S&P Lowers Outlook on LandAmerica Financial to Negative From Stable, Affirms Ratings
August 23, 2007
NEW YORK (AP) -- Standard & Poor's Ratings Services on Tuesday revised its outlook on LandAmerica Financial Group Inc., a provider of real estate transaction services, to negative from stable and affirmed its ratings on the company.
"The revised outlook reflects the challenging environment for all title insurers," said S&P credit analyst James Brender in a statement. "We believe mortgage originations will decline steadily between 2006 and 2009."
As a result, operating performance for title insurers will be strained for at least the next six quarters, S&P said.
The outlook would be revised to stable if LandAmerica demonstrates it can maintain profit margins in the low- to mid-single digits in the short term, S&P said.
If LandAmerica is unable to adjust its cost structure to at least partially offset the anticipated decline in revenue, S&P said it would lower the company's financial strength rating by one notch.
S&P affirmed its "BBB-" counterparty credit rating and senior debt rating on LandAmerica, and affirmed its "A-" counterparty credit and financial strength ratings on the company's title insurance subsidiaries. These ratings are investment-grade ratings.
Additionally, S&P affirmed the company's preliminary "BB+" subordinated debt and "BB" preferred stock ratings. These are junk bond ratings.
LandAmerica shares rose $1.80, or 3.3 percent, to $55.63 in morning trading.
Coopyright 2007 Associated Press