Old Republic International Corp. (ORI) announced an ambitious recapitalization plan for its mortgage guaranty business Thursday, as the MI unit positions itself to re-enter the mortgage insurance market after years in flux.
If it succeeds, Old Republic will have come a long way since 2011.
Just two years ago, Old Republic was forced to announce that its flagship mortgage guaranty insurance unit was operating on a waiver of minimum capital requirements – a waiver granted by its chief insurance regulator in North Carolina.
At the time, the firm’s mortgage guaranty subsidiary, RMIC Companies Inc. (RMICC), was forced to stop writing new business and told it could no longer pay more than 50% of any claims under any insurance policy it had issued.
Fast-forward to today, and Old Republic’s mortgage guaranty unit is set for a comeback.
The company said Thursday its mortgage guaranty subsidiary is aiming to raise new funds in the capital markets for the purpose of recapitalizing the firm’s three mortgage insurance units.
Once the capital is raised, the goal is to fully support existing insurance policies – keeping existing insurance clients confident – while paying off deferred claims and exiting its current status as an insurer under the supervision of North Carolina regulators.
If all goes well, and the firm’s mortgage guaranty business receives approvals from the North Carolina Department of Insurance – along with Fannie Mae and Freddie Mac – the mortgage guaranty unit hopes to begin underwriting new business again in 2014.
As part of the recapitalization plan, Old Republic intends to contribute up to $50 million of the new capital.