Old Republic's Mortgage/Title Units Take Pre-Tax Losses

While as a company, Old Republic International Corp., Chicago, was profitable in the first quarter 2010, both its mortgage guaranty and title insurance segments had pre-tax operating losses. Still the results for the mortgage guaranty segment improved more than 76% when compared with the first quarter 2009. ORI had net income of $25 million for the first quarter 2010 compared to a net loss of $54 million for the same period in 2009. The mortgage insurance segment benefited from the termination of two captive reinsurance agreements and the cancellation of certain pool insurance contracts. The transactions reduced the incurred claim ratio for the quarter by approximately 27.4 percentage points, increased the paid claim ratio by 128.8 percentage points, and decreased the pretax operating loss by approximately $35.6 million. As a further consequence, these non-recurring transactions resulted in a reduction of operating cash flow of $167.1 million. The mortgage insurance segment had a pre-tax operating loss of $34.1 million, an improvement from the pre-tax operating loss of $144.6 million for the first quarter 2009. New insurance written went from $2.2 billion for the first quarter 2009 down to $784 million for the most recent period. The title insurance segment had a pre-tax operating loss of $8.6 million, a slight improvement over the year-ago period pre-tax operating loss of $9 million. Still net premiums and fees earned in the first quarter were up 65% over the previous year as Old Republic Title benefited from industry dislocations and consolidation. This segment also benefited from the consolidation of accounts from a joint venture formed with a Florida title underwriter in mid-year 2009. ORI holds investment stakes in competitors MGIC Investment Corp. and The PMI Group. The company had an original cost $416.4 million, which it wrote down to $106.8 million in 2008. As of March 31, 2010, the investment stakes had a fair value of $254 million or 61% of the original cost; as of Dec. 31, 2009, the fair value was $130.7 million.