AM Best Takes Various Rating Actions on Subsidiaries of Old Republic International Corporation

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating (FSR) of A+
(Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of
“aa-” of certain members of Old Republic Insurance Companies (Old
Republic). (See below for a detailed list of companies.) Additionally,
AM Best has upgraded the FSRs to A+ (Superior) from A (Excellent) and
the Long-Term ICRs to “aa-” from “a” of Old Republic General Insurance
Corporation (ORGENCO) (Chicago, IL) and the members of Old Republic that
are now part of this rating unit. (See below for a detailed list of
companies.)

Concurrently, AM Best has affirmed the FSR of A (Excellent) and
Long-Term ICR of “a+” of Old Republic Insurance Company of Canada (Old
Republic Canada) (Hamilton, Ontario).

At the same time, AM Best has upgraded the Long-Term ICR to “a+” from
“a” and affirmed the FSR of A (Excellent) of Old Republic National Title
Insurance Company (Tampa, FL) and American Guaranty Title Insurance
Company (Oklahoma City, OK) (collectively referred to as the Old
Republic Title Insurance Group [ORTIG]). In addition, AM Best has
affirmed the FSR of B++ (Good) and Long-Term ICR of “bbb+” of Old
Republic Life Insurance Company (ORL) (Chicago, IL). The outlooks for
all of the aforementioned Credit Ratings (ratings) are stable. All
companies are subsidiaries of Old Republic International Corporation
[NYSE: ORI].

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 categorizes as strongest, as well
as its strong operating performance, favorable business profile and
appropriate enterprise risk management (ERM).

Old Republic is one of the top 35 property/casualty insurers in the
United States and is a commercial lines insurance carrier that focuses
predominantly on providing liability insurance for specific sectors of
the North American economy. Major lines of business include workers’
compensation and commercial auto. Old Republic benefits from its
expertise within the alternative risk transfer (ART) market and
specialty commercial segments, as well as management’s emphasis on loss
control, commitment to delivering quality insurance-related services and
by limiting, over the past few years, its exposure to unprofitable
business. Partially offsetting these positive rating factors is a loss
ratio that is slightly above the commercial casualty composite. In
addition, Old Republic maintains an elevated exposure to common stocks
within its investment portfolio, although it is within established
tolerance levels. To a lesser degree, the company remains exposed to
asbestos liabilities.

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

The ratings of Old Republic Canada also acknowledge the synergies it
realizes as an affiliate of Great West and other affiliates. Partially
offsetting these positive rating factors are the company’s narrow
product offerings, the current soft market conditions and challenging
judicial environment in Canada, which have translated into the company’s
recent below average commercial auto performance.

The ratings of ORTIG reflect its balance sheet strength, which AM Best
categorizes as strongest, as well as its adequate operating performance,
neutral business profile and appropriate ERM. It also reflects 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 also recognize its strong liquidity and reserving
practices, which remain among the most prudent in the title industry.
While the group has increased its premium volume substantially in recent
years, operating results have continued to be favorable as a result of
its consistent underwriting performance. The increase in premium volume
also has enhanced the group’s presence, allowing it to become more
competitive. However, 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. AM Best expects that ORTIG will
continue to generate adequate underwriting and operating results while
maintaining the strongest level of risk-adjusted capitalization in the
near-to-medium term.

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

The ratings for ORL are based on its risk-adjusted capitalization being
at the strongest level, as measured by the Best Capital Adequacy Ratio
(BCAR), along with an invested asset portfolio of good credit quality.
Earnings have been positive as ORL’s occupational accident line has been
profitable but partially offset by increased mortality in its ordinary
life line of business, which is comprised mostly of closed block term
life insurance. Premiums have declined in the current year due to the
runoff nature of its term block of business and the lapse of a large
policyholder in its occupational accident line. ORL’s business profile
is modest, with only the occupational accident line actively marketed.
However, management considers ORL to be integral to the group’s overall
strategy.

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:

• Old Republic Insurance Company
• Great West Casualty Company
• BITCO General Insurance Corporation
• BITCO National Insurance Company
• Old Republic Lloyds of Texas

The FSR has been upgraded to A+ (Superior) from A (Excellent) and the
Long-Term ICRs to “aa-” from “a” each with a stable outlook for the
following members of Old Republic Insurance Companies:

• Pennsylvania Manufacturers Association Insurance Company
• Manufacturers Alliance Insurance Company
• Pennsylvania Manufacturers Indemnity Company
• Old Republic Union Insurance Company
• Old Republic Surety Company
• Old Republic General Insurance Corporation

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 Understanding
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 rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

Lewis DeLosa, CFA
Financial Analyst – P/C
+1
908 439 2200, ext. 5529
lewis.delosa@ambest.com

Frank
Walko
Financial Analyst – L/H
+1 908 439 2200,
ext. 5072
frank.walko@ambest.com

Christopher
Sharkey
Manager, Public Relations
+1 908 439
2200, ext. 5159
christopher.sharkey@ambest.com

Jim
Peavy
Director, Public Relations
+1 908 439
2200, ext. 5644
james.peavy@ambest.com