NEW YORK—Fitch Ratings said Friday it placed all First American Corp. ratings on Rating Watch Negative with the expectation of lowering the ratings by one notch following the company's fourth-quarter financial report.
The ratings placed on Rating Watch Negative include an issuer default rating of "A-" and a senior debt rating of "BBB+." A one-notch downgrade would leave both ratings as investment-grade designations.
Fitch noted that First American expects a fourth-quarter loss not exceeding $50 million. First American also expects results of its title insurance segment to be reduced by deteriorating reserves.
On Tuesday, First American said it plans to spin off its title and specialty insurance business into a separate public company to be called First American Financial Corp.
First American is a business information provider that currently operates in five segments: title insurance and services; specialty insurance; mortgage information; property information; and a risk-assessment division. Its information businesses, which provide financial data and analytics products, will remain within the original enterprise, but operate under a different name.
"By segregating the companies, the title business would not be negatively affected by higher leverage from future information services acquisitions," Fitch said. "While this represents a significant transaction and strategic shift for First American, Fitch's rating action is largely focused on performance below expectations at the title operations."
First American shares rose 10 cents to $32.45 in morning trading.
