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A.M. Best Downgrades Rating of Fidelity National Financial and Its Title Companies

May 25, 2005

OLDWICK, N.J.--(BUSINESS WIRE) --A.M. Best Co. has downgraded the financial strength rating to A- (Excellent) from A (Excellent) of Fidelity National Financial Inc. (FNF) (NYSE: FNF; Jacksonville, FL) and its title insurance subsidiaries. A.M. Best has also assigned issuer credit ratings (ICR) of "a-" to the eight insurance subsidiaries and an ICR of "bbb-" to the parent, FNF. All ratings have a stable outlook. These ratings reflect the group's solid capitalization, favorable operating results and strong market profile as the largest title insurance group in the United States. These positive rating factors are somewhat offset by the group's challenge to manage future economic cycles, inherent risks with managing significant premium growth in recent years and increased debt leverage at FNF on a consolidated basis. The group's rating outlook is based on FNF's solid capitalization, favorable operating earnings and leading market position.

The group's positive rating factors are derived from the franchise value of their leading subsidiaries, Fidelity National Title Insurance Company (FNTIC) and Chicago Title Insurance Company (CTIC). The CTIC business complements FNTIC's predominantly residential title book of business with commercial title products. In addition, management's disciplined underwriting approach while minimizing revenue and earnings volatility through cost mitigation efforts and geographic and service diversification has allowed the group to realize excellent operating results in recent years.

Negative rating factors include the susceptibility of the group's underwriting revenue and profitability to fluctuating interest rate levels and a changing legal and regulatory environment, which could potentially have a generally negative impact on the title industry. The group has inherent market and execution risks associated with managing significant premium growth through acquisitions and organic growth related to the surge in refinancing activity in recent years, along with rapidly appreciating real estate markets. Additionally, debt-to-capital ratios at FNF increased significantly in 2005 primarily due to the payment of an extraordinary shareholder dividend. However, FNF has shown good experience in managing debt. Additionally, the group has an excellent record of managing economic cycles as evidenced by its favorable operating results over the last five years.

The financial strength rating has been downgraded to A- (Excellent) from A (Excellent) for Fidelity National Financial Inc and its following title insurance subsidiaries. Issuer credit ratings of "a-" have been assigned only to the eight subsidiaries.

  • Alamo Title Insurance
  • Chicago Title Insurance Company of Oregon
  • Chicago Title Insurance Company
  • Fidelity National Title Insurance Company
  • National Title Insurance of NY, Inc.
  • Security Union Title Insurance Company
  • Ticor Title Insurance Company of Florida
  • Ticor Title Insurance Company

An issuer credit rating of "bbb-" has been assigned to Fidelity National Financial, Inc.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit

Source: A.M. Best Co.

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