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Old Republic International Corporation Message Board

  • liplip221 liplip221 Aug 26, 2008 7:57 PM Flag

    Great West

    how does all of this mortgage activity impact great West Casualty? Their trucking book is largely felt to be profitable, but pressure in the market is killing their ability to produce rate. Will they sell this to prop up the rest of the organization I wonder?

    other than this portion of the overall company, I dont think many aspects of ORI are making money, or are they?

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    • I'm not sure that I have your question correct - are you asking if ORI will sell Great West? I have no idea obviously.

      But I think it would be a mistake. IMO they should do the opposite - sell the 2 real estate segments and consolidate under their general insurance division. Or divisions.

      The general insurance segment appears to be quite a mixture of subsidiaries and divisions. I've never been able to figure it all out. I'd have to think that that could be made more efficient. But that's a separate issue.

    • I believe that ORI's 3 divisions -- mortgage guaranty, title insurance, and general insurance -- are separate. The 2 related to real estate are currently unprofitable. The general insurance division, which Great West would be part of, is profitable.

      General insurance is the largest of the 3 segments. If the mortgage losses are written off, I don't see any reason the company wouldn't be profitable going forward. Although title insurance is a function of new home sales, and it could stay weak for quite a while. Mortgage guaranty is a function of prior sales.

      I think the problem - not just with ORI, but all these financial stocks -- is that investors aren't sure that all the losses been accounted for. So investors fear that further share dilution might be necessary as more capital is raised. Or that the dividend will be cut.

      I've been buying ORI under $10 per share, and bank stocks, as they drop. I'm guessing that it's just as likely that the selling has been overdone as it is that the U.S. financial system is crumbling.

      I have no idea if ORI has bottomed or if it as more to go. I have a longer perspective. All these financial stocks will muddle through and return to profitability. I don't care how long it takes, I'm going to "buy low" and wait it out. But traders have a different perspective.

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