Fitch Reports Increase in Title Industry Profitability

March 29, 2011

GAAP profitability for the title insurance industry improved in 2010 compared to 2009, Fitch Ratings reported in its report “Title Insurance Industry 2010 Financial Results.”

The five publicly traded title insurance underwriter families, which account for more than 90 percent of total industry revenue, reported an underwriting profit for the second consecutive year in 2010. Despite reduced operating revenue, continued expense reductions and stable loss costs led to improved profit margins.

Despite the year-over-year improvement, operating performance remains considerably weaker than the strong profits reported from 2004 to 2007 and the industry continues to face headwinds. Mortgage originations are expected to plunge in 2011 and refinancing activity will likely stall given rising interest rates.

Consequently, Fitch anticipates a further decline in revenue for title insurers in 2011. As such, profit margins will continue to be constrained versus past market peak levels, and expense management will continue as a prevailing theme for companies to report operating profits.

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