AM Best Affirms Credit Ratings of First American Title Insurance Group Members and First American Financial Corporation

Rhea-AI Summary

AM Best affirms the excellent financial strength rating of First American Title Insurance Company and its title affiliates. The ratings reflect the company's strong balance sheet, adequate operating performance, and solid market position.

Positive

• First American Title Insurance Company maintains a solid market position as the second-largest underwriter in the U.S. title insurance industry. The company's operating results have generally been in line with industry averages and supportive of surplus growth.

Negative

• Negative rating action could occur if rising interest rates and a slowing economy lead to a significant decline in operating profitability and risk-adjusted capitalization levels.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a” (Excellent) of First American Title Insurance Company (Omaha, NE) and its title affiliates, which are referred to as First American Title Insurance Group (FATIG). In addition, AM Best has affirmed the Long-Term ICR of “bbb” (Good) of the parent holding company, First American Financial Corporation (FAF) (Delaware) [NYSE: FAF]. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and ratings.)

The ratings reflect FATIG’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

FATIG maintains a solid market position within the U.S. title insurance industry as its second-largest underwriter, based on 2022 direct premiums written despite rising interest rates, a slowing economy and a slowdown in the real estate sector. Policies are distributed on a direct basis and through a network of independent agents. The group invests heavily in its title plant, which is one of the most comprehensive in the industry. The group’s operating results have generally been in line with the title industry composite averages and supportive of surplus growth. FATIG benefits from a strong franchise value, financial flexibility and operational support from FAF, which maintains relatively modest financial leverage and solid interest coverage.

Negative rating action could occur if challenges from rising interest rates and a slowing economy pose a significant decline in operating profitability and/or a material decline in risk-adjusted capitalization levels. Negative rating action could result should the holding company experience liquidity issues or a significant increase in leverage. Positive rating action could occur if the company experiences significant improvements in operating profitability and/or a material increase in risk-adjusted capitalization levels.

The FSR of A (Excellent) and the Long-Term ICRs of “a” (Excellent) have been affirmed with stable outlooks for the members of First American Title Insurance Group:

• First American Title Insurance Company
• First American Title Insurance Company of Australia Pty Limited
• First American Title Insurance Company of Louisiana
• First European Title Insurance Company Limited
• First Title Insurance plc
• Ohio Bar Title Insurance Company

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231020064893/en/

Kourtnie Beckwith

Senior Financial Analyst

+1 908 882 1649

kourtnie.beckwith@ambest.com

Fred Eslami

Associate Director

+1 908 882 1759

fred.eslami@ambest.com

Christopher Sharkey

Associate Director, Public Relations

+1 908 882 2310

christopher.sharkey@ambest.com

Al Slavin

Senior Public Relations Specialist

+1 908 882 2318

al.slavin@ambest.com

Source: AM Best

What is the financial strength rating of First American Title Insurance Company?

The financial strength rating of First American Title Insurance Company is A (Excellent).

What factors contribute to the ratings of First American Title Insurance Company?

The ratings reflect the company's strong balance sheet, adequate operating performance, and solid market position.

What is the market position of First American Title Insurance Company?

First American Title Insurance Company is the second-largest underwriter in the U.S. title insurance industry.

What could lead to negative rating action for First American Title Insurance Company?

Negative rating action could occur if rising interest rates and a slowing economy result in a significant decline in operating profitability and risk-adjusted capitalization levels.