UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
Washington, D. C. 20549 |
FORM 10-Q |
[x] | Quarterly report pursuant to section 13 or 15(d) of the Security Exchange Act of 1934 |
for the quarterly period ended: September 30, 2018 or | |
[ ] | Transition report pursuant to section 13 or 15(d) of the Security Exchange Act of 1934 |
Commission File Number: | 001-10607 |
OLD REPUBLIC INTERNATIONAL CORPORATION |
(Exact name of registrant as specified in its charter) |
Delaware | No. 36-2678171 | |
(State or other jurisdiction of | (IRS Employer Identification No.) | |
incorporation or organization) |
307 North Michigan Avenue, Chicago, Illinois | 60601 | |
(Address of principal executive office) | (Zip Code) |
Large accelerated filer x | Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) | |
Smaller reporting company o | |
Emerging growth company o |
Class | Shares Outstanding September 30, 2018 | |
Common Stock / $1 par value | 302,643,075 |
OLD REPUBLIC INTERNATIONAL CORPORATION | ||
Report on Form 10-Q / September 30, 2018 | ||
INDEX | ||
PAGE NO. | ||
PART I | FINANCIAL INFORMATION: | |
CONSOLIDATED BALANCE SHEETS | 3 | |
CONSOLIDATED STATEMENTS OF INCOME | 4 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | 5 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | 6 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | 7 - 18 | |
MANAGEMENT ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS | 19 - 50 | |
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK | 51 | |
CONTROLS AND PROCEDURES | 51 | |
PART II | OTHER INFORMATION: | |
ITEM 1 - LEGAL PROCEEDINGS | 52 | |
ITEM 1A - RISK FACTORS | 52 | |
ITEM 6 - EXHIBITS | 52 | |
SIGNATURE | 53 | |
EXHIBIT INDEX | 54 |
Old Republic International Corporation and Subsidiaries | |||||||
Consolidated Balance Sheets | |||||||
($ in Millions, Except Share Data) | |||||||
(Unaudited) | |||||||
September 30, | December 31, | ||||||
2018 | 2017 | ||||||
Assets | |||||||
Investments: | |||||||
Available for sale: | |||||||
Fixed maturity securities (at fair value) (amortized cost: $8,187.5 and $8,162.2) | $ | 8,070.7 | $ | 8,282.3 | |||
Short-term investments (at fair value which approximates cost) | 580.7 | 670.1 | |||||
Total | 8,651.4 | 8,952.4 | |||||
Held to maturity: | |||||||
Fixed maturity securities (at amortized cost) (fair value: $1,022.4 and $1,069.2) | 1,050.5 | 1,067.4 | |||||
Equity securities (at fair value) (cost: $2,820.9 and $2,629.9) | 3,474.3 | 3,265.5 | |||||
Other investments | 34.6 | 32.5 | |||||
Total investments | 13,211.0 | 13,318.0 | |||||
Other Assets: | |||||||
Cash | 115.2 | 125.9 | |||||
Securities and indebtedness of related parties | 19.1 | 12.8 | |||||
Accrued investment income | 93.9 | 92.4 | |||||
Accounts and notes receivable | 1,643.0 | 1,469.7 | |||||
Prepaid federal income taxes | 114.3 | 114.3 | |||||
Reinsurance balances and funds held | 169.0 | 141.6 | |||||
Reinsurance recoverable: Paid losses | 58.9 | 60.5 | |||||
Policy and claim reserves | 3,578.3 | 3,311.3 | |||||
Deferred policy acquisition costs | 316.6 | 297.8 | |||||
Sundry assets | 482.6 | 458.8 | |||||
Total Other Assets | 6,591.3 | 6,085.5 | |||||
Total Assets | $ | 19,802.3 | $ | 19,403.5 | |||
Liabilities, Preferred Stock, and Common Shareholders' Equity | |||||||
Liabilities: | |||||||
Losses, claims, and settlement expenses | $ | 9,482.9 | $ | 9,237.6 | |||
Unearned premiums | 2,245.8 | 1,971.5 | |||||
Other policyholders' benefits and funds | 204.6 | 204.7 | |||||
Total policy liabilities and accruals | 11,933.4 | 11,413.9 | |||||
Commissions, expenses, fees, and taxes | 510.8 | 547.7 | |||||
Reinsurance balances and funds | 703.2 | 566.9 | |||||
Federal income tax payable: Current | 3.7 | 6.5 | |||||
Deferred | 54.7 | 100.5 | |||||
Debt | 981.1 | 1,448.7 | |||||
Sundry liabilities | 303.9 | 585.8 | |||||
Commitments and contingent liabilities | |||||||
Total Liabilities | 14,491.1 | 14,670.2 | |||||
Preferred Stock (1) | — | — | |||||
Common Shareholders' Equity: | |||||||
Common stock (1) | 302.6 | 269.2 | |||||
Additional paid-in capital | 1,275.6 | 815.2 | |||||
Retained earnings | 4,014.6 | 3,206.9 | |||||
Accumulated other comprehensive income (loss) | (217.7 | ) | 474.2 | ||||
Unallocated ESSOP shares (at cost) | (64.0 | ) | (32.4 | ) | |||
Total Common Shareholders' Equity | 5,311.2 | 4,733.3 | |||||
Total Liabilities, Preferred Stock and Common Shareholders' Equity | $ | 19,802.3 | $ | 19,403.5 |
(1) | At September 30, 2018 and December 31, 2017, there were 75,000,000 shares of $0.01 par value preferred stock authorized, of which no shares were outstanding. As of the same dates, there were 500,000,000 shares of common stock, $1.00 par value, authorized, of which 302,643,075 and 269,238,727 were issued as of September 30, 2018 and December 31, 2017, respectively. At September 30, 2018 and December 31, 2017, there were 100,000,000 shares of Class B Common Stock, $1.00 par value, authorized, of which no shares were issued. |
Old Republic International Corporation and Subsidiaries | |||||||||||||||
Consolidated Statements of Income (Unaudited) | |||||||||||||||
($ in Millions, Except Share Data) | |||||||||||||||
Quarters Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues: | |||||||||||||||
Net premiums earned | $ | 1,388.6 | $ | 1,312.0 | $ | 3,914.4 | $ | 3,752.6 | |||||||
Title, escrow, and other fees | 116.2 | 121.4 | 341.0 | 344.6 | |||||||||||
Total premiums and fees | 1,504.8 | 1,433.4 | 4,255.5 | 4,097.3 | |||||||||||
Net investment income | 108.7 | 103.3 | 321.5 | 305.7 | |||||||||||
Other income | 30.4 | 20.4 | 91.1 | 76.3 | |||||||||||
Total operating revenues | 1,644.0 | 1,557.2 | 4,668.2 | 4,479.4 | |||||||||||
Investment gains (losses): | |||||||||||||||
Realized from actual transactions | 7.3 | 35.8 | 54.8 | 57.5 | |||||||||||
Unrealized from changes in fair value of | |||||||||||||||
equity securities | 128.4 | — | 17.7 | — | |||||||||||
Unrealized from impairments | — | — | — | — | |||||||||||
Total realized and unrealized investment | |||||||||||||||
gains (losses) | 135.7 | 35.8 | 72.6 | 57.5 | |||||||||||
Total revenues | 1,779.7 | 1,593.0 | 4,740.9 | 4,536.9 | |||||||||||
Benefits, Claims and Expenses: | |||||||||||||||
Benefits, claims and settlement expenses | 615.1 | 759.0 | 1,806.3 | 1,927.1 | |||||||||||
Dividends to policyholders | 4.2 | 7.3 | 14.4 | 17.5 | |||||||||||
Underwriting, acquisition, and other expenses | 815.2 | 751.1 | 2,310.0 | 2,173.1 | |||||||||||
Interest and other charges | 9.9 | 15.8 | 34.3 | 48.3 | |||||||||||
Total expenses | 1,444.6 | 1,533.3 | 4,165.2 | 4,166.2 | |||||||||||
Income (loss) before income taxes (credits) | 335.1 | 59.6 | 575.7 | 370.7 | |||||||||||
Income Taxes (Credits): | |||||||||||||||
Current | 34.2 | 52.9 | 95.7 | 138.4 | |||||||||||
Deferred | 25.6 | (39.4 | ) | 2.9 | (28.6 | ) | |||||||||
Total | 59.8 | 13.4 | 98.6 | 109.7 | |||||||||||
Net Income | $ | 275.2 | $ | 46.1 | $ | 477.0 | $ | 260.9 | |||||||
Net Income Per Share: | |||||||||||||||
Basic | $ | .92 | $ | .18 | $ | 1.63 | $ | 1.00 | |||||||
Diluted | $ | .92 | $ | .17 | $ | 1.59 | $ | .91 | |||||||
Average shares outstanding: Basic | 299,006,345 | 261,380,896 | 292,565,008 | 261,181,220 | |||||||||||
Diluted | 300,374,004 | 298,529,626 | 301,125,090 | 298,559,757 | |||||||||||
Dividends Per Common Share: | |||||||||||||||
Cash | $ | .1950 | $ | .1900 | $ | .5850 | $ | .5700 |
Old Republic International Corporation and Subsidiaries | |||||||||||||||
Consolidated Statements of Comprehensive Income (Unaudited) | |||||||||||||||
($ in Millions) | |||||||||||||||
Quarters Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net Income As Reported | $ | 275.2 | $ | 46.1 | $ | 477.0 | $ | 260.9 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Unrealized gains (losses) on securities not included | |||||||||||||||
in the statement of income: | |||||||||||||||
Unrealized gains (losses) on securities before | |||||||||||||||
reclassifications | (24.6 | ) | 124.1 | (236.3 | ) | 220.0 | |||||||||
Amounts reclassified as investment (gains) | |||||||||||||||
losses from actual transactions in the | |||||||||||||||
statements of income | 1.2 | (35.8 | ) | (.4 | ) | (57.5 | ) | ||||||||
Pretax unrealized gains (losses) on securities | (23.4 | ) | 88.3 | (236.8 | ) | 162.5 | |||||||||
Deferred income taxes (credits) | (4.9 | ) | 31.0 | (49.8 | ) | 56.9 | |||||||||
Net unrealized gains (losses) on securities, net of tax | (18.4 | ) | 57.3 | (186.9 | ) | 105.5 | |||||||||
Defined benefit pension plans: | |||||||||||||||
Net pension adjustment before reclassifications | — | — | — | — | |||||||||||
Amounts reclassified as underwriting, acquisition, | |||||||||||||||
and other expenses in the statements of income | .8 | .1 | 2.4 | .3 | |||||||||||
Net adjustment related to defined benefit | |||||||||||||||
pension plans | .8 | .1 | 2.4 | .3 | |||||||||||
Deferred income taxes (credits) | .1 | — | .5 | .1 | |||||||||||
Net adjustment related to defined benefit pension | |||||||||||||||
plans, net of tax | .6 | — | 1.9 | .2 | |||||||||||
Foreign currency translation and other adjustments | 2.6 | 8.6 | (4.7 | ) | 11.9 | ||||||||||
Net adjustments | (15.1 | ) | 66.1 | (189.7 | ) | 117.7 | |||||||||
Comprehensive Income (Loss) | $ | 260.0 | $ | 112.2 | $ | 287.3 | $ | 378.7 |
Old Republic International Corporation and Subsidiaries | ||||||||
Consolidated Statements of Cash Flows (Unaudited) | ||||||||
($ in Millions) | ||||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 477.0 | $ | 260.9 | ||||
Adjustments to reconcile net income to | ||||||||
net cash provided by operating activities: | ||||||||
Deferred policy acquisition costs | (18.7 | ) | (27.7 | ) | ||||
Premiums and other receivables | (173.2 | ) | (199.4 | ) | ||||
Unpaid claims and related items | 148.5 | 254.7 | ||||||
Unearned premiums and other policyholders' liabilities | 103.8 | 164.2 | ||||||
Income taxes | .8 | 11.9 | ||||||
Prepaid federal income taxes | — | (31.8 | ) | |||||
Reinsurance balances and funds | 110.4 | 75.0 | ||||||
Realized investment (gains) losses from actual transactions | (54.8 | ) | (57.5 | ) | ||||
Unrealized investment (gains) losses from changes in fair value | ||||||||
of equity securities | (17.7 | ) | — | |||||
Accounts payable, accrued expenses and other | 21.0 | 71.8 | ||||||
Total | 597.1 | 522.1 | ||||||
Cash flows from investing activities: | ||||||||
Fixed maturity securities: | ||||||||
Available for sale: | ||||||||
Maturities and early calls | 758.9 | 632.1 | ||||||
Sales | 222.6 | 381.9 | ||||||
Sales of: | ||||||||
Equity securities | 294.5 | 233.5 | ||||||
Other - net | 13.3 | 27.1 | ||||||
Purchases of: | ||||||||
Fixed maturity securities: | ||||||||
Available for sale | (1,027.6 | ) | (1,046.7 | ) | ||||
Held to maturity | — | (114.5 | ) | |||||
Equity securities | (432.0 | ) | (295.6 | ) | ||||
Other - net | (40.4 | ) | (44.3 | ) | ||||
Net decrease (increase) in short-term investments | 88.7 | (163.4 | ) | |||||
Other - net | (6.8 | ) | — | |||||
Total | (128.7 | ) | (389.9 | ) | ||||
Cash flows from financing activities: | ||||||||
Issuance of common shares | 12.2 | 14.0 | ||||||
Redemption of debentures and notes | (4.7 | ) | (3.9 | ) | ||||
Purchase of unallocated common shares by ESSOP | (37.4 | ) | — | |||||
Dividends on common shares (Including a special dividend paid in January 2018) | (440.5 | ) | (148.3 | ) | ||||
Other - net | (8.6 | ) | (.3 | ) | ||||
Total | (479.1 | ) | (138.6 | ) | ||||
Increase (decrease) in cash | (10.7 | ) | (6.4 | ) | ||||
Cash, beginning of period | 125.9 | 145.7 | ||||||
Cash, end of period | $ | 115.2 | $ | 139.2 | ||||
Supplemental cash flow information: | ||||||||
Cash paid (received) during the period for: Interest | $ | 50.4 | $ | 62.2 | ||||
Income taxes | $ | 97.9 | $ | 97.9 |
OLD REPUBLIC INTERNATIONAL CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
($ in Millions, Except Share Data) |
Quarters Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Numerator: | |||||||||||||||
Net income | $ | 275.2 | $ | 46.1 | $ | 477.0 | $ | 260.9 | |||||||
Numerator for basic earnings per share - | |||||||||||||||
income available to common stockholders | 275.2 | 46.1 | 477.0 | 260.9 | |||||||||||
Adjustment for interest expense incurred on | |||||||||||||||
assumed conversion of convertible notes | — | 3.6 | 3.1 | 10.9 | |||||||||||
Numerator for diluted earnings per share - | |||||||||||||||
income available to common stockholders | |||||||||||||||
after assumed conversion of convertible notes | $ | 275.2 | $ | 49.8 | $ | 480.1 | $ | 271.8 | |||||||
Denominator: | |||||||||||||||
Denominator for basic earnings per share - | |||||||||||||||
weighted-average shares (a) | 299,006,345 | 261,380,896 | 292,565,008 | 261,181,220 | |||||||||||
Effect of dilutive securities - stock based | |||||||||||||||
compensation awards | 1,367,659 | 1,349,148 | 1,381,914 | 1,603,514 | |||||||||||
Effect of dilutive securities - convertible notes | — | 35,799,582 | 7,178,168 | 35,775,023 | |||||||||||
Denominator for diluted earnings per share - | |||||||||||||||
adjusted weighted-average shares | |||||||||||||||
and assumed conversion of convertible notes (a) | 300,374,004 | 298,529,626 | 301,125,090 | 298,559,757 | |||||||||||
Earnings per share: Basic | $ | .92 | $ | .18 | $ | 1.63 | $ | 1.00 | |||||||
Diluted | $ | .92 | $ | .17 | $ | 1.59 | $ | .91 | |||||||
Anti-dilutive common stock equivalents | |||||||||||||||
excluded from earnings per share computations: | |||||||||||||||
Stock based compensation awards | — | 1,403,500 | — | 1,403,500 | |||||||||||
Total | — | 1,403,500 | — | 1,403,500 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Fixed Maturity Securities by Type: | |||||||||||||||
September 30, 2018: | |||||||||||||||
Available for sale: | |||||||||||||||
U.S. & Canadian Governments | $ | 1,472.9 | $ | .6 | $ | 34.8 | $ | 1,438.6 | |||||||
Corporate | 6,714.6 | 34.8 | 117.4 | 6,632.0 | |||||||||||
$ | 8,187.5 | $ | 35.5 | $ | 152.3 | $ | 8,070.7 | ||||||||
Held to maturity: | |||||||||||||||
Tax-exempt | $ | 1,050.5 | $ | .3 | $ | 28.4 | $ | 1,022.4 | |||||||
December 31, 2017: | |||||||||||||||
Available for sale: | |||||||||||||||
U.S. & Canadian Governments | $ | 1,554.3 | $ | 6.5 | $ | 8.7 | $ | 1,552.2 | |||||||
Corporate | 6,607.8 | 140.8 | 18.6 | 6,730.0 | |||||||||||
$ | 8,162.2 | $ | 147.4 | $ | 27.3 | $ | 8,282.3 | ||||||||
Held to maturity: | |||||||||||||||
Tax-exempt | $ | 1,067.4 | $ | 10.0 | $ | 8.3 | $ | 1,069.2 |
Amortized Cost | Estimated Fair Value | ||||||
Fixed Maturity Securities Stratified by Contractual Maturity at September 30, 2018: | |||||||
Available for sale: | |||||||
Due in one year or less | $ | 606.4 | $ | 607.2 | |||
Due after one year through five years | 4,563.1 | 4,517.1 | |||||
Due after five years through ten years | 2,931.5 | 2,856.4 | |||||
Due after ten years | 86.5 | 89.9 | |||||
$ | 8,187.5 | $ | 8,070.7 | ||||
Held to maturity: | |||||||
Due in one year or less | $ | — | $ | — | |||
Due after one year through five years | 155.9 | 152.9 | |||||
Due after five years through ten years | 891.4 | 866.4 | |||||
Due after ten years | 3.1 | 3.0 | |||||
$ | 1,050.5 | $ | 1,022.4 |
12 Months or Less | Greater than 12 Months | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
September 30, 2018: | |||||||||||||||||||||||
Fixed Maturity Securities: | |||||||||||||||||||||||
Available for sale: | |||||||||||||||||||||||
U.S. & Canadian Governments | $ | 943.4 | $ | 22.6 | $ | 386.5 | $ | 12.2 | $ | 1,329.9 | $ | 34.8 | |||||||||||
Corporate | 3,821.9 | 84.7 | 778.1 | 32.6 | 4,600.1 | 117.4 | |||||||||||||||||
$ | 4,765.3 | $ | 107.4 | $ | 1,164.7 | $ | 44.9 | $ | 5,930.1 | $ | 152.3 | ||||||||||||
Number of available for sale | |||||||||||||||||||||||
securities in unrealized | |||||||||||||||||||||||
loss position | 898 | 265 | 1,163 | ||||||||||||||||||||
Held to maturity: | |||||||||||||||||||||||
Tax-exempt | $ | 576.4 | $ | 9.9 | $ | 401.3 | $ | 18.4 | $ | 977.8 | $ | 28.4 | |||||||||||
Number of held to maturity | |||||||||||||||||||||||
securities in unrealized | |||||||||||||||||||||||
loss position | 204 | 144 | 348 | ||||||||||||||||||||
December 31, 2017: | |||||||||||||||||||||||
Fixed Maturity Securities: | |||||||||||||||||||||||
Available for sale: | |||||||||||||||||||||||
U.S. & Canadian Governments | $ | 1,080.9 | $ | 8.6 | $ | 29.5 | $ | — | $ | 1,110.5 | $ | 8.7 | |||||||||||
Corporate | 1,660.9 | 15.0 | 145.9 | 3.6 | 1,806.9 | 18.6 | |||||||||||||||||
$ | 2,741.9 | $ | 23.6 | $ | 175.5 | $ | 3.7 | $ | 2,917.4 | $ | 27.3 | ||||||||||||
Number of available for sale | |||||||||||||||||||||||
securities in unrealized | |||||||||||||||||||||||
loss position | 526 | 56 | 582 | ||||||||||||||||||||
Held to maturity: | |||||||||||||||||||||||
Tax-exempt | $ | 321.9 | $ | 4.8 | $ | 134.7 | $ | 3.4 | $ | 456.6 | $ | 8.3 | |||||||||||
Number of held to maturity | |||||||||||||||||||||||
securities in unrealized | |||||||||||||||||||||||
loss position | 112 | 48 | 160 |
Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Equity Securities: | |||||||||||||||
September 30, 2018 | $ | 2,820.9 | $ | 695.7 | $ | 42.3 | $ | 3,474.3 | |||||||
December 31, 2017 | $ | 2,629.9 | $ | 658.8 | $ | 23.2 | $ | 3,265.5 |
Fair Value Measurements | ||||||||||||||||
As of September 30, 2018: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Available for sale: | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
U.S. & Canadian Governments | $ | 642.6 | $ | 796.0 | $ | — | $ | 1,438.6 | ||||||||
Corporate | — | 6,621.5 | 10.5 | 6,632.0 | ||||||||||||
