NU Online News Service, May 19, 6:06 p.m.EDT--Fitch Ratings has put Fidelity National Financial,Inc. on a negative ratings watch as a result of its plans to spinoff partially its title operations in the third quarter thisyear.

Fitch also expressed concern about plans for the new titleinsurance company to borrow $500 million from a new bank facilityand pay a special dividend. "The Rating Watch primarily reflectsthe increased financial leverage at both the title insuranceoperations and in FNF overall," Fitch said in a preparedstatement.

The restructuring announced yesterday follows the recentrecapitalization of both FNF and its subsidiary, Fidelity NationalInformation Services (FIS). In addition, 25 percent of FIS was soldto two institutional investors. The debt at FIS is not guaranteedby FNF, and thus is primarily rated on its own strength andweaknesses.

Fitch said it plans to review this transaction with managementin the near term. "Resolution of the rating watch will be based onmanagement's plans regarding financial leverage on a consolidatedbasis and title insurance-only basis," the statement said.

The firm added that, "If the new company is determined tomaintain financial leverage in the mid-20s or lower, assuming nomaterial change in overall financial leverage, then the ratingswill likely be affirmed at the current level."