RMIC Set to Boost Cash Payouts On Settlement

Old Republic International Corp., Chicago, has filed a corrective plan for Republic Mortgage Insurance Co. with the North Carolina Department of Insurance which would lift the cash portion of settlement claims to 60% from its current 50%.

NCDOI has set a hearing on whether to accept the plan on Oct. 16. RMIC has been operating under a supervisory order from the regulator since Jan. 19. Since the end of August 2011, the mortgage insurer has been in run-off status.

In its filing, ORI says that while technically it is putting up a corrective plan, what it submitted is actually “a resolution plan to avoid receivership and bring to conclusion the ultimate claims that will be paid from the insurance contracts issued by RMIC.” It is not designed to allow the company to come into compliance with regulatory standards which would allow it to resume writing new mortgage insurance policies.

Earlier this year, ORI attempted to spin off its mortgage insurance business into a separately traded company, but “stakeholders” whom it refused to disclose objected to the move. The plan, while reducing the deferred payment obligation to 40%, calls for the DPO to remain in place until at least Dec. 31, 2021. It notes RMIC is projected to be facing operating losses through 2014.