Fitch Upgrades Fidelity National Financial's Ratings; Outlook Stable

Fitch Ratings has upgraded the Insurer Financial Strength (IFS) of Fidelity National Financial, Inc.'s (FNF) title insurance companies to 'BBB+' from 'BBB'. Additionally, Fitch has upgraded the Issuer Default Rating (IDR) of FNF to 'BBB-' from 'BB+' and the senior debt rating to 'BB+' from 'BB'. The Rating Outlook for all ratings is Stable. A complete list of rating actions follows at the end of this release.

The upgrade of FNF's ratings is primarily driven by the underwriter's continuing improved capital position which was greatly weakened three years ago from several events including the acquisition of operating subsidiaries from LandAmerica Financial Group and the redomestication of operating subsidiaries to Nebraska, which allowed larger dividends from operating companies. At year end 2011, FNF's Risk Adjusted Capital (RAC) score was approximately 110%. This change represents a 2, 14, and 37 percentage point improvement over year end 2010, 2009 and 2008 respectively. Similarly, non-risk adjusted capital ratios, such as net written premium to surplus, improved at year end 2011 to 3.7 times (x) from 4.0x, 4.7x, and 7.1x at year end 2010, 2009, and 2008 respectively.

Despite the period-to-period improvement, Fitch believes that FNF maintains an aggressive capital management strategy based on its willingness to periodically increase balance sheet leverage to fund acquisitions, which Fitch views as a limiting factor to the company's rating. While FNF has been successful to date in most of its acquisitions, past success does not guarantee future success.

Incorporated into Fitch's current ratings is FNF's dominant position in the title insurance market accounting for approximately 35% of the U.S. title insurance market. This scale coupled with an aggressive cost management focus has allowed FNF to be one of the most profitable title insurance companies. As of first quarter 2012, FNF reported a GAAP combined ratio of 90.5%, the best of the five publicly traded U.S. title insurance companies.

The Stable Outlook on the IFS ratings reflects FNF's operating advantage relative to peers in light of continued challenges faced by the title insurance industry. Specifically, mortgage originations are forecast to fall during 2012, placing added pressure on title insurance margins.

FNF's debt-to-tangible capital ratio was 34.1% at March 31, 2012 consistent with last year's ratio of 34.9%. Interest coverage was good at 7.7x as of March 31, 2012 much better than first quarter 2011's interest coverage of 4.8x.

Within Fitch's rating rationale are multiple key rating triggers. If FNF were to materially deviate from any of these items, especially for an extended period, the ratings could be affected either positively or negatively.

The following is a list of key rating triggers that could lead to an upgrade:

--Change in operating strategy to target Fitch's view of operating company capital at a more stable investment grade level.

--An increase in RAC to approximately 150% and a sustained improvement in traditional operating company capital metrics such as net leverage below 6.0x.

--Sustained calendar and accident year profitability.

The following is a list of key rating triggers that could lead to a downgrade:

--An absolute RAC score below 105% or deterioration in capitalization such as net leverage above 7.5x.

--A sustained increase in financial leverage (debt to total capital ratio) to 30% or higher.

--Deterioration in earnings, primarily measured by pretax GAAP margins, at a pace greater than peer averages.

--Sustained adverse reserve development.

--Any acquisition that makes a meaningful change to the company's profile, particularly one that increases financial leverage.

Fitch has upgraded the following ratings with a Stable Outlook:

Fidelity National Financial, Inc.

--IDR to 'BBB-' from 'BB+';

--$300 million 4.25% convertible senior note maturing Aug. 15, 2018 to 'BB+' from 'BB';

--$250 million 5.25% senior note maturing March 15, 2013 to 'BB+' from 'BB';

--$300 million 6.6% senior note maturing May 15, 2017 to 'BB+' from 'BB';

--Four year $800 million unsecured revolving bank line of credit due April 16, 2016 to 'BB+' from 'BB'.

Fidelity National Title Ins. Co.

Alamo Title Insurance Co. of TX

Chicago Title Ins. Co.

Commonwealth Land Title Insurance Co.

--IFS ratings to 'BBB+' from 'BBB'

Additional information is available at 'www.fitchratings.com'. The ratings above were unsolicited and have been provided by Fitch as a service to investors. The issuer did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure.

These rating actions reflect the application of Fitch's current criteria which are available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology' (Sept. 22, 2011).

Applicable Criteria and Related Research:

Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=651018

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Contacts:

Fitch Ratings
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