We know about autos (and their troubled big three), but in real estate, we have our own big four (for now) title insurance underwriting companies — soon to be the big three. Read the breaking story at Inman News.

In fact, in 2007, the top four title insurers controlled 87 percent of the $14 billion U.S. title insurance business.

• First American Corp. led the pack with 30 percent market share,
• Followed by Fidelity National Financial Inc. (26 percent),
• LandAmerica Financial Group (19 percent) and
• Stewart Information Services Corp. (12 percent).

But what is next on the horizon for title insurers in 2009?

With LandAmerica in Chapter 11 bankruptcy and Fidelity looking to buy its three underwriting subsidiaries — Lawyers Title Insurance Corp., Commonwealth Land Title Insurance Co. and United Capital Title Insurance Co. — the picture could soon look something like this:

• Fidelity (45 percent),
• First American (30 percent), and
• Stewart (12 percent).

But now we learn that Stewart also seems to be in the chase for LandAmerica’s underwriters (see story). If Stewart succeeds in outmaneuvering Fidelity, that would leave the three biggest companies still standing with roughly equal market share:

• Stewart (31 percent),
• First American (30 percent) and
• Fidelity (26 percent).

More tumult: Fidelity’s management has indicated that in order to realize synergies, layoffs would be an inevitable part of an acquisition of  Lawyers, Commonwealth and United. That’s probably true regardless of who ends up with LandAmerica’s underwriting subsidiaries.There’s one other scenario that would preserve a “big four” title industry: What if Old Republic International Corp., which had 5 percent of the underwriting business in 2007, picked up LandAmerica’s underwriters?

That would create a landscape something like this:

• First American (30 percent),
• Fidelity (26 percent),
• Old Republic (24 percent) and
• Stewart (12 percent).

If that sounds far fetched, Old Republic did file an application with Nebraska regulators this week to acquire Lawyers and Commonwealth, but withdrew the application yesterday (see story link above).

• What about First American?
• Should the current leader reconsider and jump into the hunt, now that it’s LandAmerica’s underwriting companies on the block, and not the parent company and all its debt?
• Or are they wise to stay on the sidelines and let Fidelity and Stewart engage in a bidding war?

Fidelity is hoping to wrap up a $298 million deal with LandAmerica this month, but LandAmerica’s creditors are objecting to a quick sale and have asked the bankruptcy court to hold off on approving it, saying a better offer could emerge.

Tags: Title Insurers

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