Old Republic posts 6th straight quarterly loss
Old Republic International Corp., the Chicago-based home-loan guarantor and title insurer, posted its sixth straight quarterly loss as revenue from the mortgage guaranty business fell and premiums from general insurance continued to decline.
The second-quarter loss of $15.8 million, or 7 cents a share, narrowed from a loss of $364.7 million, or $1.58 a share, in the same period a year earlier, the company said today in a statement. The operating loss of 21 cents a share, which excludes some investment returns, missed the 27-cent average deficit by three analysts compiled by Bloomberg.
Sales of mortgage insurance have declined as U.S. home sales fell amid the worst housing recession since the 1930s. More than 1.5 million properties received a default or auction notice or were seized by banks in the six months through June, RealtyTrac Inc., a seller of default data, said in a statement on July 16.
Mortgage guaranty operating results "were affected adversely by slightly higher claim ratios," the company said.
The mortgage guaranty business slid to $166.5 million from $173.6 million a year earlier. Title insurance revenue rose to $219 million in the second quarter, compared with $179.3 million in the year-earlier period.
Deteriorating credit trends may "dampen sentiment regarding a near-term recovery," said Nathaniel Otis and William Clark, analysts at KBW Inc., in a note regarding mortgage insurers on July 13.
Convertible Notes
Old Republic sold $316.3 million in convertible senior notes in a public offering, the company said April 29 in a statement distributed by PR Newswire. The offering will inject more capital into the insurer's general and title insurance business segments amid the declining financial markets.
Fitch Ratings downgraded the insurer to "BBB+" from "A" during the second quarter and placed Old Republic's debt on "rating watch negative," citing "significant ongoing market pressures in the mortgage insurance sector," the ratings firm said in a statement. Old Republic is "at risk for a substantial loss," Fitch said.
Old Republic rose 22 cents to $9.79 at 9.45 a.m. in New York Stock Exchange composite trading.