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North American Title Insurance Company is a seasoned title insurance underwriter that has been helping customers achieve the American dream of homeownership for more than 50 years. In the past several years, we have become known as the “underwriter next door,� because our associates are always easy to reach and our processes are, at all times, quick and straightforward. Our agency application process is fast and transparent for qualified agents. NATIC offers a one-hour underwriting response guarantee that is unparallelled in our industry. In addition, we value our agents based on their title industry knowledge and experience, not just on profits alone.

Fitch Affirms Connecticut Attorneys Title Insurance Company At 'A-'

May 12, 2005

Fitch Ratings has affirmed the 'A-' insurer financial strength (IFS) rating of Connecticut Attorneys Title Insurance Company (CATIC). The rating reflects CATIC's solid franchise in the Connecticut title insurance market, a conservative investment policy, strong capital position, favorable five-year operating performance and adequate agency monitoring systems. The rating also reflects CATIC's lack of geographic and product diversification, an ownership structure that limits access to outside capital funds, a modest albeit continuing decline in market share in the company's primary market, and the inherently cyclical nature of the title insurance business. The Rating Outlook is Stable.

The company's strong balance sheet fundamentals include an above average Fitch risk adjusted capital (RAC) ratio of 300% at year-end 2004 (compared to 286% at year-end 2003), consistent surplus growth, an adequate reserve position on both a statutory and GAAP basis, a conservative investment policy, below average operating leverage, and low financial leverage at CATIC's parent - CATIC Financial, Inc. (total GAAP debt-to-capital of 7.3% at Dec. 31, 2004).

In line with industry trends, in 2004, CATIC's operating results were weaker than the prior year as a result of rising interest rates that depressed the unusually high refinancing activity of the recent past. However, the decline in the company's operating results was somewhat offset by a strong buy-sell market. Statutory pretax operating income in 2004 was $4.8 million on operating revenue of $56.4 million compared with pretax operating income of $9.5 million on revenue of $64.7 million in 2003. Fitch expects future revenue growth to track industry trends, which are linked to the real estate cycle and operating profits to be impacted by costs incurred from expansion initiatives as well as cyclical factors.

CATIC reported statutory admitted assets of $57.7 million and policyholders' surplus of $38.7 million at Dec. 31, 2004. As an attorney-owned title insurance company CATIC's primary purpose is to preserve and promote the use of independent legal counsel in real estate transactions.

CATIC has a long history of success in the Connecticut title insurance market with the state's second largest market share (24% based on 2004 written premiums) and a competitive advantage derived from its relationships with local attorney-agents. In recent years, the company has entered other New England markets and currently holds the largest market share in Vermont (38% based on written premiums at year-end 2004).

Entity/Issue/Type Action Rating/Outlook

  • Connecticut Attorneys Title Insurance Company
    • Insurer financial strength Affirmed 'A-'/Stable.

Source: Fitch Ratings

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