Title Operating Gains Are Down as Rising Loss Ratios Take a Bite Out of Income
|June 22, 2006|
COLUMBUS, OH -- (MARKET WIRE) -- According to data published in Demotech Performance of Title Insurance Companies, the Title Industry is in the midst of a 3-year rise in loss ratios, which are at the highest point in 10 years. During this cycle, despite increasing overall income, net operating gains are down over 25%, which amounts to a $250 million drop from 2003 levels. At the same time, the yield on invested assets is at a 10-year low. The latest edition of Demotech's publication, a portfolio of industry analysis, also states that 2 out of every 3 companies increased their surplus as regards policyholders in 2005. Some of the largest increases are coming from industry leaders with Stewart Title Insurance Company, Fidelity National Title Insurance Company, Chicago Title and Trust Company and First American Title Insurance Company all reporting double-digit increases to surplus, averaging over 25% more surplus than at this time last year.
Although much of the industry is shoring up resources in these tough times, there are plenty of success stories as well. Land Title Insurance Company of St. Louis and Censtar Title Insurance Company both managed to triple their net premiums written in 2005. American Security Title Insurance Company continues to lead all independent Title insurers with a combined ratio of 73.2%, far below the industry average of 95.9%. They achieved this ratio by both having a loss free year and controlling expenses.
Careful examination of the detailed financial reports and analyses in the 2006 edition of Demotech Performance of Title Insurance Companies suggests that while companies like Century Title Insurance Company have discontinued writing business altogether, others are aggressively pursuing diverse strategies aimed at gaining greater market share.