Old Republic International Corp. (ORI:US) plunged the most since 2009 in New York trading after the insurer withdrew a plan to spin off the mortgage-guaranty operation that ran short of capital.
The halt is a response to “objections raised by certain stakeholders that RFIG’s separation from Old Republic would be disadvantageous to their interests and expectations,” the Chicago-based insurer said today in a statement, referring to its Republic Financial Indemnity Group subsidiary. Old Republic didn’t identify the stakeholders in the statement or return a call seeking comment.
The insurer fell 12 percent to $9.27 at 4:15 p.m. in New York, erasing its gain for the year.
Old Republic is seeking to focus on products such as title insurance and commercial-liability coverage and limit losses from backing home loans. The company announced the spinoff plan May 21 and said it had sold a 21 percent interest in RFIG to a group of investors in a partial leveraged buyout. The company said today the financial effect of that deal had been reversed.
State regulators have been working with insurers who ran short of capital at units backing home loans or mortgage-related bonds in an effort to protect policyholders. Old Republic said in January that its mortgage-guaranty subsidiary had been ordered into supervision by the North Carolina Department of Insurance and told to temporarily reduce cash payment on claims by 50 percent.
The North Carolina regulator had no immediate comment today. Old Republic reported a $678 million pretax loss in the mortgage-guaranty unit last year, wider than the 2010 loss of $261 million, according to the company’s annual report.
To contact the reporter on this story: Zachary Tracer in New York at Ztracer1@bloomberg.net
To contact the editor responsible for this story: Dan Kraut at email@example.com