OLD REPUBLIC INTERNATIONAL CORPORI
OLD REPUBLIC INTERNATIONAL CORP Income Taxes Disclosure
Income Taxes
The components of domestic and foreign pretax income are summarized below for the periods shown:
| Years Ended December 31: | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||
Amount | Percentage | Amount | Percentage | Amount | Percentage | |||||||||||||||||||||||||||||||||
Domestic | $ | 1,169.8 | 98.8 | % | $ | 1,039.3 | 97.2 | % | $ | 713.7 | 95.5 | % | ||||||||||||||||||||||||||
Foreign | 14.2 | 1.2 | 30.3 | 2.8 | 33.7 | 4.5 | ||||||||||||||||||||||||||||||||
Total | $ | 1,184.0 | 100.0 | % | $ | 1,069.7 | 100.0 | % | $ | 747.4 | 100.0 | % | ||||||||||||||||||||||||||
The following table reconciles expected income tax expense, calculated at the federal statutory income tax rate applied to pretax income, to reported income tax expense with the effective tax rate, calculated as reported income tax expense divided by pretax income. The Company disaggregates pretax income into two components: domestic and foreign.
| Years Ended December 31: | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||
Amount | Rate % | Amount | Rate % | Amount | Rate % | |||||||||||||||||||||||||||||||||
Expected income tax at | ||||||||||||||||||||||||||||||||||||||
Federal statutory rate | $ | 248.6 | 21.0 | % | $ | 224.6 | 21.0 | % | $ | 156.9 | 21.0 | % | ||||||||||||||||||||||||||
Foreign tax effect (Canada) | 0.4 | — | 1.4 | 0.1 | (1.4) | (0.2) | ||||||||||||||||||||||||||||||||
Tax-exempt interest | (0.5) | — | (2.1) | (0.2) | (2.6) | (0.4) | ||||||||||||||||||||||||||||||||
Dividends received exclusion | (6.8) | (0.6) | (6.3) | (0.6) | (7.4) | (1.0) | ||||||||||||||||||||||||||||||||
Meals and entertainment | 2.9 | 0.3 | 2.6 | 0.3 | 2.4 | 0.3 | ||||||||||||||||||||||||||||||||
Equity compensation | (3.5) | (0.3) | (2.0) | (0.2) | (0.4) | (0.1) | ||||||||||||||||||||||||||||||||
Other items - net | 1.0 | 0.1 | (1.2) | (0.1) | 1.3 | 0.2 | ||||||||||||||||||||||||||||||||
Total nontaxable or | ||||||||||||||||||||||||||||||||||||||
nondeductible items | (7.0) | (0.6) | (9.1) | (0.9) | (6.7) | (0.9) | ||||||||||||||||||||||||||||||||
Total income tax expense | $ | 242.1 | 20.4 | % | $ | 216.9 | 20.3 | % | $ | 148.7 | 19.9 | % | ||||||||||||||||||||||||||
The following table reflects income taxes paid disaggregated by jurisdiction. No individual state exceeded 5% of total income taxes paid for any of the years presented.
| Years Ended December 31: | 2025 | 2024 | 2023 | |||||||||||||||||
Federal | $ | 189.5 | $ | 189.0 | $ | 188.0 | ||||||||||||||
State | 11.8 | 7.5 | 5.3 | |||||||||||||||||
Foreign (Canada) | 9.1 | 7.3 | 10.3 | |||||||||||||||||
| Total | $ | 210.5 | $ | 203.8 | $ | 203.7 | ||||||||||||||
The tax effects of temporary differences that give rise to significant portions of the Company's U.S. net deferred tax assets (liabilities) are as follows at the dates shown:
| December 31: | 2025 | 2024 | 2023 | |||||||||||||||||
| Deferred Tax Assets: | ||||||||||||||||||||
| Loss and loss adjustment expense reserves | $ | 213.2 | $ | 207.2 | $ | 210.9 | ||||||||||||||
| Pension and deferred compensation plans | 19.1 | 18.9 | 23.8 | |||||||||||||||||
Realized loss from sale of mortgage insurance business | — | — | 9.5 | |||||||||||||||||
| Net operating loss carryforward | 1.4 | 3.4 | 5.5 | |||||||||||||||||
| AMT credit carryforward | 9.0 | 9.0 | 9.0 | |||||||||||||||||
| Operating leases | 40.4 | 42.9 | 46.4 | |||||||||||||||||
| Other temporary differences | 30.1 | 28.0 | 16.3 | |||||||||||||||||
| Total deferred tax assets | 313.2 | 309.4 | 321.4 | |||||||||||||||||
| Deferred Tax Liabilities: | ||||||||||||||||||||
| Unearned premium reserves | 14.8 | 23.9 | 46.3 | |||||||||||||||||
| Deferred policy acquisition costs | 131.3 | 110.4 | 82.8 | |||||||||||||||||
| Amortization of fixed income securities | 39.5 | 24.5 | 14.6 | |||||||||||||||||
| Net unrealized investment gains | 282.5 | 219.1 | 214.4 | |||||||||||||||||
| Title plants and records | 2.7 | 2.8 | 2.8 | |||||||||||||||||
| Tax reform transition adjustment on loss and loss adjustment | ||||||||||||||||||||
| expense reserves | — | 3.2 | 6.7 | |||||||||||||||||
| Operating leases | 35.5 | 37.7 | 40.9 | |||||||||||||||||
| Other temporary differences | 26.2 | 20.5 | 22.5 | |||||||||||||||||
| Total deferred tax liabilities | 532.5 | 442.1 | 431.0 | |||||||||||||||||
Net deferred tax liabilities | $ | (219.3) | $ | (132.7) | $ | (109.7) | ||||||||||||||
As of December 31, 2025, 2024, and 2023 the Company had net foreign deferred tax assets (principally Canada), not included in the table above, of $4.7, $3.6, and $4.0, respectively.
