Even with a sharp rise in interest rates toward the end of the second quarter, the title insurance industry still recorded a relatively strong fiscal quarter, according to the American Land Title Association’s Market Share Analysis.
During Q2 2022, ALTA recorded $6.21 billion in title insurance premium volume, only slightly down from the $6.54 billion recorded a year ago. Overall, for the first six months of the year, title premium volume was down just 0.5% from $12.22 billion in 2021 to $12.16 billion in 2022.
“This quarter’s report reinforces the fact that real estate remains local,” Diane Tomb, ALTA’s CEO said in a statement. “Housing markets in several states continued to remain strong, while other areas have started to pull back as affordability constraints increase and the Federal Reserve continues to raise interest rates to combat inflation.”
The five states with the largest title premium volumes were Texas ($969.7 million), Florida ($770.1 million), California ($582.1 million), New York ($385.3 million) and Pennsylvania ($237.7 million). The same five states held the top spots in Q1 2022.
Texas, Florida, and New York all saw year-over-year increases in title premium volume of 12.6%, 7.4% and 17.4%, respectively. On the other hand, California, and Pennsylvania both saw yearly decreases in title premium volumes at 23.0% and 19.2%, respectively.
Total operating income for the industry was down 4.2% from a year ago, while net operating income dropped from $593.8 million in Q2 2021 to $562.5 million in Q2 2022. Relatedly, total operating expenses were down 3.5%, however, loss and loss adjustment expenses were up 4.9%. During the first six months of the year the industry paid $277.2 million in claims, up from the $221.1 million paid during the same time period a year ago.
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Top underwriters by market share for the quarter included First American Title insurance Co., with 21.4%; Old Republic National Title Insurance Co., with 14.9%; Chicago Title Insurance Co., with 14.3%; Fidelity National Title Insurance, with 14.3%; and Stewart Title Guaranty Co., with 8.8%.
However, it should be noted that Chicago Title is part of Fidelity. And with 28.6% of the market, it was against the largest company by share of premiums written during Q2 2022.
During the first quarter of the year, First American’s market share was 21.5%, while Old Republic’s was 15.2% and Stewart’s was 8.9%. Stewart — which continued its acquisition spree into early 2022 —has been looking to reclaim some of the title premium it lost in recent years. As recently as 2019, Stewart’s market share was 10.62%.
Rounding out the top 10 for Q2 2022 was Westcor Land Title Insurance Co. with 4.2% of the market, good for sixth place. Title Resources Guaranty Co. had 2.7%, WFG National Title Insurance Co. had 2.5% of the market share, Doma Title Insurance Co., held 1.8%, and First National Title Insurance Co., had 0.9%.
Although the “Big Four” still command the overwhelming majority of the market with a combined market share of 73.7%, their collective grip could be slipping. In 2019, independent title underwriters such as Westcor, WFG and others, had a combined market share just shy of 15%, which has risen to 26.3% during the second quarter of 2022.
As interest rates have risen to their highest levels since 2008, causing home buying and selling activity to slow even further, the outlook for the second half of the year will be weaker.
“Despite the changing conditions, title professionals understand the cyclical nature of the housing market and are committed to delivering safe and efficient real estate closings, protecting property rights and helping all consumers achieve homeownership,” Tomb said.
In addition, the title industry may be facing a challenge in the form of attorney opinion letters. Over the weekend, Mat Ishbia, the CEO of United Wholesale Mortgage, America’s largest wholesale lender, announced that the company is hiring attorneys to review title and closing documents.
In April, Fannie Mae announced that it would be accepting written opinion letters from an attorney in lieu of a title insurance policy “in limited circumstances.”
“Title insurance protects against hidden risks that are not discoverable during searches of public records, unlike alternatives. For example, one core protection of title insurance is that it protects against fraud or forgery related to the property rights purchased by the buyer,” Tomb said in response to UWM’s announcement. “This is not covered by alternative products, and is just one of many coverage gaps that should be of great concern to consumers.”
