Friday, August 05, 2011

Is Old Republic's mortgage insurance business in run off mode?

"Absent approval to underwrite new production through the separately capitalized subsidiary, it is most likely that the flagship insurance carrier's existing book of business would be placed into run off operating mode. In this circumstance, the Company's interest would be to manage the business within constraints of this segment's current capital base of $445.1 and thereby limit a possible future economic loss from run off operations to this amount. The capital base of $445.1 accounts for approximately $1.74 (11%) of Old Republic's book value per share of $15.56 as of mid-year 2011."  2nd Quarter ORI Report.

Given the news that broke recently concerning GSE cutoffs, I was concerned.  I'm an Old Republic agent and I don't like the brand which I so respect being tarnished.  Placing the mortgage guaranty business in run off mode is the logical step given market conditions but a failure to take that step and bruise the brand name with a GSE cutoff was disturbing.

I expressed my concern to my OR agency rep and she moved it up the chain.  This morning I received a call from regional management who assured me that the mortgage guaranty business is operating in run off mode.  I'm not sure how I missed that news but I was happy to hear it. ;)

No comments: