Fitch decline Attorneys' Title IFS to 'CCC'

 

Friday, Mar 27,2009, 1:40:29 PM   Click:

CHICAGO - (BUSINESS WIRE) - March 26, 2009 - Fitch Ratings has downgraded the Insurer Financial Strength (IFS) rating of Attorneys Title Insurance Fund, Inc. (the Fund) at 'CCC' from 'BBB'.

The action follows the opinion of the Fund of 82% or $ 122 million decline in statutory surplus of $ 27 million at the end of 2008. Fitch downgraded last month, the Fund based on an estimated fall of 50% surplus in the Act. A loss of $ 89 million, $ 16 million in losses and the investment made $ 30 million in unrealized losses due to an above-average allocation of shares in the Fund investment portfolio contributed to the decline in the surplus.

Future rating actions will depend on the Fund's ability to access to additional capital. The Fund is held by a trust which in turn is owned by lawyers who act as agents of society. Accordingly, this structure adds another layer of complexity, the Fund attempts to access external capital.

The Fund's risk adjusted capital (RAC) has fallen to 46% at the end of the year 2008 of 218% at the end of 2007 and no longer correspond to the profile of the previous category. Fund capital adequacy is a key element of its financial strength rating in light of its limited geographic scope.


Other factors contributing to the evaluation included measures of poor operating performance and the adverse development of reserves. Net written premium, the Fund has decreased by 42% for the full year 2008 to 200 million dollars, while the company reported an operating loss of $ 84 million in 2008 . The severity of the operating loss reflects the loss higher than expected for the years 2004 to 2007 and that deflections of activity. In addition, the Fund has been slow reduction in operating expenses during the fall of the results has also lobbied in 2008.

Attorneys' Title Insurance Fund, Inc.

- IFS downgraded to 'CCC' from 'BBB'.

Fitch's rating definitions and conditions of use of these opinions are available on the website of the public body, www.fitchratings.com. Published opinions, criteria and methodologies are available from this site, at any time. 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 of this site.