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Fitch's rating action follows LFG's announcement today that it will be seeking Chapter 11 bankruptcy protection for LFG and LandAmerica 1031 Exchange Services. In addition, Fidelity National Financial (FNF) is expected to acquire the title underwriters for $298 million and it is expected to close as early as late December 2008. The Rating Watch Evolving status reflects that the IFS ratings of title operating subsidiaries will likely increase upon consummation of the acquisition; however, if the transaction fails to take place further negative rating actions may occur.
LFG's stockholders' equity fell by more than one-half to $485 million at the close of the third quarter 2008 as LFG wrote-off $225 million of goodwill. Contributing to the year-to-date $674 million net loss was a $90 million reserve strengthening taken during the third quarter as losses in the last several policy years were greater than expected.
The following ratings have been downgraded:
LandAmerica Financial Group, Inc.
--Long-term IDR downgraded to 'D' from 'B';
--Senior debt downgraded to 'CC/RR5' from 'B-/RR5'.
The following ratings have been placed on Rating Watch Evolving:
Commonwealth Land Title Insurance Company
Commonwealth Land Title Insurance Company of New Jersey
Land Title Insurance Company of Pasadena
Lawyers Title Insurance Corporation
Title Insurance Company of America
Transnation Title Insurance Company
--IFS 'BB'.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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.
SOURCE: Fitch Ratings
Fitch Ratings Douglas M. Pawlowski, CFA, +1-312-368-2054 (Chicago) Gerald B. Glombicki, +1-312-606-2354 (Chicago) Tyrene Frederick-Mack, +1-212-908-0540 (Media Relations, New York) tyrene.frederick-mack@fitchratings.com
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