Lower claims costs increases income at Old Republic's title unit
The strong housing economy in 2017 led to an increase in premiums earned and lower claims costs for Old Republic International's title insurance business.
Pretax operating income for the title insurance business in 2017 was $237.1 million, up 12.8% from the $210.2 million earned in 2016. Claims costs last year were 75.3% lower, $20.8 million, compared with $84.3 million in 2016. Claim activity has declined since the end of the Great Recession, Old Republic said in a press release.
The claims ratio was 0.9% in 2017, compared with 3.8% the year before.
Net premiums and fees earned of $2.3 billion was 3.6% higher than 2016's $2.2 billion.
In the fourth quarter, pretax operating income was 25% lower at $64.2 million than the same period in 2016 because of higher sales and general expenses as a result of employee incentive awards.
Pretax operating income in 2017 for the private mortgage insurance business currently in run-off was $48.9 million, down from $105 million in 2016.
Net premiums earned dropped 28.7% to $109.8 million as the insured book of business continues to shrink. But claims costs for 2017 increased by 20.4% to $63.3 million as Old Republic made an additional claims provision of $23 million in the third quarter.
In the fourth quarter, the mortgage insurance business had pretax operating income of $13.1 million, down 23.4% from $17.1 million.
Old Republic announced on Dec. 21 that the North Carolina Department of Insurance issued a final order terminating its supervision of its mortgage guaranty insurance subsidiaries chartered in that state.
The supervisory order was issued on Jan. 19, 2012, nearly five months after Old Republic placed Republic Mortgage Insurance Corp. into run-off.
"This favorable regulatory action, when coupled with the subsidiaries' good name and trustworthiness in meeting their obligations in good and bad times alike, augurs well for Old Republic's ability to advance on strategic alternatives for this business," an Old Republic press release said.