LandAmerica Financial Group Inc. on Tuesday reported that second-quarter income remained essentially flat compared to last year at $1 billion, while net income slipped 77.8 percent to $7.9 million.
Pretax income was down $45.7 million from the previous quarter, the company said in a press release, which reflected weakness in the housing market and an increase in claims provision of $34.3 million.
“The residential real estate market is experiencing the largest volume decline in nearly 20 years,” said Chairman and Chief Executive Officer Theodore L. Chandler Jr. “We came out of first-quarter 2007 ready for the seasonal acceleration we typically see in the second quarter. We did not see the traditional seasonal pickup, causing our revenue to remain flat during second-quarter 2007 over the first quarter of this year.”
Direct revenue in title operations for the quarter increased 8.9 percent from the year before, thanks in part to a Sept. 8 merger with Capital Title Insurance Co. Direct orders fell to 176,500, but revenue per order was up 9.5 percent from the year before, to $2,300.
The financial analysis firm Demotech Inc. estimates that the title insurance industry as a whole boosted net income more than 5 percent in 2006, in part by reducing dependence on affiliated business arrangements and boosting direct operations.
LandAmerica saw salary and employee benefit costs in title operations for the quarter increase by $21.4 million, or 8.9 percent, from a year ago, and by $48 million, or 10.2 percent, in the first half of the year. Employment for the quarter stood at the equivalent of 11,300 full-time positions, up from 10,500 the year before.
A change in the geographic mix of business boosted agents’ commissions as a percentage of agency revenue to 80.5 percent, up 50 basis points from last year.
As a major shareholder in LandAmerica, Viking Global Performance LLC recently urged the company’s board of directors to explore a merger with a larger competitor, claiming $200 million in potential “synergies.”