A.M. Best Places Ratings of Fidelity National Financial, Inc. & Its Title Insurance Subsidiaries Under Review With Negative I...
December 05 2008 - 2:44PM
Business Wire
A.M. Best Co. has placed the financial strength rating (FSR) of A
(Excellent) and issuer credit ratings (ICR) of �a� of Fidelity
National Financial Group (Fidelity) and its eight title insurance
members under review with negative implications. In addition, A.M.
Best has placed the ICR of �bbb� of Fidelity National Financial,
Inc. (FNF) (headquartered in Jacksonville, FL) (NYSE: FNF) under
review with negative implications. (Please see below for a detailed
listing of the companies and ratings.) Previously, the ratings were
removed from under review following the announcement of the
termination of Fidelity�s proposed merger agreement with
LandAmerica Financial Group, Inc. (LandAmerica) (Virginia) the
third-largest national writer of title insurance in the United
States, following a two week due diligence period, which expired on
November 21, 2008. (Please see A.M. Best�s press release dated
November 25, 2008.) The ratings of FNF and Fidelity have been
placed under review as A.M. Best assesses the implications of
Fidelity�s newly announced plans, which were not previously
disclosed to A.M. Best, concerning acquiring four insurance
underwriting companies of LandAmerica, following the announcement
of LandAmerica�s filing for Chapter 11 bankruptcy protection. The
stock purchase agreement calls for Fidelity�s leading title
insurance subsidiaries to acquire four LandAmerica insurance
underwriters. Specifically, Chicago Title Insurance Company (Omaha,
NE) will acquire Commonwealth Land Title Insurance Company and
Commonwealth Land Title of New Jersey, while Fidelity National
Title Insurance Company (Santa Barbara, CA) will acquire Lawyers
Title Insurance Corporation and United Capital Title. The total
purchase price will be approximately $300 million. The proposed
acquisitions are expected to result in a significant increase in
underwriting leverage for Fidelity, which may result in adversely
impacting its financial strength and risk-adjusted capitalization.
Additionally, the acquisition is expected to carry execution risks
of integrating two large insurance organizations. The proposed
transaction, which will result in the largest title insurance
organization in the United States, will be subject to regulatory
and judicial approvals including federal anti-trust review, final
approved orders by the Chapter 11 court, and approvals from all
applicable state insurance regulators. A.M. Best expects to resolve
the under review status of the ratings following the closing of the
transaction which is expected to occur by year-end 2008, along with
obtaining further information from management. The FSR of A
(Excellent) and ICRs of �a� have been placed under review with
negative implications for Fidelity National Financial Group and its
following members: Alamo Title Insurance Chicago Title Insurance
Company of Oregon Chicago Title Insurance Company Fidelity National
Title Insurance Company National Title Insurance of New York, Inc.
Security Union Title Insurance Company Ticor Title Insurance
Company of Florida Ticor Title Insurance Company The ICR of �bbb�
has been placed under review with negative implications for
Fidelity National Financial, Inc. For Best�s Ratings, an overview
of the rating process and rating methodologies, please visit
www.ambest.com/ratings. Founded in 1899, A.M. Best Company is a
global full-service credit rating organization dedicated to serving
the financial and health care service industries, including
insurance companies, banks, hospitals and health care system
providers. For more information, visit www.ambest.com.
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