Old Republic (ORI) Q4 2025 Earnings Transcript

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DATE

Thursday, Jan. 22, 2026 at 3 p.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Craig Richard Smiddy
• Chief Financial Officer — Francis Joseph Sodaro
• President and Chief Executive Officer, Baldwin Public National Title Insurance Group — Carolyn Jean Monroe

TAKEAWAYS

• Consolidated Pretax Operating Income -- $236 million, down from $285 million, with total full-year pretax operating income at $1 billion.
• Consolidated Combined Ratio -- 96%, rising from 92.7%; annual combined ratio was 94.7%.
• Book Value Per Share Growth (Including Dividends) -- 22% increase, reaching $24.21 per share by year end.
• Operating Return on Beginning Equity -- 14.1% for the full year.
• Specialty Insurance Net Premiums Earned -- Up 8.3% in the quarter and 10.9% for the full year, surpassing $5 billion for the first time.
• Specialty Insurance Pretax Operating Income -- $178 million in the quarter versus $228 million, with annual pretax operating income of $900 million.
• Specialty Insurance Combined Ratio -- 97.3%, up from 91.8% and 93.2% for the year.
• Title Group Premium and Fees -- Up 12.4% for the quarter and 9.1% for the year.
• Title Pretax Operating Income -- $65 million for the quarter compared to $55.4 million, and $140 million for the year.
• Title Insurance Combined Ratio -- 94% in the quarter, improved from 94.4%, and 97.6% for the year.
• Net Investment Income -- Increased by 7.9% in the quarter due to higher bond yields and a larger investment base.
• Bonds Portfolio Book Yield -- 4.75% versus 4.5% at year end, with 4.6% average reinvestment rate on new corporate bonds (compared to 4.2% rolling off).
• Capital Return Initiatives -- $700 million in declared dividends and $56 million in share repurchases during the quarter, totaling $1 billion in capital returned for the year; $850 million remains in the repurchase authorization.
• Favorable Prior Year Reserve Development -- Benefit of 2.4 percentage points in consolidated loss ratio this quarter, versus 2.9 points last year.
• Commercial Auto Rate Increases -- Fourth quarter rate increases accelerated to 16% from 14% the previous quarter.
• Commercial Auto Net Premiums Written -- Up 6.4% for the quarter; loss ratio at 80%, compared to 77.9% prior year, with a three-point increase to the current accident year loss ratio.
• Workers' Compensation Net Premiums Written -- Down 6% for the quarter; loss ratio at 65.2%, up from 35.5%, primarily due to lower favorable prior year development.
• Property Net Premiums Written -- Increased by 21% in the quarter, finishing the year at $750 million; property loss ratio was 55%.
• Direct Title Premiums -- Up 18% for the quarter; agency premiums up 13% and comprised 77% of revenue.
• Commercial Title Premiums as Portion of Earned Premiums -- Accounted for 29% of quarterly earned premiums and 26% for the year, up from 23% and 22% prior year, respectively.
• Title Segment Operating Expenses -- Decreased by 1.2% relative to premiums and fees, driven by continued expense management.
• Title Loss Ratio -- Increased to 0.8%, with less favorable prior policy-year development than the previous year.
• 2026 Outlook—Specialty Insurance -- Smiddy stated plans to target a specialty combined ratio "around the same level" as 2025, with emphasis on pricing and underwriting discipline.
• 2026 Outlook—Title Insurance -- Monroe cited external research indicating commercial segment could improve by about 20%, and residential may grow between 3%-7%.

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RISKS

• The consolidated combined ratio increased to 96% from 92.7%, indicating rising underwriting costs.
• Specialty insurance's combined ratio rose to 97.3% from 91.8%, with the quarter's workers' comp prior year reserve development being slightly unfavorable due to a $17.5 million credit loss from a large deductible program with insufficient collateral.
• Loss trends in commercial auto accelerated toward the end of the year, leading to a three-point increase in the current accident year loss ratio, as Smiddy noted, "trends now look to be rather than in the low teens, the mid-teens."
• Management expects net investment income growth to slow in 2026 due to "initiatives, and the current interest rate environment."

