AM Best Upgrades Credit Ratings of Members of Old Republic Title Insurance Group; Affirms Credit Ratings of Other Subsidiaries of Old Republic International Corporation

AM Best has upgraded the Financial Strength Rating (FSR) to A+ (Superior) from A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) to “aa-” from “a+” of Old Republic National Title Insurance Company (Tampa, FL) and American Guaranty Title Insurance Company (Oklahoma City, OK) (collectively referred to as Old Republic Title Insurance Group [ORTIG]). Concurrently, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of “aa-” of members of Old Republic Insurance Companies (Old Republic). (See below for a detailed list of companies.) At the same time, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” of Old Republic Insurance Company of Canada (Old Republic Canada) (Hamilton, Ontario). In addition, AM Best has affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+” of Old Republic Life Insurance Company (ORL) (Chicago, IL). The outlook of these Credit Ratings (ratings) is stable. All companies are subsidiaries of Old Republic International Corporation [NYSE: ORI].

The rating action reflects ORTIG’s strategic position and importance within the Old Republic International Corporation enterprise. The title group continues to be integral to the overall organization, with common branding and talent synergies, as well as complementary enterprise risk management (ERM) programs. In addition, the group is a consistently strong driver of revenue and profitability for the organization.

The ratings of Old Republic, which is considered the lead rating unit in the Old Republic International Corporation enterprise, reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate ERM.

Old Republic is the flagship group for the Old Republic Insurance enterprise and one of the top 35 property/casualty insurers in the United States. The group is made up of commercial lines insurance carriers that focus predominantly on providing liability insurance for specific sectors of the North American economy. Major lines of business include workers’ compensation, commercial auto and general liability. Old Republic benefits from its expertise within the alternative risk transfer market and specialty commercial segments, as well as historically solid profitability, expertise in its respective individual business specialties and well-recognized franchises. Partially offsetting these positive rating factors is some variability in prior accident-year reserve development. In addition, Old Republic maintains an elevated exposure to common stocks within its investment portfolio; however, it remains within established tolerance levels. The company continues to have a very modest exposure to asbestos liabilities.

The ratings of Old Republic Canada reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.

The ratings of Old Republic Canada recognize the synergies it gains as an affiliate of Great West Casualty Company, as well as its accident and sickness business. Partially offsetting these positive rating factors are the company’s limited product offering and challenging market environment in Canada.

The ratings of ORTIG reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings of ORTIG also reflect the implicit support the group receives from its position in the Old Republic enterprise and its strategic role within the organization.

The ratings of ORTIG recognize its modest leverage measures and strong reserving practices. The majority of ORTIG’s premiums and fees are generated through independent agents. This enables ORTIG to manage down cycles better, as fixed costs generally are lower for that distribution channel. An offsetting rating factor is the group’s higher underwriting leverage measures due to the rapid increase in premium volume over the past five years. However, AM Best expects that ORTIG will continue to generate underwriting and operating results that are in line with its title competitors, but which are significant contributors to the overall profitability of the Old Republic International Corporation enterprise, while maintaining the strongest level of risk-adjusted capitalization in the intermediate term, as measured by Best’s Capital Adequacy Ratio (BCAR).

The ratings of ORL reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate ERM.

The ratings of ORL also reflect its risk-adjusted capitalization, which is assessed as strongest, as measured by BCAR. Invested asset holdings are of good credit quality, as the portfolio is designed to minimize credit default risk rather than maximizing yield. Earnings have been positive in recent years. Due to the small size of the reserves, any increase in claims or mortality will cause large fluctuations in earnings. Premiums have declined over the past several years, as the closed term block premiums run off, and the occupational accident premiums trend lower. The company’s business profile consists of a closed block of term life insurance and the actively marketed occupational accident line. Despite its modest size, ORL is important strategically to the Old Republic organization.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” have been affirmed, each with a stable outlook, for the following members of Old Republic Insurance Companies:

• BITCO General Insurance Corporation
• BITCO National Insurance Company
• Great West Casualty Company
• Manufacturers Alliance Insurance Company
• Old Republic General Insurance Corporation
• Old Republic Insurance Company
• Old Republic Lloyds of Texas
• Old Republic Surety Company
• Old Republic Union Insurance Company
• Pennsylvania Manufacturers Indemnity Company
• Pennsylvania Manufacturers’ Association Insurance Company

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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