Fitch Publishes Sector Credit Factors for U.S. Title Insurance Companies
|March 29, 2012|
Fitch Ratings has issued a sector-specific special report describing the credit factors the agency uses to analyze the U.S. Title Insurance sector.
These sector-specific credit factors supplement the master criteria "Insurance Rating Methodology," dated Sept. 22, 2011, which details Fitch's overarching approach to rating insurance companies and is available at www.fitchratings.com.
Consistent with the master insurance criteria, companies in the U.S. title insurance sector are evaluated considering various qualitative and quantitative credit factors, including but not limited to: industry profile and operating environment, market position and size/scale, corporate governance, capitalization and leverage, financial performance and earnings, investments and liquidity, and reserve adequacy.
In its new special report, Fitch has placed the various building blocks used to formulate its ratings within typical ranges to increase the transparency of its analysis. The report includes various median financial ratios by rating category, as well as charts that demonstrate how key qualitative factors can impact a typical rating range. For example, the report highlights that based on Fitch's views of industry risk, Insurer Financial Strength ratings in the title sector would not be expected to exceed the "A" category.
The report does not offer a formula to derive a notch-specific rating for U.S. title insurance companies. Such an approach is inconsistent with Fitch's master criteria for insurance, in which weighting of different credit factors is dynamic, and based on the judgment of a rating committee.
The criteria report "Title Insurance Rating Methodology," dated March 31, 2011, has been withdrawn.