SUMMARY

Old Republic International (NYSE:ORI) delivered quarter and full-year earnings marked by strong capital return initiatives and notable premium growth across specialty and title segments, despite higher combined ratios and underwriting volatility in select lines. Specialty insurance benefitted from premium expansion and increasing rate momentum in sectors facing elevated loss trends, while the title segment achieved expanded commercial market penetration and managed expense reductions. Strategic investments in technology and data analytics continued to impact expense ratios in the short term, aligning with management's focus on underwriting discipline and long-term portfolio diversification.

• Smiddy highlighted targeted rate increases and risk selection—particularly in commercial auto and long haul trucking—supported by advanced analytics for precise underwriting decisions.
• The company's share repurchase program remains sizable, with $850 million available, and management reinforced willingness to pursue both dividend increases and opportunistic buybacks in 2026.
• Monroe outlined ongoing efforts to expand the adoption of the Qualia operating platform in title, emphasizing operational efficiency and agent support as keys for margin expansion next year.
• Both specialty and title segments realized favorable prior-year reserve development, though the degree of benefit moderated compared to the earlier period.

INDUSTRY GLOSSARY

• Combined Ratio: A measure of underwriting profitability, calculated as incurred losses and expenses divided by earned premiums; ratios below 100% indicate underwriting profit.
• Deductible Program: An insurance arrangement in which the insured assumes a portion of losses up to a specific threshold—insufficient collateral in such programs can expose insurers to unexpected credit losses.
• Favorable Prior Year Reserve Development: Occurs when claims from previous years are settled for less than the reserves previously set aside, resulting in a positive benefit to current period results.
• Case Reserve: The estimated amount an insurer sets aside for a reported insurance claim that has not yet been settled.

Full Conference Call Transcript

Craig Richard Smiddy, President and CEO; Francis Joseph Sodaro, Chief Financial Officer; and Carolyn Jean Monroe, President and CEO of Baldwin Public National Title Insurance Group. Management will make some opening remarks, and then we'll open the line for your questions. At this time, I'd like to turn the call over to Craig. Please go ahead, sir.

Craig Richard Smiddy: Alright, Joe. Thank you very much. Well, good afternoon, everyone, and welcome again to Old Republic International Corporation's fourth quarter and full year 2025 earnings. In the fourth quarter, we produced $236 million of consolidated pretax operating income compared to $285 million, and our consolidated combined ratio was 96% compared to 92.7%. For the full year, we produced $1 billion of consolidated pretax operating income, and our consolidated combined ratio was 94.7%. Some other information on 2025: our operating return on beginning equity was 14.1%, and growth in book value per share, including dividends, was 22%. We think this reflects our strong operating earnings, our higher investment valuations, and our sound capital management strategy.

In the fourth quarter, specialty insurance grew net premiums earned by 8.3% over 2024, and for the full year, grew net premiums earned by 10.9%, and we eclipsed the $5 billion mark for the first time. In the fourth quarter, specialty produced $178 million of pretax operating income compared to $228 million, and specialty's combined ratio was 97.3% compared to 91.8%. For the full year, specialty produced $900 million of pretax operating income, another all-time high for us, and specialty's combined ratio was 93.2%. In the fourth quarter, title group premium and fees grew by 12.4% over 2024, and for the full year, title grew premium and fees by 9.1%.

In the fourth quarter, title also produced $65 million of pretax operating income compared to $55.4 million, and title's combined ratio was 94% compared to 94.4%. For the full year, title produced $140 million of pretax operating income, and title's combined ratio was 97.6%. Our conservative reserving practices were slow to release prior year reserves, but we react very quickly to increased reserves. We continue to produce favorable prior year loss reserve development in both specialty insurance and title insurance, and Frank will give you a little more color around that topic. With that, Frank, I'll go ahead and turn the discussion over to you, and then please turn things back to me.

I'll discuss specialty insurance, and then I'll turn things over to Carolyn, who'll discuss title, and then we'll wrap up and open it up for Q&A. So Frank?

Francis Joseph Sodaro: Thank you, Craig, and good afternoon, everyone. This morning, we reported net operating income of $185 million for the quarter compared to $227 million last year. On a per-share basis, comparable quarter-over-quarter results were 74¢ compared to 90¢. Starting with investments, net investment income increased 7.9% in the quarter primarily as a result of higher yields on the bond portfolio and, to a lesser degree, a larger investment base. Our average reinvestment rate on corporate bonds acquired during the quarter was 4.6% compared to the average yield rolling off of about 4.2%. The total bond portfolio book yield stands at 4.75% compared to 4.5% at the end of last year.

