Title Industry Posts First Quarter Loss

The Washington, D.C.-based trade organization ""American Land Title Association"":http://www.alta.org (ALTA) released its ""Title Insurance Industry Market Share and Financial Statement"":http://www.alta.org/industry/financial.cfm for the first quarter of 2009 last week. ALTA reported that despite an uptick in refinance activity during the early part of Q1 and a reduction in loss and loss adjustment expenses of 48.9 percent, the title industry overall posted a loss of $127.5 million for the first three months of the year.
The Q1 results contrast with an operating gain of $59.9 million for the first quarter of 2008 and an operating loss of $711.9 million for the full year 2008. ALTA explained that this operating loss, combined with an 85 percent decrease in net investment gain and an increase in income taxes, resulted in a first quarter net loss for the title sector of $117.4 million, as compared to net income of $224.8 million for the first quarter of 2008 and a net loss of $438.3 million for the full year of 2008.
Still, ALTA says the title insurance industry ""remains in a strong financial position despite the continued reduction in title insurance premiums.""
ALTA's report shows that the industry has assets of over $8.7 billion, including over $7.4 billion in cash and invested assets. In addition, statutory reserves were in excess of $5.2 billion and statutory surplus was over $2 billion.
Kurt Pfotenhauer, CEO of ALTA, said, ""In light of the prolonged market downturn, the title insurance industry has shown great resiliency. The industry has toiled to get expenses in line with the reduced transaction volume and taken additional steps to maintain strong reserves.""
Pfotenhauer continued, ""While the industry has experienced 12 consecutive months of declining title insurance premiums, lenders, owners, and others with an interest in real estate should take some solace. The ability of title underwriters to investigate, examine, and settle claims remains exceptional and highlights the industry's important role in protecting stakeholders in the transfer of real property.""
While the first quarter of 2009 also marked the 12th consecutive quarter in which title premiums written decreased compared to a year earlier, the Q1 decline of 25 percent was less than each quarter in 2008, which recorded drops ranging from 26 to 34 percent. Although poor markets have continued, ALTA stressed that the rate of decline is slowing. On a whole, the industry wrote $1.98 billion in premiums during the first quarter of 2009, compared to $2.64 billion during the same period a year ago.
On a state-by-state basis, ALTA reported that 48 states plus the District of Columbia showed written premiums declined in the first quarter of 2009, compared to the first quarter of 2008. Delaware had the steepest drop - over 40 percent. The four largest states in terms of written premiums, California, Texas, Florida, and New York were down 8 percent, 32 percent, 40 percent, and 39 percent, respectively. New Jersey's premiums fell by 35 percent. Only two states showed increases, with Alaska up 12 percent and South Dakota up almost 4 percent.