MOODY'S LOWERS INSURANCE FINANCIAL STRENGTH RATINGS OF OLD REPUBLIC GENERAL INSURANCE GROUP TO Aa2; SENIOR DEBT OF OLD REPUBLIC INTERNATIONAL CORPORATION TO Aa3
New York, 06-17-97 -- Moody's Investors Service has lowered its ratings on the senior debt of Old Republic International Corporation to Aa3, from Aa2. In addition, Moody's lowered the financial strength ratings of the four principal members of Old Republic's property and casualty operations (Old Republic General Insurance Group) to Aa2, from Aa1. The Aa3 insurance financial strength rating of Old Republic's mortgage insurance subsidiary, Republic Mortgage Insurance Company, and the A1 insurance financial strength rating of the company's principal title insurance subsidiary, Old Republic National Title Insurance Company, were confirmed. Moody's also confirmed its Prime-1 rating of Old Republic Capital Corporation for commercial paper, which is guaranteed by Old Republic International Corporation. Moody's rating outlooks for the Old Republic Group members are stable.
According to Moody's, these rating actions reflect the intense competitive conditions in Old Republic General's core commercial property and casualty insurance operations, as well as the rating agency's expectation of somewhat higher financial leverage at Old Republic International Corporation over the intermediate term. However, Moody's does not expect financial leverage to become significant, in the absence of a major acquisition. Moody's added it expects that Old Republic General will be pressured to be more aggressive in order to enhance its competitive position. Old Republic's property and casualty operations remain among the most profitable and well-capitalized property and casualty insurers in the USA, and the group has consistently maintained strong underwriting, reserve, and risk management discipline throughout the underwriting cycle. Moody's further expects that Old Republic General will retain its strong position in the transportation and energy services sectors.
Moody's noted that Republic Mortgage Insurance Company has been enjoying strong earnings, but that the firm could be challenged by structural changes affecting the mortgage insurance industry, such as shifting technologies and distribution patterns, risk-sharing with mortgage originators, and a trend to higher loan-to-value books. The title insurer, Old Republic National Title Insurance Company, has been generating weak earnings, although the balance sheet remains strong.
Ratings that were changed include the following:
Old Republic International Corporation's senior debt to Aa3, from Aa2; senior shelf rating to (P)Aa3, from (P)Aa2; subordinated shelf rating to (P)A1, from (P)Aa3.
The insurance financial strength ratings on the following members of the Old Republic General Insurance Group: Bituminous Casualty Corporation, Bituminous Fire and Marine Insurance Company, Great West Casualty Company and Old Republic Insurance Company, to Aa2, from Aa1.
The following ratings are confirmed:
The Aa3 insurance financial strength rating on Republic Mortgage Insurance Company.
The A1 insurance financial strength rating on Old Republic National Title Insurance Company.
The Prime-1 rating of Old Republic Capital Corporation for commercial paper, which is guaranteed by Old Republic International Corporation.
Old Republic International Corporation, based in Chicago, Illinois, USA, is a holding company that is engaged, through its subsidiaries, in property and casualty insurance and related services, mortgage guaranty insurance, title insurance, and life and disability insurance. As of March 31, 1997, Old Republic reported year-to-date net revenues of $462 million, and had total assets of $6.6 billion, and equity of $1.9 billion.
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