Title Insurers See Big 2002; Shift Seen This Year
By DANIEL D. WILLIAMS
Orange County title insurers had another bang-up year in 2002, thanks to low interest rates, rising home values and surging house sales.
The burning question: will last year be the last hurrah?
Title insurers handled $67.5 billion in OC transactions in 2002, a 47% rise from a year earlier, according to this week’s Business Journal’s list of the 20 largest title insurers operating here. The list’s data comes from Anaheim-based First American Real Estate Solutions, a unit of Santa Ana-based First American Corp.
“2002 was a banner year,” said Parker S. Kennedy, president of First American, whose First American Title Insurance Co. ranked No. 2 on the list with a 39% rise to $11.9 billion in title deals.
“Order counts in our real estate-related businesses remain at elevated levels, which should bode well for the company’s results during the first half of 2003,” Kennedy said.
Not everyone is so sure about this year.
Last week, Federal Reserve Chairman Alan Greenspan dampened the party with a speech to bankers in Florida. Greenspan didn’t predict a housing bubble this year but said to look for the frenetic pace of refinancing,a key driver of title insurance’s growth,to “appreciably simmer down.”
Slower growth in housing prices and stabilization of mortgage rates are indicators of a slowdown, Greenspan told the group.
“This era of declining rates and rising housing prices won’t go on forever,” said John Burns, president of Irvine-based John Burns Real Estate Consulting Inc. “We’re getting to a point where you’d think that those who can afford to move up have already done so.”
Burns went as far as to say he expects home sales to decline this year.
While title insurers still are bullish about their core business, many have branched out into new areas such as credit reporting and employee screening.
“Many of the title companies have been doing their best to diversify in preparing for this,” Burns said.
Take First American. In the second quarter, the company expects to conclude its buy of Los Angeles-based US Search.com Inc., which provides people location and background search services.
All 20 of the companies on the list saw growth in their OC transactions insured. Newcomer No. 20 Mission Viejo-based California Title Co. posted the largest percentage growth, going from $3 million in deals in 2001 to $724 million last year, a 23,010% rise.
Only one company, No. 11 Walnut Creek-based North American Title Co., grew less than 20%. North American posted just a 3% rise in OC transactions.
The slower growth at North American Title came after it was bought in 2001 by Miami-based Lennar Corp., OC’s third-largest homebuilder. The lower numbers could reflect a focus on work for Lennar, and fewer other homebuilders.
Douglas Murphy, North American Title’s vice president for Southern California, said he hadn’t had a chance to review the numbers as of late last week and didn’t wanted to comment before doing so.
The top two companies,No. 1 Tustin-based Fidelity National Title, part of Irvine-based Fidelity National Financial Inc., and First American,both lost market share last year.
Fidelity’s share was 22.7%, down from 24.3% a year ago. First American went from 18.3% in 2001 to 16.9% last year.
But both insurers posted big gains.
Fidelity, whose numbers include Chicago Title acquired in 2000, saw insured transactions climb 41% to $16 billion last year, on par with First American’s 39% gain.
The volume of transactions on the list was up handily. The 267,333 closings were 36% higher than a year earlier, with only North American Title seeing a drop, 16%.
