Fitch downgrades LandAmerica

Fitch Ratings said it downgraded LandAmerica Financial Group, Inc.'s long-term issuer default rating to BBB and its senior debt to BBB- following the consummation of its acquisition of the Capital Title Group Inc.

The outlook is stable.

The downgrade reflects Fitch's ongoing concerns about LandAmerica's ability to profitably execute its acquisition strategy and the size of the purchase price relative to earnings and reported book value: the $251 million purchase price appears high relative to Capital Title Group's annualized 2006 net earnings of $6.4 million and tangible stockholders' equity of $70 million.

Furthermore, the timing of the acquisition comes as the title insurance industry enters a downturn and may weaken LandAmerica's balance sheet by adding to financial leverage and significantly increasing intangibles, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.