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Fitch Affirms Stewart Title Group; Outlook Stable

March 15, 2007

CHICAGO -- Fitch Ratings has affirmed the 'A+' insurer financial strength (IFS) ratings of Stewart Title Guaranty Company (STG) and its wholly owned subsidiary Stewart Title Insurance Company (STC), collectively referred to as Stewart. The companies are ultimately owned by Stewart Information Services Corporation (SISCO). The Rating Outlook is Stable.

The primary factor supporting the affirmations is the company's strong balance sheet fundamentals including a solid risk-adjusted and absolute capital position, conservative reserving practices, minimal debt leverage, high quality and very liquid investment portfolio, and moderate operating leverage. At year-end 2005, Stewart's 236% risk-adjusted capital (RAC) as measured by Fitch's ratio was the highest of the five national title groups.

Offsetting these positives, Fitch believes that with the current slowdown in the market, the company will be challenged to maintain profitability levels that are in line with national peer averages. Through the first nine months of 2006, STC's GAAP pretax margins were 3.6% compared with national peer averages at 6.4%.

For the current ratings, Fitch expects the company's balance sheet fundamentals to be among the best in the industry and Stewart's GAAP pretax operating margins to be at or slightly below peer averages.

Stewart is one of the nation's largest title insurance groups with a national market share of 11.2% as of Sept. 30, 2006 according to the American Land Title Association. Over half of Stewart's premiums come from its four largest states: Texas, California, New York, and Florida. Stewart distributes its products through more than 9,500 locations on properties located in all 50 states and foreign countries. Close to 44% of its business (title premiums plus escrow) comes from its affiliated agencies.

Fitch affirms the following, with a Stable Outlook:

Stewart Title Guaranty

  • Insurer financial strength (IFS) at 'A+'.
Stewart Title Insurance Company
  • IFS at 'A+'
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com.

Source: Fitch Ratings



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