(Source: Business Wire)
Fitch Ratings took no rating action following the announcement of a joint venture between Old Republic International Corporation's title insurance subsidiary, Old Republic National Title Holding Company, and Attorney's Title Insurance Fund, Inc. (The Fund). The joint venture will be called Attorneys' Title Fund Services, LLC (ATFS) and will serve as a managing title agent for Old Republic's title operations.
The joint venture will give Old Republic Title access to The Fund's 6,000 real estate attorney member agents, which were responsible for approximately $200 million in title premium in 2008. Florida represented the largest single state for Old Republic's title operations, accounting for approximately 13% of net written premium. At year-end 2008, Old Republic's title operations reported an operating leverage ratio (premium revenue-to-surplus) of 3.6 times (x), and adding run-rate levels of new premium from the joint venture could potentially increase the operating leverage ratio to approximately 5.0x. This level of operating leverage would still be consistent with the title insurance industry average.
Fitch took no rating action because the joint venture does not require a significant outlay of capital from ORI, nor does the potential new business generated by the joint venture appear to stress capitalization relative to expectations for the current rating category. Also, the agreement does not include any assumption of The Fund's existing liabilities.
The ratings on ORI's title insurance operations benefit from the support of its ownership by ORI. The operating results of ORI's title group continue to be challenged by unfavorable real estate and mortgage market conditions that have led to significant declines in title revenue and operating losses.
All ORI ratings, including those of the title operations, remain on Rating Watch Negative. The Negative Watch reflects Fitch's concerns reflecting mortgage related underwriting exposures within ORI, including the consumer credit indemnity (CCI) portfolio, which provides credit protection against pools of prime second-lien mortgages and is written by the property/casualty insurance unit. Fitch plans to resolve the Rating Watch following additional analysis of this exposure.
Fitch currently maintains the following ratings:
Old Republic International Corp.
--Issuer Default Rating 'BBB+';
--Convertible note 'BBB';
--Short term IDR 'F2';
Old Republic Capital Corp.
--Commercial paper 'F2'.
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.
--Insurer Financial Strength 'A+', on Negative Rating Watch.
Republic Mortgage Insurance Co.
--Insurer Financial Strength 'BBB', Negative Outlook.
Old Republic Title Group
--Insurer Financial Strength 'A+', on Negative Rating Watch.
Members of the Old Republic Title Group:
American Guaranty Title Insurance Co.
Mississippi Valley Title Insurance Co.
Old Republic National Title Insurance Co.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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 this site.
A service of YellowBrix, Inc.