At December 31, 2025, the Company had an available net operating loss (NOL) carryforward of $6.8 which will expire in 2027, and a $9.0 alternative minimum tax (AMT) credit carryforward. The NOL carryforward is subject to the limitations set by Section 382 of the Internal Revenue Code and is available to reduce future years' taxable income by a maximum of $9.8 each year until expiration.
In valuing the deferred tax assets, the Company considered certain factors including primarily the scheduled reversals of certain deferred tax liabilities, estimates of future taxable income, the impact of available carryback and carryforward periods, as well as the availability of certain tax planning strategies. The Company estimates that all gross deferred tax assets at year-end 2025 will more likely than not be fully realized.
Tax positions taken or expected to be taken in a tax return by the Company are recognized in the financial statements when it is more likely than not that the position would be sustained upon examination by tax authorities. To the best of management's knowledge there are no tax uncertainties that are expected to result in significant increases or decreases to unrecognized tax benefits within the next twelve-month period. The Company views its income tax exposures as primarily consisting of timing differences whereby the ultimate deductibility of a taxable amount is highly certain but the timing of its deductibility is uncertain. Such differences relate principally to the timing of deductions for loss and unearned premium reserves. As in prior examinations, the Internal Revenue Service (IRS) could assert that loss reserve deductions were overstated thereby reducing the Company's statutory taxable income in any particular year. The Company believes that it establishes its reserves fairly and consistently at each balance sheet date, and that it would succeed in defending its tax position in these regards. Because of the impact of deferred tax accounting, the possible accelerated payment of tax to the IRS would not necessarily affect the annual effective tax rate. The Company classifies interest and penalties as income tax expense in the consolidated statements of income. The Company is not currently under audit by the IRS and 2022 and subsequent tax years remain open.
The Inflation Reduction Act (IRA) was enacted into law on August 16, 2022, which, among its many elements, imposes a Corporate Alternative Minimum Tax (CAMT) on the adjusted financial statement income at the rate of 15% for tax periods beginning on or after January 1, 2023. The Company, as a member of a controlled group, has determined it is subject to the CAMT calculations for the year ended December 31, 2025. However, the Company expects to be a regular taxpayer and not a CAMT taxpayer.
A Federal Excise Tax (FET) was enacted at the rate of 1% on all corporate stock buybacks effective January 1, 2023. The Company is subject to the FET, and an immaterial amount of excise tax incurred on stock repurchases has been recognized as part of the cost basis of the treasury stock acquired.
The Organization for Economic Co-operation and Development (OECD) released Pillar Two Model Rules ("Pillar 2"), a framework to implement a global minimum corporate tax of 15% for multinational companies with global revenues and profits above certain thresholds, effective beginning January 1, 2024. While it is uncertain whether the United States will enact legislation to adopt Pillar 2, Canada, in which the Company operates, adopted legislation effective January 1, 2024. The Company analyzed the Canadian legislation and determined it did not have a Pillar 2
obligation in Canada as of December 31, 2025 or 2024, and will continue to monitor future implications of the framework, which are not expected to be material to the Company.
On July 4, 2025, the One Big Beautiful Bill Act was signed into law, enacting a broad range of tax reform affecting corporations. These include, among other provisions, the permanent extension of certain provisions initially enacted under the 2017 Tax Cuts and Jobs Act, with some modification. The provisions expected to most significantly impact the Company are:
•Immediate deduction of the cost of qualified business property, and
•Immediate deduction of domestic research and experimental expenditures.
Changes resulting from the tax provisions in this legislation did not have a material impact on the Company’s consolidated results of operations for the year ended December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 28, 2022 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.