriting expenses are as follows:

[[GREPCENT_TABLE]]
[["Years Ended December 31:","","2023","","2022","","2021"],["General Insurance","","90.2","%","","89.5","%","","91.3","%"],["Title Insurance","","97.1","","","93.2","","","89.3"],["RFIG Run-off","","9.6","","","(22.5)","","","34.6"],["Consolidated","","92.6","%","","91.0","%","","89.9","%"]]
[[/GREPCENT_TABLE]]

Net Investment Gains (Losses)

The Company's investment policies are designed to produce a stable source of income from interest and dividends, protection of capital, and provide sufficient liquidity to meet insurance underwriting and other obligations as they become payable in the future.

The following table reflects the composition of net investment gains or losses for the periods shown.

36

[[GREPCENT_TABLE]]
[["Years Ended December 31:","","2023","","2022","","2021"],["Realized investment gains (losses) from actual transactions:"],["Fixed income","","$","(180.7)","","","$","(187.6)","","","$","1.5"],["Equity securities and other","","165.5","","","373.3","","","5.3"],["Total","","(15.2)","","","185.7","","","6.9"],["Impairment losses","","(51.8)","","","(123.5)","","","\u2014"],["Unrealized gains (losses) from changes in fair value of equity securities","","(123.9)","","","(263.4)","","","751.1"],["Total investment gains (losses)","","$","(190.9)","","","$","(201.1)","","","$","758.0"]]
[[/GREPCENT_TABLE]]

Dispositions of fixed income securities from scheduled maturities and early calls were 48.3%, 49.1%, and 80.7% of total fixed income dispositions occurring in 2023, 2022, and 2021, respectively. Realized gain (loss) activity in 2023 was primarily the result of tax planning considerations in conjunction with the sales of securities to fund the Company's repurchase program. The 2023 impairment charge primarily reflects an estimated loss of $45.6 on the pending sale of the RFIG Run-off mortgage insurance business. To a lesser degree, 2023 impairment losses were also recorded on fixed income securities that the Company intended to and subsequently disposed of to facilitate certain structural changes to a deferred compensation plan, as well as a small credit loss. During 2022, the Company rebalanced the investment portfolio by reducing equity security holdings and increasing fixed income holdings as reinvestment rates began to materially improve. Additionally, 2022 includes investment impairment charges of $123.5 on fixed income securities, which management intended to and subsequently disposed of during the year, driven primarily by tax planning considerations. The realization of investment gains or losses can be highly discretionary and can be affected by such factors as the timing of individual securities sales, the recording of estimated losses from write-downs of impaired securities, tax-planning and tax-rate change considerations, and modifications of investment management judgments regarding the direction of securities markets or the future prospects of individual investees or industry sectors.

Income Taxes

The effective consolidated income tax rates were 19.9%, 19.9%, and 20.2% in 2023, 2022, and 2021, respectively. The rates for each year reflect primarily the varying proportions of pretax operating income derived from partially tax preferred investment income (principally tax-exempt interest and dividend income).

Segment Overview

General Insurance

[[GREPCENT_TABLE]]
[["Summary Operating Results"],["","","","","","","","","","% Change"],["","","","","","","","","","2023","","2022"],["Years Ended December 31:","","2023","","2022","","2021","","vs. 2022","","vs. 2021"],["Net premiums earned","","$","4,119.2","","","$","3,808.6","","","$","3,555.5","","","8.2","%","","7.1","%"],["Loss and loss adjustment expenses","","2,553.3","","","2,364.6","","","2,303.1","","","8.0","","","2.7"],["Sales and general expenses","","1,322.2","","","1,192.0","","","1,085.4","","","10.9","","","9.8"],["Segment pretax operating income","","$","787.8","","","$","689.8","","","$","589.6","","","14.2","%","","17.0","%"],["Loss ratio:"],["","Current year","","67.7","%","","67.2","%","","68.6","%"],["","Prior years","","(5.7)","","","(5.1)","","","(3.8)"],["","Total","","62.0","","","62.1","","","64.8"],["Expense ratio","","28.2","","","27.4","","","26.5"],["","Combined ratio","","90.2","%","","89.5","%","","91.3","%"]]
[[/GREPCENT_TABLE]]

Premiums & Fees

The percentage of net premiums earned for major insurance coverages in the General Insurance segment was as follows:

37

[[GREPCENT_TABLE]]
[["","","General Insurance Net Earned Premiums by Type of Coverage"],["Years Ended December 31:","","2023","","2022","","2021"],["Commercial auto","","41.0","%","","39.5","%","","39.6","%"],["Workers' compensation","","19.5","","","21.3","","","21.9"],["Property","","11.5","","","9.8","","","9.7"],["Financial indemnity","","8.4","","","10.3","","","9.7"],["Home and auto warranty","","7.6","","","8.7","","","9.5"],["General liability","","6.1","","","5.2","","","5.2"],["Other coverages","","5.9","%","","5.2","%","","4.4","%"]]
[[/GREPCENT_TABLE]]

General Insurance net premiums earned increased 8.2% for 2023, driven by a combination of premium rate increases, high renewal retention ratios, and new business production, including contributions from recently established underwriting subsidiaries. Premium growth occurred across most lines of coverage and was most pronounced within commercial auto, property and general liability, partially offset by declines in public D&O (included within financial indemnity) and home warranty. Commercial auto, general liability and property achieved strong rate increases while there were rate declines in public D&O and workers' compensation. General Insurance net premiums earned increased 7.1% for 2022, driven by growth in most lines of coverage, in particular, commercial auto. Premium rate increases for most lines of coverages, high renewal retention ratios, and new business production all contributed.

Loss and Loss Adjustment Expenses

The percentage of net loss and loss adjustment expenses measured against premiums earned by major types of insurance coverage were as follows:

[[GREPCENT_TABLE]]
[["","","General Insurance Loss Ratios by Type of Coverage"],["Years Ended December 31:","","2023","","2022","","2021"],["Commercial auto","","71.5","%","","66.6","%","","71.5","%"],["Workers' compensation","","41.4","","","45.9","","","58.9"],["Property","","61.0","","","65.4","","","59.3"],["Financial indemnity","","48.2","","","67.0","","","53.9"],["Home and auto warranty","","65.5","","","66.9","","","67.9"],["General liability","","76.0","","","71.6","","","64.1"],["Other coverages","","65.9","","","60.4","","","63.8"],["All coverages","","62.0","%","","62.1","%","","64.8","%"]]
[[/GREPCENT_TABLE]]

Overall, the longer term trends in current year loss and expense ratios reflect a shift in the line of coverage mix. Investments in new products and geographies in recent years have diversified the General Insurance business, resulting in a shift in the line of coverage mix toward lines with lower current period loss ratios and higher expense ratios. The General Insurance loss ratio has improved in recent years due to higher levels of favorable development and improving current year loss ratios. Favorable development is predominantly from workers' compensation and commercial auto, partially offset by unfavorable development within general liability in 2023. The property loss ratio was elevated in 2022 primarily due to the impacts of Hurricane Ian, impacted by reinstatement premiums of $16.6 and losses based on the Company's estimated $10.0 net retention. The financial indemnity loss ratio in 2022 reflected an elevated level of security class action claims on public company D&O insurance from accident years 2018 and 2019.

