Dec 5 - Fitch Ratings has removed from Rating Watch-Negative and upgraded
Old Republic International Corporation's (ORI) holding company ratings
by two notches, including the senior debt rating to 'BB+' from 'BB-'. Fitch has
also affirmed and removed from Rating Watch-Negative the Insurer Financial
Strength (IFS) ratings of ORI's insurance subsidiaries at 'A-'. The Rating
Outlook is Stable. A full list of ratings follows at the end of this release.
These rating actions reflect Fitch's reduced concern surrounding the possibility
of an acceleration of ORI's outstanding debt, following the approval of Republic
Mortgage Insurance Company's (RMIC) proposed corrective plan by the North
Carolina Department of Insurance (NCDOI).
On Dec. 3, 2012, ORI announced that the NCDOI issued a Final Order approving the
corrective plan submitted by RMIC on Sept. 14, 2012. Fitch believes the
extension of regulatory supervision of RMIC until Dec. 21, 2021 will likely
allow ORI to avoid a covenant breach and related debt acceleration, since RMIC
then more likely avoids bankruptcy, insolvency, rehabilitation or
Under the Final Order, RMIC will increase its cash payments to 60% from 50%, and
defer payment of the remaining claims until a future date authorized by NCDOI.
Additionally, RMIC will remain within ORI's ownership and control, as well as
under NCDOI regulatory supervision until Dec. 21, 2021. However, NCDOI retains
the right to amend the order if RMIC's financial condition changes in any
Following today's upgrade, Fitch's ratings of ORI at the holding company level
remain notched down by one additional notch from the operating company IFS
ratings compared to standard notching to reflect ongoing, albeit reduced
uncertainties related to the runoff of RMIC, and the risk this poses for ORI's
debt. Previously the ORI ratings were notched down by three additional notches
compared to standard notching.
The Stable Outlook reflects Fitch's belief that ratings will likely remain
unchanged for the next 12 - 18 months.
Upward movement in ORI's rating, including a movement to standard notching,
could be precipitated by Fitch gaining greater confidence in a successful runoff
of RMIC with reduced adverse impact from related operating losses. Downgrade
triggers would include heightened concerns with the RMIC runoff compared to
expectations, including an adverse amendment to the Final Order by the NCDOI.
Fitch removed from Rating Watch Negative and upgraded the following ratings with
a Stable Outlook:
Old Republic International Corp.
--IDR to 'BBB-' from 'BB';
--$550 million 3.75% senior notes due March 15, 2018 to 'BB+' from 'BB-'.
Fitch removed from Rating Watch Negative and affirmed the following ratings with
a Stable Outlook:
Bituminous Casualty Corp.
Bituminous Fire & Marine Insurance Co.
Great West Casualty Co.
Old Republic Insurance Co.
Old Republic Lloyds of Texas
Old Republic General Insurance Co.
Old Republic Surety Co.
Manufacturers Alliance Insurance Co.
Pennsylvania Manufacturers' Association Insurance Co.
Pennsylvania Manufacturers Indemnity Co.
American Guaranty Title Insurance Co.
Mississippi Valley Title Insurance Co.
Old Republic National Title Insurance Co.
--IFS at 'A-'.
Additional information is available at 'www.fitchratings.com'. The company did
not participate in the rating process except through public information. The
ratings above were unsolicited and have been provided by Fitch as a service to
Applicable Criteria &