California OKs Plan to Spin Off Ticor Mortgage
Ticor Mortgage Insurance, facing a potential $166-million loss on mortgages and mortgage-backed securities that it insured for a Virginia real estate company, got permission from California regulators Thursday to become a separate company so that its financial woes won’t infect its healthy title-insurance business.
Shortly before the reorganization was approved, Ticor Mortgage announced the resignation of Chairman and Chief Executive Raymond R. Rodeno and the appointment of William J. Fitzpatrick as his successor. Fitzpatrick, in addition to running the newly organized mortgage unit, will remain executive vice president, secretary and general counsel of the parent company, Ticor.
The new plan of organization took effect as soon as California Insurance Commissioner Bruce B. Bunner approved it. As a result, Ticor Mortgage and Ticor Title are now separate, wholly owned subsidiaries of the parent company. Previously, mortgage operations had been a division of title operations, which were owned by Ticor.
Ticor Mortgage also announced that, starting Wednesday, it will sell no new mortgage insurance until the full extent of its possible losses “can be quantified.” The Los Angeles-based company will honor present commitments, however, and renew existing coverage, the statement said.
“Clearly there’s no problem with Ticor’s title operations,” Bunner said in approving the separation. “We just wanted to be sure it stays that way. Now the company’s two operations are physically and financially separate.”
Rodeno could not be reached Thursday, but another Ticor executive, who asked not to be identified, said Rodeno decided to step down “for the same reasons a captain in the Navy takes responsibility if his ship hits a rock, whether or not he was at the wheel when it happened.”
Fitzpatrick, saying he could not speak for Rodeno, said: “I think it’s possible he felt that, as the CEO at the time of Ticor’s troubles, he had to accept ultimate but not personal responsibility. I think he felt the company would do better with a new chief.”
EPIC Problems
Ticor Mortgage’s expected loss of up to $166 million stems from default on payments on $1 billion in mortgages and mortgage-backed securities that it insured for Equity Programs Investment Co. (EPIC), a subsidiary of Community Savings & Loan Assn., Bethesda, Md.
Last month, EPIC gained national attention when it announced that it could not make payments on the debt. The Federal Home Loan Bank Board then told Community that it could not quality for federal deposit insurance until it disposed of the $1.5-billion real estate subsidiary. That fueled massive withdrawals from all six Community branches, forcing Maryland Gov. Harry Hughes to order a 20-day freeze on accounts in the savings and loan.
Ticor officials and California insurance regulators emphasized Thursday that Ticor’s mortgage troubles have not affected title-insurance operations. Ticor Mortgage Insurance has surplus cash of $197 million, from which the $166-million loss would come, Ticor said. Ticor Title remains the nation’s largest title insurer with surplus funds of $140 million, the company added.
