2005 was another year to forget for Orange County’s title companies.
They logged their second straight down year in 2005 and are entering what stands to be a third.
Since the sector’s 2003 high, title insurance transactions are off by $22 billion.
Last year, the 15 largest title insurers here saw business fall 13% from a year earlier to $73 billion, according to this week’s Business Journal list.
The losses came across the board, though some insurers managed to post gains last year.
The number of transactions done by title insurers also was off last year, falling 15% to 209,608.
The bright side: 2005’s declines weren’t as harsh as a year ago, when the companies on the list posted a 17% drop in business for 2004 from 2003. Transactions were off 32% in 2004.
In 2003, the top 15 largest title insurers here handled a record $95 billion in transactions.
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Softer Decline Seen
Another year of decline is expected in 2006, though not as steep as 2005.
Title insurers, which write policies protecting buyers of homes and other real estate from claims contesting ownership, have been hit hard by a falloff in mortgage refinancing that started nearly three years ago.
Title insurers boomed early in the decade as low interest rates spurred a wave of refinancing. The hot housing market also drove business.
“We’re heading back to normal,” said Eric Hungerle, Orange County manager for Jacksonville, Fla.-based Fidelity National Financial Inc., which again tops this year’s list.
The business in 2003 was “completely unrealistic,” he said.
This year, Hungerle said he expects a 5% drop in business.
No. 2 Santa Ana-based First American Corp. is more cautious.
The market could be off by about 10% this year, Gary Kermott, vice president of the company’s title insurance business, said in February.
First American has sought to offset the downturn by focusing on efficiency, including sending data processing to India.
Title insurers could get a boost from a mini wave of refinancing, said Jill Mushaney, who served as president of the Sacramento-based California Escrow Association last year.
As interest rates have gone up, homeowners could look to switch from adjustable rate mortgages and other “creative financing” to fixed-rate loans.
“More conventional loans could grow,” Mushaney said.
Acquisitions
For now, title insurers have turned to acquisitions for growth.
In 2004, Richmond, Va.-based LandAmerica Financial Group Inc., No. 3 on the list, bought Irvine’s Southland Title Corp.
Last year, Fidelity’s Chicago Title Land Trust Co. bought the land trust business of LaSalle Bank National Association.
And in February, First American bought privately held United General Financial Services Inc., which had a Newport Beach office.
The deals helped drive a 3% gain in local workers at the title insurers.
In all, the companies on the list employ 4,846 people in OC.
There was little change in the rankings on this year’s list.
None of the top five companies, which make up about 68% of the county’s market share, changed places.
Top Two Dominate
Fidelity and First American again dominated with a combined 42% of the market. That is down from about 48% a year ago.
The list ranks title insurers by the dollar value done by local operations in the past year. Anaheim-based First American Real Estate Solutions LP, a unit of First American, provided numbers for the list.
The Business Journal ranked title companies by their parent corporations, some of which have combined entries for their operations here.
Among the top five, LandAmerica held on to the No. 3 spot with $9.6 billion in business last year, down 24% from a year earlier.
LandAmerica owns Southland Title, Lawyers Title Co., Commonwealth Land Title Co. and Gateway Title Co.
No. 4 Orange Coast Title Co. saw a 9% drop to $5 billion for 2005. Even so, it was the best showing of any top five entry by percentage.
The Santa Ana-based company owns California Title Co., which continued to show strong growth. Its $1.7 billion in business was up 19%.
Rounding out the top five, Scottsdale-based Capital Title Group Inc. did $4.4 billion last year, down 16% from a year earlier.
