Fitch Revises Old Republic Int’l Corp. to Rating Watch Negative Following Announcement [Manufacturing Close – Up]

Fitch Ratings has revised the Rating Watch status for Old Republic International Corp. (ORI) and its insurance company subsidiaries to Negative from Positive, following the company's announcement to withdraw the spin-off of Republic Financial Indemnity Group, Inc. (RFIG).

A complete list of ratings follows below.

Fitch had most recently placed the ratings on Rating Watch Positive on March 23, after ORI's announced plan to spin off of its wholly owned subsidiary, RFIG. RFIG was formed to combine ORI's troubled mortgage insurance unit and its consumer credit indemnity (CCI) lines. The spin-off was withdrawn due to what management reported as 'objections raised by certain stakeholders.'

A successful spin-off would have mitigated Fitch's concern regarding a potential subsidiary collateral covenant breach under ORI's debt obligations and eliminated any future cash drain related to RFIG. ORI's debt is subject to acceleration if any of its significant subsidiaries experience bankruptcy, insolvency, rehabilitation or reorganization.

Renewed uncertainty regarding the ultimate long-term solution for the mortgage insurance business, as well as the renewed potential for a debt covenant breach, support today's action.

On Jan. 30, Fitch had downgraded ORI's senior debt rating by three notches and placed the ratings on Rating Watch Negative when the agency's concerns first surfaced as to a possible future covenant breach. Today's action effectively returns the Rating Watch status to that in effect prior to the March 2012 RFIG formation announcement.

Fitch has placed the following ratings on Rating Watch Negative:

Old Republic International Corp.

--IDR 'BB';

--$550 million 3.75 percent senior notes due March 15, 2018 'BB- '.

Bituminous Casualty Corp.

Bituminous Fire & Marine Insurance Co.

Great West Casualty Co.

Old Republic Insurance Co.

Old Republic Lloyds of Texas

Old Republic General Insurance Co.

Old Republic Surety Co.

Manufacturers Alliance Insurance Co.

Pennsylvania Manufacturers' Association Insurance Co.

Pennsylvania Manufacturers Indemnity Co.

American Guaranty Title Insurance Co.

Mississippi Valley Title Insurance Co.

Old Republic National Title Insurance Co.

--Insurer Financial Strength 'A-'.

Additional information is available at 'fitchratings.com'.

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