In the first quarter of 2026, Old Republic's headline results softened, with consolidated pre-tax operating income down to $211.5M from $252.7M and the combined ratio rising to 96.6, as a higher specialty expense ratio (31.2%) and lower favorable reserve development weighed on the specialty segment. The bright spot was title insurance, where a 12% revenue gain and margin efforts drove pre-tax operating income to $16.7M from $4.3M. The company remained highly active on capital return ($161M of buybacks in the quarter) and on portfolio expansion, launching Old Republic Property, standing up Lodestar Claims and Risk Services, and keeping the ECM acquisition on track to close around July 1. Management emphasized pricing discipline, with mid-teen commercial auto rate increases in line with loss trends.
Thank you, Rob. Good afternoon, everyone, and thank you for joining us for the Old Republic conference call to discuss first quarter 2026 results. This morning, we distributed a copy of the press release and posted a separate financial supplement. Both of the documents are available on Old Republic's website at oldrepublic.com. Please be advised that this call may involve forward-looking statements as discussed in the press release dated April 23rd, 2026. Assumptions, uncertainties, and risks exist that may cause results to differ materially from those set forth in these forward-looking statements. For more information on these assumptions, uncertainties, and risks, please refer to the forward-looking statements discussion in the press release and the company's other recent SEC filings and the risk factors discussed in the company's most recent Form 10-K and other recent SEC filings.
We may also include references to net income excluding net investment gains or net operating income, a non-GAAP financial measure, in our remarks or in response to questions. GAAP reconciliations are included in the press release. Presenting on today's conference call will be Craig Smiddy, President and CEO, Frank Sodaro, Chief Financial Officer, and Carolyn Monroe, President and CEO of Old Republic 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.
Okay, Joe. Thank you very much. Good afternoon, everyone, and welcome again to Old Republic's first quarter 2026 earnings call. In the quarter, we produced $211.5 million of consolidated pre-tax operating income, compared to $252.7 million, and our consolidated combined ratio was 96.6%, compared to 93.7%. For the quarter, our operating return on beginning equity was 11.5%, and growth in book value per share, including dividends, was 2.6%. Specialty Insurance grew net premiums earned by 4.7% over the first quarter of 2025 and produced $209 million of pre-tax operating income compared to $260 million. Specialty's combined ratio was 94.8% compared to 89.8%. Title Insurance Group grew premiums and fees by 12% over the first quarter of 2025 and produced $16.7 million of pre-tax operating income compared to $4.3 million. Title's combined ratio was 100% compared to 102%.
Our conservative reserving practices continue to produce favorable prior year loss development in both specialty insurance and title insurance, and Frank will provide more details on that topic. With that, Frank, I will turn the discussion over to you, and then you can turn them back to me to cover specialty insurance, and then we'll have Carolyn cover title insurance.
Thank you, Craig, and good afternoon, everyone. In this morning's release, we reported Net Operating Income of $171 million for the quarter, compared to $202 million last year. On a per-share basis, comparable quarter-over-quarter results were $0.68 compared to $0.81. Starting with investments, net investment income increased just over 4% in the quarter, primarily as a result of a larger investment base and higher yields on the bond portfolio. While our average rate on corporate bonds acquired during the quarter was 4.7%, compared to the average yield rolling off of about 3.8%, the total bond portfolio book yield held fairly steady with year-end at about 4.75%. With the current interest rate environment, we expect net investment income growth to remain in the low to mid-single digits throughout the rest of 2026.
Turning now to loss reserves, both specialty and title insurance recognized favorable development in the quarter, leading to a 1.5 percentage point benefit in the consolidated loss ratio compared to 2.6 points of benefit last year. While this level of favorable development was lower than we had experienced in recent years, it is within our expectations. For specialty insurance, property continued to have favorable development and led the way this quarter with a slightly higher level than last year. Commercial auto and workers' comp had solid favorable development in the quarter. However, both were at lower levels than last year. General liability had a moderate amount of unfavorable development that spanned several more recent accident years and was partially offset by favorable development in older years.
We ended the quarter with book value per share of $24.53, which inclusive of the regular dividend equated to an increase of 2.6% since year-end, resulting primarily from our operating earnings. In the quarter, we paid nearly $77 million in dividends and repurchased $161 million worth of our shares. Since the end of the quarter, we repurchased another $52 million worth of shares, which leaves us with about $640 million remaining in our current repurchase program. I'll now turn the call back over to Craig for a discussion of specialty insurance.
Thanks, Frank. Specialty insurance net premiums written were up 3.4% in the quarter, coming from strong rate increases on commercial auto and general liability, some new business writings, and increasing premium in our newer specialty operating companies, partially offset by a decline in our renewal retention ratios as we continue to prioritize rate in certain lines of coverage within our portfolio. We appear to be leading the market specifically within commercial auto by driving mid-teen rate increases. As mentioned in my opening remarks, in the quarter, specialty insurance pre-tax operating income was $209 million, while the combined ratio was 94.8%. The loss ratio for the quarter was 63.6%, and that included 1.6 percentage points of favorable prior year reserve development. That compares to a 61.7% loss ratio in the first quarter last year. That included 3.3 points of favorable development.
