NU Online News Service, Aug. 25, 2:11 p.m. EDT

Fitch Ratings affirmed the 'A' insurer financial strength ratings of Old Republic International Corp.'s (ORI) insurance subsidiaries and removed the company from Rating Watch Negative, as the rating agency says it does not anticipate that the runoff of ORI's mortgage insurance subsidiary will have a significant adverse impact on capital and liquidity.

"Fitch views the potential capital impact of a runoff of Republic Mortgage Insurance Company (RMIC) as limited to RMIC's $445.1 million capital base, given management's assertion that it would be managed within those constraints," the rating agency says.

In its last ratings action on RMIC on Aug. 9, Fitch downgraded the mortgage insurer to 'B' from 'BB' and withdrew its coverage of RMIC. "The company's statutory capital position has deteriorated significantly over the last several quarters, given continued stress in its insured portfolio," Fitch said in an Aug. 9 statement.

In an Aug. 3 notice on its website, RMIC says, "We wish to inform you that Republic Mortgage Insurance Company will discontinue writing new commitments for insurance effective Aug. 31, 2011. RMIC has been operating pursuant to a waiver of minimum state risk to capital ratio requirements which expire at the end of August."

Earlier this month, Moody's Investors Service also cited troubles at RMIC, noting that the company's parent, ORI, will not contribute additional capital to help RMIC. Additionally, Moody's says RMIC's two major counterparties, government-sponsored entities Fannie Mae and Freddie Mac, say the company is no longer an approve insurer.

But in its latest statement on ORI, Fitch says, "The affirmation of ORI's ratings reflects operating performance of its core [property and casualty] as well as title insurance operations that remain in line with Fitch's expectations and similar rated peers." Fitch says it is maintaining a negative outlook, though, reflecting "the continued uncertainty of mortgage market exposure on ORI's operations."

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Fitch Affirms Old Republic’s Ratings; Says RMIC Woes Manageable

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