Lower Earnings for Three Title Companies


Three out of the four large title underwriters reported lower earnings year-over-year for the third quarter, as new business slowed with higher interest rates resulting in fewer mortgage originations.

The fourth, Old Republic International, swung to a $103 million profit from a $15 million loss for 3Q12.

Unlike the other three, ORI has been gaining market share in terms of premiums written, moving ahead of Stewart to become the third largest underwriter. ORI also benefits from its run-off mortgage insurance business reporting net operating income of $24 million; one year ago it lost $87 million. The company is planning to revive and spin-off the mortgage insurance operation.

Open title orders are down 33% year-over-year at Fidelity National Financial, the largest underwriter. But higher margin purchase title orders opened are up 10% in the same time frame.

FNF earned $98 million in 3Q13, down from $234 million one year ago.

The company will be making a $400 million public offering of its common stock with the proceeds being used to help pay for the acquisition of Lender Processing Services Inc.

First American Financial Corp. made $64 million in 3Q13, down from $104 million last year. Open orders are down to 316,000 from 438,000 in 3Q12.

Its business mix has shifted, with resale open orders up 16% and refinance open orders down 57%. Refi orders are currently 47% of the business mix, down from 70%.

Stewart Information Services Corp. earned $15 million, down from $35 million in 3Q12. The companys results are suffering from the improving housing market.

The reduction in distressed properties resulted in its mortgage services unit having a pretax loss of $1 million, compared with pretax profits of $5 million in 3Q12. Revenue in this business line declined more than projected, CEO Matthew Morris says.

CoreLogic, which is a former First American subsidiary, had 3Q13 net income of $44 million, up from $38 million one year ago.

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