First American Acquiring United General Title Insurance.

Santa Ana, CA -- Fitch Ratings, Chicago, has affirmed its ratings of First American Corp. here following the announcement of the title insurer acquiring another underwriter, United General Title Insurance Co., Denver.

Fitch said it believes the deal aligns well with First American's strategy to increase market share.

"Fitch is slightly concerned that the business being acquired has lower profit margins and retention risk. However, these concerns are assuaged by the size of the transaction, which is small when compared with First American's total results," the rating agency said.

The current ratings for First American, which include insurer financial strength ratings for its title subsidiaries of "A" and a positive ratings outlook, is based on the company's strong and improving positions in title insurance and real estate ancillary services; solid operating performance during the recent strong real estate market, which resulted in substantial growth in policyholders' surplus; strong capitalization, including the second largest policyholders' surplus of the top five national companies; and below-average operating leverage.

But, Fitch noted, the positives are offset by a higher-than-average intangible equity and above average affiliated investments that reduce liquidity. First American is the second largest title insurance provider, ...