Sep. 29, 2009 (Business Wire) -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of Old Republic Insurance (Chicago, IL), Bituminous Insurance Companies (Bituminous) (Rock Island, IL) and their respective property/casualty members. In addition, A.M. Best has affirmed the FSR of A+ (Superior) and ICR of “aa-” of Great West Casualty Company (Great West) (South Sioux City, NE). The outlook for the above ratings is negative.
Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and ICRs of “a+” of Old Republic General Insurance Corporation (ORGENCO) (Chicago, IL), Old Republic Title Insurance Group (ORTIG) (Minneapolis, MN) and its members, Old Republic Surety Company (ORSC) (Brookfield, WI) and Old Republic Insurance Company of Canada (Hamilton, Ontario). The outlook for the FSRs is stable, while the outlook for the ICRs is negative.
A.M. Best also has affirmed the FSR of A (Excellent) and ICR of “a” of Old Republic Union Insurance Company (Old Republic Union) (Chicago, IL). The outlook for these ratings is stable.
Additionally, A.M. Best has affirmed the FSR of A- (Excellent) and ICRs of “a-” of Old Republic Security Assurance Company (ORSAC) (Phoenix, AZ) and Old Republic Life Insurance Company (Old Republic Life) (Chicago, IL). The outlook for ORSAC’s ratings is negative, while the outlook for the ratings of Old Republic Life is stable. All companies are subsidiaries of Old Republic International Corporation (Old Republic) (Chicago, IL) (NYSE: ORI). (See link below for a detailed list of the companies and ratings.)
These ratings reflect A.M. Best’s review of the amount of deterioration in the consolidated financial condition and financial flexibility of Old Republic in recent quarters. While substantial operating and net losses continued to be reported by Old Republic in the first half of 2009, they appear to have leveled off to some degree as compared with sharply rising trends in 2007 and 2008. The consolidated operating losses are resulting primarily from Old Republic's mortgage guaranty operations, and to a far lesser degree, its title insurance business, while a declining trend in the profitability of its general insurance property/casualty operations also is a contributing factor. Old Republic’s net losses were particularly high in 2008, reflecting substantial impairment losses of equity investments, including sizable investment positions in MGIC Investment Corporation, The PMI Group, Inc. and LandAmerica Financial Group, Inc.
The recent leveling off of Old Republic’s operating losses, indications of improving credit markets and segments of the U.S. economy, recoveries in equity and fixed income markets and Old Republic’s still modest level of financial leverage (debt-to-total capital of 9.0% at June 30, 2009) have contributed to A.M.
