Best Puts Fidelity National Under Review Over LandAmerica Buy

A.M. Best Co. said yesterday it has placed the ratings of Fidelity National Financial Group and its eight title insurance members under review with negative implications in the wake of its planned $128 million acquisition of LandAmerica.

Fidelity's purchase of LandAmerica Financial Group through a stock transaction was announced Friday.

The companies said the transaction has been structured to reduce the combined debt of LFG and FNF by approximately $250 million prior to the closing of the merger agreement. They said this will be accomplished by FNF's title insurance subsidiaries providing liquidity equal to the statutory book value of LFG's two primary title insurance subsidiaries.

Best said the "transfer of liquidity" from Fidelity's title insurance units to help pay down LandAmerica's debt "may result in adversely impacting the financial strength and risk-adjusted capitalization of Fidelity's title insurance members."

Best also pointed to difficulties that could be expected in bringing together any two large insurance companies, mentioning the obtaining of shareholder and regulatory approvals as factors.

Additionally, since the merged companies would comprise the largest title insurer in the U.S., the deal will also be subject to anti-trust review, it was noted.

The review of Fidelity's ratings, Best said, is expected to be completed by the end of the first quarter next year.