A.M. Best Co. has allotted a financial strength rating (FSR)
of "A-" and issuer credit rating (ICR) of "a-" to FNF Title
Insurance Company Limited (FNF Malta). This is the title
insurance subsidiary of
Fidelity National Financial Inc.
(
FNF
). Both the ratings carry a stable outlook.
The ratings account for reinsurance support received by FNF
Malta from its immediate parent Chicago Title Insurance Company,
as also financial and operational support from its ultimate
parent Fidelity National Financial and favorable risk-adjusted
capitalization.
However, to this insurance and mortgage service provider,
penetration into new markets still remains tough as it is
expected to bring marketing and implementation challenges for the
company. Formed in the first quarter of 2012, FNF Malta provides
insurance services in the United Kingdom and Europe.
A.M. Best stated that the ratings on FNF Malta could be revised
upward if the company consistently delivers sturdy operating
results along with moderate underwriting leverage. Upgradation
might also occur from continued adequate risk-adjusted
capitalization by the company.
However, the ratings might be downgraded if the company continues
to show poor underwriting and operating profitability. A rating
downgrade may also arise if the surplus level dips, causing
increase in underwriting leverage.
Rating affirmations or upgrades from credit rating agencies
play an important part in retaining investor confidence in the
stock as well as maintaining the creditworthiness in the market.
We believe that the company's present score with the credit
rating agencies will help it write more business going
forward.
Last August, Fitch Ratings had affirmed its Issuer Default
Rating (IDR) of "BBB-"and the Insurer Financial Strength (IFS) of
"BBB+" on Fidelity National Financial. It had also assigned a
"BB+" debt rating to the company's senior notes issued at the
time. The outlook for all the ratings was stable.
Recently, Fitch Ratings confirmed the IFS rating on the First
American Title Insurance Companies (First American) at "A-". It
has also affirmed the IDR at "BBB" of
First American Financial Corporation
(
FAF
), another title insurer. The rating agency also expects an IDR
of "BBB-" for First American's planned $250 million senior
unsecured debt offering maturing in 2023.
Fidelity National currently carries a Zacks Rank #1 (Strong
Buy). First American Financial,
Stewart Information Services Corporation
(
STC
) and
Cincinnati Financial Corporation
(
CINF
), among others from the industry share the same Zacks Rank.
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