A.M. Best Removes From Under Review & Downgrades Ratings of Fidelity National Financial, Inc. & Its Title Insurance Subsidiaries
June 02 2009 - 4:16PM
Business Wire
A.M. Best Co. has removed from under review with negative
implications and downgraded the financial strength rating (FSR) to
A- (Excellent) from A (Excellent) and issuer credit ratings (ICR)
to �a-� from �a� of Fidelity National Financial Group
(Fidelity) and its eight title insurance members. In addition, A.M.
Best has removed from under review with negative implications and
downgraded the ICR to �bbb-� from �bbb� of Fidelity National
Financial, Inc. (FNF) (headquartered in Jacksonville, FL)
[NYSE: FNF]. A negative outlook has been assigned to all of the
ratings. (Please see below for a detailed listing of the companies
and ratings.)
The ratings of FNF and Fidelity have been removed from under
review and downgraded due primarily to the adverse implications of
the acquisition of the four former title insurance underwriters of
the LandAmerica Financial Group, Inc. (Lawyers� Title
Insurance Corporation, Commonwealth Land Title Insurance
Company, United Capital Title Insurance Company and
LandAmerica NJ Title Insurance Company), which had been the
third-largest national writer of title insurance in the United
States.
While the acquisition has resulted in Fidelity becoming the
largest domestic title insurer with a current market share of
approximately 45%, it also has resulted in a significant increase
in underwriting leverage for Fidelity, which has adversely impacted
its risk-adjusted capitalization. Additionally, the acquisition
carries the execution risk of integrating two large insurance
organizations (Commonwealth Land Title Insurance Company and
Lawyers Title Insurance Corporation).
Fidelity�s operating results in 2008 were poor, primarily due to
a significant reserve strengthening action that was undertaken in
the third quarter of 2008 following adverse development of claims
from policy years 2006 and 2007, along with a somewhat more
conservative estimate of expected claims from the 2008 policy year.
Operating performance trends in 2009 will be contingent upon a
sustained recovery of the real estate market, which is the primary
driver of title insurance industry revenue and earnings. Further,
while Fidelity in the past has shown an ability to manage large
acquisitions, such as its acquisition of Chicago Title in 2000, the
current negative business environment poses a greater challenge as
it proceeds with the integration of its newly acquired
underwriters.
(For further information, please see A.M. Best�s press release
dated December 5, 2008.)
The FSR has been downgraded to A- (Excellent) from A (Excellent)
and ICRs to �a-� from �a� with a negative outlook 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 has been downgraded to �bbb-� from �bbb� with a negative
outlook for Fidelity National Financial, Inc.
The FSR of A- (Excellent) and ICRs of �a-� have been affirmed
with a stable outlook for Fidelity National Group and its
following property/casualty members:
- Fidelity National Insurance
Company
- Fidelity National Indemnity
Insurance Company
- Fidelity National Property
and Casualty Insurance Company
An FSR of A- (Excellent) and ICRs of �a-� have been assigned
with a negative outlook for the following new members of
Fidelity National Financial Group:
- Lawyers� Title Insurance
Corporation
- Commonwealth Land Title
Insurance Company
- United Capital Title
Insurance Company
- LandAmerica NJ Title
Insurance Company
For Best�s Credit Ratings, an overview of the rating process and
rating methodologies, please visit www.ambest.com/ratings.
The principal methodologies used in determining these ratings,
including any additional methodologies and factors that may have
been considered, can be found at
www.ambest.com/ratings/methodology.
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.
Fidelity National Financ... (NYSE:FNF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Fidelity National Financ... (NYSE:FNF)
Historical Stock Chart
From Jul 2023 to Jul 2024