Unfavorable asbestosis and environmental (A&E) claim developments included in general liability coverages above are not material in any of the periods presented, and are typically attributable to periodic re-evaluations of such reserves as well as subsequent reclassifications of other coverages' reserves, most often workers' compensation, deemed assignable to A&E category of losses. Except for a small portion that emanates from ongoing primary insurance operations, a large majority of the A&E claim reserves posted by Old Republic stem mainly from its participations in assumed reinsurance treaties and insurance pools which were discontinued during the 1980's and have since been in run-off status. With respect to the primary portion of gross A&E reserves, Old Republic administers the related claims through its claims personnel as well as outside attorneys, and posted reserves reflect its best estimates of ultimate claim costs. Claims administration for the assumed portion of the Company's A&E exposures is handled by the claims departments of unrelated primary or ceding reinsurance companies. While the Company performs periodic reviews of certain claim files managed by third parties, the overall A&E reserves it establishes respond to the paid claim and case reserve activity reported to the Company as well as available industry statistical data such as survival ratios. Such ratios represent the number of years' average paid losses for the three or five most recent calendar years that are encompassed by an insurer's A&E reserve level at any point in time. According to this appraisal of an insurer's A&E loss reserve level, Old Republic's average five-year paid loss survival ratios stood at 6.6 years (gross) and 7.4 years (net of reinsurance) as of December 31, 2023, and 6.4 years (gross) and 7.6 years (net of reinsurance) as of December 31, 2022. Fluctuations in this ratio between years can be caused by the inconsistent payout patterns associated with these types of claims. For the five years ended December 31, 2023, incurred A&E

38

claims and related loss settlement costs have averaged 0.6% of average annual General Insurance loss and loss adjustment expenses.

A summary of reserve activity, including estimates for IBNR, relating to A&E claims at December 31, 2023 and 2022 is as follows:

[[GREPCENT_TABLE]]
[["December 31:","","2023","","2022"],["","","Gross","","Net","","Gross","","Net"],["Asbestosis:"],["Reserves at beginning of year","","$","98.3","","","$","66.7","","","$","85.0","","","$","54.9"],["Loss and loss expenses incurred","","27.9","","","16.9","","","29.0","","","23.5"],["Loss and loss adjustment expenses paid","","17.0","","","13.4","","","15.7","","","11.7"],["Reserves at end of year","","109.2","","","70.2","","","98.3","","","66.7"],["Environmental:"],["Reserves at beginning of year","","23.0","","","17.3","","","33.0","","","22.3"],["Loss and loss expenses incurred","","0.4","","","1.4","","","(4.9)","","","(1.8)"],["Loss and loss adjustment expenses paid","","2.0","","","1.5","","","5.0","","","3.1"],["Reserves at end of year","","21.4","","","17.3","","","23.0","","","17.3"],["Total asbestosis and environmental reserves","","$","130.6","","","$","87.5","","","$","121.3","","","$","84.0"]]
[[/GREPCENT_TABLE]]

Sales and General Expenses

Recent years' expense ratios reflect a shift in line of coverage mix. Investments in new products and geographies in recent years have diversified the General Insurance business, resulting in a shift in the line of coverage mix toward lines with lower current period loss ratios and higher expense ratios. Higher personnel and information technology costs in 2023 also contributed to the higher expense ratios.

Title Insurance

[[GREPCENT_TABLE]]
[["Summary Operating Results"],["","","","","","","","","% Change"],["","","","","","","","","2023","","2022"],["Years Ended December 31:","2023","","2022","","2021","","vs. 2022","","vs. 2021"],["Net premiums and fees earned","$","2,562.8","","","$","3,833.8","","","$","4,404.3","","","(33.2)","%","","(13.0)","%"],["Loss and loss adjustment expenses","48.7","","","89.1","","","112.9","","","(45.3)","","","(21.1)"],["Sales and general expenses","2,439.3","","","3,484.2","","","3,818.4","","","(30.0)","","","(8.8)"],["Segment pretax operating income","$","133.5","","","$","308.8","","","$","515.7","","","(56.7)","%","","(40.1)","%"],["Loss ratio:"],["","Current year","3.7","%","","3.6","%","","3.6","%"],["","Prior years","(1.8)","","","(1.3)","","","(1.0)"],["","Total","1.9","","","2.3","","","2.6"],["Expense ratio","95.2","","","90.9","","","86.7"],["","Combined ratio","97.1","%","","93.2","%","","89.3","%"]]
[[/GREPCENT_TABLE]]

Premiums & Fees

Title Insurance premium and fee revenues stemming from the Company's direct operations (which include branch offices of its title insurers and wholly-owned agency subsidiaries) are generally recognized as income at the transaction closing date which approximates the policy effective date. Fee income related to escrow and other closing services is recognized when the related services have been performed and completed. Title premium and fee revenues produced by independent title agents are recognized upon receipt, rather than making estimates that could be subject to significant variance from actual premium and fee production. Such receipts can result in a three to four month lag relative to the effective date of the underlying title policy and are offset concurrently by production expenses and loss reserve provisions.

39

The following table shows the percentage distribution of Title Insurance premium and fee revenues by production sources:

[[GREPCENT_TABLE]]
[["","","Premium and Fee Production by Source"],["Years Ended December 31:","","2023","","2022","","2021"],["Direct Operations","","21.0","%","","19.5","%","","22.0","%"],["Independent Title Agents","","79.0","%","","80.5","%","","78.0","%"]]
[[/GREPCENT_TABLE]]

Title Insurance net premium and fee earned declined by 33.2% in 2023. Both directly produced and agency produced revenues declined, driven by a continued drop in mortgage originations attributable to higher mortgage interest rates. Commercial premiums decreased commensurately, and represent 22% of premiums earned in 2023. For 2022, net premiums and fees earned decreased by 13.0%, driven by increasing mortgage interest rates which drove a steep reduction in refinance activity and to a lesser extent, purchase activity.

Loss and Loss Adjustment Expenses

Title Insurance loss ratios have remained in the low single digits for a number of years due to a continuation of favorable trends in claims frequency and severity. Favorable developments of reserves established in prior years continued to reduce the loss ratios for the periods reported.

Sales and General Expenses

Expense ratios reflect the impact of a $17.2 state sales tax assessment paid and expensed in the fourth quarter of 2022 and subsequently recovered and taken into income in 2023. The assessment increased the 2022 expense ratio by 0.5 percentage points and its recovery reduced the 2023 expense ratio by 0.7 percentage points. Excluding the impacts of the sales tax assessment, both period's expense ratios remain elevated, generally reflecting lower directly produced revenues that carry higher fixed expenses.

