Reuters logo
Fitch Places Fidelity National Financial's Ratings on Rating Watch Positive
December 9, 2016 / 9:25 PM / a year ago

Fitch Places Fidelity National Financial's Ratings on Rating Watch Positive

(The following statement was released by the rating agency) CHICAGO, December 09 (Fitch) Fitch Ratings has placed Fidelity National Financial, Inc.'s (FNF) 'BBB-' Long-Term Issuer Default Rating (IDR) and 'BB+' senior unsecured debt rating on Rating Watch Positive. Fitch took no rating action on FNF's title insurance operating company Insurer Financial Strength (IFS) ratings of 'A-'. A complete list of rating actions follows at the end of this release. KEY RATING DRIVERS Fitch's rating action follows an announcement from the company to restructure the organization into three legally separate entities pending regulatory and shareholder approvals by third-quarter 2017. Fitch currently uses consolidated accounting as the basis for its holding company ratings. Fitch recognizes the tracking stock gives FNF's management the ability to streamline the organizational chart and lessen the volatility of title insurance operations; however, it does not alleviate holding company obligations, as neither is a separate legal entity. Fitch currently widens the holding company notching an additional notch due to more aggressive holding company capital management and higher tangible financial leverage. Should the reorganization be executed according to plan, financial leverage, which was 29% as of Sept. 30, 2016, will be reduced by approximately 11 percentage points and tangible financial leverage will also improve. Additionally, Fitch believes that post-reorganization, capital will be managed in line with a standalone title insurance operation, which Fitch views positively. However, Fitch notes that management did cite a potential more aggressive stock repurchase program, which could dampen any inherent benefit. RATING SENSITIVITIES The following is a list of key rating drivers that could lead to an upgrade for the holding company ratings: --The proposed reorganization is executed according to plan thereby reducing financial leverage; --Capital management is consistent with Fitch's guidelines for standard debt notching such as financial leverage at or below 30%. The following is a list of key rating drivers that could lead to the holding company ratings remaining at current levels: --Failure to execute the reorganization plans according to publicly disclosed terms; --Aggressive capital management post-reorganization that materially increases financial leverage or materially reduces fixed charge coverage. FULL LIST OF RATING ACTIONS Fitch has placed the following ratings on Rating Watch Positive: Fidelity National Financial, Inc. --Long-Term IDR at 'BBB-'; --$300 million 6.6% senior note maturing May 15, 2017 at 'BB+'; --$300 million 4.25% convertible senior note maturing Aug. 15, 2018 at 'BB+'; --$400 million 5.5% senior note maturing Sept. 1, 2022 at 'BB+'; --Four-year $800 million unsecured revolving bank line of credit due July 2018 at 'BB+'. Fitch took no rating action on the following operating subsidiaries with a Stable Outlook: Fidelity National Title Ins. Co. Alamo Title Insurance Co. of TX Chicago Title Ins. Co. Commonwealth Land Title Insurance Co. --IFS ratings at 'A-'. Contact: Primary Analyst Gerald Glombicki, CPA Director +1-312-606-2354 Fitch Ratings, Inc. 70 W. Madison Street Chicago, IL 60602 Secondary Analyst Jeremy Graczyk, CFA Associate Director +1-312-368-3208 Committee Chairperson Julie Burke, CFA, CPA Managing Director +1-312-368-3158 Media Relations: Hannah James, New York, Tel: + 1 646 582 4947, Email: Additional information is available on Applicable Criteria Insurance Rating Methodology (pub. 15 Sep 2016) here Additional Disclosures Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below