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A.M. Best Revises Outlook To Positive For First American Financial Corp. And Its Title And PC Insurance Subsidiaries

The rating actions for First American P&C Group recognize its continued favorable trend of operating performance, solid risk-adjusted capitalization and reduced underwriting leverage in recent years. This group’s positive results are derived from its strict underwriting discipline and loss control guidelines, which have resulted in consistent underwriting profitability and favorable operating results over the years, despite wildfire and severe weather-related activity. The ratings also recognize First American P&C Group’s use of multiple distribution channels to market its products. Besides brokers and independent agents, First American P&C Group is able to leverage FAF’s advanced computer systems and title distribution networks to facilitate direct escrow sales of homeowners’ insurance.

FAF’s ICR acknowledges the capital strength of its insurance subsidiaries, its modest financial leverage and adequate interest coverage measures.

While A.M. Best believes FAF and its operating companies are well positioned at their current rating levels, factors that may lead to positive rating actions include a sustained 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 deteriorating underwriting and operating profitability and the erosion of surplus to such an extent that it causes a significant rise in the organization’s underwriting leverage measures.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.



Copyright Business Wire 2010
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