A 28 percent decline in revenue helped push title insurer LandAmerica Financial Group Inc. to a $24.2 million first-quarter loss, despite ongoing cost-cutting measures that include the elimination of the equivalent of 3,600 full-time positions since the beginning of 2007.
LandAmerica said "persistently" lower residential mortgage originations helped reduce first-quarter revenue to $686.4 million, down from $948.6 million a year ago.
The Richmond, Va.-based company, which also provides escrow and closing services for lenders, developers and real estate agents, reported that claims as a percentage of operating revenue in the title insurance segment rose to 9.7 percent, up from 6.5 percent a year ago.
The claims provision for the first quarter included $43.4 million for the 2008 policy year and $13.7 million for increases in claims rates for policies in prior years.
LandAmerica said that companywide, it reduced full-time equivalent positions by approximately 300 in the first quarter. The 10,740 remaining jobs at the company represent a 25 percent reduction since Jan. 1, 2007.
In the title insurance division alone, LandAmerica has cut the equivalent of 3,400 full-time jobs in the last year, reducing salary and benefits costs by 30 percent, or $76.4 million. Average full-time equivalent positions in title operations fell from 11,500 a year ago to 8,100 in the first quarter.
Revenue from title operations fell 29.9 percent from a year ago, to $570.5 million. The company’s largest business segment generated a $27.9 million pretax loss, compared with $34.1 million in earnings a year ago.
Although revenue from lender services fell 14 percent from a year ago, to $72.7 million, the segment remained profitable, generating $10.1 million in pretax earnings on increased demand for lien monitoring, broker price opinions and appraisals, foreclosure, reconveyance and other related services that are in demand as a result of the housing downturn.
According to analysts at Fitch Ratings, LandAmerica and four other title insurers that dominate the U.S. market saw operating revenue from title operations fall 12 percent in 2007, and could see another 20 percent drop this year (see story).
Land America finished 2007 with an $81.6 million net loss on $3.6 billion in revenue.
Closed orders from direct title operations totaled about 597,000 in 2007, down from 731,000 closed orders in 2006 and 861,000 orders in 2006. The average fee per closed order, which includes title insurance premiums and other charges, rose from $1,800 in 2005 to $2,300 in 2007.
According to the company’s annual report to investors, about half of LandAmerica’s title operations revenue in 2007 came from just five states: California ($413 million), Texas ($391 million), New York ($310 million), ($268 million) Florida ($268 million) and Pennsylvania ($196 million).
LandAmerica issues title insurance policies through three principal underwriting subsidiaries, Commonwealth Land Title Insurance Co., Lawyers Title Insurance Corp., and Transnation Title Insurance Co., and also owns Commonwealth Land Title Insurance Co. of New Jersey, Title Insurance Co. of America, and United Capital Title Insurance Co. In December, the company merged underwriter Land Title Insurance Co. into Lawyers Title.
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