A.M. Best Affirms Financial Strength Rating of Old Republic Title Insurance Group; Assigns Issuer Credit Ratings.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and assigned issuer credit ratings (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "aa-" to the Old Republic Title Insurance Group and its subsidiaries (Minneapolis, MN). The outlook on all ratings is stable. The ratings reflect the group's strong capitalization, favorable operating results, its strong market profile as one of the five leading title insurance groups in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and the support it receives from its parent, Old Republic International Corporation (NYSE NYSE See: New York Stock Exchange : ORI). These positive rating factors are partially offset by the inherent risks associated with managing significant premium advances in recent years and the challenge of managing future economic cycles. The outlook is based on the group's strong capitalization and favorable operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before . The positive rating factors are derived from the group's strong earnings performance along with a conservative investment portfolio, commitment to technology advancement and recently strong demand for title products reflective of a generally favorable interest rate environment and strong real estate markets. Furthermore, the group benefits from the financial flexibility of its publicly-traded parent, Old Republic International Corporation, which had $10.7 billion in total assets and $3.9 billion in shareholder's equity as of March 31, 2005. The parent company also maintains a conservative balance sheet with low financial leverage. The positive rating factors are partially offset by the risk associated with absorbing significant premium advances in recent years and the challenges in handling earnings and revenue volatility stemming from the fluctuating dynamics of the real estate market. However, the group's title premium is nationally diversified, which limits volatility to regional changes in real estate markets. In addition, the majority of the group's title premium is generated from the agency distribution channel which enables the group to ratchet down Verb 1. ratchet down - move by degrees in one direction only; "a ratcheting lopping tool" rachet up, ratchet advance, march on, move on, progress, pass on, go on - move forward, also in the metaphorical sense; "Time marches on" costs more quickly and efficiently during periods of slowdown in economic activity, as fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). are generally lower as compared to competitors with a larger share of direct business. Finally, the group is exposed to some degree of volatility in the legal and regulatory climate regulatory climate The extent to which a regulated firm or industry is permitted to earn an adequate return on the stockholders' investment. This term is nearly always used in reference to utilities, which are required to obtain approval for rate changes. as it relates to the title industry. The financial strength rating of A+ (Superior) has been affirmed and the issuer credit rating of "aa-" assigned to the Old Republic Title Insurance Group and its following members: --American Guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. Title Insurance Company --Mississippi Valley Title Insurance Company --Old Republic General Title Insurance Corporation --Old Republic National Title Insurance Company For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com. |
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