Now, given the portfolio actions taken over the last few years that allowed us to accelerate improvement in the bond portfolio yield, our return of capital initiatives, and the current interest rate environment, we expect net investment income growth to slow in 2026. Turning now to loss reserves, both specialty insurance and title insurance recognized favorable development in the quarter, leading to a 2.4 percentage point benefit in the consolidated loss ratio compared to 2.9 points last year. Within specialty insurance, workers' comp prior year reserve development was slightly unfavorable in the quarter, as strong favorable development throughout the book was offset by a prior year reserve increase related to a credit loss on a single large deductible program.

Commercial auto, general liability, and property all had solid favorable development in the quarter. Now for the full year, the specialty insurance loss ratio had a benefit of 2.9 points from favorable development, and there were no large pockets of unfavorable development to report. We end the quarter with book value per share of $24.21, which inclusive of the regular and special dividends equated to an increase of 22% for the full year, resulting primarily from our strong operating earnings and higher investment valuations. In the quarter, we declared nearly $700 million in dividends and repurchased $56 million worth of our shares.

This brings total capital return this year to just over $1 billion, and it leaves us about $850 million remaining in our current repurchase program. I'll now turn the call back over to Craig for a discussion of specialty insurance.

Craig Richard Smiddy: Okay, Frank. Thanks for that summary. Specialty insurance net premiums written were up 6.1% in the quarter, with strong rate increases on commercial auto and general liability. We also had solid renewal retention ratios, new business writings, and increasing premium in our new specialty operating companies. As a matter of fact, these new companies contributed over $300 million in net premium written in 2025 and collectively delivered positive operating income. As I mentioned in my opening remarks, in the quarter, specialty insurance pretax operating income was $178 million, and the full year was $900 million. While the fourth quarter combined ratio was 97.3%, and the full year was 93.2%.

The loss ratio for the quarter was 67.6%, and that included 2.2 percentage points of favorable prior year loss reserve development. And that compares to 64.1% in the fourth quarter last year, which included 2.4 points of favorable development. The full year loss ratio was 63.9%, including 2.9 points of favorable development. Moving to the expense ratio, for the quarter was 29.7% compared to 27.7% in the fourth quarter last year. The full year expense ratio was 29.3% in line with expectations.

And our continued investment into specialty operating companies that we have recently launched, as well as in the technology modernization, data and analytics, and AI, does place some short-term strain on the expense ratio, but we're confident these investments will provide significant long-term upside potential. Turning to commercial auto, net premiums written grew 6.4% in the quarter while the loss ratio came in at 80% compared to 77.9% in the fourth quarter last year. As we noted in the release, we increased the current accident year loss ratio by three percentage points, which for the year added 12 percentage points for the quarter, I should say.

This action is consistent with what we've regularly communicated, and that is that we reserve conservatively and we're quick to react to increases in loss trends that we are observing. And those loss trends for commercial auto are now coming in a bit higher than we were observing earlier in 2025. And as such, as noted in the release, rate increases accelerated in the fourth quarter to 16% for commercial auto. Again, this would be in line with our philosophy of loss trends that are commensurate with rate increases. Workers' comp net premiums written was 6% lower in the quarter while the loss ratio came in at 65.2% compared to 35.5% in the fourth quarter last year.

The big difference here is that the vast majority in the fourth quarter of 2025 vis-a-vis the fourth quarter of 2024 is a significant difference in the level of prior year favorable development. Rate decreases in work comp were about 3% tier two in line with loss trends we're observing where severities remained very consistent and loss frequency continues its decline. So given positive wage trend that we apply our rates to, relatively stable severity trend, and a declining loss frequency trend, we think our rates remain adequate even with a small level of rate decreases. I'll also touch on property here.

We had net premiums written of which increased 21% in the quarter, bringing the full year property writings to $750 million. The property loss ratio was 55% in the quarter, and that included some favorable prior year loss reserve development. It's of note that our property writings are diverse and often written on an E and S basis, particularly at our new specialty operating company. So we expect solid growth and profitability in specialty insurance to continue through 2026, reflecting the growing contributions from our new specialty operating companies and also reflecting our commitment to underwriting excellence within all of our specialty companies, including a keen focus on pricing discipline and cycle management.

