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Old Republic International Corporation Message Board

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  • ori.investor ori.investor Jul 28, 2012 7:11 PM Flag

    Reason to buy

    Kevin, Ok, I'm slow at times. I see your point now. Yes, you are correct, if there's a CCI lawsuit, I do believe the corporate entity is on the hook. At least when the spinoff was announced, that was the case.

    It's Miller time (red wine time) so I'm not really into doing DD at the moment. Plus Al talks so slowly that it might take me several hours to find it even if I was in the mood to listen to his comments on past conf calls on the spinoff.

    Are you saying there is a current lawsuit or a potential lawsuit? Bank of America has sued on the MI payments. But is there another lawsuit on top of that against CCI? And if so, how much is it for?

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    • Well, my main concern is what is ORIC (Old Republic Insurance Company) on the hook for in terms of a worst case scenario. In other words, if were were to assume that this sub, which is the General Insurance Sub(and there is one other General Insurance sub with exposure) were to basically be washed out, what does it do to the capital and dividend paying ability?

      As ORIC is the sub that CCI rolls into, this is the one on the hook (again, along with the other). I am using ORIC as the acronym based on how it is defined in the filings, not as it is on the website.

      We know ORIC has 1.) the B of A suit for 300M+ 2.) The FDIC suit (AM Trust) which was apparently settled.

      We also know the uptick in CCI expenses was rather large in the last quarter. 50M or so related to "legal expenses". I assume the settlement of the AM trust was captured in the previous quarter, since the 10-Q made note of the settlement, but perhaps I am wrong and that is part of the recent quarter's increase? Seems not though, based on the language used to describe things...which then indicates future litigation risk.

      So, in order to really be comfortable on the dividend, we need to do the same analysis as has been done with RFIG, but with ORIC and any CCI exposed sub (there is one other general insurance sub). What I would like to see is 1.) if these subs were basically shut down, what is the capital exposed 2.) are these subs contributing dividends currently? and 3.) is there any exposure for clawbacks?

      I am still of the belief there is value here, but I am concerned the company has gone out of the way to show how the MI stuff is contained, etc, but hasnt done the same with the CCI exposure...

      • 2 Replies to kevinf1_99
      • I just listened to the cancelled spinoff conference call. It was torture, listening to Al being bombarded with questions. Particularly when he added "OK" to each comment he made, like some people say "you know" repeatedly.

        I stand corrected. He said that there is potential liability from the CCI division that could spill over to the corporate level. How much it could be, and how likely it could be, he didn't say.

        Most of the questioners were far more concerned with MI going into receivership, and the bonds being due, than they were with CCI. There is a lingering suspicion, I believe, that Al has underestimated what regulators might do. And how the stock price will react if ORI has to go into the capital markets.

        That being said, I'm probably going to buy more tomorrow.

      • settlement occurred in April and, as you reported, was in the May spin-off filing. So i suspect the Q2 claims increase was due to the settlement and will show up in the 10q. It sounds like ORI paid near if not full amount to settle but prob. does not have any significance for the BOA suite as its different grounds....but here is what they said on the CC call

        "...upward adjustment to cover what we think is a more extended claim litigation period related to various legal disputes at the Company."

        why are they so opaque?....do they think they need to coddle us? okay?

        I think we need to understand clawback potential when a lawsuit is finally settled. Logic, to me, dictates that a company can't milk a sub while staving off a claim...fraudulent conveyance, ifs called, i believe.

 
ORI
16.79-0.01(-0.06%)Jul 23 4:01 PMEDT

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