AM Best Comments on First American Financial Corporation’s Receipt of a Wells Notice
AM Best has confirmed that First American Financial Corporation's Financial Strength Rating remains at A (Excellent) and Long-Term ICRs at 'a' for its Title Insurance Group members, with a stable outlook. This follows the company’s September 2020 receipt of a Wells Notice from the SEC regarding its 2019 information security incident disclosures. First American asserts its compliance with securities laws and anticipates no material adverse effects on its financial standing. AM Best will continue to monitor the situation closely.
- Financial Strength Rating of A (Excellent) maintained for First American Title Insurance Group members.
- Long-Term Issuer Credit Ratings of 'a' remain unchanged with stable outlooks.
- SEC Wells Notice related to 2019 information security incident raises potential regulatory concerns.
OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has commented that the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of the members of First American Title Insurance Group, and the Long-Term ICR of “bbb” of the parent holding company, First American Financial Corporation (First American) (Delaware) [NYSE: FAF], with stable outlooks, remain unchanged, following the company’s announcement that in September 2020, First American received a Wells Notice from the enforcement staff of the Securities and Exchange Commission in connection with the company’s disclosures in late May 2019 concerning the information security incident disclosed by the company at that time, and the adequacy of the company’s disclosure controls in connection with those disclosures.
This release is in follow up to this regulatory action and AM Best’s comments published on May 31, 2019, as well as follow-up discussions with management. First American has responded to the Wells Notice and believes that the company’s disclosures and disclosure controls were in compliance with the securities laws and that an enforcement action is inappropriate. The company also believes that the outcome will have no material adverse effect on its financial condition, results of operations or cash flows.
While an incident such as a Wells Notice generally raises concerns, issues regarding this notice and the vulnerabilities to information security incidents are universal, and insurers are not immune to potential information technology security lapses. As for compliance, First American believes its disclosures were accurate and that all customer information is safeguarded currently. Since the incident was reported, management believes all necessary remedial actions have been implemented to ensure this vulnerability was corrected and that no evidence of any widespread damages have resulted from this incident. AM Best will continue to actively monitor this situation.
The following companies are the members of the First American Title Insurance Group:
- First American Title Insurance Company
- First American Title Insurance Company of Australia Pty Limited
- First American Title Insurance Company of Louisiana
- First European Title Insurance Company Limited
- First Title Insurance plc
- Ohio Bar Title Insurance Company
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