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Genworth Financial, Inc. Message Board

  • kunalkk23 kunalkk23 May 21, 2012 5:18 PM Flag

    ORI Announces Partial LBO and Spin-off

    What do you guys think about this? They are combining their mortgage guaranty and consumer indemnity business....

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    • The street likes ORI news this morning. Let's just hope our GNW team can get their act together.

      Up over 7.5% and climbing, on great volume. They also pay about an 8% yield yearly dividend.

    • wow, this should be very instructive for GNW and I imagine an exact prelude of an entire MI spin, just curious about ORI doing it as a taxable event...seems strange. Will be interesting to see how much new money and at what value they ascribe to an entity in run off. We know that $10 bill of NIW creates npv of $75 million or so, if you are not writing new biz you must see value in the ability to do it in the future...very interesting.

    • What's really interesting is how much private equity money is finding its way into the US MI business. Essent, NMI holdings, and now the equity injection into ORI. Plus the hint of buyer interest in RDN in today's investor letter (which could be legit, or a pump attempt).

      Notice the negative shareholder's equity in ORI's MI, and compare to GNW's 1.2B in positive US MI shareholder's equity.

      • 2 Replies to matthsusant
      • i don't think any private equity found its way to ori's mi business, i think they gave those shares to the executives, and just enough to escape consolidating the business on their balance sheet, as for rdn, i highly doubt that is legit, put it this way, in 2009 Essent raised $500M, and this year NMI raised $550M, amounts that exceed the equity valuations of RDN and probably what this ORI spinoff could be purchased for, and close to mtg's equity valuation, bottom line is the legacy risk is a black hole that no one wants to touch (including the litigation risk and the risk of rescissions which have not yet been litigated but are not past their statute of limitations to be litigated), that's why the mi's haven't been able to raise capital in two years, since the extent of their losses became clear to the dumb professional investor community (they were always clear to me), gnw needs to dump usmi ASAP before it is too late.

      • Matt, excellent post !!!

    • Here's their rationale, seems like ORI is again AHEAD of the game...

      Recessionary conditions in U.S. housing finance beginning in 2007 have erased the long-term profitability of the MI and CCI insurance lines and led to substantial losses. As a result, capital funds identified with these lines at year-end 2006 have been fully depleted. While Old Republic maintains a long-term strategic interest in these lines, it has stopped additional capital funding for them since they no longer meet its enterprise risk management disciplines and business diversification objectives. These circumstances also reinforce Old Republic's resolve to: 1) safeguard policyholders' interests in its general (property and liability), title, and life & health insurance subsidiaries by maintaining long-established protective barriers around these companies; and 2) protect economic values inuring to the Company's debt holders and shareholders.

6.97-0.04(-0.57%)Aug 3 4:01 PMEDT