Fitch puts First American on watch

Fitch Ratings said it placed the ratings of First American Corp. on Rating Watch negative, including the company's A- issuer default rating, BBB+ $200 million 5.7% notes due 2014 and BBB+ $100 million 7.55% notes due April 2028. Also on review are First American Capital Trust's BBB $100 million 8½% trust preferred securities due April 2012.

In First American's pre-announced earnings, it noted that the fourth quarter of 2007 would generate an after-tax loss not to exceed $50 million. The agency said the Rating Watch negative reflects the likelihood that upon review of the company's full-year results, Fitch will likely lower its ratings by one notch.

First American also announced plans to spin off its financial services companies. Fitch believes the spinoff represents management's attempts to improve stock valuation and provide a vehicle for acquisitions in the information services' space. By segregating the companies, the title business would not be negatively affected by higher leverage from future information services acquisitions.

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