The rapidly cooling housing market in 2022 was not kind to Big Four title insurer Old Republic. While the century-old firm, which is celebrating its 100th anniversary in 2023, did generate net income for both the fourth quarter of 2022 as well as for the year as a whole, it was down substantially last year.
During the fourth quarter of 2022, Old Republic recorded a net income of $512.1 million, down from $627.0 million in Q2 2021. The firm generated a net income of $686.4 million for the full year in 2022 compared to $1.534 billion in 2021. Despite being down drastically compared to last year’s record-breaking numbers, executives told investors on the firm’s fourth-quarter and year-end earnings call on Thursday that they were in line with expectations.
Hampered by the volatile interest rate environment and dramatic drop off in refinance transactions, the firm’s title insurance sector saw its pretax operating income drop 67.2% year over year in 2022 to $45 million.
During Q4 2022, Old Republic’s title insurance net premiums and fees generated were down to $836.4 million, a drop of 29.4% compared to a year ago. For the full year 2022, title net premiums and fees recorded a yearly drop of 13.0% to $3.8338 billion.
Carolyn Monroe, the president of Old Republic’s title insurance segment, attributed the relatively small yearly drop in 2022 to a strong performance by the firm’s commercial title insurance sector.
“While increasing mortgage rates, refinance decline, and a softening housing market impacted our residential activity, our commercial activity remained strong in the fourth quarter, with commercial premiums up 13% over fourth quarter 2021 — and they represented 26% of our total premiums compared to 18% in the fourth quarter of ’21,” Monroe said. “Commercial premiums reported for full year 2022 represented an all-time high for the title group. As we enter 2023, we will continue with a focus on commercial opportunities. During 2022, we transformed and aligned our commercial operations with an internal structure that allows us to leverage more tools, resources and support to enhance our capacity to deliver in the sector.”
Aside from leaning into their commercial title segment, Monroe also said the firm hopes to continue improving its technology usage and offerings in 2023.
“The ability to electronically record with counties is an essential step in our digital intimate process vision. Throughout 2022, our e-recording company EPM has had the fastest growing network of county connections of the major platforms,” Monroe said. “This growth in our network will give our offices and agents additional access to counties throughout the country for closing files electronically.”