Fitch Affirms Ratings Of Fidelity National Title Subsidiaries

August 21, 2002

CHICAGO--(BUSINESS WIRE)- Fitch Ratings has affirmed the insurer financial strength ratings of the title insurance underwriting subsidiaries of Fidelity National Financial, Inc. (FNF) at 'A'. In addition, Fitch has affirmed the long-term issuer rating of FNF at 'BBB'. The Rating Outlook is Stable.

The ratings reflect FNF's leading title insurance market share, largest reserve position, improved debt-to-capital position, and generally favorable operating performance relative to peer companies. These strengths are balanced against risk-adjusted capital and operating leverage ratios, lagging industry peers, and the general cyclical nature of the title insurance market.

FNF's long-term issuer rating represents the standard gapping between an insurer financial strength and senior debt ratings. As of the close of the second quarter 2002, FNF's debt-to-capital ratio was 22%, while interest coverage was quite strong at nearly 20 times (x). Management has a stated long-term leverage target between 20% and 25%. FNF's interest coverage benefited by more than 1x with the adoption of SFAS No. 142, which eliminates the amortization of goodwill.

FNF market share, measured by net written premium, was the highest in the title industry at 29%. Further, FNF holds a very large statutory surplus position, measuring $518 million at year-end 2001.

FNF reported consolidated statutory return on policyholders' surplus of 33.2% for the full year 2001, up significantly from 18.7% in 2000. The 2000 ratio assumes that the Chicago Title acquisition was made on January 1, 2000. In general, FNF's operating ratios were well ahead of the ratios from other national title insurers.

FNF reported a Fitch Risk-Adjusted Capital ratio (RAC) of 139% at year-end 2001. Although the RAC was below the average of the other national title insurers, it was considered acceptable. The factor for expense/agency risks made the largest period-to-period impact due to the increase in revenue. This risk factor is consistent with Fitch's qualitative views on capital adequacy, in that the primary risk facing most title insurers is the impact of down real estate cycles. On the other hand, FNF's reserve redundancy continues to positively impact the RAC ratio.

Entity / Issue Type Action Rating Outlook
Fidelity National Title Ins. Co.    
Fidelity National Title Ins. Co. of NY    
Alamo Title Insurance Co. of TX    
Nations Title Insurance of NY    
Chicago Title Ins. Co.    
Chicago Title Ins. Co. of OR    
Security Union Title Ins. Co.    
Ticor Title Ins. Co.    
--Insurer financial strength Affirmed 'A'/Stable.
     
Fidelity National Financial Inc.    
--Long-term issuer Affirmed 'BBB'/Stable.

Source: Fitch Ratings


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