A.M. Best Co. has downgraded the financial strength rating ofFirst American Title Insurance Group and its member companies from“A (Excellent)” to “A-minus (Excellent).”
|The move was made because of concern over the Santa Ana,Calif.-based carriers' overall capitalization following anapproximately $325 million drop in statutory surplus reported atthe end of 2007.
|Best said the surplus decline was due to a significant increasein nonadmitted intercompany receivable and goodwill resulting fromthe carrier's intended plan to spin off its financial servicescompanies into a separate company to be called First AmericanFinancial Corporation.
|The plan, announced in January, is expected to be completed inthe third quarter of this year.
|The drop in surplus also reflects claims reserve strengtheningand charges taken in 2007 amounting to more than $520 million, theOldwick, N.J.-based rating service said.
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