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Fitch removes negative watch on Old Republic, negative outlook remains

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CHICAGO—Fitch Ratings Ltd. on Tuesday removed its negative watch but maintained a negative outlook on Old Republic International Corp.'s debt.

Although Fitch cited concerns about Chicago-based Old Republic's mortgage insurance business for its actions, it said the insurer's underlying property/casualty business “continues to perform well.” The Chicago-based rating agency noted that Old Republic's property/casualty operations reported an improved combined ratio of 97.9% for the first six months of the year, compared to 102.2% during the same period of 2010.

Fitch's move came a week after A.M. Best Co. Inc. downgraded most of Old Republic's international corporation subsidiaries. For example, Best moved Old Republic Insurance and its Rock Island, Ill.-based unit Bituminous Insurance Cos. and their respective property/casualty members' financial strength ratings to A from A+, and their debt ratings to A+ from AA-, while revising the outlook on those ratings to stable from negative. The Oldwick, N.J.-based rating agency noted factors such as Old Republic's second quarter results, increased financial leverage in 2011, and expectations of further substantial losses in the mortgage guaranty business.