Old Republic International Corp. said Thursday that it moved to a loss in the second quarter, missing Wall Street's estimates, due to continued weakness in the insurer's mortgage guaranty and title insurance lines.
For the period ended June 30, the company reported a loss of $45.4 million, or 20 cents per share, compared with a profit of $115.1 million, or 49 cents per share, in the year-ago period.
Excluding investment gains and losses, the company reported net operating loss of 22 cents per share, compared with net operating income of 45 cents per share in the second quarter of last year.
Analysts polled by Thomson Financial, on average, estimated a loss of 5 cents per share. Analyst estimates typically exclude one-time, unusual items.
Total operating revenue declined 8 percent to $937.4 million from $1.02 billion.
In the company's general insurance business, net premiums earned fell 9 percent to $494.2 million, hurt by a declining rate environment for most commercial insurance prices.
The quarter's results were also hampered by two of the insurer's biggest segments, mortgage insurance and title insurance.
People generally buy title insurance only when a house is sold, so fewer home sales mean fewer customers for title insurance. Title insurance premiums and fees earned shrank 25 percent in the quarter. The division posted a pretax operating loss of $4.5 million.
Rising claim costs, due to higher mortgage loan delinquencies and claim severity, more than offset double-digit increases in net premiums earned in the company's mortgage insurance segment, which lost $140.7 million in the quarter.
Old Republic said the substantial deterioration in all businesses with housing and mortgage-lending exposures is likely to pressure the company's earnings well into next year. However, the overall earnings stability of its general insurance business should provide enough positive support to return to profitability in 2010, the company said.
Shares dropped 70 cents, or 5.9 percent, to $11.11 in afternoon trading. Shares have traded between $9.19 and $20.17 in the past 12 months.
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