RFIG Run-off

[[GREPCENT_TABLE]]
[["Summary Operating Results"],["","","","","","","","","","% Change"],["","","","","","","","","","2023","","2022"],["Years Ended December 31:","","2023","","2022","","2021","","vs. 2022","","vs. 2021"],["Net premiums earned","","$","16.4","","","$","23.2","","","$","32.6","","","(29.2)","%","","(28.9)","%"],["Loss and loss adjustment expenses","","(11.0)","","","(17.5)","","","(1.7)","","","37.2","","N/M"],["Pretax operating income","","$","21.2","","","$","35.2","","","$","32.8","","","(39.9)","%","","7.3","%"],["Loss ratio:"],["","Current year","","91.4","%","","80.8","%","","62.2","%"],["","Prior years","","(158.3)","","","(156.3)","","","(67.5)"],["","Total","","(66.9)","","","(75.5)","","","(5.3)"],["Expense ratio","","76.5","","","53.0","","","39.9"],["","Combined ratio","","9.6","%","","(22.5)","%","","34.6","%"]]
[[/GREPCENT_TABLE]]

RFIG Run-off's mortgage guaranty insurance carriers ceased the underwriting of new policies effective August 31, 2011 and the existing book of business was placed in run-off operating mode.

During the fourth quarter of 2023, a definitive agreement was reached to sell the mortgage insurance business to Arch U.S. MI Holdings Inc., a subsidiary of Arch Capital Group Ltd. The transaction is subject to regulatory approval and is expected to close in the first half of 2024. An estimated loss on the pending sale, inclusive of transaction costs, totaling $45.6 was reflected as a realized investment loss during the fourth quarter of 2023. See Note 2 in the Notes to Consolidated Financial Statements for further discussion.

Premiums & Fees

RFIG Run-off's mortgage guaranty premiums primarily stem from monthly installments paid on long-duration, guaranteed renewable insurance policies. Such premiums are written and earned in the month coverage is effective. With respect to relatively few annual or single premium policies, earned premiums are largely recognized on a pro-rata basis over the terms of the policies.

The following tables provide information on production and related risk exposure trends for Old Republic's mortgage guaranty insurance operation:

40

[[GREPCENT_TABLE]]
[["","","Premium and Persistency Trends"],["Years Ended December 31:","","2023","","2022","","2021"],["Net Earned Premiums","","$","16.4","","","$","23.2","","","$","32.6"],["Persistency","","84.4","%","","78.1","%","","74.8","%"]]
[[/GREPCENT_TABLE]]

Persistency trends improved in 2023, mostly due to the impact of rising mortgage interest rates on the real estate market.

[[GREPCENT_TABLE]]
[["","","Net Risk in Force by Type"],["Years Ended December 31:","","2023","","2022","","2021"],["Traditional Primary","","$","909.6","","","$","1,059.1","","","$","1,364.9"],["Other","","73.7","","","114.4","","","140.4"],["Total","","$","983.4","","","$","1,173.5","","","$","1,505.4"]]
[[/GREPCENT_TABLE]]

The results of RFIG Run-off reflected the continuing drop in net earned premiums in line with the declining risk in force and lower renewal premium rates.

Loss and Loss Adjustment Expenses

The following table provides certain mortgage guaranty average loss related trends.

[[GREPCENT_TABLE]]
[["Years Ended December 31:","","2023","","2022","","2021"],["Average Settled Claim Amount (a)","","$","40,213","","","$","43,742","","","$","42,411"],["Reported Delinquency Ratio at End of Period","","10.5","%","","11.8","%","","12.4","%"]]
[[/GREPCENT_TABLE]]

__________

(a)    Amounts are in whole dollars.

Mortgage insurance loss costs continued to be favorable from higher levels of cure rates on reported defaults.

FINANCIAL POSITION

The Company's financial position at December 31, 2023 reflected increases in assets, liabilities, and common shareholders' equity of 5.3%, 5.8%, and 3.8%, respectively, when compared to the immediately preceding year-end. Cash and invested assets represented 61.1% and 63.8% of consolidated assets as of December 31, 2023 and 2022, respectively. As of year-end 2023, the cash and invested asset base decreased by 0.9% to $16,187.6.

Investment Portfolio

Old Republic continues to adhere to its long-term policy of investing primarily in investment grade, marketable securities. At both December 31, 2023 and 2022, nearly all of the Company's investments consisted of marketable securities. The investment portfolio does not contain high risk or illiquid asset classes and has extremely limited exposure to collateralized debt obligations (CDO), credit default and interest rate swaps, hybrid securities, asset-backed securities (ABS), guaranteed investment contracts (GIC), structured investment vehicles (SIV), auction rate variable short-term securities, limited partnerships, derivatives, hedge funds or private equity investments. Moreover, the Company does not engage in hedging or securities lending transactions, nor does it invest in securities whose values are predicated on non-regulated financial instruments exhibiting amorphous or unfunded counter-party risk attributes. At December 31, 2023, the Company had no fixed income investments in default as to principal and/or interest.

Several years ago, interest rates dropped to a level where the Company had the opportunity to invest in high quality dividend paying equity securities to attain a higher yield than could be earned from fixed income investments with similar risk profiles. This equity portfolio grew to a high of more than 30% of the entire consolidated portfolio, including a large amount of unrealized gains. In early 2022, management decided to rebalance the portfolio and reduce its equity holdings. This decision was precipitated by several factors: the overall economic backdrop, a rapidly increasing level of inflation, the Federal Reserve signaling a tightening of monetary policy, and increasing interest rates. As a result, the Company replaced the yield that has been provided by the equity portfolio with a lower risk (in terms of volatility) source of net investment income. The Company sold more than $2 billion worth of equities, all of which were within 11% of their 52 week highs. This generated $374.5 in net realized gains on sales. As part of a tax planning initiative, the Company took advantage of depressed fixed income values from the rising interest rate environment and sold enough fixed income securities in a loss position to offset all but $62.2 in net realized gains.

Short-term maturity investment positions reflect a large variety of factors including current operating needs, expected operating cash flows, debt maturities, and investment strategy considerations. Accordingly, the future level

41

of short-term investments will vary and respond to the interplay of these factors and may, as a result, increase or decrease from current levels.

The Company does not own or utilize derivative financial instruments for the purpose of hedging, enhancing the overall return of its investment portfolio, or reducing the cost of its debt obligations. With regard to its equity portfolio, the Company does not own any options nor does it engage in any type of option writing. Traditional investment management tools and techniques are employed to address the yield and valuation exposures of the invested assets base. The fixed income investment portfolio is managed so as to limit various risks inherent in the bond market. Credit risk is addressed through asset diversification and the purchase of investment grade securities. Reinvestment rate risk is reduced by concentrating on non-callable issues, and by taking asset-liability matching considerations into account. Purchases of mortgage- and asset-backed securities, which have variable principal prepayment options, are generally avoided. Market value risk is limited through the purchase of bonds of intermediate maturity. The combination of these investment management practices is expected to produce a more stable fixed Income investment portfolio that is not subject to extreme interest rate sensitivity and principal deterioration.

