Fitch Ratings has affirmed First American Financial Corporation's (FAF) title insurance subsidiaries' Insurer Financial Strength (IFS) ratings at 'A' (Strong).
Fitch has also affirmed FAF's Long-Term Issuer Default Rating (IDR) at 'BBB+' and senior unsecured debt rating at 'BBB'. The Rating Outlook for FAF and its subsidiaries is Stable.
The affirmation reflects FAF's favorable company profile, strong capitalization, financial performance and risk management.
Key Rating Drivers
Improved Financial Performance: FAF has reported gradual improvement in financial performance in recent periods, supported by modest increases in purchase and refinance activity, and steady growth in commercial title transactions. Performance remains within rating sensitivities and could improve with a return to stronger purchase and refinance markets. The title pretax operating margin remained strong at 12% in 1H26 and 11.8% in 2025, supported by higher average revenue per order in commercial transactions and strong investment income.
Leading Market Position: FAF maintained its position as the second-largest U.S. title insurer by market share for residential and commercial transactions. The company's long history of leading market position and the concentrated competitive landscape provide significant advantages compared with the broader universe of title underwriters.
Fitch's criteria typically assign a standard 30% weighting to the company profile, which for FAF is scored at the 'a-?' level, contributing to an implied IFS rating of 'A'. For FAF's, the company profile has a stronger impact on the assigned IFS than the weighting would suggest, leading to an adjusted IFS rating of 'A-?'?.
Strong Capitalization: The title insurance subsidiaries' capital strength remained strong at YE 2025 based on Fitch's risk-adjusted capital (RAC) model and traditional leverage ratios. The adjusted RAC score was 206% in 2025, consistent with Fitch's assessment of strong capital and supportive of current ratings. Non-RAC metrics were affected by premium growth that outpaced surplus in 2025, as statutory operating leverage increased to 3.1x from 2.5x the year prior. Reported policyholders' surplus declined by 6.6% in 2025. The financial leverage ratio was 20.5% at June 30, 2026, down from 21.1% at YE 2025.
Strong Reserve Position: Fitch considers FAF's reserve profile is sufficient, and expects it to remain favorable over the near term as the company's title losses remain very low. FAF reported only minimal GAAP reserve development during the last several years and the company continues to carry reserves within the actuarial range of reasonable estimates. Fitch still views FAF's statutory reserve position as redundant based on its own analysis.
Conservative Investment Portfolio: FAF maintains a diversified investment portfolio to support its core insurance operations and enhance financial stability. The company's investment strategy prioritizes high-quality, liquid assets including fixed income securities and cash equivalents to ensure adequate liquidity for claims payments and operational needs. Investment income remains a significant contributor to the company's profitability, particularly during periods of elevated interest rates.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
A decline in company profile score to below 'a';
Adverse GAAP reserve development more than 10% of total reserves;
Sharp deterioration in earnings performance, primarily measured by pretax GAAP margins, at a pace greater than peer averages;
Sustained increase in financial leverage above 30%;
A reduction in Fitch's overall assessment of capitalization and leverage to below 'a', including a deterioration in RAC score.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
An improvement in company profile score to 'a+'.
A solid reserve position with consistently favorable GAAP reserves development;
Sustained improvement in the RAC score of 200% or higher;
Sustained pretax GAAP consolidated operating margins of 12% or better.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
RATING ACTIONS
Entity / Debt
Rating Type
Rating
Rating Action
Prior
Ohio Bar Title Insurance Company
LT IFS
A
Affirmed
A
First American Title Guaranty Company
LT IFS
A
Affirmed
A
First American Title Insurance Company of Louisiana
LT IFS
A
Affirmed
A
First European Title Insurance Company Limited
LT IFS
A
Affirmed
A
First American Title Insurance Company
LT IFS
A
Affirmed
A
First Title Insurance plc
LT IFS
A
Affirmed
A
First American Financial Corporation
LT IDR
BBB+
Affirmed
BBB+
senior unsecured
LT
BBB
Affirmed
BBB
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Additional information is available on www.fitchratings.com
PARTICIPATION STATUS
The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure.
APPLICABLE CRITERIA
Insurance Rating Criteria (pub. 30 May 2026) (including rating assumption sensitivity)
ADDITIONAL DISCLOSURES
Dodd-Frank Rating Information Disclosure Form
Solicitation Status
Endorsement Policy
ENDORSEMENT STATUS
First American Financial Corporation EU Endorsed, UK Endorsed
First American Title Guaranty Company EU Endorsed, UK Endorsed
First American Title Insurance Company EU Endorsed, UK Endorsed
First American Title Insurance Company of Louisiana EU Endorsed, UK Endorsed
First European Title Insurance Company Limited EU Endorsed, UK Endorsed
First Title Insurance plc EU Endorsed, UK Endorsed
Ohio Bar Title Insurance Company EU Endorsed, UK Endorsed
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Solicitation Status
The ratings above were solicited and assigned or maintained by Fitch at the request of the rated entity/issuer or a related third party. Any exceptions follow below.
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Endorsement Policy
Fitch's international credit ratings produced outside the EU or the UK, as the case may be, are endorsed for use by regulated entities within the EU or the UK, respectively, for regulatory purposes, pursuant to the terms of the EU Regulation or the UK Regulation, as the case may be. Fitch's approach to endorsement in the EU and the UK can be found on Fitch's Regulatory Affairs page on Fitch's website. The endorsement status of international credit ratings is provided within the entity summary page for each rated entity and in the transaction detail pages for structured finance transactions on the Fitch website. These disclosures are updated on a daily basis.
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