Fitch Downgrades Attorneys' Title Insurance Fund

For the second time in seven weeks, Fitch Ratings, Chicago, has downgraded the insurer financial strength rating of Attorneys' Title Insurance Fund Inc., Orlando, this time cutting the rating to 'CCC' from 'BBB'. Back on Feb. 9, Fitch downgraded the company from an 'A-' rating. Fitch's latest action follows Attorneys' Title seeing an 82% or $122 million decline in statutory surplus to $27 million at year-end 2008. An underwriting loss of $89 million, $16 million in realized investment losses and $30 million in unrealized losses due to an above average allocation to common stocks in the investment portfolio all contributed to the decrease in surplus. Future rating actions by Fitch depend on Attorneys' Title's ability to access additional capital. A potential problem, said Fitch, is that Attorneys' Title is owned by a business trust that in turn is owned by attorneys who serve as agents for the company. Consequently, this ownership structure adds a layer of complexity in any attempt to access new capital. Fitch added that the company's capital adequacy was a key component of its financial strength ratings in light of its more limited geographic scope. The company underwrites title insurance in Florida, Georgia, North Carolina, South Carolina and Illinois.