The fair value of the Company's fixed income investment portfolio is sensitive, however, to fluctuations in the level of interest rates, but not materially affected by changes in anticipated cash flows caused by any prepayments. The impact of interest rate movements on the fixed income investment portfolio generally affects net unrealized gains or losses. As a general rule, rising interest rates enhance currently available yields but typically lead to a reduction in the fair value of existing fixed income investments. By contrast, a decline in such rates reduces currently available yields but usually serves to increase the fair value of the existing fixed income investment portfolio. All such changes in fair value of securities are reflected, net of deferred income taxes, directly in the common shareholders' equity account, and as a separate component of the consolidated statements of comprehensive income. Given the Company's inability to forecast or control the movement of interest rates, Old Republic sets the maturity spectrum of its fixed income securities portfolio within parameters of estimated liability payouts, and focuses the overall portfolio on high quality investments. By so doing, Old Republic believes it is reasonably assured of its ability to hold securities to maturity as it may deem necessary in changing environments, and of ultimately recovering their aggregate cost.

Possible future declines in fair values for Old Republic's fixed income portfolio would negatively affect the common shareholders' equity account at any point in time but would not necessarily result in the recognition of realized investment losses.

The following tables show certain information relating to the Company's fixed income and equity portfolios as of the dates shown:

[[GREPCENT_TABLE]]
[["Fixed Income Securities Stratified by Credit Quality (a)"],["December 31:","","2023","","2022"],["Aaa","","18.8","%","","22.1","%"],["Aa","","9.5","","","10.0"],["A","","35.9","","","34.1"],["Baa","","34.7","","","32.3"],["Total investment grade","","98.9","","","98.5"],["Non-investment grade or non-rated issuers","","1.1","","","1.5"],["Total","","100.0","%","","100.0","%"]]
[[/GREPCENT_TABLE]]
__________

(a)    Credit quality ratings referred to herein are a blend of those assigned by the major credit rating agencies for U.S. and Canadian Governments, Agencies, Corporates, and Municipal issuers.

42

[[GREPCENT_TABLE]]
[["Gross Unrealized Gains and Losses Stratified by Industry Concentration for Fixed Income Securities"],["December 31, 2023","","Amortized Cost","","Gross Unrealized Gains","","Gross Unrealized Losses","","Estimated Fair Value"],["Non-Investment Grade Fixed Income Securities by Industry Concentration:"],["Consumer, Cyclical","","$","38.1","","","$","0.2","","","$","0.5","","","$","37.8"],["Basic Materials","","23.7","","","0.2","","","0.7","","","23.1"],["Energy","","22.5","","","\u2014","","","0.4","","","22.1"],["Industrial","","19.2","","","\u2014","","","1.1","","","18.1"],["Other (includes four industry groups)","","33.7","","","0.4","","","0.2","","","33.9"],["Total","","$","137.4","","","$","1.0","","","$","3.1","","","$","135.2"],["Investment Grade Fixed Income Securities by Industry Concentration:"],["Governments","","$","2,558.1","","","$","3.4","","","$","69.1","","","$","2,492.4"],["Utilities","","1,982.4","","","23.5","","","54.5","","","1,951.4"],["Consumer, Non-cyclical","","1,799.2","","","27.5","","","31.5","","","1,795.2"],["Financial","","1,543.0","","","21.1","","","27.1","","","1,537.0"],["Industrial","","1,506.8","","","23.8","","","27.3","","","1,503.3"],["Consumer, Cyclical","","959.6","","","15.0","","","12.7","","","961.8"],["Energy","","709.4","","","6.9","","","16.2","","","700.1"],["Other (includes five industry groups)","","1,066.6","","","16.2","","","20.0","","","1,062.9"],["Total","","$","12,125.5","","","$","137.9","","","$","258.8","","","$","12,004.6"]]
[[/GREPCENT_TABLE]]

In the above tables the unrealized losses on fixed income securities are primarily deemed to reflect changes in the interest rate environment.

[[GREPCENT_TABLE]]
[["Gross Unrealized Gains and Losses Stratified by Industry Concentration for Equity Securities"],["December 31, 2023","","Cost","","Gross Unrealized Gains","","Gross Unrealized Losses","","Estimated Fair Value"],["Equity Securities by Industry Concentration:"],["Consumer, Non-cyclical","","$","406.2","","","$","236.9","","","$","3.9","","","$","639.1"],["Utilities","","355.2","","","100.5","","","11.4","","","444.3"],["Industrial","","288.6","","","344.6","","","0.1","","","633.1"],["Energy","","150.5","","","118.9","","","\u2014","","","269.5"],["Financial","","79.0","","","85.0","","","0.2","","","163.7"],["Consumer, Cyclical","","68.6","","","98.4","","","\u2014","","","167.0"],["Other (includes five industry groups)","","163.6","","","180.1","","","\u2014","","","343.7"],["Total","","$","1,511.9","","","$","1,164.7","","","$","15.7","","","$","2,660.8"]]
[[/GREPCENT_TABLE]]

The Company's equity portfolio consists of high-quality common stocks of U.S. companies with long-term records of reasonable earnings growth and steadily increasing dividends.

[[GREPCENT_TABLE]]
[["Gross Unrealized Losses Stratified by Maturity Ranges for All Fixed Income Securities"],["","","","Amortized Cost","","Gross Unrealized Losses"],["December 31, 2023","","All","","Non-Investment Grade Only","","All","","Non- Investment Grade Only"],["Maturity Ranges:"],["Due in one year or less","","$","1,550.8","","","$","14.7","","","$","16.4","","","$","0.1"],["Due after one year through five years","","4,428.7","","","49.9","","","150.8","","","1.3"],["Due after five years through ten years","","1,752.4","","","26.5","","","93.6","","","1.6"],["Due after ten years","","22.7","","","\u2014","","","1.1","","","\u2014"],["","Total","","$","7,754.8","","","$","91.2","","","$","262.0","","","$","3.1"]]
[[/GREPCENT_TABLE]]

43

[[GREPCENT_TABLE]]
[["Gross Unrealized Losses Stratified by Duration and Amount of Unrealized Losses for All Fixed Income Securities"],["","","","","","Amount of Gross Unrealized Losses"],["December 31, 2023","","Less than 20% of Cost","","20% to 50% of Cost","","More than 50% of Cost","","Total Gross Unrealized Loss"],["Number of Months in Unrealized Loss Position:"],["Fixed Income Securities:"],["","One to six months","","$","0.9","","","$","\u2014","","","$","\u2014","","","$","0.9"],["","Seven to twelve months","","10.8","","","\u2014","","","\u2014","","","10.8"],["","More than twelve months","","250.0","","","0.1","","","\u2014","","","250.2"],["","","Total","","$","261.8","","","$","0.1","","","$","\u2014","","","$","262.0"]]
[[/GREPCENT_TABLE]]

In the above tables the unrealized losses on fixed income securities are primarily deemed to reflect changes in the interest rate environment.

