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.