Fitch Ratings
| Company type | Private |
|---|---|
| Industry | Credit rating agency, Financial services |
| Founded | December 24, 1914 in New York City, United States |
| Founder | John Knowles Fitch |
| Headquarters | New York City and London , United States and United Kingdom |
Area served | Worldwide |
Key people | Paul Taylor (President and CEO of Fitch Group), Ian Linnell (President of Fitch Ratings) |
| Owner | Hearst Corporation |
Number of employees | 2400+ |
| Parent | Fitch Group |
Fitch Ratings Inc. is a United States-based credit rating agency and one of the trio of nationally recognized statistical rating organizations (NRSRO) officially recognized by the U.S. Securities and Exchange Commission. It is considered part of the "Big Three credit rating agencies" alongside Moody's and Standard & Poor's.
History
Fitch Ratings maintains dual headquarters located in New York and London. The firm is entirely owned by Hearst Corporation, which completed the purchase of the remaining 20 percent stake for $2.8 billion on April 12, 2018. Prior to this, Hearst had gradually increased its ownership from an initial 20 percent in 2006 to 80 percent by December 2014 through transactions totaling nearly $2 billion.
Before Hearst acquired full ownership, Fitch was co-owned with the French company FIMALAC SA, which retained a 20 percent share until 2018. Fitch Ratings operates alongside Fitch Solutions as subsidiaries under the Fitch Group umbrella.
The company was established by John Knowles Fitch on December 24, 1914, in New York City originally as Fitch Publishing Company. In 1989, it was purchased by a consortium that included Robert Van Kampen. Subsequently, in 1997, FIMALAC acquired Fitch and merged it with London-based IBCA Limited.
In the year 2000, Fitch broadened its portfolio by acquiring Chicago-based Duff & Phelps Credit Rating Co. as well as Thomson Financial BankWatch.
Ranking as the third largest NRSRO rating agency, Fitch holds a smaller portion of the market compared to S&P and Moody's but frequently acts as the decisive "tie-breaker" when their ratings differ marginally.
To strengthen its analytics capabilities, Fitch Group divested its risk analytics software business Algorithmics to IBM for $387 million in September 2011. More recently, in June 2022, Fitch expanded its technological expertise by acquiring AI-focused data technology firm GeoQuant.
Operations
Fitch Ratings operates as a division within Fitch Group, a holding entity wholly owned by Hearst Communications. Fitch Group also manages Fitch Solutions, which delivers Fitch Ratings’ offerings alongside credit market intelligence and financial analytics services. The entire group employs approximately 5,000 staff members, including more than 1,600 analysts. Paul Taylor holds the position of president and CEO of Fitch Group. Fitch Ratings itself is registered as a nationally recognized statistical rating organization (NRSRO) and employs over 2,400 individuals. Ian Linnell serves as the president of Fitch Ratings.
Criticism
Fitch, along with other leading credit rating agencies, has been criticized for inaccurately assessing risks associated with mortgage-backed securities, especially within the collateralized debt obligation (CDO) sector. Despite receiving top-tier ratings from credit rating agencies, these securities experienced substantial losses. For instance, CDOs issued by Credit Suisse Group amounting to $340.7 million suffered losses close to $125 million, even though Fitch had assigned them AAA ratings. Nevertheless, Fitch distinguished itself by issuing an early warning in 2007 regarding the dangers linked to constant proportion debt obligations (CPDOs), prior to the broader financial crisis.
See also
- FIMALAC
- Kroll Bond Rating Agency
- List of countries by credit rating
- Moody's Investors Service
- Spread Research
- Standard and Poor's