[[GREPCENT_TABLE]]
[["Age Distribution of Fixed Income Securities"],["December 31:","","2023","","2022"],["Maturity Ranges:"],["","Due in one year or less","","13.1","%","","11.4","%"],["","Due after one year through five years","","49.9","","","48.5"],["","Due after five years through ten years","","36.3","","","38.8"],["","Due after ten years through fifteen years","","0.6","","","1.2"],["","Due after fifteen years","","0.1","","","0.1"],["","","Total","","100.0","%","","100.0","%"],["Average Maturity in Years","","4.3","","","4.3"],["Duration","","3.7","","","3.9"]]
[[/GREPCENT_TABLE]]

Duration is used as a measure of bond price sensitivity to interest rate changes. A duration of 3.7 as of December 31, 2023 implies that a 100-basis point parallel increase in interest rates from current levels would result in a possible decline in the fair value of the fixed income investment portfolio of approximately 3.7%.

Liquidity and Capital Resources

The parent holding company meets its liquidity and capital needs principally through dividends and interest on intercompany financing arrangements paid by its subsidiaries. The insurance subsidiaries' ability to pay cash dividends and interest to the parent company is generally restricted by law or subject to approval of the insurance regulatory authorities. Based on December 31, 2023 statutory balances, the Company can receive up to $854.5 in ordinary dividends from its subsidiaries in 2024 without the prior approval of regulatory authorities. The liquidity achievable through such permitted dividend payments is sufficient to cover the parent holding company's currently expected regularly recurring cash outflows represented mostly by interest, anticipated cash dividend payments to shareholders, operating expenses, and the near-term capital needs of its operating subsidiaries.

Old Republic's total capitalization of $8,002.0 at December 31, 2023 consisted of debt of $1,591.2 and common shareholders' equity of $6,410.7. Changes in the common shareholders' equity account reflect primarily net income excluding net investment gains (losses), realized and unrealized gains (losses), dividend payments to shareholders, and share repurchases for the year then ended. At December 31, 2023, the Company's consolidated debt to equity ratio was 24.8%. The Company plans to have adequate liquidity available to retire the senior notes maturing in October 2024 in the event that market conditions are not favorable to refinancing.

Old Republic has paid a cash dividend without interruption since 1942 (82 years), and it has raised the annual cash dividend payment for each of the past 42 years. The dividend rate is reviewed and approved by the Board of Directors on a quarterly basis each year. In establishing each year's cash dividend rate the Company does not follow a strict formulaic approach. Rather, it favors a gradual rise in the annual dividend rate that is largely reflective of long-term consolidated operating earnings trends. Accordingly, each year's dividend rate is set judgmentally in consideration of such key factors as the dividend paying capacity of the Company's insurance subsidiaries, the trends in average annual earnings for the five to ten most recent calendar years, and management's long-term expectations for the Company's consolidated business and its individual operating subsidiaries.

44

During 2023, the Company returned capital to shareholders of $806, comprised of $276 in dividends and $530 of share repurchases (20.9 million shares at an average price of $25.59 per share). Following the close of the year and through February 20, 2024, the Company repurchased 2.9 million additional shares for $83.1 (average price of $28.33), completing its repurchase program under the most recent repurchase authorization, approved by the Company's Board of Directors on May 12, 2023. The repurchase program was intended to comply with Rule 10b-18 and had no expiration date, did not require the purchase of any minimum number of shares and could be suspended, modified or discontinued at any time without prior notice. Old Republic may also from time to time repurchase shares pursuant to written, pre-arranged Rule 10b5-1 plans. The Company's Board of Directors also declared special cash dividends of $1.00 per share in August 2022 (paid on September 15, 2022) and $1.50 per share in August 2021 (paid on October 6, 2021). In reaching its decision to authorize the share repurchase program, the Board evaluated such factors as the current and foreseeable liquidity and capital needs of the parent holding company and its insurance company subsidiaries.

Under state insurance regulations, the Company's three mortgage insurance subsidiaries are required to hold minimum amounts of capital based on specified formulas. Because the Company's mortgage insurance subsidiaries have discontinued writing new business the risk-to-capital ratio considerations are therefore no longer of consequence.

The Company's principal mortgage insurance subsidiaries sought and received approval from the North Carolina Department of Insurance to pay extraordinary dividends amounting to $110.0, $140.0, and $100.0 in 2023, 2022, and 2021, respectively. Shortly after closing the previously announced sale of the mortgage insurance subsidiaries, the Company expects proceeds of approximately $140.0 to be returned to the parent company through a cash dividend from the intermediate holding company.

Other Assets

Substantially all of the Company's receivables are current. Reinsurance recoverable balances on paid or estimated unpaid losses are deemed recoverable from solvent reinsurers or have otherwise been reduced by allowances for estimated credit losses. Deferred policy acquisition costs are estimated by taking into account the direct costs relating to the successful acquisition of new or renewal insurance contracts and evaluating their recoverability on the basis of recent trends in loss costs.

Contractual Obligations

The following table shows certain information relating to the required reporting of contractual obligations as of December 31, 2023:

[[GREPCENT_TABLE]]
[["","2024","","2025 and 2026","","2027 and 2028","","2029 and After","","Total"],["Contractual Obligations:"],["Debt","$","400.0","","","$","550.0","","","$","\u2014","","","$","650.0","","","$","1,600.0"],["Interest on Debt","65.8","","","92.6","","","50.0","","","563.0","","","771.6"],["Operating Leases","58.1","","","89.2","","","51.1","","","82.1","","","280.6"],["Loss and Loss Adjustment Reserves (a)","2,957.7","","","3,455.5","","","1,772.1","","","4,352.8","","","12,538.2"],["Total","$","3,481.7","","","$","4,187.4","","","$","1,873.2","","","$","5,648.0","","","$","15,190.5"]]
[[/GREPCENT_TABLE]]

__________

(a)    Amounts are reported gross of reinsurance. As discussed herein with respect to the nature of loss reserves and the estimating process utilized in their establishment, the Company's loss reserves do not have a contractual maturity date. Estimated gross loss payments are based primarily on historical claim payment patterns, are subject to change due to a wide variety of factors, do not reflect anticipated recoveries under the terms of reinsurance contracts, and cannot be predicted with certainty. Actual future loss payments may differ materially from the current estimates shown in the table above.

Reinsurance Programs

In order to maintain premium production within its capacity and limit maximum losses for which it might become liable under its policies, Old Republic, as is common practice in the insurance industry, may cede a portion or all of its premiums and related liabilities on certain classes of insurance, individual policies, or blocks of business to other insurers and reinsurers.

The following table displays the Company's General Insurance liabilities reinsured by its ten largest reinsurers as of December 31, 2023.

