Old Republic Still Willing to Resurrect Mortgage Insurer

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Old Republic International Corp. is not declaring its private mortgage insurance subsidiary dead even after two failed attempts at recapitalizing the business.

The company believes that over the next couple of years, while Republic Mortgage Insurance Co. continues operating in runoff, "some appropriate acceptable external sources of capital can be brought to there and reinvigorate what is still in our opinion a very well-organized and reputable business charter," said ORI chairman and CEO Al Zucaro during the parent company's first-quarter conference call.

"We have not given up on the idea of allowing RMIC to be resurrected. It deserves to get back into business, one way or the other with the right amount of capital and the right pedigree for that capital," he declares.

It was in March that ORI pulled the plug on its second recapitalization plan, citing the inability to obtain capital market funding under the terms and conditions it desired.

The plan remains to eliminate the deferred payment obligation where it has to set aside 50% of paid claims and instead pay out 100% of all claims. The North Carolina Department of Insurance has to approve that plan because the deferred payments count as capital for RMIC and new capital would need to come from ORI to finance the runoff.

Existing ORI shareholders should be approached for capital for restarting RMIC, an investor, John Deysher of Pinnacle, says. "We would be interested in the possibility of contributing capital to the company via rights offering or some other way because we agree, we think the RMIC business has a good future going forward."

While ORI will take this suggestion into consideration, what it is doing by keeping RMIC in runoff from a capital injection standpoint is in the best interests of the parent company's shareholders, Zucaro says.

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