|Michael Russo |
(908) 439-2200, ext. 5372
Assistant Vice President
(908) 439-2200, ext. 5665
Public Relations Associate
(908) 439-2200, ext. 5445
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JULY 15, 2011 12:00 AM (EDT)
A.M. Best Co. has placed under review with negative implications the financial strength rating of A- (Excellent) and issuer credit ratings of "a-" of Fidelity National Group (Fidelity) and its members, Fidelity National Insurance Company (FNIC) (Santa Barbara, CA), Fidelity National Property and Casualty Insurance Company (FNPC) (New York, NY) and Fidelity National Indemnity Insurance Company (FNII) (San Antonio, TX).
These rating actions follow the announcement on July 13, 2011 of the signing of a definitive agreement between Fidelity's parent holding company, Fidelity National Financial, Inc. (FNF) [NYSE: FNF] and WRM America Holding Company, LLC (WRM America), in which WRM America will acquire 100% of the equity interests of FNII and Fidelity National Insurance Services for approximately $210 million. Currently, FNII and FNPC principally reinsure all of their business with FNIC.
The under review with negative implications status reflects the anticipated decline in Fidelity's operating performance as a result of losing the profitable flood business. FNII is the single largest writer of "Write-Your-Own" flood insurance policies under the National Flood Insurance Program. As the company has lost its natural hedge with the sale of the flood business, management has implemented several initiatives designed to improve underwriting performance and enhance operating results. The ratings will remain under review until completion of the transaction, which is expected in the fourth quarter of 2011, subject to regulatory approval and until A.M. Best conducts further analysis and discussions with management.
The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Rating Members of Insurance Groups"; "Natural Catastrophe Stress Test Methodology"; "Understanding BCAR for Property/Casualty Insurers"; "Catastrophe Analysis in A.M. Best Ratings"; "Risk Management and the Rating Process for Insurance Companies"; and "Catastrophe Risk Management Incorporated Within the Rating Analysis." Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.