Orange County’s largest title insurers, and their employees, took it on the chin last year.
The county’s 12 largest title companies,which write policies protecting buyers of homes and other real estate from claims contesting ownership,saw their 2008 business cut nearly in half from a year earlier.
In 2008, the largest title insurers here did $18.1 billion in title insurance work, according to this week’s Business Journal list. That’s a 49% decline from 2007.
The decline was expected given the housing and mortgage implosion that started in 2007 and spread to commercial real estate last year.
Only two businesses on this year’s list showed an increase in business from last year,No. 8 CalCounties Title Nation and No. 9 LandSafe Title.
CalCounties was bought in 2007 and a new management team reworked the business.
LandSafe’s business is tied to Countrywide Financial Corp., which was sold to Bank of America Corp. for $4 billion early last year.
The drop in 2008’s title business work far outpaced the 27% decline in sales of new and existing homes here last year. Refinance work also slowed sharply last year, due to tougher lending standards knocking out potential business and tumult in the banking industry.
Consolidation
Since 2007, a number of title companies have combined, closed offices or shut down altogether, cutting the total number of companies on this year’s list by two.
The list ranks title insurers by their parent companies, many of which have combined entries for their operations here. Anaheim-based First American Real Estate Solutions LP, a unit of Santa Ana-based First American Corp., No. 2 on this year’s list, provided data for the ranking.
By our count, eight local companies closed operations at some point in 2008, the same amount seen in 2007.
The largest change in listings came with Richmond, Va.-based LandAmerica Finan-cial Group, which for several years has ranked No. 3 on our list behind Jacksonville, Fla.-based Fidelity National Financial Inc. and First American.
LandAmerica, which counted about a 15% market share nationwide and until last year held about a 20% share of the local market, filed for bankruptcy in November.
The company, which saw a nearly 93% drop in OC business last year, sold off much of its business to Fidelity National, which retained the No. 1 spot on our list, despite a combined 48% drop in business for all its units.
With LandAmerica no longer a standalone entry in our list, Fidelity National and First American, together with their affiliates, now have a combined market share in Orange County totaling about 70%.
The two companies,which also vie nationally for having the largest title operations,counted about a 42% market share in 2004, but have steadily increased their presence here through acquisitions and competitor attrition.
The weak housing and mortgage markets made 2008 the slowest of the past decade for local title insurers, by a wide margin. In 2003, the 15 largest title insurers here handled a record high $95 billion in transactions.
Since 2003, OC’s title industry has seen a decline in business every year.
The results here appear worse than what’s being seen elsewhere in California. Through the end of September, the number of premiums written in the state was down 33% from a year ago, according to the Washington, D.C.-based American Land Title Association.
Nationally, there’s been a 28% year-over-year decline in title business work, according to the title association’s most recent data. The industry’s seen 10 straight quarters of declining volumes, and each quarter’s decline was greater than the
last.
In recent months there have been some positive signs of increased business,primarily refinance work as homeowners try to take advantage of low interest rates,according to officials at First American.
In October, First American’s title business was seeing about 5,400 orders per day. By January, orders topped 10,000 a day. In February, they were 8,800 a day, the company said during a call with analysts late last month.
Nearly 60% of the new orders in January and February were for refinance work, compared to 40% the prior quarter. That represents less money for the title companies because the profit margin for a refinance order is about half of what it is for the sale of a home, company officials said.
Job cuts continued to be the norm for the industry last year.
Our list estimates the total employee count of companies on our list to be 1,825, a 21% drop from a year ago. That figure includes some guesswork on our part,many companies on this year’s list declined to provide their employee counts.
The Business Journal estimated the largest local title employer, First American, cut its employee count 22% to about 1,000 employees here. That’s off 42% from its highest levels in June 2006.
In comparison, Fidelity National Financial registered an estimated 6% drop in workers. But Fidelity’s numbers were helped by the estimated addition of some workers from LandAmerica.
Fidelity could see a bigger drop this year as it fully integrates LandAmerica.