Short-term investments | 580.7 | — | — | 580.7 | ||||||||||||
Held to maturity: | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
Tax-exempt | — | 1,022.4 | — | 1,022.4 | ||||||||||||
Equity securities | $ | 3,472.6 | $ | — | $ | 1.6 | $ | 3,474.3 | ||||||||
As of December 31, 2017: | ||||||||||||||||
Available for sale: | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
U.S. & Canadian Governments | $ | 761.4 | $ | 790.8 | $ | — | $ | 1,552.2 | ||||||||
Corporate | — | 6,719.5 | 10.5 | 6,730.0 | ||||||||||||
Short-term investments | 670.1 | — | — | 670.1 | ||||||||||||
Held to maturity: | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
Tax-exempt | — | 1,069.2 | — | 1,069.2 | ||||||||||||
Equity securities | $ | 3,264.4 | $ | — | $ | 1.1 | $ | 3,265.5 |
Quarters Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Investment income from: | |||||||||||||||
Fixed maturity securities | $ | 74.4 | $ | 72.9 | $ | 224.2 | $ | 220.4 | |||||||
Equity securities | 31.5 | 28.7 | 91.3 | 81.6 | |||||||||||
Short-term investments | 2.7 | 1.6 | 6.9 | 3.6 | |||||||||||
Other sources | 1.4 | 1.0 | 3.6 | 3.2 | |||||||||||
Gross investment income | 110.2 | 104.4 | 326.2 | 309.0 | |||||||||||
Investment expenses (a) | 1.4 | 1.1 | 4.6 | 3.3 | |||||||||||
Net investment income | $ | 108.7 | $ | 103.3 | $ | 321.5 | $ | 305.7 | |||||||
Investment gains (losses): | |||||||||||||||
From actual transactions: | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
Gains | $ | .5 | $ | 2.6 | $ | 1.6 | $ | 17.0 | |||||||
Losses | (1.7 | ) | — | (2.6 | ) | (4.9 | ) | ||||||||
Net | (1.2 | ) | 2.5 | (1.0 | ) | 12.1 | |||||||||
Equity securities: | |||||||||||||||
Gains | 8.6 | 39.4 | 61.5 | 51.6 | |||||||||||
Losses | — | (6.3 | ) | (7.1 | ) | (6.3 | ) | ||||||||
Net | 8.6 | 33.0 | 54.4 | 45.3 | |||||||||||
Other long-term investments, net | — | .1 | 1.5 | — | |||||||||||
Total from actual transactions | 7.3 | 35.8 | 54.8 | 57.5 | |||||||||||
From unrealized changes in fair value of equity securities | 128.4 | — | 17.7 | — | |||||||||||
From impairments | — | — | — | — | |||||||||||
Total realized and unrealized investment gains (losses) | 135.7 | 35.8 | 72.6 | 57.5 | |||||||||||
Current and deferred income taxes (credits) | 28.5 | 12.5 | 15.2 | 20.1 | |||||||||||
Post tax realized and unrealized investment gains (losses) | $ | 107.2 | $ | 23.2 | $ | 57.4 | $ | 37.3 | |||||||
Changes in unrealized investment gains (losses) | |||||||||||||||
reflected directly in shareholders' equity on: | |||||||||||||||
Fixed maturity securities | $ | (23.4 | ) | $ | 4.4 | $ | (236.4 | ) | $ | 27.4 | |||||
Less: Deferred income taxes (credits) | (5.0 | ) | 1.7 | (49.8 | ) | 9.8 | |||||||||
(18.4 | ) | 2.7 | (186.6 | ) | 17.6 | ||||||||||
Equity securities & other long-term investments | — | 83.8 | (.3 | ) | 135.0 | ||||||||||
Less: Deferred income taxes (credits) | — | 29.2 | — | 47.1 | |||||||||||
— | 54.6 | (.2 | ) | 87.8 | |||||||||||
Net changes in unrealized investment gains (losses) | $ | (18.4 | ) | $ | 57.3 | $ | (186.9 | ) | $ | 105.5 |
(a) | Investment expenses largely consist of personnel costs and investment management and custody service fees. |
This space left intentionally blank |
Nine Months Ended | |||||||
September 30, | |||||||
2018 | 2017 | ||||||
Gross reserves at beginning of period | $ | 9,237.6 | $ | 9,206.0 | |||
Less: reinsurance losses recoverable | 2,921.1 | 2,766.1 | |||||
Net reserves at beginning of period: | |||||||
General Insurance | 5,471.5 | 5,249.9 | |||||
Title Insurance | 559.7 | 602.0 | |||||
RFIG Run-off | 271.7 | 574.0 | |||||
Other | 13.5 | 13.8 | |||||
Sub-total | 6,316.4 | 6,439.8 | |||||
Incurred claims and claim adjustment expenses: | |||||||
Provisions for insured events of the current year: | |||||||
General Insurance | 1,717.4 | 1,650.0 | |||||
Title Insurance | 72.0 | 69.5 | |||||
RFIG Run-off (a) | 43.7 | 277.6 | |||||
Other | 15.7 | 15.7 | |||||
Sub-total | 1,849.0 | 2,012.9 | |||||
Change in provision for insured events of prior years: | |||||||
General Insurance | 7.3 | 41.9 | |||||
Title Insurance | (27.0 | ) | (34.9 | ) | |||
RFIG Run-off (a) | (19.8 | ) | (90.4 | ) | |||
Other | (3.2 | ) | (1.6 | ) | |||
Sub-total | (42.7 | ) | (85.0 | ) | |||
Total incurred claims and claim adjustment expenses (a) | 1,806.2 | 1,927.9 | |||||
Payments: | |||||||
Claims and claim adjustment expenses attributable to | |||||||
insured events of the current year: | |||||||
General Insurance | 543.1 | 501.0 | |||||
Title Insurance | 5.7 | 2.9 | |||||
RFIG Run-off (b) | 1.6 | 4.8 | |||||
Other | 10.6 | 9.8 | |||||
Sub-total | 561.1 | 518.7 | |||||
Claims and claim adjustment expenses attributable to | |||||||
insured events of prior years: | |||||||
General Insurance | 959.4 | 960.2 | |||||
Title Insurance | 44.9 | 45.5 | |||||
RFIG Run-off (b) | 87.3 | 144.6 | |||||
Other | 4.7 | 3.5 | |||||
Sub-total | 1,096.4 | 1,153.9 | |||||
Total payments (b) | 1,657.6 | 1,672.6 | |||||
Amount of reserves for unpaid claims and claim adjustment expenses | |||||||
at the end of each period, net of reinsurance losses recoverable: (c) | |||||||
General Insurance | 5,693.8 | 5,480.6 | |||||
Title Insurance | 554.0 | 588.1 | |||||
RFIG Run-off | 206.5 | 611.7 | |||||
Other | 10.6 | 14.4 | |||||
Sub-total | 6,465.0 | 6,695.1 | |||||
Reinsurance losses recoverable | 3,017.8 | 2,999.3 | |||||
Gross reserves at end of period | $ | 9,482.9 | $ | 9,694.4 |
(a) | In common with all other insurance coverages, RFIG Run-off mortgage guaranty settled and incurred claim and claim adjustment expenses include only those costs actually or expected to be paid by the Company. Changes in mortgage guaranty aggregate case, IBNR, and loss adjustment expense reserves shown below and entering into |
(b) | Rescissions reduced the Company's paid losses by an estimated $3.5 and $10.0 for the year-to-date periods ended September 30, 2018 and 2017, respectively. |
(c) | Net reserves for claims that have been incurred but are not yet reported ("IBNR") carried in each segment were as follows: |
September 30, | September 30, | December 31, | ||||||||||
2018 | 2017 | 2017 | ||||||||||
General Insurance | $ | 2,696.3 | $ | 2,607.7 | $ | 2,585.9 | ||||||
Title Insurance | 466.1 | 509.3 | 479.3 | |||||||||
RFIG Run-off | 29.6 | 327.3 | 30.5 | |||||||||
Other | 4.5 | 6.8 | 4.7 | |||||||||
Total | $ | 3,196.6 | $ | 3,451.3 | $ | 3,100.6 |
This space left intentionally blank |
Quarters Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
General Insurance: | |||||||||||||||
Net premiums earned | $ | 841.5 | $ | 801.3 | $ | 2,441.3 | $ | 2,313.7 | |||||||
Net investment income and other income | 116.3 | 100.4 | 344.4 | 313.9 | |||||||||||
Total revenues excluding investment gains (losses) | $ | 957.8 | $ | 901.8 | $ | 2,785.7 | $ | 2,627.6 | |||||||
Segment pretax operating income (loss) (a)(c) | $ | 105.1 | $ | 59.7 | $ | 279.1 | $ | 216.2 | |||||||
Income tax expense (credits) on above | $ | 18.0 | $ | 15.8 | $ | 46.7 | $ | 61.5 | |||||||
Title Insurance: | |||||||||||||||
Net premiums earned | $ | 524.5 | $ | 475.4 | $ | 1,402.5 | $ | 1,325.8 | |||||||
Title, escrow and other fees | 116.2 | 121.4 | 341.0 | 344.6 | |||||||||||
Sub-total | 640.7 | 596.8 | 1,743.6 | 1,670.5 | |||||||||||
Net investment income and other income | 10.0 | 9.3 | 29.5 | 28.4 | |||||||||||
Total revenues excluding investment gains (losses) | $ | 650.8 | $ | 606.1 | $ | 1,773.1 | $ | 1,699.0 | |||||||
Segment pretax operating income (loss) (a) | $ | 67.7 | $ | 67.3 | $ | 158.2 | $ | 172.8 | |||||||
Income tax expense (credits) on above | $ | 14.0 | $ | 23.4 | $ | 33.3 | $ | 59.8 | |||||||
RFIG Run-off Business: | |||||||||||||||
Net premiums earned | $ | 18.2 | $ | 30.2 | $ | 59.2 | $ | 98.7 | |||||||
Net investment income and other income | 4.6 | 5.4 | 15.4 | 16.4 | |||||||||||
Total revenues excluding investment gains (losses) | $ | 22.8 | $ | 35.6 | $ | 74.7 | $ | 115.1 | |||||||
Segment pretax operating income (loss) (d) | $ | 13.3 | $ | (109.7 | ) | $ | 38.0 | $ | (88.3 | ) | |||||
Income tax expense (credits) on above | $ | 2.6 | $ | (38.5 | ) | $ | 7.7 | $ | (30.9 | ) | |||||
Consolidated Revenues: | |||||||||||||||
Total revenues of above Company segments | $ | 1,631.5 | $ | 1,543.6 | $ | 4,633.6 | $ | 4,441.7 | |||||||
Other sources (b) | 45.7 | 44.0 | 127.4 | 128.1 | |||||||||||
Consolidated investment gains (losses): | |||||||||||||||
Realized from actual transactions | 7.3 | 35.8 | 54.8 | 57.5 | |||||||||||
Unrealized from changes in fair value of equity securities | 128.4 | — | 17.7 | — | |||||||||||
Total realized and unrealized investment gains (losses) | 135.7 | 35.8 | 72.6 | 57.5 | |||||||||||
Consolidation elimination adjustments | (33.2 | ) | (30.4 | ) | (92.8 | ) | (90.5 | ) | |||||||
Consolidated revenues | $ | 1,779.7 | $ | 1,593.0 | $ | 4,740.9 | $ | 4,536.9 | |||||||
Consolidated Income (Loss) Before Income | |||||||||||||||
Taxes (Credits): | |||||||||||||||
Total segment pretax operating income (loss) of | |||||||||||||||
above Company segments | $ | 186.1 | $ | 17.3 | $ | 475.4 | $ | 300.6 | |||||||
Other sources - net (b) | 13.1 | 6.5 | 27.6 | 12.4 | |||||||||||
Consolidated investment gains (losses): | |||||||||||||||
Realized from actual transactions | 7.3 | 35.8 | 54.8 | 57.5 | |||||||||||
Unrealized from changes in fair value of equity securities | 128.4 | — | 17.7 | — | |||||||||||
Total realized and unrealized investment gains (losses) | 135.7 | 35.8 | 72.6 | 57.5 | |||||||||||
Consolidated income (loss) before income | |||||||||||||||
taxes (credits) | $ | 335.1 | $ | 59.6 | $ | 575.7 | $ | 370.7 | |||||||
Quarters Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Consolidated Income Tax Expense (Credits): | |||||||||||||||
Total income tax expense (credits) | |||||||||||||||
of above Company segments | $ | 34.7 | $ | .7 | $ | 87.8 | $ | 90.4 | |||||||
Other sources - net (b) | (3.3 | ) | .1 | (4.4 | ) | (.7 | ) | ||||||||
Income tax expense (credits) on consolidated realized | |||||||||||||||
and unrealized investment gains (losses) | 28.5 | 12.5 | 15.2 | 20.1 | |||||||||||
Consolidated income tax expense (credits) | $ | 59.8 | $ | 13.4 | $ | 98.6 | $ | 109.7 | |||||||
September 30, | December 31, | ||||||
2018 | 2017 | ||||||
Consolidated Assets: | |||||||
General Insurance | $ | 16,752.1 | $ | 16,055.5 | |||
Title Insurance | 1,470.1 | 1,466.0 | |||||
RFIG Run-off Business | 765.9 | 805.0 | |||||
Total assets for the above company segments | 18,988.1 | 18,326.6 | |||||
Other assets (b) | 1,080.0 | 1,440.9 | |||||
Consolidation elimination adjustments | (265.9 | ) | (364.0 | ) | |||
Consolidated assets | $ | 19,802.3 | $ | 19,403.5 | |||
(a) | Segment pretax operating income (loss) is reported net of interest charges on intercompany financing arrangements with Old Republic's holding company parent for the following segments: General - $17.9 and $49.9 compared to $14.3 and $42.7 for the quarters and nine months ended September 30, 2018 and 2017, respectively, and Title - $1.5 and $4.6 compared to $1.9 and $6.3 for the quarters and nine months ended September 30, 2018 and 2017, respectively. |
(b) | Represents amounts for Old Republic's holding company parent, minor corporate services subsidiaries, and a small life and accident insurance operation. |
(c) | General Insurance segment pretax operating income (loss) for the quarter and nine months ended September 30, 2017 include hurricane-related claim costs of $20.0. |
(d) | RFIG Run-off segment pretax operating income (loss) for the quarter and nine months ended September 30, 2017 include additional claim and related expense provisions of $130.0 applicable to the final settlements and probable dispositions of all known litigated and other claim costs incurred by the Company's run-off Financial Indemnity business during the Great Recession years and their aftermath. |
September 30, 2018 | December 31, 2017 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
3.75% Convertible Senior Notes due 2018 | $ | — | $ | — | $ | 470.6 | $ | 652.2 | |||||||
4.875% Senior Notes issued in 2014 and due 2024 | 396.6 | 411.6 | 396.2 | 430.3 | |||||||||||
3.875% Senior Notes issued in 2016 and due 2026 | 545.5 | 527.8 | 545.1 | 553.9 | |||||||||||
ESSOP debt | — | — | 4.2 | 4.2 | |||||||||||
Other miscellaneous debt | 38.8 | 38.8 | 32.4 | 32.5 | |||||||||||
Total debt | $ | 981.1 | $ | 978.4 | $ | 1,448.7 | $ | 1,673.2 |
Carrying | Fair | |||||||||||||||||||
Value | Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Financial Liabilities: | ||||||||||||||||||||
Debt: | ||||||||||||||||||||
September 30, 2018 | $ | 981.1 | $ | 978.4 | $ | — | $ | 939.5 | $ | 38.8 | ||||||||||
December 31, 2017 | $ | 1,448.7 | $ | 1,673.2 | $ | — | $ | 1,636.5 | $ | 36.7 |
This space left intentionally blank |
OVERVIEW |
EXECUTIVE SUMMARY |
Quarters Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Pretax income (loss) | $ | 335.1 | $ | 59.6 | $ | 575.7 | $ | 370.7 | |||||||
Pretax investment gains (losses) included in pretax income (loss) | 135.7 | 35.8 | 72.6 | 57.5 | |||||||||||
Pretax income (loss) excluding investment gains (losses) | $ | 199.3 | $ | 23.8 | $ | 503.0 | $ | 313.1 | |||||||
Net income (loss) | $ | 275.2 | $ | 46.1 | $ | 477.0 | $ | 260.9 | |||||||
Net of tax investment gains (losses) included in net income (loss) | 107.2 | 23.2 | 57.4 | 37.3 | |||||||||||
Net income (loss) excluding investment gains (losses) | $ | 167.9 | $ | 22.8 | $ | 419.6 | $ | 223.5 |
FINANCIAL HIGHLIGHTS | |||||||||||||||||||||
Quarters Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
SUMMARY INCOME STATEMENTS: | |||||||||||||||||||||
Revenues: | |||||||||||||||||||||
Net premiums and fees earned | $ | 1,504.8 | $ | 1,433.4 | 5.0 | % | $ | 4,255.5 | $ | 4,097.3 | 3.9 | % | |||||||||
Net investment income | 108.7 | 103.3 | 5.3 | 321.5 | 305.7 | 5.2 | |||||||||||||||
Other income | 30.4 | 20.4 | 48.5 | 91.1 | 76.3 | 19.5 | |||||||||||||||
Total operating revenues | 1,644.0 | 1,557.2 | 5.6 | 4,668.2 | 4,479.4 | 4.2 | |||||||||||||||
Investment gains (losses): | |||||||||||||||||||||
Realized from actual transactions | 7.3 | 35.8 | 54.8 | 57.5 | |||||||||||||||||
Unrealized from changes in fair value of equity securities | 128.4 | — | 17.7 | — | |||||||||||||||||
Total investment gains (losses) | 135.7 | 35.8 | 72.6 | 57.5 | |||||||||||||||||
Total revenues | 1,779.7 | 1,593.0 | 4,740.9 | 4,536.9 | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||
Claim costs | 619.4 | 766.4 | (19.2 | ) | 1,820.8 | 1,944.7 | (6.4 | ) | |||||||||||||
Sales and general expenses | 815.2 | 751.1 | 8.5 | 2,310.0 | 2,173.1 | 6.3 | |||||||||||||||
Interest and other costs | 9.9 | 15.8 | (37.0 | ) | 34.3 | 48.3 | (28.9 | ) | |||||||||||||
Total operating expenses | 1,444.6 | 1,533.3 | (5.8 | )% | 4,165.2 | 4,166.2 | — | % | |||||||||||||
Pretax income (loss) | 335.1 | 59.6 | 575.7 | 370.7 | |||||||||||||||||
Income taxes (credits) | 59.8 | 13.4 | 98.6 | 109.7 | |||||||||||||||||
Net income (loss) | $ | 275.2 | $ | 46.1 | $ | 477.0 | $ | 260.9 | |||||||||||||
COMMON STOCK STATISTICS: | |||||||||||||||||||||
Net income (loss) per share: Basic | $ | 0.92 | $ | 0.18 | $ | 1.63 | $ | 1.00 | |||||||||||||
Net income (loss) per share: Diluted | $ | 0.92 | $ | 0.17 | $ | 1.59 | $ | 0.91 | |||||||||||||
Components of net income (loss) per share: | |||||||||||||||||||||
Basic net income (loss) excluding investment | |||||||||||||||||||||
gains (losses) | $ | 0.56 | $ | 0.09 | $ | 1.43 | $ | 0.86 | |||||||||||||
Net investment gains (losses): | |||||||||||||||||||||
Realized from actual transactions | 0.02 | 0.09 | 0.15 | 0.14 | |||||||||||||||||
Unrealized from changes in fair value of | |||||||||||||||||||||
equity securities | 0.34 | — | 0.05 | — | |||||||||||||||||
Basic net income (loss) | $ | 0.92 | $ | 0.18 | $ | 1.63 | $ | 1.00 | |||||||||||||
Diluted net income (loss) excluding investment | |||||||||||||||||||||
gains (losses) | $ | 0.56 | $ | 0.09 | $ | 1.40 | $ | 0.79 | |||||||||||||
Net investment gains (losses): | |||||||||||||||||||||
Realized from actual transactions | 0.02 | 0.08 | 0.14 | 0.12 | |||||||||||||||||
Unrealized from changes in fair value of | |||||||||||||||||||||
equity securities | 0.34 | — | 0.05 | — | |||||||||||||||||
Diluted net income (loss) | $ | 0.92 | $ | 0.17 | $ | 1.59 | $ | 0.91 | |||||||||||||
Cash dividends on common stock | $ | 0.1950 | $ | 0.1900 | 2.6 | % | $ | 0.5850 | $ | 0.5700 | 2.6 | % | |||||||||
Book value per share | $ | 17.76 | $ | 18.05 | (1.6 | )% | |||||||||||||||
Common shares outstanding: | |||||||||||||||||||||
Average basic | 299,006,345 | 261,380,896 | 14.4 | % | 292,565,008 | 261,181,220 | 12.0 | % | |||||||||||||
Average diluted | 300,374,004 | 298,529,626 | 0.6 | % | 301,125,090 | 298,559,757 | 0.9 | % | |||||||||||||
Actual, end of period | 302,643,075 | 263,806,691 | 14.7 | % |
Quarters Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Net income (loss) | 17.9 | % | 22.6 | % | 17.1 | % | 29.6 | % | |||
Realized investment gains (losses) | 21.0 | % | 35.0 | % | 21.0 | % | 35.0 | % | |||
Unrealized investment gains (losses) | 21.0 | % | N/A | 20.8 | % | N/A | |||||
Net income (loss) excluding investment gains (losses) | 15.7 | % | 4.0 | % | 16.6 | % | 28.6 | % |
Major Segmented and Consolidated Elements of Income (Loss) | |||||||||||||||||||||
Quarters Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
Net premiums, fees, and other income: | |||||||||||||||||||||
General insurance | $ | 841.5 | $ | 801.3 | 5.0 | % | $ | 2,441.3 | $ | 2,313.7 | 5.5 | % | |||||||||
Title insurance | 640.7 | 596.8 | 7.4 | 1,743.6 | 1,670.5 | 4.4 | |||||||||||||||
