I'm a little confused by the 85% of reinsurance comment on call. that said, am reasonably sure, just like MI, CCI is its own corporate entity, in run-off, with contained losses - the key principal being one insurance entity cannot finance another, reguardless of which operating segment it is included under -
At some pt. you have to take their word for this. What did Aldo say in 2008 that would make you not trust him? They certainly messed up the MI business, but so did every other mortgage insurer.
There were more details on the CCI structure in the RFIG prospectus, but I guess they withdrew this from SEC site - unless I'm missing it...
Somewhere around page 10 is the info on the new relationship but basically anything above 85% cumulative loss ratio goes back to ORI in one form or another. The recent release indicates that $48.7 in CCI op loss (out of the 49.8) goes back to ORI gen ins subs. Why then do they not just hack that out and include it in the General Insurance segment, as opposed to reporting it as CCI, I do not know. Probably to throw people off the scent and I am not convinced that its legit reporting (not that its audited). Basically, they said that it is higher lawyer costs and salvage recovery lowered. Indicates on going legal risk and poor quality of the $1.2 bn or so of risk-in-force still on the books (hooks). I don't think the CCI story is over. Aldo is not upfront - not saying he's dishonest - but he's not forthcoming for sure....his professorial demeanor wears thin. I think not coming clean over the whole spin-off and, now, CCI, and their attempt to conceal, means credibility is shot (with me for sure)....one thing I've learned is if you think they are trying to hide something, run.....good luck longs
I was trying to listen to the conf call at work and kept getting interrupted. I'll listen to the replay again later. But from what I heard, the dividend is solid and the losses from the businesses in runoff can't spill over to the other subsidiaries. They still expect the MI runoff to be positive in a few years.