It's also noteworthy that our specialty portfolio is now more diversified than it's ever been, which also helps set us up to successfully manage market cycles. So I will now turn it over to you, Carolyn, to report on title insurance.

Carolyn Jean Monroe: Thank you, Craig. Title reported premium and fee revenue for the quarter of $789 million. This represents an increase of 12% from the fourth quarter of last year. The fourth quarter was our strongest of the year and is a continuation of the market story that we have been reporting all year. Seeing strong activity in the commercial sector and softness in the residential market driven by persistent price and some affordability challenges. Still, premiums produced in our direct title operations were up 18% from this time last year. Our agency produced premiums were up 13% and made up 77% of our revenue during the quarter, which is consistent with the fourth quarter of last year.

Commercial premiums increased this quarter and were 29% of our earned premiums compared to 23% in the fourth quarter of last year. For the year, our commercial premiums made up 26% of our earned premiums compared to 22% in 2024. Investment income was also up this quarter by nearly 12% compared to 2024, primarily from higher investment yields. Our combined ratio improved to 94% this quarter compared to 94.4% in the fourth quarter of last year. During the quarter, our continued expense management efforts and increased revenues resulted in a decrease in our operating expenses of 1.2% relative to premium and fees. Our loss ratio increased to 0.8%.

Although prior policy years continued to develop favorably, the amount of favorable development in the fourth quarter this year was less than in 2024. Our pretax operating income this quarter was $66 million, compared to $55 million in the fourth quarter of last year. This 18% increase during the quarter brings our full year pretax income to $140 million for 2025. As we start 2026, the cornerstone of our business continues to be our title agents. We remain focused on providing our agents with the innovative technological solutions required to maintain a competitive edge. Operationally, we will continue our margin expansion efforts to ensure that our structure efficiently serves our agents.

We remain focused on maximizing efficiencies and implementing the Qualia operating platform across the title operations during 2026, as well as continuing our initiatives to service the large commercial transactions we are seeing in the market. And thank you. And with that, I'll turn it back to Craig.

Craig Richard Smiddy: Okay, Carolyn. Thank you. So that concludes our prepared remarks. And we will now open up the discussion to Q&A. And I'll either answer your question or I'll ask Frank or Carolyn to chime in and help me out.

Regina: We will now begin the question and answer session. In order to ask a question, simply press star, followed by the number one on your telephone keypad. Again, that is star 1 for any questions. Our first question will come from the line of Gregory Peters with Raymond James. Please go ahead.

Gregory Peters: Good afternoon, and happy New Year to everyone.

Craig Richard Smiddy: Happy New Year, Greg.

Gregory Peters: I guess starting at just the high level, you know, in the past, you've talked about sort of what you think the specialty insurance target combined ratios should look like over a course of a year, and I guess, in the context of understanding those moving pieces, can you kind of provide us some perspective of how you think the budgeting is coming along and where you think the combined ratio targets might be for 2026?

Craig Richard Smiddy: Sure, Greg. Yeah. So, you know, ending the year at a combined ratio in specialty of 93.2% feels pretty good to us. We hopefully over time, be a bit better than that. But I think where we're at in the PNC cycle, that feels pretty good. And relative to next year, our plan is to produce something around the same level. You know, it depends by we have 20 different operating companies. Depending on the operating company, that varies. You know, if it's longer tail lines of business, it might be a little bit higher. If it's shorter tail lines of business, it's probably lower.

So all the businesses have a unique plan, and they have targets that they set relative to those plans. So I would say 2026 looking for a very consistent year. Obviously, there's talk of pricing pressure in the marketplace. But we're going to maintain our discipline. As I mentioned in my opening comments, we're keenly focused on pricing discipline, underwriting discipline, every company is focused on combined ratio over top line. And even in our incentive compensation plans, when we have soft pockets of business where pricing is too aggressive in the marketplace, we will remove any kind of growth or retention goal and make compensation based on strictly on combined ratios.

So it's all about bottom line for us, and that's really driven by the combined ratio.

