Old Republic Weighed Down By Mortgage Insurance Line
Old Republic International Corp., Chicago, reported a fourth-quarter loss of $24 million and full-year loss of $69 million because of its run-off mortgage insurance and consumer credit insurance businesses posting losses of $80 million and $322 million, respectively, for those periods.
For the same periods in 2011, ORI had a profit of $55 million and a loss of $140 million, respectively.
Earlier in 2012, ORI was unsuccessful in trying to maneuver the run-off businesses, now operating under the name of Republic Financial Indemnity Group Inc., off of the balance sheet.
Among the good news in the MI business is that claim costs fell to $196 million from $262 million in 2011. ORI said this is a continuing downtrend in newly reported cases and relatively stable cure rates. Plus, lower-paid claim levels more than offset reduced provisions for claim rescissions or denials and assumptions of greater defaults headed to foreclosure.
In the results ORI said RMIC's 10-year standard model of forecasted results extending through 2022 continues to reflect ultimate profitability for the book of business. But over the short term, it is more likely than not that MI operating results for 2013 and 2014 will be negative.
ORI’s title insurance business has been benefitting not only from the refinance market but also from shifts in market share following LandAmerica Financial Group’s troubles and its subsequent acquisition by Fidelity National Financial.
The segment’s fourth-quarter pretax operating profit was $20 million, up from $18 million in 4Q11. But over the full year, the increase in pretax operating income was more than double, to $74 million from 2011’s $36 million.