Old Republic swings to 2Q loss, may halt the writing of new mortgage biz
Mortgage insurer Old Republic International (ORI) swung to a loss for the most recent quarter as the carrier battled an influx of claims on troubled mortgages and warned it may have to stop writing new business temporarily in the month of August. The Chicago-based firm said its mortgage guaranty performance suffered from "worsening claim costs trends" in the second quarter. This negative trend prompted Old Republic to say in its earnings that unless it gains approval from its state regulator and policyholders, Fannie Mae and Freddie Mac, to move new production of its insurance guaranty business to a separately capitalized subsidiary, the firm will have to place its existing book of business into "runoff of operating mode." Old Republic said its mortgage guaranty insurance carrier has been operating with a waiver from its state regulator due to the insurer not meeting minimum capital requirements set by the state. The waiver was originally supposed to expire in June, but has been extended to August. Moving production of Old Republic's mortgage-related business into a subsidiary would help it meet capitalization requirements, but Old Republic is still in the process of gaining approval. "While the company will continue to pursue these important capital utilization and related enterprise risk management matters, it is probable that new business production will cease, at least temporarily, prior to Aug. 31, 2011," Old Republic said. Old Republic's posted a net loss of $66.3 million, or 26 cents per share, on revenue of $1.1 billion in the second quarter. That is down from a profit of $57.4 million, or 23 cents per share, on revenue of $935.3 million a year ago. Write to Kerri Panchuk.