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Fitch puts Mississippi Valley Title on 'Rating Watch Negative'

MADISON — Fitch Ratings has placed the ratings of Old Republic International Corporation’s (ORI) and its insurance company subsidiaries, including Mississippi Valley Title Insurance Company, on “Rating Watch Negative.”

Fitch reports: “The Rating Watch reflects uncertainty as to ORI’s ability to continue to avoid a covenant breach under its debt obligations in light of ongoing challenges at its troubled mortgage insurance subsidiary. ORI is subject to acceleration on its debt if any of its significant subsidiaries experience bankruptcy, insolvency, rehabilitation or reorganization.

“On Jan. 20, 2012, Republic Mortgage Insurance Co. (RMIC) was issued an Order of Supervision from the North Carolina Department of Insurance. Indications from ORI are that the Order of Supervision would not trigger a breach of the above noted covenant. Nonetheless, the agency believes the uncertainty surrounding how the RMIC runoff will play out, and the significance of the consequences should the covenant ultimately be breached, are potentially inconsistent with investment-grade debt and Issuer Default Ratings (IDR) at ORI.

“Fitch plans to review ORI’s ratings following the company’s fourth quarter earnings announcement and complete additional analysis, including the impact of how a potential debt acceleration would be funded and its impact on liquidity, capital and financial flexibility.”

“Fitch has placed the following ratings on ‘Rating Watch Negative’:

Old Republic International Corp.
— IDR at ‘BBB’;
— $316 million 8% senior notes due May 12, 2012 at ‘BBB-‘;
— $550 million 3.75% senior notes due March 15, 2018 at ‘BBB-‘.

Old Republic Property Casualty Group:
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.
— Insurer Financial Strength (IFS) at ‘A’.”

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