45

[[GREPCENT_TABLE]]
[["","","","","","","","","","% of Total"],["","","","","","A.M.","","Reinsurance Recoverable","","Total","","Consolidated"],["","","","","","Best","","on Paid","","on Loss","","Exposure","","Reinsured"],["Reinsurer","","Rating","","Losses","","Reserves","","to Reinsurer","","Liabilities"],["","Day One Insurance, Inc.","","Unrated","","$","\u2014","","","$","676.8","","","$","676.8","","","13.2","%"],["","Hannover Ruckversicherungs","","A+","","23.2","","","468.9","","","492.2","","","9.6"],["","Archway Insurance, Ltd.","","Unrated","","3.8","","","467.0","","","470.8","","","9.2"],["","Munich Re America, Inc.","","A+","","15.3","","","251.2","","","266.6","","","5.2"],["","Endurance Assurance Corporation","","A+","","8.9","","","236.0","","","244.9","","","4.8"],["","AXIS Reinsurance Company","","A","","15.3","","","215.3","","","230.7","","","4.5"],["","Summit Insurance, Ltd.","","Unrated","","\u2014","","","213.6","","","213.6","","","4.2"],["","Partner Reinsurance Company","","A+","","7.4","","","145.0","","","152.5","","","3.0"],["","Transatlantic Reinsurance Company","","A++","","7.2","","","139.9","","","147.1","","","2.9"],["","ARU SPC, Ltd.","","Unrated","","0.9","","","123.0","","","123.9","","","2.4"],["","","","","","$","82.4","","","$","2,937.2","","","$","3,019.6","","","58.7","%"]]
[[/GREPCENT_TABLE]]

Reinsurance recoverable asset balances represent amounts due from or credited by assuming reinsurers for paid and unpaid losses and premium reserves. Such reinsurance balances recoverable from non-admitted foreign and certain other reinsurers such as captive insurance companies owned by insureds or business producers, as well as similar balances or credits arising from policies that are retrospectively rated or subject to insureds' high deductible retentions are substantially collateralized by irrevocable letters of credit, securities, and other financial instruments. Old Republic evaluates on a regular basis the financial condition of its assuming reinsurers and insureds who purchase its retrospectively rated or high deductible policies. Allowances for estimated credit losses are recognized because reinsurance, retrospectively rated, and self-insured deductible policies and contracts do not relieve Old Republic from its direct obligations to insureds or their beneficiaries.

Old Republic's reinsurance practices with respect to portions of its business also result from its desire to bring its sponsoring organizations and customers into some degree of joint venture or risk-sharing relationship. The Company may, in exchange for a ceding commission, reinsure up to 100% of the underwriting risk, and the premium applicable to such risk, to commercial institutions generally whose customers are insured by Old Republic, or individual customers who have formed captive insurance companies. The ceding commissions received compensate Old Republic for performing the direct insurer's functions of underwriting, actuarial, claim settlement, loss control, legal, reinsurance, and administrative services to comply with local and federal regulations, and for providing appropriate risk management services.

Remaining portions of Old Republic's business are reinsured in most instances with independent insurance or reinsurance companies pursuant to excess of loss agreements. Except as noted in the following paragraph, reinsurance protection on property and liability coverages generally limits the net loss from any one event to a maximum of: $5.2 for workers' compensation; $7.0 for commercial auto liability; $7.0 for general liability; $12.8 for D&O; $2.2 for aviation; and $23.1 for property coverages. Title insurance risk assumptions are generally limited to a maximum of $500.0 as to any one policy. The vast majority of title policies issued, however, carry exposures of less than $1.0. The average direct primary mortgage guaranty exposure is (in whole dollars) $37,000 per insured loan.

The Company maintains treaty and facultative reinsurance coverage for its workers' compensation exposures. Pursuant to regulatory requirements, however, all workers' compensation primary insurers such as the Company remain liable for unlimited amounts in excess of reinsured limits. Other than the substantial concentration of workers' compensation losses caused by the September 11, 2001 terrorist attack on America, to the best of the Company's knowledge there had not been a similar accumulation of claims in a single location from a single occurrence prior to that event. Nevertheless, the possibility continues to exist that non-reinsured losses could, depending on a wide range of severity and frequency assumptions, aggregate several hundred million dollars to an insurer such as the Company. Such aggregation of losses could occur in the event of a catastrophe such as an earthquake that could lead to the death or injury of a large number of persons concentrated in a single facility such as a high-rise building.

As a result of the September 11, 2001 terrorist attack on America, the reinsurance industry eliminated coverage from substantially all contracts for claims arising from acts of terrorism. Primary insurers like the Company therefore became fully exposed to such claims. The Terrorism Risk Insurance Act (TRIA), the Terrorism Risk Insurance Revision and Extension Act (TRIREA), and the Terrorism Risk Insurance Program Reauthorization Act of 2019 (TRIPRA) were subsequently placed into law and serve as a federal reinsurance program administered by the Secretary of the Treasury. This legislation requires primary insurers to offer coverage for certified acts of terrorism under most commercial property and casualty insurance policies (excluding such coverages as commercial auto, burglary and theft, professional liability, and farm owners multi-peril insurance) and also provides for temporary reinsurance protection through December 31, 2027.

Although insurers are permitted to charge an additional premium for terrorism coverage, insureds may reject the coverage. The program's protection is not triggered for losses arising from an act of terrorism until the industry first suffers losses in excess of a prescribed aggregate deductible during any one year. The program deductible trigger was $200.0 for 2023. Once the program trigger is met, the program will be responsible for a fixed percentage of the

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Company's terrorism losses that exceed its deductible. The Company's deductible amounts to 20% of direct earned premium on eligible property and casualty insurance coverages. The Company currently reinsures limits on a treaty basis of $195.0 in excess of $5.0 for claims arising from certain acts of terrorism for casualty clash and catastrophe workers' compensation liability insurance coverages. The Company also purchases facultative reinsurance on certain accounts in excess of $200.0 to manage the Company's net exposures.

CRITICAL ACCOUNTING ESTIMATES

The Company's annual financial statements incorporate a large number and types of estimates relative to matters which are highly uncertain at the time the estimates are made. The estimation process required of an insurance enterprise such as Old Republic is by its very nature highly dynamic inasmuch as it necessitates a continuous evaluation, analysis, and quantification of factual data as it becomes known to the Company. As a result, actual experienced outcomes can differ from the estimates made at any point in time and thus affect future periods' reported revenues, expenses, net income or loss, and financial condition.

Changes in estimates generally result from altered circumstances, the continuum of newly emerging information and its effect on past assumptions and judgments, the effects of securities markets valuations, and changes in inflation rates and future economic conditions beyond the Company's control. As a result, Old Republic cannot predict, quantify, or guaranty the likely impact that probable changes in estimates will have on its future financial condition or results of operations.

Old Republic believes that its most critical accounting estimate relates to the establishment of reserves for losses and loss adjustment expense. The major assumptions and methods used in setting this estimate is summarized as follows:

The establishment of reserves for losses and loss adjustment expenses

The Company's reserves for losses and loss adjustment expenses represents the accumulation of estimates of ultimate losses payable, including those incurred but not reported (IBNR). The establishment of loss reserves by the Company's insurance subsidiaries is a reasonably complex and dynamic process influenced by a large variety of factors as further discussed below. Consequently, reserves established are a reflection of: the opinions of a large number of persons; the application and interpretation of historical precedent and trends; expectations as to future developments; and management's judgment in interpreting all such factors. At any point in time, the Company is exposed to the possibility of higher or lower than anticipated loss costs and the resulting changes in estimates are recorded in operations of the periods during which they are made. Increases to prior reserve estimates are referred to as unfavorable development, whereas any changes that decrease previous estimates of the Company's ultimate liability are referred to as favorable development.