Corporate and other | 4.2 | 5.0 | (14.8 | ) | 11.2 | 14.4 | (22.2 | ) | |||||||||||||
Other income | 30.4 | 20.4 | 48.5 | 91.1 | 76.3 | 19.5 | |||||||||||||||
Subtotal | 1,517.0 | 1,423.7 | 6.6 | 4,287.4 | 4,074.9 | 5.2 | |||||||||||||||
RFIG run-off business | 18.2 | 30.2 | (39.7 | ) | 59.2 | 98.7 | (39.9 | ) | |||||||||||||
Consolidated total | $ | 1,535.2 | $ | 1,453.9 | 5.6 | % | $ | 4,346.7 | $ | 4,173.6 | 4.1 | % | |||||||||
Underwriting and related services income (loss): | |||||||||||||||||||||
General insurance | $ | 37.0 | $ | (4.4 | ) | 935.0 | % | $ | 78.0 | $ | 25.4 | 206.7 | % | ||||||||
Title insurance | 58.7 | 59.6 | (1.6 | ) | 132.6 | 150.7 | (12.0 | ) | |||||||||||||
Corporate and other (a) | (4.0 | ) | (3.7 | ) | (7.5 | ) | (17.4 | ) | (15.5 | ) | (12.1 | ) | |||||||||
Subtotal | 91.7 | 51.5 | 78.2 | 193.2 | 160.6 | 20.3 | |||||||||||||||
RFIG run-off business | 8.7 | (115.1 | ) | 107.6 | 22.6 | (104.8 | ) | 121.6 | |||||||||||||
Consolidated total | $ | 100.5 | $ | (63.6 | ) | 257.9 | % | $ | 215.8 | $ | 55.8 | 286.8 | % | ||||||||
Consolidated composite ratio: | |||||||||||||||||||||
Claim ratio | 41.2 | % | 53.5 | % | 42.8 | % | 47.5 | % | |||||||||||||
Expense ratio | 51.9 | 50.8 | 51.9 | 50.9 | |||||||||||||||||
Composite ratio | 93.1 | % | 104.3 | % | 94.7 | % | 98.4 | % | |||||||||||||
Net investment income: | |||||||||||||||||||||
General insurance | $ | 86.1 | $ | 80.0 | 7.5 | % | $ | 253.8 | $ | 238.0 | 6.6 | % | |||||||||
Title insurance | 9.8 | 9.1 | 7.3 | 28.8 | 27.9 | 3.3 | |||||||||||||||
Corporate and other | 8.1 | 8.6 | (5.0 | ) | 23.4 | 23.2 | 0.8 | ||||||||||||||
Subtotal | 104.1 | 97.8 | 6.4 | 306.1 | 289.2 | 5.8 | |||||||||||||||
RFIG run-off business | 4.6 | 5.4 | (15.3 | ) | 15.4 | 16.4 | (6.1 | ) | |||||||||||||
Consolidated total | $ | 108.7 | $ | 103.3 | 5.3 | % | $ | 321.5 | $ | 305.7 | 5.2 | % | |||||||||
Interest and other charges: | |||||||||||||||||||||
General insurance | $ | 18.0 | $ | 15.8 | $ | 52.7 | $ | 47.2 | |||||||||||||
Title insurance | 0.8 | 1.5 | 3.2 | 5.8 | |||||||||||||||||
Corporate and other (b) | (8.9 | ) | (1.6 | ) | (21.6 | ) | (4.8 | ) | |||||||||||||
Subtotal | 9.9 | 15.8 | 34.3 | 48.3 | |||||||||||||||||
RFIG run-off business | — | — | — | — | |||||||||||||||||
Consolidated total | $ | 9.9 | $ | 15.8 | (37.1 | )% | $ | 34.3 | $ | 48.3 | (28.9 | )% | |||||||||
Segmented and consolidated pretax income | |||||||||||||||||||||
(loss) excluding investment gains (losses): | |||||||||||||||||||||
General insurance | $ | 105.1 | $ | 59.7 | 75.9 | % | $ | 279.1 | $ | 216.2 | 29.1 | % | |||||||||
Title insurance | 67.7 | 67.3 | 0.6 | 158.2 | 172.8 | (8.5 | ) | ||||||||||||||
Corporate and other | 13.1 | 6.5 | 101.6 | 27.6 | 12.4 | 121.0 | |||||||||||||||
Subtotal | 185.9 | 133.5 | 39.2 | 464.9 | 401.5 | 15.8 | |||||||||||||||
RFIG run-off business | 13.3 | (109.7 | ) | 112.2 | 38.0 | (88.3 | ) | 143.1 | |||||||||||||
Consolidated pretax income (loss) excluding | |||||||||||||||||||||
investment gains (losses) | 199.3 | 23.8 | 735.5 | % | 503.0 | 313.1 | 60.6 | % | |||||||||||||
Income taxes (credits) on above | 31.3 | 0.9 | 83.4 | 89.6 | |||||||||||||||||
Net income (loss) excluding | |||||||||||||||||||||
investment gains (losses) | 167.9 | 22.8 | 419.6 | 223.5 | |||||||||||||||||
Pretax investment gains (losses): | |||||||||||||||||||||
Realized from actual transactions | 7.3 | 35.8 | 54.8 | 57.5 | |||||||||||||||||
Unrealized from changes in fair value of equity securities | 128.4 | — | 17.7 | — | |||||||||||||||||
Total realized and unrealized investment gains (losses) | 135.7 | 35.8 | 72.6 | 57.5 | |||||||||||||||||
Income taxes (credits) on investment gains (losses) | 28.5 | 12.5 | 15.2 | 20.1 | |||||||||||||||||
Net of tax investment gains (losses) | 107.2 | 23.2 | 57.4 | 37.3 | |||||||||||||||||
Net income (loss) | $ | 275.2 | $ | 46.1 | $ | 477.0 | $ | 260.9 | |||||||||||||
Net operating cash flows: | |||||||||||||||||||||
Consolidated | $ | 597.1 | $ | 522.1 | 14.4 | % | |||||||||||||||
Exclusive of RFIG run-off business | $ | 620.0 | $ | 598.6 | 3.6 | % |
General Insurance Segment Results - The table below shows the major elements affecting this segment’s financial performance for the interim periods reported upon. |
General Insurance Business | ||||||||||||||||||||||
Quarters Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||
Net premiums earned | $ | 841.5 | $ | 801.3 | 5.0 | % | $ | 2,441.3 | $ | 2,313.7 | 5.5 | % | ||||||||||
Net investment income | 86.1 | 80.0 | 7.5 | 253.8 | 238.0 | 6.6 | ||||||||||||||||
Other income | 30.2 | 20.4 | 48.1 | 90.5 | 75.8 | 19.5 | ||||||||||||||||
Operating revenues | 957.8 | 901.8 | 6.2 | 2,785.7 | 2,627.6 | 6.0 | ||||||||||||||||
Claim costs (a) | 595.0 | 608.7 | (2.3 | ) | 1,739.3 | 1,709.5 | 1.7 | |||||||||||||||
Sales and general expenses | 239.6 | 217.4 | 10.2 | 714.5 | 654.5 | 9.2 | ||||||||||||||||
Interest and other costs | 18.0 | 15.8 | 13.9 | 52.7 | 47.2 | 11.5 | ||||||||||||||||
Operating expenses | 852.7 | 842.0 | 1.3 | 2,506.6 | 2,411.3 | 3.9 | ||||||||||||||||
Segment pretax operating income | ||||||||||||||||||||||
(loss) (b) | $ | 105.1 | $ | 59.7 | 75.9 | % | $ | 279.1 | $ | 216.2 | 29.1 | % |
Claim ratio | 70.7 | % | 76.0 | % | 71.2 | % | 73.9 | % | ||||||||
Expense ratio | 24.9 | 24.6 | 25.6 | 25.0 | ||||||||||||
Composite ratio | 95.6 | % | 100.6 | % | 96.8 | % | 98.9 | % |
(a) | General insurance pretax results for the quarter and nine months ended September 30, 2017 include hurricane-related claim costs of $20.0. |
(b) | In connection with the run-off mortgage guaranty ("MI") and consumer credit indemnity ("CCI") combination, $0.2 and $0.7 of pretax operating income for the third quarter and first nine months of 2018, and $106.3 and $123.0 of pretax operating losses for the third quarter and first nine months of 2017, respectively, were retained by certain general insurance companies pursuant to various quota share and stop loss reinsurance agreements. All of these amounts, however, have been reclassified such that 100% of the CCI run-off business is reported in the RFIG run-off segment. |
Effect of Prior Periods' | ||||||
(Favorable)/ | Claim Ratio Excluding Prior | |||||
Unfavorable Claim | Periods' Claim Reserves | |||||
Reported Claim Ratio | Reserves Development | Development | ||||
2013 | 73.6% | (0.9)% | 74.5% | |||
2014 | 77.9 | 3.9 | 74.0 | |||
2015 | 74.1 | 1.5 | 72.6 | |||
2016 | 73.0 | 0.3 | 72.7 | |||
2017 | 71.8% | 0.7% | 71.1% | |||
3rd Quarter 2017 | 76.0% | 1.7% | 74.3% | |||
3rd Quarter 2018 | 70.7% | (1.0)% | 71.7% | |||
1st Nine Months 2017 | 73.9% | 1.8% | 72.1% | |||
1st Nine Months 2018 | 71.2% | 0.3% | 70.9% |
Title Insurance Segment Results - The table below shows the major elements affecting this segment’s financial performance for the interim periods reported upon. |
Title Insurance Business | ||||||||||||||||||||||
Quarters Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||
Net premiums and fees earned | $ | 640.7 | $ | 596.8 | 7.4 | % | $ | 1,743.6 | $ | 1,670.5 | 4.4 | % | ||||||||||
Net investment income | 9.8 | 9.1 | 7.3 | 28.8 | 27.9 | 3.3 | ||||||||||||||||
Other income | 0.1 | 0.1 | 88.5 | 0.6 | 0.5 | 24.9 | ||||||||||||||||
Operating revenues | 650.8 | 606.1 | 7.4 | 1,773.1 | 1,699.0 | 4.4 | ||||||||||||||||
Claim costs | 15.1 | 12.3 | 22.2 | 45.0 | 34.6 | 30.0 | ||||||||||||||||
Sales and general expenses | 567.1 | 524.9 | 8.0 | 1,566.6 | 1,485.6 | 5.4 | ||||||||||||||||
Interest and other costs | 0.8 | 1.5 | (46.1 | ) | 3.2 | 5.8 | (43.8 | ) | ||||||||||||||
Operating expenses | 583.1 | 538.8 | 8.2 | 1,614.9 | 1,526.1 | 5.8 | ||||||||||||||||
Segment pretax operating income | ||||||||||||||||||||||
(loss) | $ | 67.7 | $ | 67.3 | 0.6 | % | $ | 158.2 | $ | 172.8 | (8.5 | )% |
Claim ratio | 2.4 | % | 2.1 | % | 2.6 | % | 2.1 | % | ||||||||
Expense ratio | 88.5 | 87.9 | 89.8 | 88.9 | ||||||||||||
Composite ratio | 90.9 | % | 90.0 | % | 92.4 | % | 91.0 | % |
Effect of Prior Periods' | ||||||
(Favorable)/ | Claim Ratio Excluding Prior | |||||
Unfavorable Claim | Periods' Claim Reserves | |||||
Reported Claim Ratio | Reserves Development | Development | ||||
2013 | 6.7% | (0.2)% | 6.9% | |||
2014 | 5.2 | (0.8) | 6.0 | |||
2015 | 4.9 | (0.6) | 5.5 | |||
2016 | 3.8 | (1.1) | 4.9 | |||
2017 | 0.9% | (3.3)% | 4.2% | |||
3rd Quarter 2017 | 2.1% | (2.1)% | 4.2% | |||
3rd Quarter 2018 | 2.4% | (1.8)% | 4.2% | |||
1st Nine Months 2017 | 2.1% | (2.1)% | 4.2% | |||
1st Nine Months 2018 | 2.6% | (1.5)% | 4.1% |
RFIG Run-off Segment Results - The table below shows the major elements affecting this segment’s financial performance for the interim periods reported upon. |
RFIG Run-off Business | ||||||||||||||||||||||
Quarters Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||
A. Mortgage Insurance (MI) | ||||||||||||||||||||||
Net premiums earned | $ | 17.8 | $ | 25.6 | (30.3 | )% | $ | 58.0 | $ | 86.1 | (32.6 | )% | ||||||||||
Net investment income | 4.3 | 5.1 | (13.8 | ) | 14.7 | 15.4 | (4.3 | ) | ||||||||||||||
Claim costs (a) | 5.5 | 29.9 | (81.4 | )% | 23.3 | 51.2 | (54.4 | ) | ||||||||||||||
MI pretax operating income (loss) | $ | 13.2 | $ | (3.0 | ) | N/M | $ | 37.9 | $ | 35.7 | 6.2 | % |
Claim ratio (a) | 31.1 | % | 116.8 | % | 40.2 | % | 59.5 | % | ||||||||
Expense ratio | 19.1 | 14.9 | 19.9 | 16.9 | ||||||||||||
Composite ratio | 50.2 | % | 131.7 | % | 60.1 | % | 76.4 | % |
B. Consumer Credit Indemnity (CCI) | ||||||||||||||||||||||
Net premiums earned | $ | 0.3 | $ | 4.5 | (92.1 | )% | $ | 1.2 | $ | 12.5 | (90.4 | )% | ||||||||||
Net investment income | 0.2 | 0.3 | (38.5 | ) | 0.6 | 1.0 | (34.5 | ) | ||||||||||||||
Claim costs (a) | 0.1 | 111.1 | (99.9 | ) | 0.5 | 135.9 | (99.6 | ) | ||||||||||||||
CCI pretax operating income (loss) (b) | $ | — | $ | (106.7 | ) | 100.1 | % | $ | 0.1 | $ | (124.1 | ) | 100.1 | % |
Claim ratio (a) | 36.3 | % | N/M | 42.1 | % | N/M | ||||||||
Expense ratio | 105.2 | N/M | 102.6 | N/M | ||||||||||
Composite ratio | 141.5 | % | N/M | 144.7 | % | N/M |
C. Total MI and CCI run-off business: | ||||||||||||||||||||||
Net premiums earned | $ | 18.2 | $ | 30.2 | (39.7 | )% | $ | 59.2 | $ | 98.7 | (39.9 | )% | ||||||||||
Net investment income | 4.6 | 5.4 | (15.3 | ) | 15.4 | 16.4 | (6.1 | ) | ||||||||||||||
Claim costs (a) | 5.6 | 141.0 | (96.0 | ) | 23.8 | 187.1 | (87.3 | ) | ||||||||||||||
Segment pretax operating income | ||||||||||||||||||||||
(loss) (b) | $ | 13.3 | $ | (109.7 | ) | 112.2 | % | $ | 38.0 | $ | (88.3 | ) | 143.1 | % |
Claim ratio (a) | 31.2 | % | 466.6 | % | 40.2 | % | 189.6 | % | ||||||||
Expense ratio | 20.8 | 14.5 | % | 21.6 | 16.6 | |||||||||||
Composite ratio | 52.0 | % | 481.1 | % | 61.8 | % | 206.2 | % |
(a) | RFIG run-off pretax results for the quarter and nine months ended September 30, 2017 include additional claim and related expense provisions of $130.0 applicable to the final settlements and probable dispositions of all known litigated and other claim costs incurred by the Company’s run-off Financial Indemnity business during the Great Recession years and their aftermath. Of the total charge, $23.0 related to mortgage guaranty claim costs, and $107.0 was attributable to additional claim provisions in the consumer credit indemnity run-off business. |
(b) | In connection with the run-off mortgage guaranty ("MI") and consumer credit indemnity ("CCI") combination, $0.2 and $0.7 of pretax operating income for the third quarter and first nine months of 2018, and $106.3 and $123.0 of pretax operating losses for the third quarter and first nine months of 2017, respectively, were retained by certain general insurance companies pursuant to various quota share and stop loss reinsurance agreements. All of these amounts, however, have been reclassified such that 100% of the CCI run-off business is reported in the RFIG run-off segment. |
Corporate and Other Results - The combination of a small life and accident insurance business and the net costs associated with the parent holding company and its internal services subsidiaries usually produce highly variable results. Earnings variations stem from volatility inherent to the small scale of the life and accident insurance line, net investment income, and net interest charges pertaining to external and intra-system financing arrangements. This year’s third quarter and first nine months results were enhanced by the elimination of interest costs related to outstanding external debt converted into ORI common stock in March. The interplay of these various elements is summarized in the following table: |
Corporate and Other Operations | |||||||||||||||
Quarters Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net life and accident premiums earned | $ | 4.2 | $ | 5.0 | $ | 11.2 | $ | 14.4 | |||||||
Net investment income | 8.1 | 8.6 | 23.4 | 23.2 | |||||||||||
Other operating income | — | — | — | — | |||||||||||
Operating revenues | 12.4 | 13.5 | 34.6 | 37.6 | |||||||||||
Claim costs | 3.5 | 4.2 | 12.6 | 13.5 | |||||||||||
Insurance expenses | 1.3 | 1.3 | 3.7 | 6.9 | |||||||||||
Corporate, interest and other expenses - net | (5.6 | ) | 1.5 | (9.3 | ) | 4.7 | |||||||||
Operating expenses | (0.6 | ) | 7.0 | 7.0 | 25.1 | ||||||||||
Corporate and other pretax operating income | |||||||||||||||
(loss) | $ | 13.1 | $ | 6.5 | $ | 27.6 | $ | 12.4 |
Summary Consolidated Balance Sheet - The following table shows Old Republic's consolidated financial position at the dates shown. |
September 30, | December 31, | September 30, | |||||||||
2018 | 2017 | 2017 | |||||||||
Assets: | |||||||||||
Cash and fixed maturity securities | $ | 9,817.2 | $ | 10,145.9 | $ | 10,297.2 | |||||
Equity securities | 3,474.3 | 3,265.5 | 3,140.2 | ||||||||
Other invested assets | 128.5 | 124.9 | 128.8 | ||||||||
Cash and invested assets | 13,420.1 | 13,536.4 | 13,566.3 | ||||||||
Accounts and premiums receivable | 1,643.0 | 1,469.7 | 1,589.8 | ||||||||
Prepaid federal income taxes | 114.3 | 114.3 | 114.3 | ||||||||
Reinsurance balances recoverable | 3,637.2 | 3,371.8 | 3,568.9 | ||||||||
Sundry assets | 987.5 | 911.1 | 907.9 | ||||||||
Total | $ | 19,802.3 | $ | 19,403.5 | $ | 19,747.4 | |||||
Liabilities and Shareholders' Equity: | |||||||||||
Policy liabilities | $ | 2,450.5 | $ | 2,176.3 | $ | 2,308.6 | |||||
Claim reserves | 9,482.9 | 9,237.6 | 9,694.4 | ||||||||
Federal income tax payable: Current | 3.7 | 6.5 | 25.2 | ||||||||
Deferred | 54.7 | 100.5 | 71.4 | ||||||||
Debt | 981.1 | 1,448.7 | 1,526.9 | ||||||||
Sundry liabilities | 1,517.9 | 1,700.5 | 1,401.5 | ||||||||
Shareholders' equity | 5,311.2 | (a) | 4,733.3 | 4,719.0 | |||||||
Total | $ | 19,802.3 | $ | 19,403.5 | $ | 19,747.4 |
Cash, Invested Assets, and Shareholders' Equity - The table below shows Old Republic's consolidated cash and invested assets as well as the shareholders' equity balances at the dates shown. |
Cash, Invested Assets, and Shareholders' Equity | ||||||||||||||||||||
% Change | ||||||||||||||||||||
Sept. 30, | Dec. 31, | Sept. 30, | Sept. '18/ | Sept. '18/ | ||||||||||||||||
2018 | 2017 | 2017 | Dec. '17 | Sept. '17 | ||||||||||||||||
Cash and invested assets: | ||||||||||||||||||||
Invested assets, carried at fair value | $ | 12,369.6 | $ | 12,468.9 | $ | 12,493.2 | (0.8 | )% | (1.0 | )% | ||||||||||
Held to maturity, carried at amortized cost | 1,050.5 | 1,067.4 | 1,073.0 | (1.6 | )% | (2.1 | )% | |||||||||||||
Total per balance sheet | $ | 13,420.1 | $ | 13,536.4 | $ | 13,566.3 | (0.9 | )% | (1.1 | )% | ||||||||||
Total at original cost for all | $ | 12,886.1 | $ | 12,783.4 | $ | 12,764.3 | 0.8 | % | 1.0 | % | ||||||||||
Shareholders' equity: Total | $ | 5,311.2 | $ | 4,733.3 | $ | 4,719.0 | 12.2 | % | 12.5 | % | ||||||||||
Per common share | $ | 17.76 | $ | 17.72 | $ | 18.05 | 0.2 | % | (1.6 | )% | ||||||||||
Composition of shareholders' equity per share: | ||||||||||||||||||||
Equity before items below | $ | 16.76 | $ | 16.26 | $ | 16.36 | 3.1 | % | 2.4 | % | ||||||||||
Unrealized investment gains (losses) and other | ||||||||||||||||||||
accumulated comprehensive income (loss) | 1.00 | 1.46 | 1.69 | |||||||||||||||||
Total | $ | 17.76 | $ | 17.72 | $ | 18.05 | 0.2 | % | (1.6 | )% | ||||||||||
Segmented composition of | ||||||||||||||||||||
shareholders' equity per share: | ||||||||||||||||||||
Excluding run-off segment | $ | 16.26 | $ | 16.14 | $ | 16.67 | 0.7 | % | (2.5 | )% | ||||||||||
RFIG run-off segment | 1.50 | 1.58 | 1.38 | |||||||||||||||||
Consolidated total | $ | 17.76 | $ | 17.72 | $ | 18.05 | 0.2 | % | (1.6 | )% |
Shareholders' Equity Per Share | |||||||||||||||
Quarter | Year | ||||||||||||||
Ended | Nine Months Ended | Ended | |||||||||||||
Sept. 30, | September 30, | Dec. 31, | |||||||||||||
2018 | 2018 | 2017 | 2017 | ||||||||||||
Beginning balance | $ | 17.08 | $ | 17.72 | $ | 17.16 | $ | 17.16 | |||||||
Changes in shareholders' equity: | |||||||||||||||
Net income (loss) excluding net investment gains (losses) | 0.56 | 1.43 | 0.86 | 1.21 | |||||||||||
Net of tax realized investment gains (losses) from | |||||||||||||||
actual transactions | 0.02 | 0.15 | 0.14 | 0.93 | |||||||||||
Net of tax unrealized investment gains (losses) on | |||||||||||||||
securities carried at fair value: | |||||||||||||||
Reported in net income (loss) | 0.34 | 0.05 | — | — | |||||||||||
Reported as other comprehensive income (loss) | (0.06 | ) | (0.62 | ) | 0.40 | 0.28 | |||||||||
Subtotal | 0.28 | (0.57 | ) | 0.40 | 0.28 | ||||||||||
Total net of tax realized and unrealized | |||||||||||||||
investment gains (losses) | 0.30 | (0.42 | ) | 0.54 | 1.21 | ||||||||||
Cash dividends (a) | (0.1950 | ) | (0.5850 | ) | (0.5700 | ) | (1.7600 | ) | |||||||
