Title Industry Sees $19M in Losses But Expected to Remain Profitable

Following two quarters of increasing operating results, the title industry met with $18.9 million in losses in the third quarter, according to the 2012 edition of Demotech Performance of Title Insurance, released in December.

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Also, in December Fitch Ratings Agency revised its outlook on the title insurance industry from negative to stable. ""Fitch anticipates the industry will remain profitable in 2012 despite top-line pressures,"" Fitch wrote in a recent release.

Unaffiliated underwriters experienced a $17.7 million operating gain from the beginning of the year through the third quarter, compared to grouped underwriters, who experienced a $36.6 million operating loss, according to Demotech.

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However, the larger underwriting companies brought in $148.8 million in the third quarter, making up more than 92 percent of total net income for the title industry for the quarter.

Fitch Ratings Agency suggests this trend will continue. ""Large title insurers with scale and those with a more variable cost structure should continue to outperform their smaller and less efficient peers,"" Fitch reported.

Fitch also anticipates that a ""sustained downturn may lead to further industry consolidation among smaller underwriters.""

Direct losses increased $15 million for the quarter but have decreased 4.6 percent since the third quarter of last year, according to Demotech's report.

The third quarter saw a year-over-year income increase of 175 percent, which is down from a 200 percent year-over-year increase in the second quarter.

While premiums may not be growing on a national level, some states, such as Texas and New York are seeing increases. New York has seen a 15.8 percent increase in title premiums, while Texas has seen a 10.6 percent increase since last year, according to Demotech.

On the other hand, premiums in Utah have declined 18.8 percent, and premiums in California have declined 5.6 percent since last year.