Gregory Peters: Great. I guess, you know, the other two questions I had on the specialty insurance side, you know, one is just going back to, you know, just some more background and what led to the higher loss pick. Because you said it wasn't reflected in yet in the paid claim data. So I'm just curious what you're seeing, and I do recognize your approach to case reserves and loss picks. So and then the other question I had, just so we just get them out on the table there for you is, I think, Frank, mentioned a credit loss on one of the large deductible programs. Just some background on that well.

Craig Richard Smiddy: Sure, Greg. I'll take both of those. Yeah. So, you know, we start beginning of the year with what we believe to be a conservative loss pick. And from there, as we go through each week, we study what's happening with case reserves, and also what's happening with paid losses. And we take those into consideration, and look at what trend we think that implies. We take a closer look at severity. We take a close look at frequency. And come up with an overall trend. So what we saw in commercial auto this year for the better part of the year was trends.

We said, I think, on prior calls, we were saying trends in the low teens, and that we were obtaining rate increases that were at least commensurate with those trends. And that was the case. As we got toward the end of the year, while we did not notice any paid claim difference, we did notice that case reserves were higher. And, as we communicate, we're conservative. And if we see case reserves at a higher level, we'll react. We did that, I think, a couple years ago, same exact thing. Where trends all of a sudden moved a bit higher than what we were seeing earlier in the year.

And, as such, trends now look to be rather than in the low teens, the mid-teens. And as such, the three percentage point increase to the accident year loss ratio. We'd rather be conservative and go with what we're seeing in case reserves as opposed to being relaxed and relying on paid losses. So, you know, I just point out it's not something we missed. It's and to give everyone a little more color around that, you know, loss trends move. They're volatile. We follow them regularly. You know? Like, daily, weekly, monthly, quarterly, and it's always a moving target. It's impossible to instantaneously know what today or tomorrow's loss trend is. No one has a crystal ball.

And the best anyone can do is make a projection based on current observations, and that's exactly what we do. We make a projection based on what we're seeing, and that's it's usually a conservative projection. In this case, a conservative projection around what we saw in the movement between case reserves in the beginning of the year as opposed to case reserves more toward the end of the year. And just to underscore this a little bit more, when I make the statement that it's impossible to precisely and instantaneously know what your trend's gonna be, it takes time from the first notice of loss to the time that an adjuster is able to set ultimate case reserves.

You know, at the time of first notice of loss, the ultimate number of bodily injuries, the severity of the injuries, whether or not there's attorney representation, are all things that are not usually immediately known, and it takes time for that to play out. And that's why it's impossible to instantaneously know what your severity is until you get that kind of information and the year progresses and it comes through in your case reserves. So hopefully, that provides a little more color around what we saw, how we reacted, and you know, it's really 100% consistent with what we've communicated to all of our investors and analysts.

We observe higher loss trends, we immediately react by adjusting the loss ratio. And, as you saw in the fourth quarter, as I mentioned in my comments, we immediately react with rate. And rate increases in commercial auto accelerated. In the fourth quarter and now are upwards of 16% compared to I think we were at 14% last quarter. So and we'll keep doing exactly that. So I'll move on to your second question. Regarding the $17.5 million offset we had on workers' comp favorable development. And that came from, as we said in the release, a large deductible program where the losses from prior years had developed.

And in this case, there was a credit risk exposure, so we ended up with insufficient collateral and on large deductible programs when that happens. That's something that then falls to us. And, accordingly, we have to put up the reserves ourselves. So that's what happened. In this quarter, and you've been following us long enough to know that those kind of losses are somewhat unique and certainly, in our forty, forty-five year history, that's a pretty big number for us relative to past experience. And 99 out of 100 times, we have enough collateral to take care of things even if losses do develop unfavorably in prior years. But in this one instance, there was insufficient collateral.

Gregory Peters: Well, that's excellent detail. So it's appreciated. Mindful that others might be asking questions, so I just close out. Carolyn, if you could just provide your crystal ball view on what 2026 might look for the title business. I feel like your pick might be as good as anybody's out there. So just curious about your perspective on that.

Carolyn Jean Monroe: Sure. You know, in all of kind of the research that we do from people that report on that, it's still showing that commercial should have about a 20% improvement over this year, which was a wonderful year for commercial. But, you know, they see a single-digit increase in residential for next year. Less than 10%. So somewhere there's it goes between 3-7% depending on who you look at. So I think it's going to be, you know, another year like this year. With some improvement, especially if commercial does improve like it did. So you know, we're looking forward to 2026.

