11.10.07
Old Republic Buys Significant Shares in 2 more PMI Co’s
Old Republic International, parent of Old Republic National Title, has purchased significant shares in both MGIC and PMI Group, Inc. as abbounced on Nov. 9th by Bloomberg
Old Republic has long been in the Private Mortgage Insurance Business with its subsidiary, Republic Mortgage Insurance Company, better known as RMIC, which has been a significant competitor with Magic and PMI, but is now related.
It appears to be a happy circumstance for MGIC and PMI, who Bloomberg reports as having lost more than 65 percent of their market value in the last year. Presumably due in part to Piggy-back loans, where an 80 percent first mortgage and a twenty percent second mortgages were place on real estate accounting for the full value of the property, in order to avoid the cost of purchasing Private Mortgage Insurance. And with the over-appraisal of many homes and declining values, Piggy-back loans are likely a thing of the past, and PMI will return. A good buy for Old Republic and one that the stock market approved of based on the jump in stock values for all involved.