Old Republic International (ORI) reported fourth-quarter and full-year earnings on January 24th. The bottom line was negatively impacted by a new accounting standard that went into effect at the start of 2018. The new FASB (Financial Accounting Standards Board) rule requires unrealized investment gains and losses in equity securities be included in income.
The Rule
The key word in the new FASB rule is “unrealized”. The equity securities (outstanding shares of companies) are not actually sold. Thus, the gains and losses are not “realized”. Rather, these unrealized investment gains and