Most of Old Republic's consolidated loss and loss adjustment expense reserves stem from its General Insurance business. At December 31, 2023, such reserves accounted for 95.1% and 92.0% of consolidated gross and net of reinsurance reserves, respectively, while similar reserves at December 31, 2022 represented 94.3% and 90.7% of the respective consolidated amounts.

The Company's reserve setting process reflects the nature of its insurance business and the operationally decentralized basis upon which it is conducted. Old Republic's General Insurance operations encompass a large variety of coverages or classes of predominantly commercial insurance; it does not have a meaningful exposure to personal insurance coverages such as homeowners or private passenger auto insurance. Consequently, the wide variety of policies issued and commercial insurance customers served require that loss reserves be analyzed and established in the context of the unique or different attributes of each block or class of business produced by the Company. For example, accident liability claims emanating from insured trucking companies or from general aviation customers become known relatively quickly, whereas claims of a general liability nature arising from the building activities of a construction company may emerge over extended periods of time. Similarly, claims filed pursuant to E&O or D&O liability coverages are usually not prone to immediate evaluation or quantification inasmuch as many such claims may be litigated over several years and their ultimate costs may be affected by judge or jury verdicts. Approximately 88% of the General Insurance's loss reserves stem from liability insurance coverages for commercial customers which typically require more extended periods of investigation and at times protracted litigation before they are finally settled. As a consequence of these and other factors, Old Republic does not utilize a single, overarching loss reserving approach.

The Company prepares periodic analyses of its loss reserve estimates for its significant insurance coverages. It establishes point estimates for most losses on an insurance coverage line-by-line basis for individual subsidiaries, sub-classes, individual accounts, blocks of business or other unique concentrations of insurance risks, such as D&O liability, that have similar attributes. Actuarially or otherwise derived ranges of reserve levels are not utilized directly when setting reserves, rather actuarial modeling creates data points that inform management's estimates. Reported reserves encompass the Company's best point estimates at each reporting date and the overall reserve level at any point in time therefore represents the compilation of a very large number of reported reserve estimates and the results of a variety of formula calculations largely driven by analysis of historical data. Favorable or unfavorable developments of prior year reserves are implicitly covered by the point estimates incorporated in total reserves at each balance sheet date. The Company does not project future variability or make an explicit provision for uncertainty when determining its best estimate of loss reserves. Over the most recent decade actual incurred losses have developed within a reasonable range of their original estimates.

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Aggregate loss reserves consist of liability estimates for claims that have been reported (case) to the Company's insurance subsidiaries and reserves for claims that have been incurred but not yet reported (IBNR) or whose ultimate costs may not become fully apparent until a future time. Additionally, the Company establishes unallocated loss adjustment expense reserves for loss settlement costs that are not directly related to individual claims. Such reserves are based on prior years' cost experience and trends and are intended to cover the unallocated costs of claim departments' administration of case and IBNR claims over time.

A large variety of statistical analyses and formula calculations are utilized to provide for IBNR claim costs as well as additional costs that can arise from such factors as monetary and social inflation, changes in claims administration processes, changes in reinsurance ceded and recoverability levels, and expected trends in claim costs and related ratios. Typically, such formulas take into account link ratios that represent prior years' patterns of incurred or paid loss trends between succeeding years, or past experience relative to progressions of the number of claims reported over time and ultimate average costs per claim.

Overall, reserves pertaining to several hundred large individual commercial insurance accounts that exhibit sufficient statistical credibility, and at times may be subject to retrospective premium rating plans or the utilization of varying levels or types of self-insured retentions through captive insurers and similar risk management mechanisms, are established on an account by account basis using case reserves and applicable formula-driven methods. Large account reserves are usually set and analyzed for groups of coverages such as workers' compensation, commercial auto, and general liability that are typically underwritten jointly for many customers. For certain long-tail categories of insurance such as retained or assumed excess liability or excess workers' compensation, D&O liability, and commercial umbrella liability relative to which claim development patterns are particularly long, more volatile, and immature in their early stages of development, the Company judgmentally establishes the most current accident years' loss reserves on the basis of expected loss ratios. Such expected loss ratios typically reflect currently estimated loss ratios from prior accident years, adjusted for the effect of actual and anticipated rate changes, actual and anticipated changes in coverage, reinsurance, mix of business, and other anticipated changes in external factors such as trends in loss costs or the legal and claims environment. Expected loss ratios are generally held for the two to five most recent accident years depending on the individual class or category of business. However, reserves may be increased within a holding period when the initial expected loss ratio is believed to be inadequate. Conversely, in certain cases, reserves may be released within a holding period when the redundancies are expected to exceed the upper end of the actuarially determined range. As actual claims data emerges in succeeding interim and annual periods, the original accident year loss ratio assumptions are validated or otherwise adjusted sequentially through the application of statistical projection techniques such as the Bornhuetter/Ferguson method, which utilizes data from the more mature experience of prior years to arrive at a likely indication of more recent years' loss trends and costs.

Title insurance and related escrow services loss and loss adjustment expense reserves are established as point estimates to cover the projected settlement costs of known as well as IBNR losses related to premium and escrow service revenues of each reporting period. Reserves for known claims are based on an assessment of the facts available to the Company during the settlement process. The point estimates covering all loss reserves take into account IBNR claims based on past experience and evaluations of such variables as changing trends in the types of policies issued, changes in real estate markets and interest rate environments, and changing levels of loan refinancing, all of which can have a bearing on the emergence, number, and ultimate costs of claims.

RFIG Run-off mortgage guaranty insurance reserves for unpaid loss and loss adjustment expenses are recognized only upon an instance of default, defined as an insured mortgage loan for which two or more consecutive monthly payments have been missed. Loss reserves are based on statistical calculations that take into account the number of reported insured mortgage loan defaults as of each balance sheet date, as well as experience-based estimates of loan defaults that have occurred but have not as yet been reported. Further, the loss reserve estimation process takes into account a large number of variables including trends in claim severity, potential salvage recoveries, expected cure rates for reported loan delinquencies at various stages of default, the level of coverage rescissions and claims denials due to material misrepresentation in key underwriting information or non-compliance with prescribed underwriting guidelines, and management judgments relative to future employment levels, housing market activity, and mortgage loan interest costs, demand, and extensions.

The Company has the legal right to rescind mortgage insurance coverage unilaterally as expressly stated in its policy. Moreover, two federal courts that have considered that policy wording have each affirmed that right. According to the policy, if any of those representations are materially false or misleading with respect to a loan, the Company has the right to cancel or rescind coverage for that loan retroactively to commencement of the coverage.

As discussed above, the reserves for losses and related loss adjustment expenses are based on a wide variety of factors and calculations. Among these the Company believes the most critical are:

•Holding expected loss ratios for the two to five most recent accident years, particularly for long-tail coverages as to which information about covered losses emerges and becomes more accurately quantifiable over long periods of time. Long-tail coverages generally include workers' compensation, commercial auto liability, general liability, E&O and D&O liability, as well as title insurance. Gross loss reserves related to such long-tail coverages ranged between 94.1% and 94.4%, and averaged 94.2% of gross consolidated loss reserves as of the three most recent year ends. Net of reinsurance recoverables, such reserves ranged between 94.3% and 94.9% and averaged 94.6% as of the same dates.

