Fitch Affirms LandAmerica's 'A' IFS Rating; Outlook Stable

Business Wire, Oct 27, 2004

CHICAGO -- Fitch Ratings has affirmed the 'A' insurer financial strength (IFS) ratings of the title insurance underwriting companies of LandAmerica Financial Group, Inc. (LFG). The Rating Outlook is Stable.

The current ratings reflect LandAmerica's strong brand name that supports the organizations competitive positioning, solid statutory earnings that in recent periods have resulted in strong capital growth, adequate reserves and conservative operating leverage. The ratings also consider the company's high-quality investment portfolio that has no below investment grade exposure, below average affiliated investments and strong liquidity.

Offsetting these positives, Fitch believes that balance sheet fundamentals and financial flexibility have modestly weakened. The organization's acquisition strategy has resulted in lower surplus at the title companies, increased intangible equity and modestly aggressive financial leverage. Fitch believes this is a critical juncture for the organization that magnifies the company's need to successfully execute in both weakening market conditions and in optimizing the potential of its acquisitions.

LandAmerica's RAC ratio declined to 146% at year-end 2003 (from 191% at year-end 2002) and was lower than the industry average of 193%. LFG's debt-to-total capital ratio is expected to be managed long term to approximately 25%, and was 29.1% at June 30, 2004.

Fitch also believes that given the company's decrease in market share in 2003 and the current slowdown in the market, LFG will be challenged to maintain enterprise-wide earnings that are in line with national peer averages. Through the second quarter of 2004, LFG's GAAP revenue growth and pretax margins were 9% and 7.5%, respectively, compared with national peer averages at 11.6% and 9.5%, respectively.

For the current rating, Fitch expects no increase or write-down of intangible equity and absolute surplus to return to 2002 levels. Fitch expects LFG's GAAP pre-tax operating margins to remain above 5% in all market conditions.

LFG is the third largest provider of title insurance in the United States with a market share of approximately 18%. The organization has a strong market position in residential and commercial title insurance, and its title operations are well diversified geographically. LFG, a publicly traded holding company, with GAAP assets and shareholder's equity of $3.1 billion and $1.1 billion, respectively at June 30, 2004, provides title insurance and real estate products in the U.S., Canada and the Caribbean.

Entity/Issue/Type                          Action       Rating/Outlook

Commonwealth Land Title Insurance Company
-- Insurer financial strength              Affirm       'A'/Stable;

Commonwealth Land Title Insurance Company of New Jersey
-- Insurer financial strength              Affirm       'A'/Stable;

Land Title Insurance Company of Pasadena
-- Insurer financial strength              Affirm       'A'/Stable;

Lawyers Title Insurance Corporation
-- Insurer financial strength              Affirm       'A'/Stable;

Title Insurance Company of America
-- Insurer financial strength              Affirm       'A'/Stable;

Transnation Title Insurance Company
-- Insurer financial strength              Affirm       'A'/Stable;

Transnation Title Insurance Co. of New York.
-- Insurer financial strength              Affirm       'A'/Stable.