This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

A.M. Best Affirms Ratings Of First American Financial Corporation And Its Title Insurance Subsidiaries

A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of the six title insurance subsidiaries (collectively referred to as the First American Title Insurance Group) of First American Financial Corporation (FAF) (Santa Ana, CA) [NYSE: FAF]. Concurrently, A.M. Best has affirmed the ICR of “bbb-” of FAF. The outlook for all ratings is stable.

The ratings reflect First American Title Insurance Group’s significant market presence within the title industry as well as its significantly improved underwriting leverage measures and risk-adjusted capitalization. The group maintains a strong franchise value and benefits from the financial flexibility and operational support from FAF, which maintains relatively modest financial leverage. First American Title Group’s underwriting leverage measures significantly improved in recent years due to overall surplus growth, improved operating results, cost reduction initiatives and declining premium volume.

These positive rating factors are somewhat offset by First American Title Insurance Group’s challenging operating environment, which is reflective of ongoing profitability concerns due to a significant softening in real estate markets that has negatively impacted title premium revenues in recent years. While the group’s revenue and profitability were both negatively impacted in 2008 due to the prevailing economic environment, operating results have rebounded since 2009. This rebound was mainly due to cost reduction initiatives as First American Title

Insurance Group focused on managing the real estate down cycle. In addition, the group took significant reserve strengthening actions in recent years due to unfavorable loss development in prior policy years.

The ICR of FAF recognizes the capital strength of its insurance subsidiaries, its modest financial leverage and solid interest coverage measures.

While A.M. Best believes FAF and First American Title Insurance Group’s ratings are well positioned at their current levels, factors that may lead to positive rating actions include a trend of improved operating results while maintaining favorable underwriting leverage and risk-adjusted capitalization. However, factors that may lead to negative rating actions include a trend of further deteriorating underwriting and operating profitability or the erosion of surplus to an extent to cause a significant rise in the organization’s underwriting leverage measures.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs