The First American Corporation saw various ratings dropped late Monday by Fitch Ratings, with the agency citing "further analysis" of the title insurance giant's warning that it would lose up to $50 million when it reports its fourth quarter results later this month. The soon-to-be-split title and information services company had been put of negative ratings watch when it first announced plans for reorganization that would see the company spin off its title operations and re-focus on on information services. Fitch dropped First American's Issuer Default Rating to 'BBB+' from 'A-,' while cutting the rating on senior debt to 'BBB' from 'BBB+' -- both leave the company with investment-grade ratings. The company's insurance segment saw is financial strength rating dropped to 'A' from a previous rating of 'A+'. From the press statement:
... post spin off, First American Financial, will not have access to unregulated cash flows to service its debt. First American had one of the highest standalone IFS ratings for title insurance companies within Fitch's rating universe and thus Fitch had expectations that the company's financials and metrics would be representative of an industry leader. Fitch believes that today's rating action incorporates the underperformance of expectations and better aligns the company with peers.
The agency said it was "cautious" in its outlook for the firm's performance over the next year. For more information, visit http://www.fitchratings.com.