Freddie Seeks Remediation Plan From RMIC

Republic Mortgage Insurance Co., Winston-Salem, N.C., has been ordered by Freddie Mac to come up with a remediation plan to maintain Type I status as a mortgage insurer. This is a result of Moody's Investors Service's downgrading of the insurance financial strength rating of RMIC from Aa3 to A1. Moody's also cut the debt ratings of RMIC's parent company, Chicago-based Old Republic International Corp., from (P)A1 to (P)A2. Moody's said its rating action reflects the deterioration in RMIC's capital adequacy and medium-term prospects for profitability. While mortgage insurance demand and new business quality have both improved in recent months, the performance of RMIC's book of business originated before 2008 has eroded capitalization and the company remains vulnerable to further economic deterioration. For ORI, mortgage guaranty is one of its three businesses, the others being property/casualty and title. "As the second-largest unit of the three, the deterioration in credit quality at the mortgage insurer directly impacts the profile of the parent company," Moody's said. Freddie Mac said RMIC has committed to submit a remediation plan within 60 days. RMIC did not return a request for comment by deadline time.