Fitch late Tuesday downgraded its ratings on Republic Mortgage Insurance and then withdrew entirely its coverage of the firm, saying its business likely will enter run-off status in the near future.
Fitch cut RMIC to 'B' from 'BB' after its second quarter results proved weaker than what the rating agency expected.
Recently, the North Carolina Department of Insurance said it will not renew a waiver of risk-to-capital requirements for RMIC. Also, Fannie Mae and Freddie Mac suspended RMIC as an approved MI provider.
Earlier, parent company Old Republic International said the MI unit would be placed into run-off if both these things happened.
If RMIC goes into runoff, Fitch said it believes there is "a higher probability that RMIC will not have enough capital resources to support all of its claims in run-off."
The rating agency is making the assumption that ORI will no longer provide capital support to RMIC.
