A.M. Best Affirms Ratings of the Member Companies of Stewart Title Group15:00 EST Tuesday, March 08, 2011 OLDWICK, N.J. (Business Wire) -- A.M. Best Co. has affirmed the financial strength rating of B++ (Good) and issuer credit ratings (ICR) of “bbb+” of the member companies of Stewart Title Group (Stewart). A.M. Best also has affirmed the ICR of “bb+” of the parent holding company, Stewart Information Services Corporation (Houston, TX) [NYSE: STC]. The outlook for all ratings is stable. (See below for a complete list of the companies and ratings.) Stewart's ratings reflect its adequate risk-adjusted capitalization as evidenced by fairly reasonable underwriting and premium leverage ratios. While statutory surplus on a reported basis declined slightly by approximately 4% in 2010 compared with 2009, the group's net premium to surplus ratio did not markedly change. This measure still remains relatively moderate compared to that of the title insurance industry as a whole. The drop in surplus was primarily due to the establishment of a deferred tax liability on certain transactions. While underwriting performance for the title segment was still negative in 2010, it was a significant improvement over 2008 and 2009 when earnings were sharply impacted by unfavorable operating results, including significant strengthening of claim reserves for past policy years, large title claims (including agency defalcations) and a significant slowdown in real estate market transactions. Events in 2010, however, such as introduction of new real estate settlement regulations and questions surrounding the processing of foreclosure properties also caused a slowdown in order volumes, particularly in the first and third quarters of 2010. In the two quarters of 2010 without such market disruptions, Stewart's results have been somewhat more favorable. Last year also witnessed an improvement in Stewart's loss experience from active agents, as losses incurred from agents cancelled in recent years had been markedly poor. Stewart also made significant progress in achieving a lower volume of defalcations in 2010, a significant source of claims in recent years. However, Stewart's revenues and earnings in 2011 will be closely tied to the real estate market in the United States, which continues to remain weak, given continued high unemployment and foreclosure activity. As such, Stewart is challenged to show consistently profitable, sustainable operating performance in the near to medium term. Stewart retains a considerable franchise value as the third-largest writer of title insurance in the United States with a market share of approximately 14%. It also writes business in approximately 40 countries including Canada, United Kingdom, Mexico, and Australia, thus enhancing geographical diversification of its products. The group has also initiated additional expense and risk management efforts in recent quarters, which have somewhat mitigated the impact from the prevailing economic environment and housing market conditions. The outlook is based on Stewart's adequate capitalization as well as its significant business profile as the third-largest writer of title insurance in the United States. The FSR of B++ (Good) and ICRs of “bbb+” have been affirmed for the following members of Stewart Title Group: Stewart Title Guaranty CompanyStewart Title Insurance CompanyStewart Title Limited The ICR of “bb+” has been affirmed for the group's parent holding company, Stewart Information Services Corporation. The principal methodology used in determining these ratings is Best's Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “A.M. Best Title Insurance Rating Methodology”; “Risk Management and the Rating Process for Insurance Companies”; “Rating Members of Insurance Groups”; and “A.M. Best's Ratings & the Treatment of Debt.” Methodologies can be found at www.ambest.com/ratings/methodology. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2011 by A.M. Best Company, Inc.ALL RIGHTS RESERVED. A.M. Best Co.Neil Das Gupta, 908-439-2200, ext. 5206Senior Financial Analystneil.dasgupta@ambest.comorGary Davis, 908-439-2200, ext. 5665Assistant Vice Presidentgary.davis@ambest.comorRachelle Morrow, 908-439-2200, ext. 5378Senior Manager, Public Relationsrachelle.morrow@ambest.comorJim Peavy, 908-439-2200, ext. 5644Assistant Vice President, Public Relationsjames.peavy@ambest.com