LandAmerica Financial Group Inc.'s Operating Companies Outlook Revised to Stable
|February 5, 2004|
NEW YORK--(BUSINESS WIRE)-- On Feb. 4, 2004, Standard& Poor's Ratings Services revised its outlook on LandAmerica Financial Group Inc.'s (NYSE:LFG) title insurance operations (collectively referred to as LandAmerica) to stable from negative. At the same time, Standard& Poor's affirmed its 'A-' counterparty credit and financial strength ratings on these companies.
Standard& Poor's revised its outlook on LandAmerica to stable because the company's market position has stabilized, with the company currently the third largest domestic title insurer. Standard& Poor's expects that LandAmerica should be well positioned to manage any downturn or moderation in the real estate sector given the variable cost structure of its predominant agency distribution channel, which accounted for 54% of total title revenues as of Sept. 30, 2003. Standard& Poor's further expects that in 2004, LandAmerica will maintain an expense ratio of less than 92% and an ROR of at least 7%.
Major Rating Factors
-- Strong and stabilizing market position. LandAmerica has been continually ceding market share to its competitors, partially because of earlier industry consolidation and the company's lower concentration of revenue in California. In 2002, California accounted for 13% of LandAmerica's top line, whereas the state constituted more than 25% of title revenue for LandAmerica's main competitors. California has been the bedrock of the refinancing boom that has led to record mortgage originations in each of the past three years, during which refinancing volume has outpaced the purchase market. Standard& Poor's expects that LandAmerica's market position as the third-largest domestic title insurer has stabilized and that the company has a strong market position buffeted by good geographic diversification.
|Lawyers Title Insurance Corp.|
|Land Title Insurance Co.|
|Title Insurance Co. of America|
|Transnation Title Insurance Co.|
|Transnation Title Insurance Co. of NY|
|Commonwealth Land Title Insurance Co.|
|Commonwealth Land Title Insurance Co. of New Jersey|
|Counterparty credit rating||A-/Stable/||A-/Negative/|
|Financial strength rating||A-/Stable||A-/Negative|
Soure: Standard& Poor's