Fitch Downgrades Two Ratings at Stewart Entities

Fitch Ratings, Chicago, has downgraded the issuer default rating of Stewart Information Services Corp., Houston, to 'BBB' from 'BBB+'. Fitch has also downgraded the insurer financial strength ratings of Stewart Title Guaranty Co., to A- from A. The Rating Outlook has been revised to Negative from Stable. This action was driven by deterioration in Stewart's absolute and risk adjusted capital levels in the fourth quarter of 2008. "An area of concern is Stewart's debt structure whereby the $107.6 million of unsecured debt may be called for any reason by the issuing banks. This constraint places an additional liquidity strain for the company particularly given the current stressful environment. Favorably, the company continues to reduce the amount outstanding by paying the obligations as they mature. Of the $62.4 million due this year approximately half has already been extinguished," Fitch said. The agency added that the company's ratings had been based on the assumption that technology investments may have allowed the title unit to show better margins than its peers in a down market, but this has not been the case.