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•Loss trends that are considered when establishing the above noted expected loss ratios which take into account such variables as: judgments and estimates relative to premium rate trends and adequacy, current and expected interest rates, current and expected social and economic inflation trends, and insurance industry statistical claim trends. The Company applies these expected loss ratios to earned premiums when estimating the periodic reserve for losses and loss adjustment expenses.

•Loss development factors, expected claim rates and average claim costs, all of which are based on Company and/or industry statistics may also be used to project reported and unreported losses for each accounting period.

Volatility of Reserve Estimates and Sensitivity

There is a great deal of uncertainty in the estimates of loss and loss adjustment expense reserves, and unanticipated events can have both a favorable or unfavorable impact on such estimates. The Company believes that the factors most responsible, in varying and continually changing degrees, for such favorable or unfavorable development are as follows:

General Insurance net loss reserves can be affected by actual experience differing from expectations related to:

•frequency of claims incurred but not reported;

•the effect of reserve discounts applicable to certain workers' compensation claims;

•severity of litigated claims in particular;

•governmental or judicially imposed retroactive conditions in the settlement of claims such as noted elsewhere in this document in regard to black lung disease claims;

•inflation rates applicable to repairs and the medical benefits portion of claims; and

•the emergence patterns applicable to certain types of claims such as those stemming from litigated, assumed reinsurance, or A&E claims.

Title Insurance loss reserve levels can be impacted by such developments as:

•loan refinancing activity, the effect of which can be to change the expected period during which title policies remain exposed to loss emergence; and

•changes in either property values or the volume of transactions which, by virtue of the speculative nature of some real estate developments, can lead to increased occurrences of fraud, defalcations or mechanics' liens.

RFIG Run-off net loss reserve levels can be influenced by several factors including:

•changes in the mix of insured business toward loans that have a higher or lower probability of default;

•increases in the average risk per insured loan;

•the levels of estimated rescission and claim denial activity;

•the deterioration of regional or national economic conditions leading to a reduction in borrowers' income and thus their ability to make payments on outstanding loans; and

•changes in housing values and/or in housing supply that can change the rate at which defaults evolve into claims and affect their overall severity.

With respect to Old Republic's small life and accident insurance operations, reserve adequacy may be impacted by:

•medical care cost inflation;

•frequency and severity of claims; and

•catastrophic events where there are concentrations of insured lives.

Consolidated loss costs developed favorably in the three most recent calendar years. This development had the effect of reducing consolidated annual loss costs for the three most recent years within a range of 8.1% and 10.6%, or by an average of approximately 9.7% per annum. As a percentage of each of these years' consolidated earned premiums and fees, the favorable developments have ranged between 2.6% and 4.6%, and have averaged 3.6%.

The consolidated cumulative development on prior year loss reserves over the past ten years through December 31, 2023 has ranged from 4.3% favorable to 15.2% favorable and averaged 9.9% favorable (approximately $748.4 based on current year ending reserves). Given the long tail associated with most of the Company’s lines of business, this loss reserve development has occurred over many years. The consolidated one-year development on prior year loss reserves over the past ten years through December 31, 2023 has ranged from 0.4% unfavorable to 4.3% favorable and averaged 2.1% favorable (approximately $158.7 based on current year ending reserves). Management does not have a practical business reason for making projections of likely outcomes of future loss developments. Further, the analysis and evaluation of the existing business mix, the natural offset effects of the Company's diverse coverage, current aggregate loss reserve levels, and loss development patterns suggest these historical outcomes are illustrative of the reasonable likelihood of how 2023 year-end loss reserves could ultimately develop. The most significant factors impacting the potential reserve development for each of the Company's insurance segments are discussed above.

The current analysis of loss development factors and economic conditions influencing the Company's insurance coverages point to a position of reserve adequacy. In management's opinion, the other segments' loss reserve development patterns (most notably those associated with title and mortgage insurance) show greater variability due to changes in economic conditions which cannot be reasonably anticipated. Consequently, management believes that

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using the historical outcomes presented above provides a reasonable range of cumulative and one-year reserve development for a sensitivity analysis of the Company's consolidated reserves as of December 31, 2023.

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OTHER INFORMATION

Reference is here made to "Information About Segments of Business" appearing elsewhere herein.

Historical data pertaining to the operating results, liquidity, and other performance indicators applicable to an insurance enterprise such as Old Republic are not necessarily indicative of results to be achieved in succeeding years. In addition to the factors cited below, the long-term nature of the insurance business, seasonal and annual patterns in premium production and incidence of claims, changes in yields obtained on invested assets, changes in government policies and free markets affecting inflation rates and general economic conditions, and changes in legal precedents or the application of law affecting the settlement of disputed and other claims can have a bearing on period-to-period comparisons and future operating results.

Some of the oral or written statements made in the Company's reports, press releases, and conference calls following earnings releases, can constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements involve assumptions, uncertainties, and risks that may affect the Company's future performance. With regard to Old Republic's General Insurance segment, its results can be particularly affected by the level of market competition, which is typically a function of available capital and expected returns on such capital among competitors, the levels of investment yields and inflation rates, and periodic changes in claim frequency and severity patterns caused by natural disasters, weather conditions, accidents, illnesses, work-related injuries, and unanticipated external events. Title Insurance and RFIG Run-off results can be affected by similar factors, and by changes in national and regional housing demand and values, the availability and cost of mortgage loans, employment trends, and default rates on mortgage loans. Life and accident insurance earnings can be affected by the levels of employment and consumer spending, changes in mortality and health trends, and alterations in policy lapsation rates. At the parent holding company level, operating earnings or losses are generally reflective of the amount of debt outstanding and its cost, interest income on temporary holdings of short-term investments, and period-to-period variations in the costs of administering the Company's widespread operations.

General Insurance, Title Insurance, Corporate & Other, and RFIG Run-off maintain customer information and rely upon technology platforms to conduct their business. As a result, each of them and the Company are exposed to cyber risk. Many of the Company's operating subsidiaries, maintain separate IT systems which are deemed to reduce enterprise-wide risks of potential cybersecurity incidents. However, given the potential magnitude of a significant breach, the Company continually evaluates on an enterprise-wide basis its IT hardware, security infrastructure and business practices to respond to these risks and to detect and remediate in a timely manner significant cybersecurity incidents or business process interruptions. Refer to Part I, Item 1C - Cybersecurity for additional discussion.

A more detailed listing and discussion of the risks and other factors which affect the Company's risk-taking insurance business are included in Part I, Item 1A - Risk Factors.

Any forward-looking statements or commentaries speak only as of their dates. Old Republic undertakes no obligation to publicly update or revise any and all such comments, whether as a result of new information, future events or otherwise, and accordingly they may not be unduly relied upon.

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