LandAmerica Financial's Ratings on Negative Watch - S&P
July 29, 2008
Standard & Poor's Ratings Services said it placed its 'A-' counterparty credit and financial strength ratings on LandAmerica Financial Group Inc.'s (LFG) title insurance operations on negative watch, following the announcement of unfavourable operating results by LandAmerica's peers and news on macroeconomic factors that affect title insurers, such as mortgage originations.
"The above information suggests it is very likely LFG will report a quarterly loss in 2008," S&P said.
It said it believes the environment for title insurers will remain challenging until 2010 because of declining mortgage originations and rising claim rates.
The Mortgage Bankers Association's current forecast for mortgage originations features a six percent decline in 2009.
S&P said it also placed its 'BBB-' counterparty credit rating on LFG on negative watch.
The insurer financial strength ratings reflect the group's strong competitive position, strong capitalisation and good long-term operating performance but the group's limited product diversification and challenging current environment of the title insurance industry offset the strengths, the ratings agency said.
The outlook remains negative because of concerns about how the challenging environment for all title insurers would impact LandAmerica's operating performance, S&P added. tf.TFN-Europe_newsdesk@thomson.com pvi/alo
Copyright Thomson Financial News Limited 2008