Debt conversion, stock issuance, and other transactions | 0.02 | (0.38 | ) | 0.06 | (0.10 | ) | |||||||||
Net change | 0.68 | 0.04 | 0.89 | 0.56 | |||||||||||
Ending balance | $ | 17.76 | $ | 17.76 | $ | 18.05 | $ | 17.72 | |||||||
Percentage change for the period | 4.0 | % | 0.2 | % | 5.2 | % | 3.3 | % |
(a) | Full year 2017 includes a special cash dividend of $1.00 per share. |
Capitalization - The following table shows the components of ORI’s total capitalization. The most significant change during the fiscal twelve-months ended September 30, 2018 relates to the completed conversion of the 3.75% convertible senior notes into ORI common stock in March 2018. |
Capitalization | ||||||||||||
September 30, | December 31, | September 30, | ||||||||||
2018 | 2017 | 2017 | ||||||||||
Debt: | ||||||||||||
3.75% Convertible Senior Notes due 2018 | $ | — | $ | 470.6 | $ | 549.1 | ||||||
4.875% Senior Notes due 2024 | 396.6 | 396.2 | 396.1 | |||||||||
3.875% Senior Notes due 2026 | 545.5 | 545.1 | 545.0 | |||||||||
ESSOP debt | — | 4.2 | 4.2 | |||||||||
Other miscellaneous debt | 38.8 | 32.4 | 32.4 | |||||||||
Total debt | 981.1 | 1,448.7 | 1,526.9 | |||||||||
Common shareholders' equity | 5,311.2 | 4,733.3 | 4,719.0 | |||||||||
Total capitalization | $ | 6,292.3 | $ | 6,182.0 | $ | 6,245.9 | ||||||
Capitalization ratios: | ||||||||||||
Debt | 15.6 | % | 23.4 | % | 24.4 | % | ||||||
Common shareholders' equity | 84.4 | 76.6 | 75.6 | |||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % |
DETAILED MANAGEMENT ANALYSIS |
FINANCIAL ACCOUNTING AND REPORTING POLICIES |
FINANCIAL POSITION |
Credit Quality Ratings of Fixed Maturity Securities (a) | |||||
September 30, | December 31, | ||||
2018 | 2017 | ||||
Aaa | 20.6 | % | 21.6 | % | |
Aa | 13.1 | 12.9 | |||
A | 31.6 | 31.8 | |||
Baa | 28.7 | 27.5 | |||
Total investment grade | 94.0 | 93.8 | |||
All other (b) | 6.0 | 6.2 | |||
Total | 100.0 | % | 100.0 | % |
(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, which are converted to the above ratings classifications. |
(b) | "All other" includes non-investment grade or non-rated issuers. |
Gross Unrealized Losses Stratified by Industry Concentration for Non-Investment Grade Fixed Maturity Securities | |||||||||||
September 30, 2018 | Amortized Cost | Gross Unrealized Losses | |||||||||
Fixed Maturity Securities by Industry Concentration: | |||||||||||
Energy | $ | 115.9 | $ | 2.9 | |||||||
Health Care | 26.2 | 2.1 | |||||||||
Basic Industry | 20.7 | 1.2 | |||||||||
Consumer Durable | 29.6 | 1.2 | |||||||||
Other (includes 6 industry groups) | 128.7 | 1.2 | |||||||||
Total | $ | 321.4 | (c) | $ | 8.7 |
(c) | Represents 3.5% of the total fixed maturity securities portfolio. |
Gross Unrealized Losses Stratified by Industry Concentration for Investment Grade Fixed Maturity Securities | |||||||||||
September 30, 2018 | Amortized Cost | Gross Unrealized Losses | |||||||||
Fixed Maturity Securities by Industry Concentration: | |||||||||||
U.S. Government & Agencies | $ | 1,265.9 | $ | 32.4 | |||||||
Municipals | 1,006.2 | 28.4 | |||||||||
Utilities | 898.2 | 27.2 | |||||||||
Industrial | 568.3 | 15.7 | |||||||||
Other (includes 17 industry groups) | 3,028.4 | 68.0 | |||||||||
Total | $ | 6,767.2 | (d) | $ | 171.9 |
(d) | Represents 73.3% of the total fixed maturity securities portfolio. |
Gross Unrealized Losses Stratified by Industry Concentration for Equity Securities | |||||||||||
September 30, 2018 | Cost | Gross Unrealized Losses | |||||||||
Equity Securities by Industry Concentration: | |||||||||||
Consumer Non Durable | $ | 184.6 | $ | 22.0 | |||||||
Utilities | 137.1 | 12.0 | |||||||||
Financial | 25.3 | 2.9 | |||||||||
Health Care | 34.9 | 1.9 | |||||||||
Other (includes 5 industry groups) | 221.7 | 3.4 | |||||||||
Total | $ | 603.7 | (e) | $ | 42.3 | (f) |
(e) | Represents 21.4% of the total equity securities portfolio. |
(f) | Represents 1.5% of the cost of the total equity securities portfolio, while gross unrealized gains represent 24.7% of the portfolio. |
Gross Unrealized Losses Stratified by Maturity Ranges for All Fixed Maturity Securities | ||||||||||||||||||
Amortized Cost of Fixed Maturity Securities | Gross Unrealized Losses | |||||||||||||||||
September 30, 2018 | All | Non- Investment Grade Only | All | Non- Investment Grade Only | ||||||||||||||
Maturity Ranges: | ||||||||||||||||||
Due in one year or less | $ | 335.0 | $ | — | $ | 1.7 | $ | — | ||||||||||
Due after one year through five years | 3,366.9 | 174.5 | 68.8 | 2.3 | ||||||||||||||
Due after five years through ten years | 3,351.8 | 138.3 | 109.1 | 6.1 | ||||||||||||||
Due after ten years | 34.9 | 8.5 | 1.0 | .2 | ||||||||||||||
Total | $ | 7,088.7 | $ | 321.4 | $ | 180.7 | $ | 8.7 |
Gross Unrealized Losses Stratified by Duration and Amount of Unrealized Losses | ||||||||||||||||||||
Amount of Gross Unrealized Losses | ||||||||||||||||||||
September 30, 2018 | 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 Maturity Securities: | ||||||||||||||||||||
One to six months | $ | 64.3 | $ | — | $ | — | $ | 64.3 | ||||||||||||
Seven to twelve months | 53.0 | — | — | 53.0 | ||||||||||||||||
More than twelve months | 63.3 | — | — | 63.3 | ||||||||||||||||
Total | $ | 180.7 | $ | — | $ | — | $ | 180.7 | ||||||||||||
Number of Issues in Unrealized Loss Position: | ||||||||||||||||||||
Fixed Maturity Securities: | ||||||||||||||||||||
One to six months | 823 | — | — | 823 | ||||||||||||||||
Seven to twelve months | 279 | — | — | 279 | ||||||||||||||||
More than twelve months | 409 | — | — | 409 | ||||||||||||||||
Total | 1,511 | — | — | 1,511 | (g) |
(g) | At September 30, 2018 the number of issues in an unrealized loss position represent 77.1% of the total number of such fixed maturity issues held by the Company. |
Age Distribution of Fixed Maturity Securities | |||||||||
September 30, | December 31, | ||||||||
2018 | 2017 | ||||||||
Maturity Ranges: | |||||||||
Due in one year or less | 6.6 | % | 9.2 | % | |||||
Due after one year through five years | 51.1 | 45.5 | |||||||
Due after five years through ten years | 41.4 | 44.1 | |||||||
Due after ten years through fifteen years | .8 | 1.0 | |||||||
Due after fifteen years | .1 | .2 | |||||||
Total | 100.0 | % | 100.0 | % | |||||
Average Maturity in Years | 4.6 | 4.7 | |||||||
Duration (h) | 4.1 | 4.2 |
(h) | Duration is used as a measure of bond price sensitivity to interest rate changes. A duration of 4.1 as of September 30, 2018 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 long-term fixed maturity investment portfolio of approximately 4.1%. |
Composition of Unrealized Gains (Losses) | |||||||||||
September 30, | December 31, | ||||||||||
2018 | 2017 | ||||||||||
Available for Sale: | |||||||||||
Fixed Maturity Securities: | |||||||||||
Amortized cost | $ | 8,187.5 | $ | 8,162.2 | |||||||
Estimated fair value | 8,070.7 | 8,282.3 | |||||||||
Net unrealized gains (losses) | (116.8 | ) | 120.0 | ||||||||
Components of net unrealized gains (losses): | |||||||||||
Gross unrealized gains | 35.5 | 147.4 | |||||||||
Gross unrealized losses | (152.3 | ) | (27.3 | ) | |||||||
Net unrealized gains (losses) | $ | (116.8 | ) | $ | 120.0 | ||||||
Equity Securities: | |||||||||||
Original cost | $ | 2,820.9 | $ | 2,629.9 | |||||||
Estimated fair value | 3,474.3 | 3,265.5 | |||||||||
Net unrealized gains (losses) | 653.4 | (i) | 635.6 | ||||||||
Components of net unrealized gains (losses): | |||||||||||
Gross unrealized gains | 695.7 | 658.8 | |||||||||
Gross unrealized losses | (42.3 | ) | (23.2 | ) | |||||||
Net unrealized gains (losses) | $ | 653.4 | (i) | $ | 635.6 |
(i) | Effective January 1, 2018, changes in fair value of equity securities are recognized in net income. See Note 3. |
RESULTS OF OPERATIONS |
Revenues: Premiums & Fees |
Earned Premiums and Fees | ||||||||||||||||||||||
General | Title | RFIG Run-off | Other | Total | % Change from prior period | |||||||||||||||||
Years Ended December 31: | ||||||||||||||||||||||
2015 | $ | 2,894.7 | $ | 2,045.3 | $ | 219.9 | $ | 19.4 | $ | 5,179.4 | 7.7 | % | ||||||||||
2016 | 2,936.3 | 2,206.6 | 170.0 | 20.1 | 5,333.2 | 3.0 | ||||||||||||||||
2017 | 3,110.8 | 2,287.2 | 122.9 | 18.8 | 5,539.7 | 3.9 | ||||||||||||||||
Nine Months Ended September 30: | ||||||||||||||||||||||
2017 | 2,313.7 | 1,670.5 | 98.7 | 14.4 | 4,097.3 | 4.4 | ||||||||||||||||
2018 | 2,441.3 | 1,743.6 | 59.2 | 11.2 | 4,255.5 | 3.9 | ||||||||||||||||
Quarters Ended September 30: | ||||||||||||||||||||||
2017 | 801.3 | 596.8 | 30.2 | 5.0 | 1,433.4 | 5.0 | ||||||||||||||||
2018 | $ | 841.5 | $ | 640.7 | $ | 18.2 | $ | 4.2 | $ | 1,504.8 | 5.0 | % |
General Insurance Earned Premiums by Type of Coverage | |||||||||||||||||
Workers' Compensation | Commercial Automobile (mostly trucking) | Financial Indemnity | Inland Marine and Property | General Liability | Other | ||||||||||||
Years Ended December 31: | |||||||||||||||||
2015 | 39.0 | % | 32.1 | % | 4.1 | % | 7.4 | % | 5.9 | % | 11.5 | % | |||||
2016 | 36.5 | 33.7 | 4.3 | 7.4 | 5.6 | 12.5 | |||||||||||
2017 | 33.6 | 34.6 | 4.9 | 7.6 | 6.3 | 13.0 | |||||||||||
Nine Months Ended September 30: | |||||||||||||||||
2017 | 33.9 | 34.7 | 4.9 | 7.5 | 5.9 | 13.1 | |||||||||||
2018 | 31.2 | 36.4 | 5.3 | 7.7 | 6.2 | 13.2 | |||||||||||
Quarters Ended September 30: | |||||||||||||||||
2017 | 32.6 | 35.4 | 5.3 | 7.6 | 5.7 | 13.4 | |||||||||||
2018 | 30.6 | % | 36.9 | % | 5.3 | % | 7.7 | % | 6.0 | % | 13.5 | % |
Title Premium and Fee Production by Source | |||||
Direct Operations | Independent Title Agents & Other | ||||
Years Ended December 31: | |||||
2015 | 27.2 | % | 72.8 | % | |
2016 | 27.9 | 72.1 | |||
2017 | 26.9 | 73.1 | |||
Nine Months Ended September 30: | |||||
2017 | 27.4 | 72.6 | |||
2018 | 26.2 | 73.8 | |||
Quarters Ended September 30: | |||||
2017 | 27.0 | 73.0 | |||
2018 | 25.3 | % | 74.7 | % |
Earned Premiums | Persistency | ||||||||||||
Premium and Persistency Trends by Type: | Direct | Net | Traditional Primary | Bulk | |||||||||
Years Ended December 31: | |||||||||||||
2015 | $ | 201.1 | $ | 195.9 | 79.9 | % | 56.1 | % | |||||
2016 | 157.1 | 154.1 | 77.7 | 72.8 | |||||||||
2017 | 110.4 | 109.8 | 77.9 | 78.2 | |||||||||
Nine Months Ended September 30: | |||||||||||||
2017 | 86.6 | 86.1 | 76.9 | 76.7 | |||||||||
2018 | 58.0 | 58.0 | 78.5 | % | 74.9 | % | |||||||
Quarters Ended September 30: | |||||||||||||
2017 | 25.7 | 25.6 | |||||||||||
2018 | $ | 17.8 | $ | 17.8 |
Net Risk in Force | |||||||||||||||
Net Risk in Force By Type: | Traditional Primary | Bulk | Other | Total | |||||||||||
As of December 31: | |||||||||||||||
2015 | $ | 6,414.9 | $ | 428.2 | $ | 24.1 | $ | 6,867.3 | |||||||
2016 | 4,987.9 | 359.5 | 20.5 | 5,367.9 | |||||||||||
2017 | 3,888.0 | 292.4 | 12.1 | 4,192.6 | |||||||||||
As of September 30: | |||||||||||||||
2017 | 4,137.2 | 308.3 | 19.3 | 4,464.8 | |||||||||||
2018 | $ | 3,254.9 | $ | 246.1 | $ | 11.2 | $ | 3,512.3 |
Analysis of Risk in Force | |||||||||||
Risk in Force Distribution By FICO Scores: | FICO less than 620 | FICO 620 to 680 | FICO Greater than 680 | Unscored/ Unavailable | |||||||
Traditional Primary: | |||||||||||
As of December 31: | |||||||||||
2015 | 6.8 | % | 29.3 | % | 63.0 | % | .9 | % | |||
2016 | 7.2 | 30.5 | 61.5 | .8 | |||||||
2017 | 7.5 | 31.5 | 60.2 | .8 | |||||||
As of September 30: | |||||||||||
2017 | 7.4 | 31.2 | 60.6 | .8 | |||||||
2018 | 7.8 | % | 32.0 | % | 59.4 | % | .8 | % | |||
Bulk(a): | |||||||||||
As of December 31: | |||||||||||
2015 | 28.4 | % | 32.2 | % | 39.2 | % | .2 | % | |||
2016 | 29.9 | 32.0 | 38.0 | .1 | |||||||
2017 | 31.8 | 31.7 | 36.3 | .2 | |||||||
As of September 30: | |||||||||||
2017 | 31.6 | 31.8 | 36.4 | .2 | |||||||
2018 | 33.4 | % | 31.4 | % | 35.0 | % | .2 | % |
Risk in Force Distribution By Loan to Value ("LTV") Ratio: | LTV 85.0 and below | LTV 85.01 to 90.0 | LTV 90.01 to 95.0 | LTV Greater than 95.0 | |||||||
Traditional Primary(b): | |||||||||||
As of December 31: | |||||||||||
2015 | 3.8 | % | 33.5 | % | 30.9 | % | 31.8 | % | |||
2016 | 3.8 | 32.1 | 30.6 | 33.5 | |||||||
2017 | 4.0 | 30.9 | 30.5 | 34.6 | |||||||
As of September 30: | |||||||||||
2017 | 3.9 | 31.2 | 30.5 | 34.4 | |||||||
2018 | 4.0 | % | 30.3 | % | 30.2 | % | 35.5 | % | |||
Bulk(a): | |||||||||||
As of December 31: | |||||||||||
2015 | 48.3 | % | 28.0 | % | 11.9 | % | 11.8 | % | |||
2016 | 46.5 | 29.0 | 12.3 | 12.2 | |||||||
2017 | 45.3 | 29.9 | 12.6 | 12.2 | |||||||
As of September 30: | |||||||||||
2017 | 46.0 | 29.2 | 12.7 | 12.1 | |||||||
2018 | 43.4 | % | 30.9 | % | 13.1 | % | 12.6 | % |
(a) | Bulk pool risk in-force, which represented 8.1% of total bulk risk in-force at September 30, 2018 has been allocated pro-rata based on insurance in-force. |
(b) | The LTV distribution reflects base LTV ratios which are determined prior to the impact of single premiums financed and paid at the time of loan origination. |
Traditional Primary | |||||||||||||||||||||||||||||
TX | FL | GA | IL | CA | NC | PA | NJ | VA | MD | ||||||||||||||||||||
As of December 31: | |||||||||||||||||||||||||||||
2015 | 7.1 | % | 7.5 | % | 5.9 | % | 5.5 | % | 4.9 | % | 4.7 | % | 4.3 | % | 4.2 | % | 3.4 | % | 3.4 | % | |||||||||
2016 | 6.4 | 7.8 | 6.0 | 5.8 | 4.8 | 4.6 | 4.4 | 4.4 | 3.6 | 3.8 | |||||||||||||||||||
2017 | 5.9 | 8.1 | 6.0 | 6.1 | 4.8 | 4.4 | 4.3 | 4.6 | 3.7 | 4.2 | |||||||||||||||||||
As of September 30: | |||||||||||||||||||||||||||||
2017 | 6.0 | 8.0 | 6.0 | 6.1 | 4.8 | 4.4 | 4.3 | 4.6 | 3.7 | 4.1 | |||||||||||||||||||
2018 | 5.6 | % | 8.4 | % | 6.0 | % | 6.4 | % | 4.8 | % | 4.2 | % | 4.3 | % | 4.8 | % | 3.8 | % | 4.5 | % |
Bulk (a) | |||||||||||||||||||||||||||||
TX | FL | GA | IL | CA | NY | PA | NJ | OH | MD | ||||||||||||||||||||
As of December 31: | |||||||||||||||||||||||||||||
2015 | 5.1 | % | 8.9 | % | 4.7 | % | 4.0 | % | 12.8 | % | 7.4 | % | 3.6 | % | 4.4 | % | 4.2 | % | 2.6 | % | |||||||||
2016 | 5.3 | 8.6 | 4.9 | 4.2 | 12.4 | 7.4 | 3.7 | 4.1 | 4.2 | 2.6 | |||||||||||||||||||
2017 | 5.4 | 8.3 | 5.1 | 4.4 | 12.4 | 7.8 | 3.8 | 3.4 | 4.4 | 2.7 | |||||||||||||||||||
As of September 30: | |||||||||||||||||||||||||||||
2017 | 5.4 | 8.3 | 5.1 | 4.4 | 12.4 | 7.7 | 3.8 | 3.6 | 4.4 | 2.6 | |||||||||||||||||||
2018 | 5.6 | % | 8.2 | % | 5.3 | % | 4.6 | % | 12.2 | % | 7.2 | % | 3.9 | % | 3.1 | % | 4.7 | % | 2.8 | % |
Risk in Force Distribution By Level of Documentation: | Full Documentation | Reduced Documentation | |||
Traditional Primary: | |||||
As of December 31: | |||||
2015 | 92.6 | % | 7.4 | % | |
2016 | 92.4 | 7.6 | |||
2017 | 92.3 | 7.7 | |||
As of September 30: | |||||
2017 | 92.6 | 7.4 | |||
2018 | 92.2 | % | 7.8 | % | |
Bulk (a): | |||||
As of December 31: | |||||
2015 | 66.6 | % | 33.4 | % | |
2016 | 68.0 | 32.0 | |||
2017 | 69.4 | 30.6 | |||
As of September 30: | |||||
2017 | 68.8 | 31.2 | |||
2018 | 71.7 | % | 28.3 | % |
(a) | Bulk pool risk in-force, which represented 8.1% of total bulk risk in-force at September 30, 2018, has been allocated pro-rata based on insurance in-force. |
Risk in Force Distribution By Loan Type: | Fixed Rate & ARMs with Resets >=5 Years | ARMs with Resets <5 years | |||
Traditional Primary: | |||||
As of December 31: | |||||
2015 | 97.3 | % | 2.7 | % | |
2016 | 97.2 | 2.8 | |||
2017 | 97.2 | 2.8 | |||
As of September 30: | |||||
2017 | 97.2 | 2.8 | |||
2018 | 97.2 | % | 2.8 | % | |
Bulk (a): | |||||
As of December 31: | |||||
2015 | 71.8 | % | 28.2 | % | |
2016 | 71.3 | 28.7 | |||
2017 | 70.1 | 29.9 | |||
As of September 30: | |||||
2017 | 70.4 | 29.6 | |||
2018 | 69.1 | % | 30.9 | % |
(a) | Bulk pool risk in-force, which represented 8.1% of total bulk risk in-force at September 30, 2018, has been allocated pro-rata based on insurance in-force. |
Net CCI Earned Premiums | Risk in Force | ||||||
Years Ended December 31: | |||||||
2015 | $ | 23.9 | $ | 776.9 | |||
2016 | 15.8 | 699.7 | |||||
2017 | 13.0 | 140.9 | |||||
Nine Months Ended September 30: | |||||||
2017 | 12.5 | 629.9 | |||||
2018 | 1.2 | $ | 121.9 | ||||
Quarters Ended September 30: | |||||||
2017 | 4.5 | ||||||
2018 | $ | .3 |
Revenues: Net Investment Income |
Invested Assets at Cost | Fair Value Adjust- ment | Invested Assets at Fair Value (a) | |||||||||||||||||||||||||
General | Title | RFIG Run-off | Corporate and Other | Total | |||||||||||||||||||||||
As of December 31: | |||||||||||||||||||||||||||
2016 | $ | 9,255.8 | $ | 1,100.2 | $ | 685.3 | $ | 1,073.6 | $ | 12,115.1 | $ | 642.5 | $ | 12,757.7 | |||||||||||||
2017 | 9,702.7 | 1,106.2 | 545.9 | 1,206.9 | 12,561.9 | 756.1 | 13,318.0 | ||||||||||||||||||||
As of September 30: | |||||||||||||||||||||||||||
2017 | 9,514.0 | 1,084.1 | 588.6 | 1,338.7 | 12,525.6 | 805.2 | 13,330.8 | ||||||||||||||||||||
2018 | $ | 10,083.6 | $ | 1,100.4 | $ | 612.3 | $ | 878.0 | $ | 12,674.3 | $ | 536.6 | $ | 13,211.0 |
Net Investment Income | Yield at | ||||||||||||||||||||||||
General | Title | RFIG Run-off | Corporate and Other | Total | Cost | Fair Value | |||||||||||||||||||
Years Ended | |||||||||||||||||||||||||
December 31: | |||||||||||||||||||||||||
2015 | $ | 312.1 | $ | 34.0 | $ | 25.1 | $ | 17.2 | $ | 388.6 | 3.61 | % | 3.49 | % | |||||||||||
2016 | 312.1 | 36.2 | 23.2 | 15.4 | 387.0 | 3.34 | 3.23 | ||||||||||||||||||
2017 | 318.9 | 37.3 | 21.7 | 31.4 | 409.4 | 3.32 | 3.14 | ||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||
September 30: | |||||||||||||||||||||||||
2017 | 238.0 | 27.9 | 16.4 | 23.2 | 305.7 | 3.31 | 3.12 | ||||||||||||||||||
2018 | 253.8 | 28.8 | 15.4 | 23.4 | 321.5 | 3.40 | 3.23 | ||||||||||||||||||
Quarters Ended | |||||||||||||||||||||||||
September 30: | |||||||||||||||||||||||||