Gregory Peters: When you say next year, you and Craig, I'd presume you mean '26.

Carolyn Jean Monroe: Yes. I do. Right.

Craig Richard Smiddy: Right. Yep. Yeah. Perfect.

Gregory Peters: Yeah.

Craig Richard Smiddy: We're stuck in fourth quarter, full year '25, mode right now.

Gregory Peters: Right. I assume so, but thanks for the answers.

Craig Richard Smiddy: Thank you.

Regina: Once again, for any questions, simply press 1 on your telephone keypad. Our next question will come from the line of Paul Newsome with Piper Sandler. Please go ahead.

Paul Newsome: Good afternoon. Thanks for the call. Maybe just to follow-up on the case reserves, and I apologize if I missed this because I got a little technical issues myself during the call. The case reserve increases, were there any sort of geographic or patterns within the case reserve that stood out or would suggest other than just pure sort of overall loss trend? That might give us a hint as to what might be happening under the hood?

Craig Richard Smiddy: Yeah. Paul, that's a great question. The one we and we've looked at it in great detail. I can't say geographically there's anything we've detected. But there are a few things we do know, and that is that the number of people making bodily injury claims relative to the number of accidents that we have is higher. And the percentage of bodily injury claims with attorney representation is higher. And the percentage of claims that end up in litigation is higher as well. So, you know, a bit of an opinion section here.

And that is our view is that litigation system abuse is accounting for these increases and that includes the ongoing proliferation of attorney advertising where plaintiff attorneys are attempting to vilify insurance companies and you only need to turn on a television or drive down the interstate and see the billboards. And it's amazing. You know? The number of advertisements on television, on billboards, is just continuing to proliferate. And, to us, it's clear that plaintiff attorneys have come to the conclusion that there's a return on these investments. So I think, you know, there's industry studies out there from some good industry associations that we're part of. And they have are coming to the same conclusion.

So those are the only observations. Again, you know, if you have an accident, and you have a property damage claim, we track both bodily injury and property damage, third-party property damage separately. Third-party property damage frequency isn't going up. But bodily injury frequency is going up. Well, how can that be other than just more people willing to make bodily injury claims? And, so you know, it again, it comes back to the only conclusion that we can come to is that this litigation system abuse and proliferation of attorney advertising continues to rear its head. And we'll have to see where it goes. But that is what we would attribute a good portion of this to.

Paul Newsome: Were the trends any different? Like, you cited long haul trucking. Is the trends any different in other portions of what you do in commercial auto, obviously? Trucking is your big piece, but I think you do some other stuff as well. Was it just consistent across anything that had to do with commercial auto?

Craig Richard Smiddy: Another great question. Because on our other commercial auto, other than long haul trucking, the trends are there, but they're not as pronounced as they are on long haul trucking. I think coming back to litigation abuse, you know, a lot of these plaintiff attorneys try to target trucking companies and vilify insurance trucking companies and insurance companies. And, you know, so I Yeah. Yeah. And usually, trucking long haul trucking in particular has larger limit policies, and plaintiff attorneys know that. So there's more of a target on their back, so to speak. So there is a little bit more rearing its head on long haul trucking as opposed to other commercial auto.

Paul Newsome: Well, I know in the past, you've been it was, you know, last question. Don't know if you asked it. I know in the past, you guys have been very disciplined about hitting loss trend rate. And I would've assumed that's the plan prospectively as well. Are there other things that you're considering in terms of reacting to the loss trend change in terms of condition or, you know, areas to your right or anything else sort of non-rate actions? Is this gonna be just a matter of hit it with rate at whatever you think is happening from the loss trend perspective?

Craig Richard Smiddy: Yeah. So, you know, we are out of all of our 20 companies, our most sophisticated data and analytics area is within our long haul trucking company. And we slice and dice the data and analytics in a very robust and sophisticated fashion, which helps us with targeting rate to those customers that elevate higher propensity for loss. And so part of that is risk selection as well. It helps us with risk selection. And being able to not broad brush rate, but target rate to the insureds that require more rate.

