NU Online News Service, Jan. 26, 11:42 a.m.EST

Fitch Ratings has placed Old Republic InternationalCorporation's (ORI) 'A' insurer financial strength rating and 'BBB'issuer default rating on Rating Watch Negative due to continuedtroubles at its mortgage-insurance subsidiary.

Fitch says there is uncertainty as to ORI's “ability to continueto avoid a covenant breach under its debt obligations in light ofongoing challenges” at Republic Mortgage Insurance Co. (RMIC),which was issued an Order of Supervision from the North CarolinaDepartment of Insurance on Jan. 20.

The ratings agency notes that ORI is subject to acceleration onits debt if any of its significant subsidiaries experiencebankruptcy, insolvency, rehabilitation or reorganization.

While Fitch says that ORI has signaled that the development atRMIC will not trigger a breach of this covenant, Fitch says “theuncertainty surrounding how the RMIC runoff will play out, and thesignificance of the consequences should the covenant ultimately bebreached, are potentially inconsistent with investment-grade debtand issuer default ratings at ORI.”

Fitch says it will review the ratings after additional analysisand ORI's fourth-quarter earnings announcement.

In August 2011, Fitch affirmed ORI's 'A' rating and removed the company from RatingWatch Negative, stating that it did not anticipate that a runoff ofRMIC would have a significant adverse impact on capital andliquidity.