2017 | 80.0 | 9.1 | 5.4 | 8.6 | 103.3 | 3.34 | 3.15 | ||||||||||||||||||
2018 | $ | 86.1 | $ | 9.8 | $ | 4.6 | $ | 8.1 | $ | 108.7 | 3.46 | % | 3.33 | % |
Revenues: Net Investment Gains (Losses) |
Realized Investment Gains (Losses) from Actual Transactions | Impairment Losses on Securities | Unrealized Gains (Losses) from Changes in Fair Value of Equity Securities | |||||||||||||||||||||||||||||
Fixed Maturity Securities | Equity Securities and Miscel- laneous Investments | Total | Fixed Maturity Securities | Miscel- laneous Investments | Total | Investment Gains (Losses) | |||||||||||||||||||||||||
Years Ended | |||||||||||||||||||||||||||||||
December 31: | |||||||||||||||||||||||||||||||
2015 | $ | 16.3 | $ | 75.0 | $ | 91.3 | $ | — | $ | — | $ | — | $ | — | $ | 91.3 | |||||||||||||||
2016 | 7.8 | 69.9 | 77.8 | (4.9 | ) | — | (4.9 | ) | — | 72.8 | |||||||||||||||||||||
2017 | 16.6 | 194.9 | 211.6 | — | — | — | — | 211.6 | |||||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||||||||
September 30: | |||||||||||||||||||||||||||||||
2017 | 12.1 | 45.3 | 57.5 | — | — | — | — | 57.5 | |||||||||||||||||||||||
2018 | (1.0 | ) | 55.9 | 54.8 | — | — | — | 17.7 | 72.6 | ||||||||||||||||||||||
Quarters Ended | |||||||||||||||||||||||||||||||
September 30: | |||||||||||||||||||||||||||||||
2017 | 2.5 | 33.2 | 35.8 | — | — | — | — | 35.8 | |||||||||||||||||||||||
2018 | $ | (1.2 | ) | $ | 8.5 | $ | 7.3 | $ | — | $ | — | $ | — | $ | 128.4 | $ | 135.7 |
Expenses: Benefits and Claims |
Claim and Loss Adjustment Expense Reserves | ||||||||||||||||||
September 30, 2018 | December 31, 2017 | |||||||||||||||||
Gross | Net | Gross | Net | |||||||||||||||
Workers' compensation | $ | 4,861.7 | $ | 3,077.5 | $ | 4,752.1 | $ | 2,993.9 | ||||||||||
General liability | 1,098.9 | 558.6 | 1,072.6 | 565.4 | ||||||||||||||
Commercial automobile (mostly trucking) | 1,656.8 | 1,237.9 | 1,524.8 | 1,151.8 | ||||||||||||||
Other coverages | 859.2 | 605.1 | 810.8 | 561.4 | ||||||||||||||
Unallocated loss adjustment expense reserves | 228.5 | 214.5 | 225.1 | 198.8 | ||||||||||||||
Total general insurance reserves | 8,705.3 | 5,693.8 | 8,385.6 | 5,471.5 | ||||||||||||||
Title | 554.0 | 554.0 | 559.7 | 559.7 | ||||||||||||||
RFIG Run-off | 206.5 | 206.5 | 271.7 | 271.7 | ||||||||||||||
Life and accident | 16.9 | 10.6 | 20.4 | 13.5 | ||||||||||||||
Total claim and loss adjustment expense reserves | $ | 9,482.9 | $ | 6,465.0 | $ | 9,237.6 | $ | 6,316.4 | ||||||||||
Asbestosis and environmental claim reserves included | ||||||||||||||||||
in the above general insurance reserves: | ||||||||||||||||||
Amount | $ | 108.0 | $ | 89.6 | $ | 117.4 | $ | 96.4 | ||||||||||
% of total general insurance reserves | 1.2 | % | 1.6 | % | 1.4 | % | 1.8 | % |
September 30, | September 30, | December 31, | December 31, | ||||||||||||
2018 | 2017 | 2017 | 2016 | ||||||||||||
Estimated reduction in beginning reserve | $ | 19.0 | $ | 29.6 | $ | 29.6 | $ | 47.5 | |||||||
Total incurred claims and settlement expenses | |||||||||||||||
reduced (increased) by changes in | |||||||||||||||
estimated rescissions: | |||||||||||||||
Current year | .7 | 5.0 | 6.2 | 8.3 | |||||||||||
Prior year | (12.6 | ) | (3.5 | ) | (3.7 | ) | (24.8 | ) | |||||||
Sub-total | (11.9 | ) | 1.5 | 2.5 | (16.5 | ) | |||||||||
Estimated rescission reduction in paid claims | (3.5 | ) | (10.0 | ) | (13.1 | ) | (1.4 | ) | |||||||
Estimated reduction in ending reserve | $ | 3.6 | $ | 21.1 | $ | 19.0 | $ | 29.6 |
This space left intentionally blank |
Nine Months Ended | |||||||
September 30, | |||||||
2018 | 2017 | ||||||
Gross reserves at beginning of period | $ | 9,237.6 | $ | 9,206.0 | |||
Less: reinsurance losses recoverable | 2,921.1 | 2,766.1 | |||||
Net reserves at beginning of period: | |||||||
General Insurance | 5,471.5 | 5,249.9 | |||||
Title Insurance | 559.7 | 602.0 | |||||
RFIG Run-off | 271.7 | 574.0 | |||||
Other | 13.5 | 13.8 | |||||
Sub-total | 6,316.4 | 6,439.8 | |||||
Incurred claims and claim adjustment expenses: | |||||||
Provisions for insured events of the current year: | |||||||
General Insurance | 1,717.4 | 1,650.0 | |||||
Title Insurance | 72.0 | 69.5 | |||||
RFIG Run-off (a) | 43.7 | 277.6 | |||||
Other | 15.7 | 15.7 | |||||
Sub-total | 1,849.0 | 2,012.9 | |||||
Change in provision for insured events of prior years: | |||||||
General Insurance | 7.3 | 41.9 | |||||
Title Insurance | (27.0 | ) | (34.9 | ) | |||
RFIG Run-off (a) | (19.8 | ) | (90.4 | ) | |||
Other | (3.2 | ) | (1.6 | ) | |||
Sub-total | (42.7 | ) | (85.0 | ) | |||
Total incurred claims and claim adjustment expenses (a) | 1,806.2 | 1,927.9 | |||||
Payments: | |||||||
Claims and claim adjustment expenses attributable to | |||||||
insured events of the current year: | |||||||
General Insurance | 543.1 | 501.0 | |||||
Title Insurance | 5.7 | 2.9 | |||||
RFIG Run-off (b) | 1.6 | 4.8 | |||||
Other | 10.6 | 9.8 | |||||
Sub-total | 561.1 | 518.7 | |||||
Claims and claim adjustment expenses attributable to | |||||||
insured events of prior years: | |||||||
General Insurance | 959.4 | 960.2 | |||||
Title Insurance | 44.9 | 45.5 | |||||
RFIG Run-off (b) | 87.3 | 144.6 | |||||
Other | 4.7 | 3.5 | |||||
Sub-total | 1,096.4 | 1,153.9 | |||||
Total payments (b) | 1,657.6 | 1,672.6 | |||||
Amount of reserves for unpaid claims and claim adjustment expenses | |||||||
at the end of each period, net of reinsurance losses recoverable: (c) | |||||||
General Insurance | 5,693.8 | 5,480.6 | |||||
Title Insurance | 554.0 | 588.1 | |||||
RFIG Run-off | 206.5 | 611.7 | |||||
Other | 10.6 | 14.4 | |||||
Sub-total | 6,465.0 | 6,695.1 | |||||
Reinsurance losses recoverable | 3,017.8 | 2,999.3 | |||||
Gross reserves at end of period | $ | 9,482.9 | $ | 9,694.4 |
(a) | In common with all other insurance coverages, RFIG Run-off mortgage guaranty settled and incurred claim and claim adjustment expenses include only those costs actually or expected to be paid by the Company. As previously noted, changes in mortgage guaranty aggregate case, IBNR, and loss adjustment expense reserves shown below |
(b) | Rescissions reduced the Company's paid losses by an estimated $3.5 and $10.0 for the year-to-date periods ended September 30, 2018 and 2017, respectively. |
(c) | Net reserves for claims that have been incurred but are not yet reported ("IBNR") carried in each segment were as follows: |
September 30, | September 30, | December 31, | ||||||||||
2018 | 2017 | 2017 | ||||||||||
General Insurance | $ | 2,696.3 | $ | 2,607.7 | $ | 2,585.9 | ||||||
Title Insurance | 466.1 | 509.3 | 479.3 | |||||||||
RFIG Run-off | 29.6 | 327.3 | 30.5 | |||||||||
Other | 4.5 | 6.8 | 4.7 | |||||||||
Total | $ | 3,196.6 | $ | 3,451.3 | $ | 3,100.6 |
General | Title | RFIG Run-off | Consolidated | ||||||||
Years Ended December 31: | |||||||||||
2015 | 74.1 | % | 4.9 | % | 88.0 | % | 47.5 | % | |||
2016 | 73.0 | 3.8 | 60.4 | 44.0 | |||||||
2017 | 71.8 | .9 | 160.9 | 44.7 | |||||||
Nine Months Ended September 30: | |||||||||||
2017 | 73.9 | 2.1 | 189.6 | 47.5 | |||||||
2018 | 71.2 | 2.6 | 40.2 | 42.8 | |||||||
Quarters Ended September 30: | |||||||||||
2017 | 76.0 | 2.1 | 466.6 | 53.5 | |||||||
2018 | 70.7 | % | 2.4 | % | 31.2 | % | 41.2 | % |
General Insurance Claim Ratios by Type of Coverage | ||||||||||||||||||||
All Coverages | Commercial Automobile (mostly trucking) | Workers' Compen-sation | Financial Indemnity | Inland Marine and Property | General Liability | Other | ||||||||||||||
Years Ended | ||||||||||||||||||||
December 31: | ||||||||||||||||||||
2015 | 74.1 | % | 77.8 | % | 80.7 | % | 39.1 | % | 57.0 | % | 76.8 | % | 60.4 | % | ||||||
2016 | 73.0 | 79.4 | 76.1 | 45.5 | 60.9 | 77.5 | 62.2 | |||||||||||||
2017 | 71.8 | 76.8 | 75.5 | 62.1 | 59.3 | 73.1 | 59.0 | |||||||||||||
Nine Months Ended | ||||||||||||||||||||
September 30: | ||||||||||||||||||||
2017 | 73.9 | 81.3 | 76.1 | 69.4 | 60.2 | 66.3 | 60.6 | |||||||||||||
2018 | 71.2 | 77.9 | 71.8 | 65.7 | 58.5 | 67.8 | 59.4 | |||||||||||||
Quarters Ended | ||||||||||||||||||||
September 30: | ||||||||||||||||||||
2017 | 76.0 | 81.5 | 75.4 | 82.6 | 67.0 | 67.0 | 63.9 | |||||||||||||
2018 | 70.7 | % | 79.0 | % | 69.4 | % | 57.8 | % | 57.5 | % | 61.4 | % | 61.3 | % |
Average Settled Claim Amount (a) | Reported Delinquency Ratio at End of Period | Claims Rescissions and Denials | |||||||||||||||
Traditional Primary | Bulk | Traditional Primary | Bulk | ||||||||||||||
Years Ended December 31: | |||||||||||||||||
2015 | $ | 45,745 | $ | 46,669 | 10.45 | % | 26.74 | % | $ | 33.0 | |||||||
2016 | 45,478 | 48,158 | 10.53 | 25.78 | 1.4 | ||||||||||||
2017 | 47,267 | 51,446 | 10.52 | 23.31 | 13.1 | ||||||||||||
Nine Months Ended September 30: | |||||||||||||||||
2017 | 47,170 | 50,940 | 9.92 | 23.79 | 10.0 | ||||||||||||
2018 | 47,308 | 55,949 | 9.27 | % | 17.45 | % | 3.5 | ||||||||||
Quarters Ended September 30: | |||||||||||||||||
2017 | 47,528 | 53,524 | 3.6 | ||||||||||||||
2018 | $ | 45,624 | $ | 54,448 | $ | .8 |
(a) | Amounts are in whole dollars. |
Traditional Primary Delinquency Ratios for Top Ten States (b): | |||||||||||||||||||||||||||||
TX | FL | GA | IL | CA | NC | PA | MD | NJ | VA | ||||||||||||||||||||
As of December 31: | |||||||||||||||||||||||||||||
2015 | 7.7 | % | 13.5 | % | 8.4 | % | 10.8 | % | 6.1 | % | 8.6 | % | 12.2 | % | 13.3 | % | 25.0 | % | 8.5 | % | |||||||||
2016 | 9.1 | 11.8 | 8.7 | 10.7 | 6.1 | 8.3 | 12.7 | 12.8 | 23.5 | 8.6 | |||||||||||||||||||
2017 | 11.4 | 15.6 | 8.3 | 10.1 | 6.0 | 8.1 | 12.0 | 11.5 | 19.6 | 8.4 | |||||||||||||||||||
As of September 30: | |||||||||||||||||||||||||||||
2017 | 9.1 | 11.0 | 7.8 | 10.1 | 5.8 | 8.2 | 11.1 | 12.2 | 20.2 | 8.2 | |||||||||||||||||||
2018 | 9.4 | % | 10.2 | % | 7.3 | % | 8.7 | % | 5.5 | % | 8.9 | % | 10.8 | % | 10.9 | % | 14.6 | % | 7.6 | % |
Bulk Delinquency Ratios for Top Ten States (b): | |||||||||||||||||||||||||||||
TX | FL | GA | IL | CA | NY | PA | OH | NJ | MD | ||||||||||||||||||||
As of December 31: | |||||||||||||||||||||||||||||
2015 | 19.0 | % | 38.9 | % | 17.6 | % | 25.7 | % | 26.0 | % | 52.1 | % | 26.9 | % | 16.3 | % | 59.0 | % | 30.7 | % | |||||||||
2016 | 20.3 | 33.7 | 19.6 | 23.6 | 29.1 | 53.3 | 28.1 | 14.1 | 61.0 | 35.8 | |||||||||||||||||||
2017 | 20.3 | 34.2 | 17.8 | 21.5 | 26.4 | 44.2 | 25.3 | 15.0 | 50.3 | 24.8 | |||||||||||||||||||
As of September 30: | |||||||||||||||||||||||||||||
2017 | 19.7 | 32.2 | 17.4 | 21.3 | 27.9 | 47.0 | 22.2 | 15.0 | 55.1 | 29.5 | |||||||||||||||||||
2018 | 13.6 | % | 24.7 | % | 14.5 | % | 20.6 | % | 13.4 | % | 33.8 | % | 21.6 | % | 13.7 | % | 40.3 | % | 16.1 | % |
Total Delinquency Ratios for Top Ten States (includes "other" business) (b): | |||||||||||||||||||||||||||||
TX | FL | GA | IL | CA | NC | PA | MD | NJ | VA | ||||||||||||||||||||
As of December 31: | |||||||||||||||||||||||||||||
2015 | 8.3 | % | 15.9 | % | 8.8 | % | 11.5 | % | 9.3 | % | 9.0 | % | 13.0 | % | 14.2 | % | 27.4 | % | 8.9 | % | |||||||||
2016 | 9.8 | 13.4 | 9.1 | 11.3 | 9.3 | 8.5 | 13.5 | 13.5 | 25.6 | 8.7 | |||||||||||||||||||
2017 | 12.1 | 16.9 | 8.8 | 10.6 | 9.2 | 8.4 | 12.8 | 12.0 | 21.1 | 8.6 | |||||||||||||||||||
As of September 30: | |||||||||||||||||||||||||||||
2017 | 9.9 | 12.6 | 8.3 | 10.6 | 9.1 | 8.6 | 11.8 | 12.8 | 22.0 | 8.5 | |||||||||||||||||||
2018 | 9.7 | % | 11.2 | % | 7.7 | % | 9.2 | % | 6.6 | % | 9.2 | % | 11.5 | % | 11.1 | % | 15.7 | % | 7.7 | % |
(b) | As determined by risk in force as of September 30, 2018, these 10 states represent approximately 52.6%, 57.6%, and 52.5%, of traditional primary, bulk, and total risk in force, respectively. |
Reported Delinquency Ratio at End of Period | Claim Rescissions and Denials | |||||||||||||||||||
CCI Claim Costs | ||||||||||||||||||||
Paid | Incurred | |||||||||||||||||||
Amount | Ratio (a) | Amount | Ratio (a) | |||||||||||||||||
Years Ended | ||||||||||||||||||||
December 31: | ||||||||||||||||||||
2015 | $ | 35.6 | 148.8 | % | $ | 83.0 | 346.9 | % | 2.1 | % | $ | 19.1 | ||||||||
2016 | 11.7 | 74.0 | 50.0 | 315.9 | 2.0 | 10.1 | ||||||||||||||
2017 | 304.2 | N/M | 134.5 | N/M | 2.6 | 5.7 | ||||||||||||||
Nine Months Ended | ||||||||||||||||||||
September 30: | ||||||||||||||||||||
2017 | 9.0 | 71.8 | 135.9 | N/M | 1.9 | 5.3 | ||||||||||||||
2018 | (.2 | ) | (22.9 | ) | .5 | 42.1 | 2.4 | % | .3 | |||||||||||
Quarters Ended | ||||||||||||||||||||
September 30: | ||||||||||||||||||||
2017 | 4.3 | 93.9 | 111.1 | N/M | 1.4 | |||||||||||||||
2018 | $ | .1 | 37.6 | % | $ | .1 | 36.3 | % | $ | — |
(a) | Percent of net CCI earned premiums. CCI claims ratios include only those costs actually or expected to be paid by the Company and exclude claims not paid by virtue of coverage rescissions and claims denials as well as unsubstantiated claim submissions. Certain claim rescissions and denials may from time to time become the |
Expenses: Underwriting Acquisition and Other Expenses |
General | Title | RFIG Run-off | Consolidated | ||||||||
Years Ended December 31: | |||||||||||
2015 | 23.5 | % | 88.3 | % | 10.0 | % | 48.5 | % | |||
2016 | 24.8 | 87.9 | 12.2 | 50.6 | |||||||
2017 | 25.5 | 90.0 | 16.6 | 52.0 | |||||||
Nine Months Ended September 30: | |||||||||||
2017 | 25.0 | 88.9 | 16.6 | 50.9 | |||||||
2018 | 25.6 | 89.8 | 21.6 | 51.9 | |||||||
Quarters Ended September 30: | |||||||||||
2017 | 24.6 | 87.9 | 14.5 | 50.8 | |||||||
2018 | 24.9 | % | 88.5 | % | 20.8 | % | 51.9 | % |
Expenses: Total |
General | Title | RFIG Run-off | Consolidated | ||||||||
Years Ended December 31: | |||||||||||
2015 | 97.6 | % | 93.2 | % | 98.0 | % | 96.0 | % | |||
2016 | 97.8 | 91.7 | 72.6 | 94.6 | |||||||
2017 | 97.3 | 90.9 | 177.5 | 96.7 | |||||||
Nine Months Ended September 30: | |||||||||||
2017 | 98.9 | 91.0 | 206.2 | 98.4 | |||||||
2018 | 96.8 | 92.4 | 61.8 | 94.7 | |||||||
Quarters Ended September 30: | |||||||||||
2017 | 100.6 | 90.0 | 481.1 | 104.3 | |||||||
2018 | 95.6 | % | 90.9 | % | 52.0 | % | 93.1 | % |
Expenses: Income Taxes |
End of Management Analysis of Financial Position and Results of Operations |
OTHER INFORMATION |
Item 3 - Quantitative and Qualitative Disclosure About Market Risk |
OLD REPUBLIC INTERNATIONAL CORPORATION |
FORM 10-Q |
PART II - OTHER INFORMATION |
31.1 | Certification by Aldo C. Zucaro, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as | ||
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
31.2 | Certification by Karl W. Mueller, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as | ||
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
32.1 | Certification by Aldo C. Zucaro, Chief Executive Officer, pursuant to Section 1350, Chapter 63 of Title 18, | ||
United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
32.2 | Certification by Karl W. Mueller, Chief Financial Officer, pursuant to Section 1350, Chapter 63 of Title 18, | ||
United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
Old Republic International Corporation | |||
(Registrant) | |||
Date: | November 3, 2018 | ||
/s/ Karl W. Mueller | |||
Karl W. Mueller Senior Vice President, Chief Financial Officer, and Principal Accounting Officer |
Exhibit | ||
No. | Description | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
(1) | the quarterly report on Form 10-Q of the Company for the quarter ended September 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
(2) | the information contained in the Report fairly presents the financial condition and results of operations of the Company. |
Document and Entity Information |
9 Months Ended |
---|---|
Sep. 30, 2018
shares
| |
Entity Information [Line Items] | |
Entity Registrant Name | Old Republic International Corporation |
Entity Central Index Key | 0000074260 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2018 |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | Q3 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 302,643,075 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Available for sale: | ||
Fixed maturity securities (amortized costs) | $ 8,187.5 | $ 8,162.2 |
Held to maturity securities | ||
Fixed maturity securities (fair value) | 1,022.4 | 1,069.2 |
Equity securities - cost | $ 2,820.9 | $ 2,629.9 |
Preferred Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred Stock, authorized shares (in shares) | 75,000,000 | 75,000,000 |
Preferred Stock, outstanding shares (in shares) | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 1.00 | $ 1.00 |
Common Stock, authorized shares (in shares) | 500,000,000 | 500,000,000 |
Common Stock, issued shares (in shares) | 302,643,075 | 269,238,727 |
Common Class B [Member] | ||
Held to maturity securities | ||
Common Stock, par value (in dollars per share) | $ 1.00 | $ 1.00 |
Common Stock, authorized shares (in shares) | 100,000,000 | 100,000,000 |
Common Stock, issued shares (in shares) | 0 | 0 |
Consolidated Statements of Income - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Revenues: | ||||
Net premiums earned | $ 1,388.6 | $ 1,312.0 | $ 3,914.4 | $ 3,752.6 |
Title, escrow, and other fees | 116.2 | 121.4 | 341.0 | 344.6 |
Total premiums and fees | 1,504.8 | 1,433.4 | 4,255.5 | 4,097.3 |
Net investment income | 108.7 | 103.3 | 321.5 | 305.7 |
Other income | 30.4 | 20.4 | 91.1 | 76.3 |
Total operating revenues | 1,644.0 | 1,557.2 | 4,668.2 | 4,479.4 |
Investment gains (losses): | ||||
Realized from actual transactions | 7.3 | 35.8 | 54.8 | 57.5 |
Unrealized from changes in fair value of equity securities | 128.4 | 0.0 | 17.7 | 0.0 |
Unrealized from impairments | 0.0 | 0.0 | 0.0 | 0.0 |
Total realized and unrealized investment gains (losses) | 135.7 | 35.8 | 72.6 | 57.5 |
Total revenues | 1,779.7 | 1,593.0 | 4,740.9 | 4,536.9 |
Benefits, Claims and Expenses: | ||||
Benefits, claims and settlement expenses | 615.1 | 759.0 | 1,806.3 | 1,927.1 |
Dividends to policyholders | 4.2 | 7.3 | 14.4 | 17.5 |
Underwriting, acquisition, and other expenses | 815.2 | 751.1 | 2,310.0 | 2,173.1 |
Interest and other charges | 9.9 | 15.8 | 34.3 | 48.3 |
Total expenses | 1,444.6 | 1,533.3 | 4,165.2 | 4,166.2 |
Income (loss) before income taxes (credits) | 335.1 | 59.6 | 575.7 | 370.7 |
Income Taxes (Credits): | ||||
Current | 34.2 | 52.9 | 95.7 | 138.4 |
Deferred | 25.6 | (39.4) | 2.9 | (28.6) |
Total | 59.8 | 13.4 | 98.6 | 109.7 |
Net Income | $ 275.2 | $ 46.1 | $ 477.0 | $ 260.9 |
Net Income Per Share: | ||||
Net income (loss) per share: Basic (in dollars per share) | $ 0.92 | $ 0.18 | $ 1.63 | $ 1.00 |
Net income (loss) per share: Diluted (in dollars per share) | $ 0.92 | $ 0.17 | $ 1.59 | $ 0.91 |
Average shares outstanding: Basic (in shares) | 299,006,345 | 261,380,896 | 292,565,008 | 261,181,220 |
Average shares outstanding: Diluted (in shares) | 300,374,004 | 298,529,626 | 301,125,090 | 298,559,757 |
Dividends Per Common Share: | ||||
Cash | $ 0.1950 | $ 0.1900 | $ 0.5850 | $ 0.5700 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 275.2 | $ 46.1 | $ 477.0 | $ 260.9 |
Unrealized gains (losses) on securities: | ||||
Unrealized gains (losses) on securities before reclassifications | (24.6) | 124.1 | (236.3) | 220.0 |
Amounts reclassified as realized investment gains from sales in the statements of income | 1.2 | (35.8) | (0.4) | (57.5) |
Pretax unrealized gains (losses) on securities | (23.4) | 88.3 | (236.8) | 162.5 |
Deferred income taxes (credits) | (4.9) | 31.0 | (49.8) | 56.9 |
Net unrealized gains (losses) on securities, net of tax | (18.4) | 57.3 | (186.9) | 105.5 |
Defined benefit pension plans: | ||||
Net pension adjustment before reclassifications | 0.0 | 0.0 | 0.0 | 0.0 |
Amounts reclassified as underwriting, acquisition, and other expenses in the statements of income | 0.8 | 0.1 | 2.4 | 0.3 |
Net adjustment related to defined benefit pension plans | 0.8 | 0.1 | 2.4 | 0.3 |
Deferred income taxes (credits) | 0.1 | 0.0 | 0.5 | 0.1 |
Net adjustment related to defined benefit pension plans, net of tax | 0.6 | 0.0 | 1.9 | 0.2 |
Foreign currency translation and other adjustments | 2.6 | 8.6 | (4.7) | 11.9 |
Net adjustments | (15.1) | 66.1 | (189.7) | 117.7 |
Comprehensive Income (Loss) | $ 260.0 | $ 112.2 | $ 287.3 | $ 378.7 |
Consolidated Statements of Cash Flows - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Cash flows from operating activities: | ||
Net income | $ 477.0 | $ 260.9 |
Adjustments to reconcile net income to | ||
Deferred policy acquisition costs | (18.7) | (27.7) |
Premiums and other receivables | (173.2) | (199.4) |
Unpaid claims and related items | 148.5 | 254.7 |
Unearned premiums and other policyholders' liabilities | 103.8 | 164.2 |
Income taxes | 0.8 | 11.9 |
Prepaid federal income taxes | 0.0 | (31.8) |
Reinsurance balances and funds | 110.4 | 75.0 |
Realized investment (gains) losses from actual transactions | (54.8) | (57.5) |
Unrealized investment (gains) losses from changes in fair value of equity securities | (17.7) | 0.0 |
Accounts payable, accrued expenses and other | 21.0 | 71.8 |
Total | 597.1 | 522.1 |
Available for sale | ||
Maturities and early calls | 758.9 | 632.1 |
Sales | 222.6 | 381.9 |
Sales of: | ||
Equity securities | 294.5 | 233.5 |
Other - net | 13.3 | 27.1 |
Purchases of: | ||
Available for sale | (1,027.6) | (1,046.7) |
Held to maturity | 0.0 | (114.5) |
Equity securities | (432.0) | (295.6) |
Other - net | (40.4) | (44.3) |
Net decrease (increase) in short-term investments | 88.7 | (163.4) |
Other - net | (6.8) | 0.0 |
Total | (128.7) | (389.9) |
Cash flows from financing activities: | ||
Issuance of common shares | 12.2 | 14.0 |
Redemption of debentures and notes | (4.7) | (3.9) |
Origination of Loans to Employee Stock Ownership Plans | (37.4) | 0.0 |
Dividends on common shares (Including a special dividend paid in January 2018) | (440.5) | (148.3) |
Other - net | (8.6) | (0.3) |
Total | (479.1) | (138.6) |
Increase (decrease) in cash | (10.7) | (6.4) |
Cash, beginning of period | 125.9 | 145.7 |
Cash, end of period | 115.2 | 139.2 |
Supplemental cash flow information: | ||
Cash paid (received) during the period for: Interest | 50.4 | 62.2 |
Cash paid (received) during the period for: Income taxes | $ 97.9 | $ 97.9 |
Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Accounting Policies and Basis of Presentation | Accounting Policies and Basis of Presentation: The accompanying consolidated financial statements have been prepared in conformity with the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") of accounting principles generally accepted in the United States of America ("GAAP"). These interim financial statements should be read in conjunction with these notes and those included in the Company's 2017 Annual Report on Form 10-K incorporated herein by reference. Pertinent accounting and disclosure pronouncements issued from time to time by the FASB are adopted by the Company as they become effective and are further discussed below. a) Effective January 1, 2018, the Company adopted FASB guidance on the recognition and measurement of financial instruments. The impact of the Company’s adoption of this pronouncement and the related interim disclosure requirements have been included in the pertinent note herein. b) In addition, effective January 1, 2018, the Company adopted the FASB's comprehensive revenue recognition standard which applies to contracts with customers, except for those that fall within the scope of other standards, such as insurance contracts. The Company’s adoption of this standard did not have an effect on its insurance contract revenues, and based on its evaluation of certain less significant revenue streams generated from contracts with customers, does not have a material impact on the consolidated financial statements taken as a whole. c) Effective January 1, 2017, the Company adopted new FASB guidance on accounting for share-based payment awards without material impact on the consolidated financial statements. d) In February 2016, the FASB issued guidance on lease accounting which will be effective in 2019 and requires balance sheet recognition of all leases with a term greater than 12 months. The Company's prospective adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements. e) In June 2016, the FASB issued guidance on accounting for credit losses on financial instruments which will be effective in 2020. The guidance will require immediate recognition of expected credit losses for (1) certain financial instruments including reinsurance recoverables, (2) held to maturity securities, (3) accounts and notes receivable and (4) modification of the impairment model for available for sale fixed maturity securities. The Company is currently evaluating the guidance to determine the potential impact of its adoption on its consolidated financial statements. The financial accounting and reporting process relies on estimates and on the exercise of judgment. In the opinion of management all adjustments consisting only of normal recurring accruals necessary for a fair presentation of interim periods' results and financial position have been recorded. Amounts shown in the consolidated financial statements and applicable notes are stated (except as otherwise indicated and as to share data) in millions, which amounts may not add to totals shown due to truncation. Necessary reclassifications are made in prior periods' financial statements whenever appropriate to conform to the most current presentation. |
Common Share Data |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Share Data | Common Share Data: Earnings Per Share - Consolidated basic earnings per share excludes the dilutive effect of common stock equivalents and is computed by dividing income available to common stockholders by the weighted-average number of common shares actually outstanding for the quarterly and year-to-date periods. Diluted earnings per share are similarly calculated with the inclusion of dilutive common stock equivalents. The following table provides a reconciliation of net income and the number of shares used in basic and diluted earnings per share calculations.
__________ (a) In calculating earnings per share, pertinent accounting rules require that common shares owned by the Company's Employee Savings and Stock Ownership Plan that are not yet allocated to participants in the plan be excluded from the calculation. However, such shares are issued and outstanding and have the same voting and other rights applicable to all common shares. |
Investments |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments: The Company may classify its fixed maturity invested assets in terms of those assets relative to which it either (1) has the positive intent and ability to hold until maturity, (2) has available for sale or (3) has the intention of trading. As of September 30, 2018 and December 31, 2017, the majority of the Company's fixed maturity invested assets were classified as "available for sale." Fixed maturity securities classified as "available for sale" are included at fair value with changes in such values, net of deferred income taxes, reflected directly in shareholders' equity. Fixed maturity securities classified as "held to maturity" are carried at amortized cost. Effective January 1, 2018, preferred and common stocks (equity securities) are included at fair value with changes in such values reflected as unrealized investment gains (losses) in the consolidated statements of income. Fair values for fixed maturity securities and equity securities are based on quoted market prices or estimates using values obtained from recognized independent pricing services. The Company reviews the status and fair value changes of each of its fixed maturity investments on at least a quarterly basis during the year, and estimates of other-than-temporary impairments ("OTTI") in the portfolio's value are evaluated and established at each quarterly balance sheet date. In reviewing investments for OTTI, the Company, in addition to a security's market price history, considers the totality of such factors as the issuer's operating results, financial condition and liquidity, its ability to access capital markets, credit rating trends, most current audited financial statements, industry and securities markets conditions, and analyst expectations to reach its conclusions. Sudden fair value declines caused by such adverse developments as newly emerged or imminent bankruptcy filings, issuer default on significant obligations, or reports of financial accounting developments that bring into question the validity of the issuer's previously reported earnings or financial condition, are recognized as realized losses as soon as credible publicly available information emerges to confirm such developments. In the event the Company's estimate of OTTI is insufficient at any point in time, future periods' net income (loss) would be adversely affected by the recognition of additional impairment losses, but its financial position would not necessarily be affected adversely inasmuch as such losses, or a portion of them, could have been recognized previously as unrealized losses directly in shareholders' equity. The Company recognized no OTTI adjustments for the quarters and nine months ended September 30, 2018 and 2017. The amortized cost and estimated fair values by type and contractual maturity of fixed maturity securities are shown in the following tables. Expected maturities will differ from contractual maturities since borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
The following tables reflect the Company's gross unrealized losses and fair value, aggregated by category and length of time that individual available for sale and held to maturity fixed maturity securities have been in an unrealized loss position. Fair value and issuer's cost comparisons follow:
In the above tables the unrealized losses on fixed income securities are primarily deemed to reflect changes in the interest rate environment. As part of its assessment of other-than-temporary impairments, the Company considers its intent to continue to hold, and the likelihood that it will not be required to sell investment securities in an unrealized loss position until cost recovery, principally on the basis of its asset and liability maturity matching procedures. A summary of the Company's equity securities holdings follows:
At December 31, 2017, the Company held 9 available for sale equity securities that had been in an unrealized loss position for 12 months or less. Effective January 1, 2018, the Company adopted a new accounting standard which requires the recognition of changes in fair value of equity securities in net income. The effect is shown in the accompanying consolidated financial statements. The cumulative-effect adjustment resulting from the adoption of the new standard was to reclassify $502.1 from accumulated other comprehensive income to retained earnings; total shareholders' equity remained unchanged. During the quarter and first nine months of 2018, the Company recognized unrealized investment gains (losses) of $128.4 and $17.7 emanating from changes in the fair value of equity securities in the consolidated statements of income. Changes in the fair value of equity securities still held at September 30, 2018 were $137.1 and $67.4 for the quarter and first nine months of 2018, respectively. Fair Value Measurements - Fair value is defined as the estimated price that is likely to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (an exit price) at the measurement date. A fair value hierarchy is established that prioritizes the sources ("inputs") used to measure fair value into three broad levels: inputs based on quoted market prices in active markets (Level 1); observable inputs based on corroboration with available market data (Level 2); and unobservable inputs based on uncorroborated market data or a reporting entity's own assumptions (Level 3). Following is a description of the valuation methodologies and general classification used for financial instruments measured at fair value. The Company uses quoted values and other data provided by a nationally recognized independent pricing source as inputs into its quarterly process for determining fair values of its fixed maturity and equity securities. To validate the techniques or models used by pricing sources, the Company's review process includes, but is not limited to: (i) initial and ongoing evaluation of methodologies used by outside parties to calculate fair value; and (ii) comparing other sources including the fair value estimates to its knowledge of the current market and to independent fair value estimates provided by the investment custodian. The independent pricing source obtains market quotations and actual transaction prices for securities that have quoted prices in active markets and uses its own proprietary method for determining the fair value of securities that are not actively traded. In general, these methods involve the use of "matrix pricing" in which the independent pricing source uses observable market inputs including, but not limited to, investment yields, credit risks and spreads, benchmarking of like securities, broker-dealer quotes, reported trades and sector groupings to determine a reasonable fair value. Level 1 securities include U.S. and Canadian Treasury notes, publicly traded common stocks, the quoted net asset value ("NAV") mutual funds, and short-term investments in highly liquid money market instruments. Level 2 securities generally include corporate bonds, municipal bonds, and certain U.S. and Canadian government agency securities. Securities classified within Level 3 include non-publicly traded bonds and equity securities. There were no significant changes in the fair value of assets measured with the use of significant unobservable inputs as of September 30, 2018 and December 31, 2017. The following tables show a summary of the fair value of financial assets segregated among the various input levels described above:
There were no transfers between Levels 1, 2 or 3 during the nine months ended September 30, 2018. Investment income is reported net of allocated expenses and includes appropriate adjustments for amortization of premium and accretion of discount on fixed maturity securities acquired at other than par value. Dividends on equity securities are credited to income on the ex-dividend date. Realized investment gains and losses, which result from sales or write-downs of securities, are reflected as revenues in the income statement and are determined on the basis of amortized cost at date of sale for fixed maturity securities, and cost in regard to equity securities; such bases apply to the specific securities sold. Effective January 1, 2018, as above noted, unrealized gains and (losses) from changes in fair value of equity securities are recorded as investment gains (losses) in the income statement. Unrealized investment gains (losses) on fixed maturity securities, net of any deferred income taxes, are recorded directly as a component of accumulated other comprehensive income in shareholders' equity. At September 30, 2018, the Company and its subsidiaries had no non-income producing fixed maturity or equity securities. The following table reflects the composition of net investment income, net realized gains or losses, and the net change in unrealized investment gains or losses for each of the periods shown.
