A.M. Best Affirms Ratings of First American Title Insurance Group and First American Corporation.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and affirmed issuer credit ratings (ICR) of "a+" of First American Title Insurance Group (First American) (Santa Ana, CA) and its member companies. A.M. Best has also affirmed the ICR of "bbb+" of First American Corporation [NYSE: FAF] and the debt ratings of "bbb+" and "bbb-" on its existing senior debt and preferred securities, respectively. All ratings have a stable outlook. (See link below for a complete list of the ratings.)

The rating reflects the group's continuing favorable operating results and significant market presence within the title industry. These positive rating factors are partially offset by execution, integration and market risks posed by recent title related acquisitions, as well as inherent risks with managing significant premium growth in recent years and the challenge to manage future economic cycles. The outlook is based on First American's favorable operating earnings and solid market position.

The group's positive rating factors are derived from a strong franchise value as it is the largest writer of title insurance in the United States. Additionally, the group has invested heavily in advanced computer systems and operating infrastructure, which allows it to process and service business more efficiently.

The ratings also acknowledge the benefits the group derives from the financial flexibility and operational support from its publicly traded parent, The First American Corporation, which maintains moderate financial leverage and solid fixed charge coverage.

Negative rating factors include potential integration, execution and market concentration risks associated with several large title related acquisitions made by the group in recent years.

Additionally in 2006, the group's surplus declined, and underwriting leverage increased due to the impact of writedowns in the statutory valuations of member companies as a result of complying with new statutory regulations that limit the amount of goodwill that can be recognized.

While the group has absorbed significant growth in premium volume in recent years, owing to both organic growth and acquisitions, revenue and profitability remain subject to changes in interest rates and fluctuations in the real estate markets as evidenced by the slowdown in the U.S. housing market, which began in 2006 and has continued in 2007. The group, however, has national diversification of products and services, which helps dampen the effects of volatility in regional housing markets. In addition, greater efficiencies derived from the group's technology investments are expected to further improve the expense ratio. Further, a higher concentration of First American's business associated with the independent agency distribution channel provides the group with a flexible cost structure, which allows it to better manage its expenses during real estate downturns.

For a complete list of First American Title Insurance Group and First American Corporation's financial strength, issuer credit and debt ratings, please visit www.ambest.com/press/061407firstamericantitleinsurance.pdf.

Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.