Fitch Ratings has revised the Rating Watch status for Old Republic
International Corporation (ORI) and its insurance company subsidiaries
to Negative from Positive, following the company's announcement to
withdraw the spin-off of Republic Financial Indemnity Group, Inc.
(RFIG). A complete list of ratings is provided at the end of this
Fitch had most recently placed the ratings on Rating Watch Positive on
March 23, 2012 after ORI's announced plan to spin off of its wholly
owned subsidiary, RFIG. RFIG was formed to combine ORI's troubled
mortgage insurance unit and its consumer credit indemnity (CCI) lines.
The spin-off was withdrawn due to what management reported as
'objections raised by certain stakeholders.'
A successful spin-off would have mitigated Fitch's concern regarding a
potential subsidiary collateral covenant breach under ORI's debt
obligations and eliminated any future cash drain related to RFIG. ORI's
debt is subject to acceleration if any of its significant subsidiaries
experience bankruptcy, insolvency, rehabilitation or reorganization.
Renewed uncertainty regarding the ultimate long-term solution for the
mortgage insurance business, as well as the renewed potential for a debt
covenant breach, support today's action.
On Jan. 30, 2012, Fitch had downgraded ORI's senior debt rating by three
notches and placed the ratings on Rating Watch Negative when the
agency's concerns first surfaced as to a possible future covenant
breach. Today's action effectively returns the Rating Watch status to
that in effect prior to the March 2012 RFIG formation announcement.
Fitch has placed the following ratings on Rating Watch Negative:
Old Republic International Corp.
--$550 million 3.75% senior notes due March 15, 2018 'BB-'.
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 '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 investors.
Applicable Criteria & Related Research:
--'Insurance Rating Methodology' (Sept. 22, 2011).
Applicable Criteria and Related Research:
Insurance Rating Methodology
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
Fitch RatingsBrian Bertsch, +1-212-908-0549Media Relations,
Analyst:Dafina M. Dunmore, CFA, +1-312-368-3136DirectorFitch,
Inc.70 W. Madison StreetChicago, IL 60602orSecondary
Analyst:Doug M. Pawlowski, CFA, +1-312-368-2054Senior
DirectororCommittee Chairperson:Keith M. Buckley, CFA,
Source: Fitch Ratings