__________
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Losses, Claims and Settlement Expenses |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Losses, Claims and Settlement Expenses | Losses, Claims and Settlement Expenses: The establishment of claim reserves by the Company's insurance subsidiaries is a reasonably complex and dynamic process influenced by a large variety of factors. These factors principally include past experience applicable to the anticipated costs of various types of claims, continually evolving and changing legal theories emanating from the judicial system, recurring accounting, statistical, and actuarial studies, the professional experience and expertise of the Company's claim departments' personnel or attorneys and independent claim adjusters, ongoing changes in claim frequency or severity patterns such as those caused by natural disasters, illnesses, accidents, work‑related injuries, and changes in general and industry-specific economic conditions. Consequently, the reserves established are a reflection of the opinions of a large number of persons, of the application and interpretation of historical precedent and trends, of expectations as to future developments, and of management's judgment in interpreting all such factors. At any point in time, the Company is exposed to the incurrence of possibly higher or lower than anticipated claim costs due to all of these factors, and to the evolution, interpretation, and expansion of tort law, as well as the effects of unexpected jury verdicts. All reserves are therefore based on estimates which are periodically reviewed and evaluated in the light of emerging claim experience and changing circumstances. The resulting changes in estimates are recorded in operations of the periods during which they are made. Return and additional premiums and policyholders' dividends, all of which tend to be affected by development of claims in future years, may offset, in whole or in part, favorable or unfavorable claim developments for certain coverages such as workers' compensation, portions of which are written under loss sensitive programs that provide for such adjustments. The Company 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 claims incurred. However, no representation is made nor is any guaranty given that ultimate net claim and related costs will not develop in future years to be greater or lower than currently established reserve estimates. The Company’s accounting policy regarding the establishment of claim reserve estimates is described in Note 1(h) to the consolidated financial statements included in Old Republic’s 2017 Annual Report on Form 10-K. The following table shows an analysis of changes in aggregate reserves for the Company's losses, claims and settlement expenses for each of the periods shown.
Summary of changes in aggregate reserves for claims and related costs:
__________
The RFIG Run-off mortgage guaranty provision for insured events of the current year was reduced by estimated coverage rescissions and claims denials of $.7 and $5.0 for the year-to-date periods ended September 30, 2018 and 2017, respectively. The provision for insured events of prior years for the periods shown in the table was (increased) reduced by estimated coverage rescissions and claims denials of $(12.6) and $(3.5), respectively. Prior year development was also affected in varying degrees by differences between actual claim settlements relative to expected experience, by reinstatement of previously rescinded or denied claims, and by subsequent revisions of assumptions in regards to claim frequency, severity or levels of associated claim settlement costs which result from consideration of underlying trends and expectations.
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Employee Benefit Plans |
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Sep. 30, 2018 | |
Retirement Benefits [Abstract] | |
Pension Plans | Employee Benefit Plans: The Company had an active pension plan (the "Plan") covering a portion of its work force until December 31, 2013. The Plan is a defined benefit plan pursuant to which pension payments are based primarily on years of service and employee compensation near retirement. The Plan was closed to new participants and benefits were frozen as of December 31, 2013. As a result, eligible employees retained all of the vested rights as of the effective date of the freeze. While additional benefits no longer accrue, the Company's cumulative obligation continues to be subject to further adjustment due to changes in actuarial assumptions such as expected mortality and changes in interest rates. Net periodic pension costs for the quarterly and year-to-date periods ended September 30, 2018 and 2017 were not material to Old Republic's consolidated statements of income. During the second quarter of 2018, the Employee Savings and Stock Ownership Plan (ESSOP) purchased 1.7 million shares of Old Republic common stock for $37.4. The purchases were financed by loans to the ESSOP from participating subsidiaries. |
Information About Segments of Business |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information About Segments of Business | Information About Segments of Business: Old Republic is engaged in the single business of insurance underwriting and related services. The Company conducts its operations through a number of regulated insurance company subsidiaries organized into three major segments, namely its General Insurance Group (property and liability insurance), Title Insurance Group, and the Republic Financial Indemnity Group ("RFIG") Run-off Business. The results of a small life & accident insurance business are included with those of its holding company parent and minor corporate services operations. Each of the Company's segments underwrites and services only those insurance coverages which may be written by it pursuant to state insurance regulations and corporate charter provisions. Segment results exclude investment gains or losses and other-than-temporary impairments as these are aggregated in the consolidated totals. The contributions of Old Republic's insurance industry segments to consolidated totals are shown in the following table.
Segmented and Consolidated Results:
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Commitments and Contingent Liabilities Commitments and Contingent Liabilities |
9 Months Ended |
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Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingent Liabilities | Commitments and Contingent Liabilities: Legal proceedings against the Company and its subsidiaries routinely arise in the normal course of business and usually pertain to claim matters related to insurance policies and contracts issued by its insurance subsidiaries. Under GAAP, an estimated loss is accrued only if the loss is probable and reasonably estimable. At September 30, 2018, the Company did not have material non-claim litigation exposures in its consolidated business for which adequate loss and related expense provisions had not been made. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt: Consolidated debt of Old Republic and its subsidiaries is summarized below:
During the first quarter 2018, the Company's outstanding aggregate principal amount of the 3.75% Convertible Senior Notes were converted into 32,229,787 shares of Old Republic common stock. Fair Value Measurements - The Company utilizes indicative market prices, which incorporate recent actual market transactions and current bid/ask quotations to estimate the fair value of outstanding debt securities that are classified within Level 2 of the fair value hierarchy as presented below. The Company uses an internally generated interest yield market matrix table, which incorporates maturity, coupon rate, credit quality, structure and current market conditions to estimate the fair value of its outstanding debt securities that are classified within Level 3. The following table shows a summary of the carrying value and fair value of financial liabilities segregated among the various input levels described in Note 3 above:
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Income Taxes |
9 Months Ended | |||
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Sep. 30, 2018 | ||||
Income Tax Disclosure [Abstract] | ||||
Income Taxes | Income Taxes: Tax positions taken or expected to be taken in a tax return by the Company are recognized in the financial statements when it is more likely than not that the position would be sustained upon examination by tax authorities. To the best of management's knowledge, there are no tax uncertainties that are expected to result in significant increases or decreases to unrecognized tax benefits within the next twelve month period. The Company views its income tax exposures as primarily consisting of timing differences whereby the ultimate deductibility of a taxable amount is highly certain but the timing of its deductibility is uncertain. Such differences relate principally to the timing of deductions for loss and premium reserves. As in prior examinations, the Internal Revenue Service ("IRS") could assert that claim reserve deductions were overstated thereby reducing the Company's statutory taxable income in any particular year. The Company believes that it establishes its reserves fairly and consistently at each balance sheet date, and that it would succeed in defending its tax position in these regards. Because of the impact of deferred income tax accounting, the possible accelerated payment of tax to the IRS would not necessarily affect the annual effective tax rate. The Company classifies interest and penalties as income tax expense in the consolidated statement of income. The IRS has audited the Company's consolidated Federal income tax returns through year-end 2013. The Tax Cuts and Jobs Act ("TCJA") was enacted into law on December 22, 2017. The TCJA, among its many elements, lowered the nominal federal corporate tax rate to 21.0% from 35.0%. The IRS requires the Company's insurance subsidiaries to discount loss reserves using either company specific payment patterns, or industry average tables published by the IRS. The Company has previously elected to follow the IRS industry average tables. The TCJA requires the IRS to publish tables linking the interest rates used to discount loss reserves to the corporate bond yield curve as opposed to the Federal mid-term rates used under the old law. As of the date of this report, the IRS has not published the updated tables. Accordingly, the Company has made a provisional estimate of the adjustment resulting from the application of the new IRS published discount rates. The initial provisional estimate resulted in an increase to deferred tax assets of approximately $42.0, and a corresponding increase to deferred tax liabilities. The deferred tax liability is being amortized into taxable income over 8 years, with no impact to the Company's effective tax rate. Any adjustment to the loss reserve discount estimate will be recorded in the period in which additional information becomes available.
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Common Share Data (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Calculation of Numerator and Denominator in Earnings Per Share | The following table provides a reconciliation of net income and the number of shares used in basic and diluted earnings per share calculations.
__________ (a) In calculating earnings per share, pertinent accounting rules require that common shares owned by the Company's Employee Savings and Stock Ownership Plan that are not yet allocated to participants in the plan be excluded from the calculation. However, such shares are issued and outstanding and have the same voting and other rights applicable to all common shares. |
Investments (Tables) |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost and Estimated Fair Values Of Fixed Maturities | The amortized cost and estimated fair values by type and contractual maturity of fixed maturity securities are shown in the following tables. Expected maturities will differ from contractual maturities since borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
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Amortized Cost and Estimated Fair Values Of Fixed Maturities By Contractual Maturities |
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Gross Unrealized Losses and Fair Value, Aggregated | The following tables reflect the Company's gross unrealized losses and fair value, aggregated by category and length of time that individual available for sale and held to maturity fixed maturity securities have been in an unrealized loss position. Fair value and issuer's cost comparisons follow:
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Equity Securities Reflecting Reported Cost |
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Fair Value, Assets Measured on Recurring Basis | The following tables show a summary of the fair value of financial assets segregated among the various input levels described above:
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Investment Income | The following table reflects the composition of net investment income, net realized gains or losses, and the net change in unrealized investment gains or losses for each of the periods shown.
__________
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Losses, Claims and Settlement Expenses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Aggregate Reserves for Losses, Claims and Settlement Expenses | The following table shows an analysis of changes in aggregate reserves for the Company's losses, claims and settlement expenses for each of the periods shown.
Summary of changes in aggregate reserves for claims and related costs:
__________
The RFIG Run-off mortgage guaranty provision for insured events of the current year was reduced by estimated coverage rescissions and claims denials of $.7 and $5.0 for the year-to-date periods ended September 30, 2018 and 2017, respectively. The provision for insured events of prior years for the periods shown in the table was (increased) reduced by estimated coverage rescissions and claims denials of $(12.6) and $(3.5), respectively. Prior year development was also affected in varying degrees by differences between actual claim settlements relative to expected experience, by reinstatement of previously rescinded or denied claims, and by subsequent revisions of assumptions in regards to claim frequency, severity or levels of associated claim settlement costs which result from consideration of underlying trends and expectations.
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Information About Segments of Business (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting | The contributions of Old Republic's insurance industry segments to consolidated totals are shown in the following table.
Segmented and Consolidated Results:
|
Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Consolidated debt of Old Republic and its subsidiaries is summarized below:
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Fair Value, Debt Measured on Recurring Basis | The following table shows a summary of the carrying value and fair value of financial liabilities segregated among the various input levels described in Note 3 above:
|
Common Share Data (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||
Earnings Per Share [Abstract] | |||||||
Net income | $ 275.2 | $ 46.1 | $ 477.0 | $ 260.9 | |||
Numerator for basic earnings per share - income (loss) available to common stockholders | 275.2 | 46.1 | 477.0 | 260.9 | |||
Adjustment for interest expense incurred on assumed conversions of convertible senior notes | 0.0 | 3.6 | 3.1 | 10.9 | |||
Numerator for diluted earnings per share - income (loss) available to common stockholders after assumed conversions | $ 275.2 | $ 49.8 | $ 480.1 | $ 271.8 | |||
Denominator for basic earnings per share - weighted-average shares (a) | [1] | 299,006,345 | 261,380,896 | 292,565,008 | 261,181,220 | ||
Effect of dilutive securities - stock based compensation awards | 1,367,659 | 1,349,148 | 1,381,914 | 1,603,514 | |||
Effect of dilutive securities - convertible senior notes | 0 | 35,799,582 | 7,178,168 | 35,775,023 | |||
Denominator for diluted earnings per shares adjusted weighted average shares and assumed conversions (a) (in shares) | [1] | 300,374,004 | 298,529,626 | 301,125,090 | 298,559,757 | ||
Net income (loss) per share: Basic (in dollars per share) | $ 0.92 | $ 0.18 | $ 1.63 | $ 1.00 | |||
Net income (loss) per share: Diluted (in dollars per share) | $ 0.92 | $ 0.17 | $ 1.59 | $ 0.91 | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||
Antidilutive common stock equivalents excluded from earnings per share computations | 0 | 1,403,500 | 0 | 1,403,500 | |||
Stock based compensation awards [Member] | |||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||
Antidilutive common stock equivalents excluded from earnings per share computations | 0 | 1,403,500 | 0 | 1,403,500 | |||
|
Investments Fixed Maturity Securities by Type (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Schedule of Available-for-sale and Held-to-maturity Securities [Table] [Line Items] | ||
Available for sale, Fixed maturity securities (amortized cost) | $ 8,187.5 | $ 8,162.2 |
Available for sale, Fixed maturity securities (estimated fair value) | 8,070.7 | 8,282.3 |
Held to maturity (estimated fair value) | 1,022.4 | 1,069.2 |
U.S. & Canadian Governments [Member] | ||
Schedule of Available-for-sale and Held-to-maturity Securities [Table] [Line Items] | ||
Available for sale, Fixed maturity securities (amortized cost) | 1,472.9 | 1,554.3 |
Available for sale, Fixed maturity securities (gross unrealized gains) | 0.6 | 6.5 |
Available for sale, Fixed maturity securities (gross unrealized losses) | 34.8 | 8.7 |
Available for sale, Fixed maturity securities (estimated fair value) | 1,438.6 | 1,552.2 |
Tax-exempt [Member] | ||
Schedule of Available-for-sale and Held-to-maturity Securities [Table] [Line Items] | ||
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment | 1,050.5 | 1,067.4 |
Held to maturity (gross unrealized gains) | 0.3 | 10.0 |
Held to maturity (gross unrealized losses) | 28.4 | 8.3 |
Held to maturity (estimated fair value) | 1,022.4 | 1,069.2 |
Corporate [Member] | ||
Schedule of Available-for-sale and Held-to-maturity Securities [Table] [Line Items] | ||
Available for sale, Fixed maturity securities (amortized cost) | 6,714.6 | 6,607.8 |
Available for sale, Fixed maturity securities (gross unrealized gains) | 34.8 | 140.8 |
Available for sale, Fixed maturity securities (gross unrealized losses) | 117.4 | 18.6 |
Available for sale, Fixed maturity securities (estimated fair value) | 6,632.0 | 6,730.0 |
Fixed Maturity Securities [Member] | ||
Schedule of Available-for-sale and Held-to-maturity Securities [Table] [Line Items] | ||
Available for sale, Fixed maturity securities (amortized cost) | 8,187.5 | 8,162.2 |
Available for sale, Fixed maturity securities (gross unrealized gains) | 35.5 | 147.4 |
Available for sale, Fixed maturity securities (gross unrealized losses) | 152.3 | 27.3 |
Available for sale, Fixed maturity securities (estimated fair value) | $ 8,070.7 | $ 8,282.3 |
Investments Fair Value (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Held to maturity (amortized cost) | $ 1,050.5 | $ 1,067.4 |
Equity securities | 3,474.3 | 3,265.5 |
Available for sale, Fixed maturity securities | 8,070.7 | 8,282.3 |
Short-term investments | 580.7 | 670.1 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 580.7 | 670.1 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 0.0 | 0.0 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 0.0 | 0.0 |
U.S. & Canadian Governments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale, Fixed maturity securities | 1,438.6 | 1,552.2 |
U.S. & Canadian Governments [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale, Fixed maturity securities | 642.6 | 761.4 |
U.S. & Canadian Governments [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale, Fixed maturity securities | 796.0 | 790.8 |
U.S. & Canadian Governments [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale, Fixed maturity securities | 0.0 | 0.0 |
Tax-exempt [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Held to maturity (amortized cost) | 1,022.4 | 1,069.2 |
Tax-exempt [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Held to maturity (amortized cost) | 0.0 | 0.0 |
Tax-exempt [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Held to maturity (amortized cost) | 1,022.4 | 1,069.2 |
Tax-exempt [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Held to maturity (amortized cost) | 0.0 | 0.0 |
Corporate [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale, Fixed maturity securities | 6,632.0 | 6,730.0 |
Corporate [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale, Fixed maturity securities | 0.0 | 0.0 |
Corporate [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale, Fixed maturity securities | 6,621.5 | 6,719.5 |
Corporate [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale, Fixed maturity securities | 10.5 | 10.5 |
Equity Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 3,474.3 | 3,265.5 |
Available-for-sale, equity securities | 3,474.3 | 3,265.5 |
Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 3,472.6 | 3,264.4 |
Equity Securities [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 0.0 | 0.0 |
Equity Securities [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | $ 1.6 | $ 1.1 |
Investments Net Investment Income (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|||
Gain (Loss) on Investments [Line Items] | ||||||
Gross investment income | $ 110.2 | $ 104.4 | $ 326.2 | $ 309.0 | ||
Investment expenses | [1] | 1.4 | 1.1 | 4.6 | 3.3 | |
Net investment income | 108.7 | 103.3 | 321.5 | 305.7 | ||
Net realized gains (losses) | 107.2 | 23.2 | 57.4 | 37.3 | ||
