AM Best

A.M. Best Affirms Rating of Fidelity National's Subsidiaries and Upgrades Rating of Fidelity National Group's P/C Subsidiaries



Gary Davis

(908) 439-2200, ext. 5665

Andrew Colannino

(908) 439-2200, ext. 5756
Public Relations

Jim Peavy

(908) 439-2200, ext. 5644

Rachelle Striegel

(908) 439-2200, ext. 5378


OLDWICK, N.J. - JUNE 15, 2004 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating of A (Excellent) of Fidelity National Financial Inc's [NYSE: FNF] title insurance subsidiaries. In addition, A.M. Best has upgraded the financial strength rating to A- (Excellent) from B++ (Very Good) of Fidelity National Group's (both of Jacksonville, FL) property/casualty operating subsidiaries. The outlook for all ratings remains stable.

Fidelity National Financial's rating is derived from the franchise value of their leading brands Fidelity National Title Insurance Company (FNI) (California) and Chicago Title Corporation (CTC) (Missouri). The CTC business complements FNI's predominately residential title book of business with commercial title products. Additionally, management's disciplined approach to focus on underwriting while minimizing revenue and earnings volatility through cost mitigation efforts and geographic and service diversification has allowed the Fidelity National Financial group to realize excellent operating results. Finally, the Fidelity National Financial group benefits from the financial flexibility and operational support from its publicly-traded parent, Fidelity National Financial, Inc.

The negative rating factors for the title operating companies include the susceptibility of the group's underwriting revenue and profitability to fluctuating interest rate levels. Furthermore, the group has inherent risks associated with managing significant premium growth in recent years through acquisitions and organic growth related to refinance activity and strong real estate markets. However, the group has an excellent record of managing economic cycles as evidenced by the favorable operating results over the last five years.

The rating for Fidelity National Group recognizes its strict underwriting discipline and conservative investment policy. The rating also reflects the group's experienced management team and its strategy to leverage the parent's real estate computer systems and effective title distribution networks into its operations. Management's initiatives to use the unique distribution networks and provide enhanced support for real estate transactions represent market synergies for product pricing and distribution. As a result of the group's significant writings of non-risk bearing flood business, its operating performance is enhanced due to the expense relief related to large ceding commissions.

The group's negative rating factors include the integration and execution risk between title and property/casualty operations and significant planned growth organically and through renewal rights acquisitions. With a substantial portion of the risk bearing book of business in California, the group remains exposed to earnings and surplus volatility from potential market, regulatory and fire following earthquake risks. Nevertheless, management routinely monitors catastrophe exposures in order to mitigate potential losses and maintains moderate gross and net probable maximum losses (PML) from a 250-year earthquake as depicted in a PML analysis. Moreover, the group continues to implement a national distribution strategy in order to diversify its risks.

For a complete listing of Fidelity National Financial and Fidelity National Group's financial strength ratings, please visit Fidelity National.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.

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