CHICAGO--(BUSINESS WIRE)-- Fitch Ratings took no rating action on First American Corporation's (FAF) ratings following FAF's announcement to purchase the 26% minority interest in First Advantage Corporation (FADV) in an all stock transaction. This transaction is expected to close before year end.

Fitch views this transaction as ratings neutral because this is an all stock transaction. Structuring this transaction as an all equity deal will have a modest impact on financial leverage and no impact on earnings based on interest coverage. However, Fitch recognizes that all acquisitions have some level of risk embedded in them, particularly in areas of purchase price and inability to materialize management's synergy estimates. Fitch will cautiously monitor this transaction as it matures to look for these potential shortcomings.

Fitch believes that this transaction will simplify the legal and organizational structure of the companies which will aid in the proposed spin-off of the Financial Services business, which include title and specialty insurance. The initial timeframe for the spin-off was third quarter 2008; however, market conditions have forced a delay of the spin-off. FAF's management has stated that it is still committed to the spin-off but will only do so when the conditions are favorable.


Additional benefits of the FADV buyout include improved corporate governance alignment and a potential to recognize cost savings.

Fitch recognizes that the Information Solutions business segment has acted as a shock absorber during this recent downturn in the real estate cycle. The agency will evaluate how the organizational and capital structure on a post spin-off basis when this event occurs to determine if the current ratings adequately reflect a post spin-off structure.

The current Negative Outlook is indicative of the negative trends in First American's reserves and profitability coupled with the lack of organic capital growth. Fitch will review the company's performance over the near term, along with the rest of the industry, to determine if the company's credit profile remains consistent with the current rating level. If Fitch concludes that the company is operating in a manner inconsistent with its current rating category, Fitch would likely lower the ratings one to two notches.

Fitch notes that any topics that are covered in its criteria reports not specifically mentioned above are considered neutral to the rating as of the date of this publication.

Fitch currently maintains the following ratings with a Negative Outlook:

The First American Corporation

--IDR 'BBB';

--Senior debt 'BBB-';

--$200 million senior unsecured notes 2014 'BBB-';

--$100 million senior unsecured debentures due 2028 'BBB-'.

First American Capital Trust

--$100 million trust preferred security due 2012 'BB+'.

Fitch currently rates the following insurance companies as follows:

First American Title Insurance Company

First American Title Insurance Co. of New York

First American Title Insurance Co. (UK) PLC.

Ohio Bar Title Insurance Co.

Pacific Northwest Title Ins Co

Port Lawrence Title & Trust Co.

Mortgage Guaranty & Title Co.

Massachusetts Title Insurance Co.

Western National Title Insurance Company

United General Title Insurance Co.


Censtar Title Ins Co

T.A. Title Ins Co

First American Title Ins Co of KS

First American Title Insurance Co. of Oregon

First American Title Insurance Co. of North Carolina

Land Title Insurance Co. of St. Louis

--Insurer Financial Strength (IFS) 'A-'.

The Rating Outlook for the insurance companies is Negative.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.





Fitch Ratings, Chicago

Gerald B. Glombicki, +1-312-606-2354

Doug Pawlowski CFA, +1-312-368-2054

Media Relations, New York

Brian Bertsch,+1-212-908-0549

brian.bertsch@fitchratings.com



Source: Fitch Ratings