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Press release from Business Wire

A.M. Best Revises Outlook to Positive for First American Corporation Property Casualty Companies and Its Members

Wednesday, June 08, 2011

A.M. Best Revises Outlook to Positive for First American Corporation Property Casualty Companies and Its Members09:40 EDT Wednesday, June 08, 2011 OLDWICK, N.J. (Business Wire) -- A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating of A- (Excellent) and issuer credit ratings of “a-” of First American Corporation Property Casualty Companies (First American P&C Group) and its member companies, First American Property & Casualty Insurance Company and First American Specialty Insurance Company. All companies are domiciled in Santa Ana, CA. The rating actions are due to First American P&C Group's continued favorable operating performance, solid risk-adjusted capitalization and declining underwriting leverage trend in recent years. The ratings also recognize the fact that the group is able to employ multiple distribution channels to market its products. Besides brokers and independent agents, First American P&C Group also is able to leverage the parent corporation's, First American Financial Corporation [NYSE: FAF], advanced computer systems and title distribution networks to facilitate direct escrow sales of homeowners' insurance. These positive rating factors are somewhat offset by First American P&C Group's concentration of business in California, which exposes earnings and surplus to volatility from changes in that state's regulatory and judicial climate, as well as catastrophe risks. 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: “Understanding BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; “Catastrophe Risk Management Incorporated Within the Rating Analysis”; “Catastrophe Analysis in A.M. Best Ratings”; “Risk Management and the Rating Process for Insurance Companies”; and “Natural Catastrophe Stress Test Methodology.” 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.Michael RussoFinancial Analyst(908) 439-2200, ext. 5372michael.russo@ambest.comorGary DavisAssistant Vice President(908) 439-2200, ext. 5665gary.davis@ambest.comorRachelle MorrowSenior Manager, Public Relations(908) 439-2200, ext. 5378rachelle.morrow@ambest.comorJim PeavyAssistant Vice President, Public Relations(908) 439-2200, ext. 5644james.peavy@ambest.com