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American Land Title Association Reports First-quarter Industry Financial Results

July 6, 2009

The title insurance industry remains in a strong financial position despite the continued reduction in title insurance premiums, the American Land Title Association reported after releasing its first-quarter 2009 Title Insurance Industry Market Share and Financial Statement.

Go to the ALTA Industry Financial Data Page

ALTA reported the industry has admitted assets of over $8.7 billion, including over $7.4 billion in cash and invested assets. Also, statutory reserves were in excess of $5.2 billion and statutory surplus was over $2 billion. Despite an uptick in refinance activity during the early part of the quarter and a substantial reduction in loss and loss adjustment expenses (48.9 percent), the industry posted a loss of $127.5 million during the first quarter of 2009.

This contrasts with an operating gain of the $59.9 million for the corresponding 2008 first quarter and an operating loss of $711.9 million for the full year 2008. This operating loss, combined with an 85 percent decrease in net investment gain and an increase in income taxes, resulted in a net loss for the first quarter 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 2008.

"In light of the prolonged market downturn, the title insurance industry has shown great resiliency," according to Kurt Pfotenhauer, chief executive officer of ALTA. "The industry has toiled to get expenses in line with the reduced transaction volume and taken additional steps to maintain strong reserves. 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 marked the 12th consecutive quarter in which title premiums written declined from the prior year’s equivalent quarter, this was the first of the 12 where the quarterly decline was less than the prior quarter’s decline. In fact, the first-quarter 2009 decline of 25 percent was less than the first quarter 2008 decline (over 26 percent), the second quarter 2008 decline (almost 28 percent), the third quarter decline (over 30 percent) and the fourth quarter decline of 34 percent. Although poor markets have continued, 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 in premiums during the same period a year ago.

On a state-by-state basis, 48 states plus the District of Columbia show written premiums declined in the first quarter of 2009, compared to the first quarter of 2008. Forty-one states, plus the District of Columbia declined over 10 percent. However, only one state (Delaware) declined over 40 percent. Eleven states, including four of the seven largest, declined more than 30 percent. Fifteen states plus the District of Columbia were down between 20 and 30 percent. Only two states showed increases, with Alaska up 12 percent and South Dakota up almost 4 percent. The four largest states in terms of written premiums, California, Texas, Florida and New York were down 8, 32, 40 and 39 percent, respectively. The seventh largest, New Jersey, was down 35 percent.

Of the two states that reported an increase in premiums, Alaska reported a 12 percent increase, going from $8.17 million Q1 2008 to $9.15 million during the first quarter of this year, while South Dakota recorded $3.64 million in premiums during the first quarter of 2009, up 3.6 percent from $3.52 million during the same period a year ago.



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