There is a firewall that keeps the MI division isolated from the rest of the company. As long as the other divisions generate enough profits to pay the dividend, they can pay it. IMO the other divisions will generate more than enough money to pay the dividend.
There seems to be a lot of misunderstanding of what will happen if the MI division goes into bankruptcy. If that happens - I don't think it will - but if it does, and the stock sells off, buy all you can. It's a non-event.
I freely admit that I thought ORI was going to move higher before now. I was wrong. Nonetheless, I still think it will move much, much higher. I have 10,000+ shares. Bought more today.
the concern is that if the mort ins. goes into receivership, it's an event of default for the 2018 debt, making the debt puttable to ORI - but the idea they would issue 100 mil shares at 6 is totally far fetched - they would face a $550 mil immediate maturity, which they could prob. refinance at a higher rate - failing that, they have $100 mil plus cash on hand - the additional $450 could be financed through a convertible or bank funding - but the latter would require a dividend cut - all this prob. not an issue for two years, giving them time to come up with a better refinance option - FWIW, I think the stock is too cheap.
whether 100mn shares at 6 (or 7, which i agree is more reasonable) or a convert, the result is the same risk-adjusted dilution unless u think there will be some capital structure arb to boot....
they also have 200mn that MI owes ORI that will be a goner not to mention CCI unknowns
finally, I, for one, would like to see some legal precedent that shows MI is fire walled off from ORI other than Aldo's words (any one have a link?). And, at the risk of being far-fetched, is there a scenario where the dividends don't get paid up to ORI holding so that they remain out of reach?