The expense ratio for the quarter was 31.2%, and that compares to 28.1% in the first quarter last year. Our continued investments into new specialty operating companies, technology modernization, data and analytics, and AI placed some strain on the expense ratio this quarter. We remain confident that all of these investments will provide significant long-term upside. Turning to commercial auto, net premiums written were up just over 1% in the quarter, while the loss ratio came in relatively flat with the first quarter of last year at 70.4%. As I referred earlier, rate increases remained steady with the fourth quarter that we reported, and that is at a 16% rate increase level, which is in line with loss trends.
Workers' comp, on the other hand, net written premiums were also up just over 1% in the quarter, while the loss ratio came in at 62.3%, compared to 58.7% in the first quarter last year. Most of that difference is due to the difference in the level of favorable prior year loss reserve development. Rate decreases for workers' comp were about 2%, and here, too, that's in line with loss trends, with severity remaining relatively consistent and frequency continuing its downward trends. While we're seeing some top-line pressure, along with some pressure on the expense ratio, we remain confident that our underwriting approach to focus on risk-adequate rates will continue to produce profitable combined ratios, which is really the foremost priority for us. We also expect to see continuing growth in top-line contributions from our newer specialty operating companies. A couple of other things.
Additionally, in the quarter, we announced the formation of another new operating company, Old Republic Property, led by Patrick Hagerty, who has assembled a highly respected team of underwriters that will specialize in very selective property placements. Just this week, the executive team here at the holding company in Chicago met with Patrick and his team, and they're currently focused on building out their operating platform. Ultimately, we expect this new venture to produce solid underwriting profits, very similar to what Old Republic Inland Marine has delivered over the last couple of years. We also announced the rebranded Lodestar Claims and Risk Services, which is now set up as a separate standalone operating company focused on growing fee income for our portfolio.
Finally, as we mentioned in the release, we expect to close on the ECM acquisition around July 1st, which will also contribute to top line and bottom line in the second half of this year. That concludes my comments for specialty, and I'll now turn the discussion over to Carolyn to report on title.
Thank you, Craig, and good afternoon. Title insurance reported premium and fee revenue for the quarter of $678 million. This represents an increase of 12% from first quarter of last year. So far in 2026, we've seen continued strong commercial activity. Consistent with prior years, the first quarter is seasonally slow in the residential market. The start of the 2026 home buying season was marked by higher inventory levels, lower interest rates, and moderating price growth compared to 2025. While interest rates spiked during the last month of the quarter due to uncertainty and inflation concerns, they did ease slightly in April. The premiums produced in our direct title operations were up 6% from this time last year. Our agency-produced premiums were up 14% and made up nearly 80% of our revenues during the quarter, which is up from 78% in the first quarter of last year.
Commercial premiums increased this quarter and were 27% of our earned premiums this quarter, compared to 24% in the first quarter of last year. During the quarter, we entered into a new excess of loss reinsurance agreement that will expand our capacity to underwrite large commercial deals. Investment income was also up this quarter by 4% compared to first quarter of 2025, driven by a higher invested asset base and higher investment yields. Our loss ratio improved to 2.6% this quarter, including 1.1 percentage points of favorable prior year loss reserve development, compared to 2.7% in first quarter of 2025. That included a 0.8 percentage points of favorable development. Our expense ratio improved nearly 2 percentage points to 97.5% from 99.4% in the first quarter of 2025.
While our combined ratio of 100% is still elevated, the improvement reflects increased revenues and the margin expansion efforts we have been working on. Our pre-tax operating income increased to $16.7 million this quarter, compared to $4.3 million in the first quarter of 2025. As we look forward to some long-awaited improvement in the residential housing market, we remain focused on operational efficiency and efforts to expand our margins. We're committed to equipping our agents with the latest fraud prevention tools and other technological solutions to help them succeed in all market conditions. Internally, we are busy continuing to execute on the rollout of our new operating platform across the title operations. We are also progressing with ongoing enhancements to our commercial structure and enhancing our ability to service the elevated level of commercial transactions taking place in the market. With that, I'll give it back to Craig.
Okay, Carolyn, thank you. Well, that concludes our prepared remarks. While we're seeing some top-line pressure along with some expense pressure in specialty insurance, the fundamentals in specialty remain very strong, and the investments we're making will contribute to continued profitable growth. In title, we're well-positioned for a turn in the residential real estate market while we continue to reduce expenses in the short term. With that, we're happy to answer questions, and either I'll answer your questions or I'll ask Frank or Carolyn to help me answer the question. We'll open it up for questions.