A.M. Best Downgrades and Withdraws the Ratings of National Title Insurance of NY
December 30, 2010
A.M. Best Co.downgraded the financial strength rating (FSR) to B+ (Good) from B++ (Good) and the issuer credit rating (ICR) to “bbb-” from “bbb+” of National Title Insurance of NY, Inc. (NTNY). The ratings have been removed from under review with developing implications and assigned a stable outlook. Subsequently, A.M. Best has withdrawn the ratings at the company’s request and assigned a category NR-4 to the FSR and an “nr” to the ICR.
The ratings of NTNY had originally been placed under review with developing implications pending further evaluation of and potential impact to the ratings from the financial strength and support of its parent, Lender Processing Services, Inc. (LPS), which is engaged in the business of processing mortgage and related information services.
The downgrade related primarily to rapid premium growth in 2010, resulting in significantly higher underwriting and operating leverage, as surplus growth in the current year, while still positive, has not kept pace with the significant increase in writings. However, the company’s book of business is somewhat less risk exposed than traditional title insurers due to its primary focus on the default and foreclosure segments of title insurance which have historically produced lower loss ratios than the traditional purchase and refinance segments.
NTNY’s parent, LPS, is a provider of integrated technology and services to the mortgage and real estate industries with gross revenues of $1.8 billion, total assets of $2.3 billion, and stockholder’s equity of nearly $530 million as of September 30, 2010.