A.M. Best Affirms Ratings of Fidelity National Financial, Inc. and Its Title Insurance Subsidiaries

A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit ratings (ICR) of “a-” of Fidelity National Financial Group (Fidelity) and its four title insurance members. A.M. Best also has affirmed the ICR of “bbb-” of the parent holding company, Fidelity National Financial, Inc. (FNF) (headquartered in Jacksonville, FL) (NYSE: FNF). The outlook for all ratings is stable. (See below for a complete list of the companies and ratings.)

The ratings reflect Fidelity’s adequate capitalization and strong market profile as the largest title insurance group in the United States. The stable outlook is based on Fidelity’s improved trend of risk-adjusted capitalization, lower premium leverage and the support it receives from FNF.

In 2009 and 2010, the group was able to reduce premium leverage measures through organic surplus growth from improved operating earnings, along with a moderate decline in premium writings. FNF’s financial leverage measures, which had been elevated in recent years primarily due to increased borrowings to support liquidity levels, have been reduced mainly due to the issuance of over $300 million in new common stock in 2010, the proceeds of which were used exclusively to pay down a portion of the company’s existing debt.

These positive rating factors are somewhat offset by Fidelity’s challenge to manage and sustain operating performance through the current downswing in the real estate cycle. The significant slowdown in the U.S. housing market in recent years has negatively impacted the company’s profitability. However, Fidelity continues to undertake aggressive efforts to achieve operating efficiencies, which along with its flexible cost structure, have helped to somewhat mitigate the effects of this down cycle.

The FSR of A- (Excellent) and ICR of “a-” have been affirmed for Fidelity National Financial Group and its following members:

Alamo Title Insurance
Chicago Title Insurance Company
Commonwealth Land Title Insurance Company
Fidelity National Title Insurance Company

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Rating Members of Insurance Groups”; “Risk Management and the Rating Process for Insurance Companies”; “A.M. Best’s Title Insurance Rating Methodology”; “BCAR for Title Insurance Companies”; “Catastrophe Risk Management Incorporated Within the Rating Process”; and “A.M. Best’s Ratings & the Treatment of Debt.” Methodologies can be found at www.ambest.com/ratings/methodology..

Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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