SANTA ANA, CA-First American Title Insurance Co. has been given single “A minus” counter-party credit and financial-strength ratings by Standard & Poor’s. Concurrently, the national rating service gave the parent company, First American Corp., a triple “B” rating on its senior debt and double “B-plus” rating to its preferred stock.

Overall, S&P sees the outlook for the insurance company, FATICO, as stable because of its strong national market share (21.5%) in the commercial and residential real estate sectors, good operating and underwriting performance margins since 1994 and historically strong cash flows.

The rating process, which FATICO voluntarily underwent, is nothing more than a rating of the title insurance company’s claims paying ability, says Tom Clemens, FATICO’s EVP and CFO. “We actually went to them and said let’s get rated, because other companies in the industry are rated. We’re pleased with it. It’s pretty easy to keep our claims rates low because we’re insuring past events. We just have to make sure we don’t make mistakes and pick up all liens and encumbrances on the property.”

On the negative side, S&P cites increased competition and operational pressures on FATICO due to the parent company’s aggressive acquisition strategy to develop a one-stop shopping network and the uncertainty generated by the company’s decision to diversify into businesses not necessarily tied to the cyclical nature of the real estate industry. Because of this diversification strategy, the parent company’s outlook is seen as generally negative.

“With anybody who has that pace, there is the risk of assimilation,” says Fred Loeloff, an analyst with S&P. “The next three years–tops–we’ll see how it plays out. It should work from all standpoints.”

FATICO has a self-imposed, single-risk limit for commercial transactions of $200 million, comparing favorably with its main competitors, whose averages range between $150 million and $393 million.

The company’s National Accounts division handles highly complex multi-property, multi-county and multi-state commercial and industrial real estate transactions throughout the country. It also offers title underwriting, escrow closing and coordinating services to process multimillion-dollar commercial/industrial real estate transactions throughout the country.

S&P believes that over the next three years, FATICO’s expenditure management will remain a critical issue as the parent company’s integration risk increases as it assimilates each acquisition into its operational structure. As for the parent company, the S&P report notes that, barring an economic downturn, its expense ratio for 2000-2001 should be 90% to 93% on a rate of return of 4% to 6%.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Dig Deeper


GlobeSt. NET LEASE Fall 2023Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join now!

  • Free unlimited access to's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including and

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2023 ALM Global, LLC. All Rights Reserved.