Realized from actual transactions | 7.3 | 35.8 | 54.8 | 57.5 | ||
Unrealized from changes in fair value of equity securities | 128.4 | 0.0 | 17.7 | 0.0 | ||
Realized Investment Gains Losses From Impairment | 0.0 | 0.0 | 0.0 | 0.0 | ||
Total realized and unrealized investment gains (losses) | 135.7 | 35.8 | 72.6 | 57.5 | ||
Current and deferred income taxes (credits) | 28.5 | 12.5 | 15.2 | 20.1 | ||
Unrealized Gain (Loss) on Investments | (18.4) | 57.3 | (186.9) | 105.5 | ||
Equity Securities [Member] | ||||||
Gain (Loss) on Investments [Line Items] | ||||||
Equity securities, gross realized gains | 8.6 | 39.4 | 61.5 | 51.6 | ||
Equity securities, gross realized losses | 0.0 | (6.3) | (7.1) | (6.3) | ||
Equity securities, net realized gains (losses) | 8.6 | 33.0 | 54.4 | 45.3 | ||
Fixed Maturity Securities [Member] | ||||||
Gain (Loss) on Investments [Line Items] | ||||||
Fixed maturity securities, gross realized gains | 0.5 | 2.6 | 1.6 | 17.0 | ||
Fixed maturity securities, gross realized losses | (1.7) | 0.0 | (2.6) | (4.9) | ||
Net realized gains (losses) | (1.2) | 2.5 | (1.0) | 12.1 | ||
Changes in unrealized investment gains (losses) on, fixed maturity securities | (23.4) | 4.4 | (236.4) | 27.4 | ||
Less: Deferred income taxes (credits) | (5.0) | 1.7 | (49.8) | 9.8 | ||
Net changes in unrealized investment gains (losses) | (18.4) | 2.7 | (186.6) | 17.6 | ||
Equity securities & other long-term investments [Member] | ||||||
Gain (Loss) on Investments [Line Items] | ||||||
Changes in unrealized investment gains (losses) on, fixed maturity securities | 0.0 | 83.8 | (0.3) | 135.0 | ||
Less: Deferred income taxes (credits) | 0.0 | 29.2 | 0.0 | 47.1 | ||
Net changes in unrealized investment gains (losses) | 0.0 | 54.6 | (0.2) | 87.8 | ||
Other Investments | ||||||
Gain (Loss) on Investments [Line Items] | ||||||
Other long-term investments, net | 0.0 | 0.1 | 1.5 | 0.0 | ||
Fixed Maturity Securities [Member] | ||||||
Gain (Loss) on Investments [Line Items] | ||||||
Gross investment income | 74.4 | 72.9 | 224.2 | 220.4 | ||
Equity Securities [Member] | ||||||
Gain (Loss) on Investments [Line Items] | ||||||
Gross investment income | 31.5 | 28.7 | 91.3 | 81.6 | ||
Short-term Investments [Member] | ||||||
Gain (Loss) on Investments [Line Items] | ||||||
Gross investment income | 2.7 | 1.6 | 6.9 | 3.6 | ||
Investments [Member] | ||||||
Gain (Loss) on Investments [Line Items] | ||||||
Gross investment income | $ 1.4 | $ 1.0 | $ 3.6 | $ 3.2 | ||
|
Investments Textuals (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Schedule of Available-for-sale Securities [Line Items] | ||||
Net Unrealized Gains Losses Recognized from Changes in Fair Value of Equity Securities Held | $ 137.1 | $ 67.4 | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | 502.1 | 502.1 | ||
Unrealized from changes in fair value of equity securities | 128.4 | $ 0.0 | 17.7 | $ 0.0 |
Realized Investment Gains Losses From Impairment | $ 0.0 | $ 0.0 | $ 0.0 | $ 0.0 |
Investments Fixed Maturity Securities Stratified by Contractual Maturity (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Investments [Abstract] | ||
Available for sale, Due in one year or less (amortized cost) | $ 606.4 | |
Available for sale, Due after one year through five years (amortized cost) | 4,563.1 | |
Available for sale, Due after five years through ten years (amortized cost) | 2,931.5 | |
Available for sale, Due after ten years (amortized cost) | 86.5 | |
Available for sale, Fixed maturity securities (amortized cost) | 8,187.5 | $ 8,162.2 |
Available for sale, Due in one year or less (estimated fair value) | 607.2 | |
Available for sale, Due after one year through five years (estimated fair value) | 4,517.1 | |
Available for sale, Due after five years through ten years (estimated fair value) | 2,856.4 | |
Available for sale, Due after ten years (estimated fair value) | 89.9 | |
Available for sale, Fixed maturity securities (estimated fair value) | 8,070.7 | 8,282.3 |
Held to maturity, Due within one year or less (amortized cost) | 0.0 | |
Held to maturity, Due after one year through five years (amortized cost) | 155.9 | |
Held to maturity, Due after five years through then years (amortized cost) | 891.4 | |
Held to maturity, Due after ten years (amortized cost) | 3.1 | |
Held to maturity (amortized cost) | 1,050.5 | 1,067.4 |
Held to maturity, Due in one year or less (estimated fair value) | 0.0 | |
Held to maturity, Due after one year through five years (estimated fair value) | 152.9 | |
Held to maturity, Due after five years through ten years (estimated fair value) | 866.4 | |
Held to maturity, Due after ten years (estimated fair value) | 3.0 | |
Held to maturity (estimated fair value) | $ 1,022.4 | $ 1,069.2 |
Investments Gross Unrealized Losses and Fair Value (Details) $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Schedule of Available-for-sale and Held-to-maturity Securities [Table] [Line Items] | ||
Available for sale, Fair Value, 12 Months or Less | $ 4,765.3 | $ 2,741.9 |
Available for sale, Unrealized Losses, 12 Months or Less | 107.4 | 23.6 |
Available for sale, Fair Value, Greater than 12 Months | 1,164.7 | 175.5 |
Available for sale, Unrealized Losses, Greater than 12 Months | 44.9 | 3.7 |
Available for sale, Fair Value, Total | 5,930.1 | 2,917.4 |
Available for sale, Unrealized Losses, Total | 152.3 | 27.3 |
U.S. & Canadian Governments [Member] | ||
Schedule of Available-for-sale and Held-to-maturity Securities [Table] [Line Items] | ||
Available for sale, Fair Value, 12 Months or Less | 943.4 | 1,080.9 |
Available for sale, Unrealized Losses, 12 Months or Less | 22.6 | 8.6 |
Available for sale, Fair Value, Greater than 12 Months | 386.5 | 29.5 |
Available for sale, Unrealized Losses, Greater than 12 Months | 12.2 | 0.0 |
Available for sale, Fair Value, Total | 1,329.9 | 1,110.5 |
Available for sale, Unrealized Losses, Total | 34.8 | 8.7 |
Tax-exempt [Member] | ||
Schedule of Available-for-sale and Held-to-maturity Securities [Table] [Line Items] | ||
Available for sale, Fair Value, 12 Months or Less | 576.4 | 321.9 |
Available for sale, Unrealized Losses, 12 Months or Less | 9.9 | 4.8 |
Available for sale, Fair Value, Greater than 12 Months | 401.3 | 134.7 |
Available for sale, Unrealized Losses, Greater than 12 Months | 18.4 | 3.4 |
Available for sale, Fair Value, Total | 977.8 | 456.6 |
Available for sale, Unrealized Losses, Total | $ 28.4 | $ 8.3 |
Held-to-maturity Securities [Member] | ||
Schedule of Available-for-sale and Held-to-maturity Securities [Table] [Line Items] | ||
Number of securities in continuous unrealized loss position for 12 months or less | 204 | 112 |
Number of securities in continuous unrealized loss position for more than 12 months | 144 | 48 |
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions | 348 | 160 |
Corporate [Member] | ||
Schedule of Available-for-sale and Held-to-maturity Securities [Table] [Line Items] | ||
Available for sale, Fair Value, 12 Months or Less | $ 3,821.9 | $ 1,660.9 |
Available for sale, Unrealized Losses, 12 Months or Less | 84.7 | 15.0 |
Available for sale, Fair Value, Greater than 12 Months | 778.1 | 145.9 |
Available for sale, Unrealized Losses, Greater than 12 Months | 32.6 | 3.6 |
Available for sale, Fair Value, Total | 4,600.1 | 1,806.9 |
Available for sale, Unrealized Losses, Total | $ 117.4 | $ 18.6 |
Available-for-sale Securities [Member] | ||
Schedule of Available-for-sale and Held-to-maturity Securities [Table] [Line Items] | ||
Number of securities in continuous unrealized loss position for 12 months or less | 898 | 526 |
Number of securities in continuous unrealized loss position for more than 12 months | 265 | 56 |
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions | 1,163 | 582 |
Equity Securities [Member] | ||
Schedule of Available-for-sale and Held-to-maturity Securities [Table] [Line Items] | ||
Number of securities in continuous unrealized loss position for 12 months or less | 9 |
Investments Equity Securities (Details) - Equity Securities [Member] - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Equity securities - cost | $ 2,820.9 | $ 2,629.9 |
Equity securities, gross unrealized gains | 695.7 | 658.8 |
Equity securities, gross unrealized losses | 42.3 | 23.2 |
Available-for-sale, equity securities | $ 3,474.3 | $ 3,265.5 |
Losses, Claims and Settlement Expenses (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Liability for Unpaid Claims and Claims Adjustment Expense | |||||
Gross reserves at beginning of period | $ 9,237.6 | $ 9,206.0 | |||
Net reserves at beginning of period | $ 6,316.4 | $ 6,439.8 | |||
Provisions for insured events of the current year | 1,849.0 | 2,012.9 | |||
Change in provision for insured events of prior years | (42.7) | (85.0) | |||
Total incurred claims and claim adjustment expenses | 1,806.2 | 1,927.9 | |||
Claims and claim adjustment expenses attributable to insured events of the current year | 561.1 | 518.7 | |||
Claims and claim adjustment expenses attributable to insured events of prior years | 1,096.4 | 1,153.9 | |||
Total payments | 1,657.6 | 1,672.6 | |||
Amount of reserves for unpaid claims and claim adjustment expenses at the end of each period, net of reinsurance losses recoverable | $ 6,695.1 | 6,465.0 | 6,695.1 | ||
Gross reserves at end of period | 9,694.4 | 9,482.9 | 9,694.4 | ||
Net reserves for claims that have been incurred but are not yet reported | 3,451.3 | 3,196.6 | 3,451.3 | 3,100.6 | |
Reinsurance losses recoverable | |||||
Supplementary Insurance Information, by Segment [Line Items] | |||||
Reinsurance Recoverable for Unpaid Claims and Claims Adjustments | 2,921.1 | 2,766.1 | |||
Liability for Unpaid Claims and Claims Adjustment Expense | |||||
Less: reinsurance losses recoverable | 2,999.3 | 3,017.8 | 2,999.3 | ||
General Insurance | |||||
Liability for Unpaid Claims and Claims Adjustment Expense | |||||
Net reserves at beginning of period | 5,471.5 | 5,249.9 | |||
Provisions for insured events of the current year | 1,717.4 | 1,650.0 | |||
Change in provision for insured events of prior years | 7.3 | 41.9 | |||
Claims and claim adjustment expenses attributable to insured events of the current year | 543.1 | 501.0 | |||
Claims and claim adjustment expenses attributable to insured events of prior years | 959.4 | 960.2 | |||
Amount of reserves for unpaid claims and claim adjustment expenses at the end of each period, net of reinsurance losses recoverable | 5,480.6 | 5,693.8 | 5,480.6 | ||
Net reserves for claims that have been incurred but are not yet reported | 2,607.7 | 2,696.3 | 2,607.7 | 2,585.9 | |
Title Insurance | |||||
Liability for Unpaid Claims and Claims Adjustment Expense | |||||
Net reserves at beginning of period | 559.7 | 602.0 | |||
Provisions for insured events of the current year | 72.0 | 69.5 | |||
Change in provision for insured events of prior years | (27.0) | (34.9) | |||
Claims and claim adjustment expenses attributable to insured events of the current year | 5.7 | 2.9 | |||
Claims and claim adjustment expenses attributable to insured events of prior years | 44.9 | 45.5 | |||
Amount of reserves for unpaid claims and claim adjustment expenses at the end of each period, net of reinsurance losses recoverable | 588.1 | 554.0 | 588.1 | ||
Net reserves for claims that have been incurred but are not yet reported | 509.3 | 466.1 | 509.3 | 479.3 | |
RFIG Run-off | |||||
Liability for Unpaid Claims and Claims Adjustment Expense | |||||
Net reserves at beginning of period | 271.7 | 574.0 | |||
Provisions for insured events of the current year | 43.7 | 277.6 | |||
Change in provision for insured events of prior years | (19.8) | (90.4) | |||
Claims and claim adjustment expenses attributable to insured events of the current year | 1.6 | 4.8 | |||
Claims and claim adjustment expenses attributable to insured events of prior years | 87.3 | 144.6 | |||
Amount of reserves for unpaid claims and claim adjustment expenses at the end of each period, net of reinsurance losses recoverable | 611.7 | 206.5 | 611.7 | ||
Current year estimated coverage rescissions and claims denials | 0.7 | 5.0 | |||
Prior period estimated coverage rescissions and claims denials | (12.6) | (3.5) | |||
Estimated reduction in paid losses from rescissions | 3.5 | 10.0 | |||
Net reserves for claims that have been incurred but are not yet reported | 327.3 | 29.6 | 327.3 | 30.5 | |
Additional claim and related expenses | 130.0 | 130.0 | |||
Other | |||||
Liability for Unpaid Claims and Claims Adjustment Expense | |||||
Net reserves at beginning of period | 13.5 | $ 13.8 | |||
Provisions for insured events of the current year | 15.7 | 15.7 | |||
Change in provision for insured events of prior years | (3.2) | (1.6) | |||
Claims and claim adjustment expenses attributable to insured events of the current year | 10.6 | 9.8 | |||
Claims and claim adjustment expenses attributable to insured events of prior years | 4.7 | 3.5 | |||
Amount of reserves for unpaid claims and claim adjustment expenses at the end of each period, net of reinsurance losses recoverable | 14.4 | 10.6 | 14.4 | ||
Net reserves for claims that have been incurred but are not yet reported | $ 6.8 | $ 4.5 | $ 6.8 | $ 4.7 |
Employee Benefit Plans Employee Savings and Stock Ownership Plan (Details) shares in Millions, $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
shares
| |
Retirement Benefits [Abstract] | |
stock acquired during period shares employee stock ownership plan | shares | 1.7 |
stock acquired during period value employee stock ownership plan | $ | $ 37.4 |
Information About Segments of Business (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||||||||
Segment Reporting Information | |||||||||||||
Realized from actual transactions | $ 7.3 | $ 35.8 | $ 54.8 | $ 57.5 | |||||||||
Unrealized from changes in fair value of equity securities | 128.4 | 0.0 | 17.7 | 0.0 | |||||||||
Consolidated Revenues [Abstract] | |||||||||||||
Consolidated revenues | 1,779.7 | 1,593.0 | 4,740.9 | 4,536.9 | |||||||||
Net premiums earned | 1,388.6 | 1,312.0 | 3,914.4 | 3,752.6 | |||||||||
Title, escrow and other fees | 116.2 | 121.4 | 341.0 | 344.6 | |||||||||
Total premiums and fees | 1,504.8 | 1,433.4 | 4,255.5 | 4,097.3 | |||||||||
Total realized and unrealized investment gains (losses) | 135.7 | 35.8 | 72.6 | 57.5 | |||||||||
Total operating revenues | 1,644.0 | 1,557.2 | 4,668.2 | 4,479.4 | |||||||||
Consolidated Income (Loss) Before Taxes (Credits) [Abstract] | |||||||||||||
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest | 335.1 | 59.6 | 575.7 | 370.7 | |||||||||
Total realized and unrealized investment gains (losses) | 135.7 | 35.8 | 72.6 | 57.5 | |||||||||
Consolidated Income Tax Expense (Credits) [Abstract] | |||||||||||||
Income tax expense (credits) | 59.8 | 13.4 | 98.6 | 109.7 | |||||||||
Income tax expense (credits) on consolidated net realized investment gains (losses) | 28.5 | 12.5 | 15.2 | 20.1 | |||||||||
Total Company Segments [Member] | |||||||||||||
Consolidated Revenues [Abstract] | |||||||||||||
Consolidated revenues | 1,631.5 | 1,543.6 | 4,633.6 | 4,441.7 | |||||||||
Consolidated Income (Loss) Before Taxes (Credits) [Abstract] | |||||||||||||
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest | 186.1 | 17.3 | 475.4 | 300.6 | |||||||||
Consolidated Income Tax Expense (Credits) [Abstract] | |||||||||||||
Income tax expense (credits) | 34.7 | 0.7 | 87.8 | 90.4 | |||||||||
General Insurance Group [Member] | |||||||||||||
Segment Reporting Information | |||||||||||||
Hurricane-related claim costs | 20.0 | 20.0 | |||||||||||
Consolidated Revenues [Abstract] | |||||||||||||
Net premiums earned | 841.5 | 801.3 | 2,441.3 | 2,313.7 | |||||||||
Net investment income and other income | 116.3 | 100.4 | 344.4 | 313.9 | |||||||||
Income (loss) before income taxes (credits) and realized investment gains or losses | [1],[2] | 105.1 | 59.7 | 279.1 | 216.2 | ||||||||
Total operating revenues | 957.8 | 901.8 | 2,785.7 | 2,627.6 | |||||||||
Consolidated Income Tax Expense (Credits) [Abstract] | |||||||||||||
Income tax expense (credits) | 18.0 | 15.8 | 46.7 | 61.5 | |||||||||
Interest charges on intercompany financing arrangements | 17.9 | 14.3 | 49.9 | 42.7 | |||||||||
Title Insurance Segment [Member] | |||||||||||||
Consolidated Revenues [Abstract] | |||||||||||||
Net premiums earned | 524.5 | 475.4 | 1,402.5 | 1,325.8 | |||||||||
Title, escrow and other fees | 116.2 | 121.4 | 341.0 | 344.6 | |||||||||
Total premiums and fees | 640.7 | 596.8 | 1,743.6 | 1,670.5 | |||||||||
Net investment income and other income | 10.0 | 9.3 | 29.5 | 28.4 | |||||||||
Income (loss) before income taxes (credits) and realized investment gains or losses | [2] | 67.7 | 67.3 | 158.2 | 172.8 | ||||||||
Total operating revenues | 650.8 | 606.1 | 1,773.1 | 1,699.0 | |||||||||
Consolidated Income Tax Expense (Credits) [Abstract] | |||||||||||||
Income tax expense (credits) | 14.0 | 23.4 | 33.3 | 59.8 | |||||||||
Interest charges on intercompany financing arrangements | 1.5 | 1.9 | 4.6 | 6.3 | |||||||||
RFIG Run-off Business [Member] | |||||||||||||
Consolidated Revenues [Abstract] | |||||||||||||
Net premiums earned | 18.2 | 30.2 | 59.2 | 98.7 | |||||||||
Net investment income and other income | 4.6 | 5.4 | 15.4 | 16.4 | |||||||||
Income (loss) before income taxes (credits) and realized investment gains or losses | [3] | 13.3 | (109.7) | 38.0 | (88.3) | ||||||||
Total operating revenues | 22.8 | 35.6 | 74.7 | 115.1 | |||||||||
Consolidated Income Tax Expense (Credits) [Abstract] | |||||||||||||
Income tax expense (credits) | 2.6 | (38.5) | 7.7 | (30.9) | |||||||||
Additional claim and related expenses | 130.0 | 130.0 | |||||||||||
Other sources - net [Member] | |||||||||||||
Consolidated Revenues [Abstract] | |||||||||||||
Consolidated revenues | [4] | 45.7 | 44.0 | 127.4 | 128.1 | ||||||||
Consolidated Income (Loss) Before Taxes (Credits) [Abstract] | |||||||||||||
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest | [4] | 13.1 | 6.5 | 27.6 | 12.4 | ||||||||
Consolidated Income Tax Expense (Credits) [Abstract] | |||||||||||||
Income tax expense (credits) | [4] | (3.3) | 0.1 | (4.4) | (0.7) | ||||||||
Consolidation elimination adjustments [Member] | |||||||||||||
Consolidated Revenues [Abstract] | |||||||||||||
Consolidated revenues | $ (33.2) | $ (30.4) | $ (92.8) | $ (90.5) | |||||||||
|
Information About Segments of Business Textuals (Details) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
segment
|
Sep. 30, 2017
USD ($)
|
|
Segment Reporting Information | ||||
Number of major segments | segment | 3 | |||
General Insurance Group [Member] | ||||
Segment Reporting Information | ||||
Hurricane-related claim costs | $ 20.0 | $ 20.0 | ||
Interest charges on intercompany financing arrangements | $ 17.9 | 14.3 | $ 49.9 | 42.7 |
Title Insurance Segment [Member] | ||||
Segment Reporting Information | ||||
Interest charges on intercompany financing arrangements | $ 1.5 | 1.9 | $ 4.6 | 6.3 |
RFIG Run-off Business [Member] | ||||
Segment Reporting Information | ||||
Additional claim and related expenses | $ 130.0 | $ 130.0 |
Information About Segments of Business Reconciliation of Assets from Segment to Consolidated (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
||
---|---|---|---|---|
Segment Reporting, Asset Reconciling Item | ||||
Assets | $ 19,802.3 | $ 19,403.5 | ||
General Insurance Group [Member] | ||||
Segment Reporting, Asset Reconciling Item | ||||
Assets | 16,752.1 | 16,055.5 | ||
Title Insurance Segment [Member] | ||||
Segment Reporting, Asset Reconciling Item | ||||
Assets | 1,470.1 | 1,466.0 | ||
RFIG Run-off Business [Member] | ||||
Segment Reporting, Asset Reconciling Item | ||||
Assets | 765.9 | 805.0 | ||
Total Company Segments [Member] | ||||
Segment Reporting, Asset Reconciling Item | ||||
Assets | 18,988.1 | 18,326.6 | ||
All Other Segments [Member] | ||||
Segment Reporting, Asset Reconciling Item | ||||
Assets | [1] | 1,080.0 | 1,440.9 | |
Intersegment Elimination [Member] | ||||
Segment Reporting, Asset Reconciling Item | ||||
Assets | $ (265.9) | $ (364.0) | ||
|
Debt (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Debt Instrument [Line Items] | ||
Fair value | $ 978.4 | $ 1,673.2 |
Debt and Capital Lease Obligations | $ 981.1 | 1,448.7 |
Debt Conversion, Converted Instrument, Shares Issued | 32,229,787 | |
Convertible Senior Notes Due 2018 | ||
Debt Instrument [Line Items] | ||
Fair value | $ 0.0 | 652.2 |
Debt and Capital Lease Obligations | 0.0 | $ 470.6 |
Debt Instrument, Interest Rate, Stated Percentage | 3.75% | |
Senior Notes Due 2024 | ||
Debt Instrument [Line Items] | ||
Fair value | 411.6 | $ 430.3 |
Debt and Capital Lease Obligations | $ 396.6 | $ 396.2 |
Debt Instrument, Interest Rate, Stated Percentage | 4.875% | 4.875% |
Senior Notes Due 2026 [Member] | ||
Debt Instrument [Line Items] | ||
Fair value | $ 527.8 | $ 553.9 |
Debt and Capital Lease Obligations | $ 545.5 | $ 545.1 |
Debt Instrument, Interest Rate, Stated Percentage | 3.875% | 3.875% |
ESSOP Debt | ||
Debt Instrument [Line Items] | ||
Fair value | $ 0.0 | $ 4.2 |
Debt and Capital Lease Obligations | 0.0 | 4.2 |
Debt [Member] | ||
Debt Instrument [Line Items] | ||
Fair value | 38.8 | 32.5 |
Debt and Capital Lease Obligations | $ 38.8 | $ 32.4 |
Debt Financial Liabilities Disclosed, but not Carried, at Fair Value (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt | $ 981.1 | $ 1,448.7 |
Estimate of Fair Value Measurement [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt | 978.4 | 1,673.2 |
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt | 0.0 | 0.0 |
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt | 939.5 | 1,636.5 |
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt | 38.8 | 36.7 |
Reported Value Measurement [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt | $ 981.1 | $ 1,448.7 |
Income taxes (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Income Tax Disclosure [Abstract] | |
Tax Cut and Jobs Act Remeasurement | $ 42.0 |
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