And then also, continually refine our risk selection so that we're selecting what we think are the best risks and making it very punitive or not providing quotes at all to those risks that we deem too high. With respect to terms and conditions, you know, there's not there's, while in other of our businesses, terms and conditions are key, really key to the business, the specialty business they're in, long haul trucking, there's not a lot you can do with terms and condition on commercial auto. So I wouldn't say that there's a lot we're doing with terms and conditions. But you know, we react with rate.

We make sure our overall portfolio rate increase is reflective of the trends that we're observing. And, you know, when I answered Greg's question, you know, I explained that understanding what the trend is not instantaneous. But we use a conservative approach. We assume trend is going to if it's going up, we assume it's going to continue to either be where it's at or continue to go up and until we have clear evidence it's going down, we're not adjusting rates downward. You know, we adjust the rates upward and, just in one quarter, you know, two or 300 basis points and we'll have to keep our foot on the pedal on that.

Assuming that we, our goal is to stay ahead of trend which, we will continue to do. I would also I would also just point out that you know, as far as what this means for 2026 are, because we do that, our expectations for 2026 are not different from where we're at now with respect to loss ratio. We assume we're going to keep up with trend. You may recall from a couple of years ago, we had similar kinds of observations back at the 2023. And we, for the 2023, we bumped up that accident year loss pick. And if you look at how that year has played out, can look at the financial supplement.

You know, things after 2023 were remained pretty steady. And the '24 and '25, with 72% loss ratios following a 71.5% loss ratio in '23. So we would expect the same to happen here again. We're not changing our view on how 2026 looks.

Paul Newsome: We always appreciate the proper insight. Thank you very much.

Craig Richard Smiddy: Thank you, Paul.

Regina: Our next question is a follow-up from the line of Gregory Peters with Raymond James. Please go ahead.

Gregory Peters: Hey. One of the things I just wanted to touch upon just as to close out, the capital position of the company. I mean, you've been, you know, your record of special dividends alongside your regular dividends is pretty interesting. And I'm just curious how you view in light of the $2.50 dividend that I guess is paid out in was paid out already in January here, how you view the capital of the company at this point in time and, you know, what are the metrics we should be watching for, you know, to determine whether there's still, you know, excess capital, etcetera?

Craig Richard Smiddy: Sure, Greg. I'll be happy to do that. So part of our regular planning cycle is to head into our February board meetings and present our plan for 2026, which includes a complete analysis of our capital position and our projected capital position. We still think we have plenty of capital. So we think that'll put us in a position to, again, recommend to the board a regular dividend increase somewhere in line with what we've been doing over the last couple of years. And, in the meantime, we also have $850 million still remaining on our share repurchase program. And, we'll put that to work. Especially, you know, when there's opportunity.

We set all along that we like having both tools in our tool chest, the share repurchase tool as well as the special dividend and regular dividend tool. And, you know, to the extent that we think there's a buying opportunity, we've said we'll be opportunistic, and to the extent that markets react or overreact, it gives us a buying opportunity to repurchase more shares. So have that $850 million. We believe that, you know, if the opportunity presented itself, we could put most of that to good use throughout the year. And we would do that.

And then, you know, as we get further along in the year, again, take a look at where we're at with that capital position, what we've been able to do with share repurchases, and if we as we did at the end of last year in December, if we think we are ending the year with more capital again, we'll reset it with a special dividend.

Gregory Peters: Alright. Got it. Thanks for letting me ask the follow-up question.

Craig Richard Smiddy: Thank you.

Regina: And this concludes our question and answer. I'll hand the call back to management for any closing comments.

Craig Richard Smiddy: Okay. Well, thank you. We appreciate the Q&A. We appreciate the opportunity to share our prepared remarks in addition to the earnings release and wrap up 2025 for the year with another very good solid year, and we think we're set up for a very good '26. We realize market conditions are in question, but we'll focus on bottom line and profitability and continue with our underwriting excellence initiatives and our pricing discipline and continue to produce growth, particularly as our new specialty operating companies are producing more and more premium. And we feel very good about where we're heading in '26.

So thank you all for your interest and participation, and we will talk to you all again next quarter.

Francis Joseph Sodaro: Thank you.

Regina: This concludes today's call. Thank you all for joining. You may now disconnect.

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