Fidelity National Financial Inc. has raised title insurance rates in 22 states and slashed $231 million in annual expenses by firing workers and closing offices since acquiring the underwriting subsidiaries of rival LandAmerica Financial Group Inc. in December.

Fidelity National Financial Inc. has raised title insurance rates in 22 states and slashed $231 million in annual expenses by firing workers and closing offices since acquiring the underwriting subsidiaries of rival LandAmerica Financial Group Inc. in December.

In announcing plans to issue 13.3 million shares of common stock, Fidelity disclosed that through the end of March it had fired 2,068 of the 5,500 workers formerly employed by LandAmerica subsidiaries Commonwealth Land Title, Lawyers Title and United Capital Title Insurance Co.

Fidelity acquired the companies a month after LandAmerica filed for Chapter 11 bankruptcy protection in November, allowing the company to overtake First American Corp. as the nation’s largest title insurer but prompting analysts at Fitch Ratings to downgrade the company’s debt (see story).

Fidelity has since closed 216 of the 500 direct title offices it acquired in the acquisition, and is cutting ties with about half of the independent title agents that LandAmerica’s subsidiaries had relationships with.

Fidelity said it has already terminated 3,000 of LandAmerica’s 7,000 agency relationships and plans to end 500 others, leaving the company with a distribution network of more than 1,300 direct residential title offices and 9,000 agents.

The $231 million in annual savings achieved triggers $20.4 million in bonus payments to company executives and employees who helped hit the target, the company said. But the paring back at Commonwealth, Lawyers and United Capital also means the companies have lost some of their historic market share.

Fidelity said that during the first three months of the year, LandAmerica’s former underwriters accounted for 16 percent of total direct orders opened by Fidelity. In 2007, by comparison, LandAmerica’s underwriters controlled a 19.6 percent share of the entire U.S. title insurance market, compared with Fidelity’s 26.7 percent share, the company said, citing numbers from Demotech Performance.

Fidelity said operations at LandAmerica’s underwriters — already suffering from a "loss of business momentum" as a result of their parent company’s Chapter 11 bankruptcy filing — "will, at least initially, be somewhat less sizable than they were historically."

But business is booming for Fidelity and other title insurers, as borrowers rush to refinance at lower rates. The Mortgage Bankers Association forecasts that mortgage originations will grow 39 percent this year over last, to $2.78 trillion, even though purchase-mortgage originations are expected to fall slightly (see story).

Fidelity said it has raised title insurance rates in 22 states, including a 10 percent increase in California. First American has announced it’s taking similar steps in California and about a dozen other states (see story).

In releasing a preliminary estimate of first-quarter results, Fidelity said revenue grew from $903 million in the fourth quarter of 2008 to $1.24 billion in the first quarter of 2009. Although much of the growth was attributable to the merger, Fidelity said direct orders closed rose from 120,500 in January to 141,900 in February, and increased again to 166,200 in March.

Editor’s note: This story has been edited to correct that the Mortgage Bankers Association is forecasting mortgage originations to grow by 39 percent this year, not 65 percent as stated by Fidelity in the prospectus supplement to its stock issue. 

***

What’s your opinion? Leave your comments below or send a letter to the editor.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Prepare for this fall with top agents & brokers at Connect Now this Tuesday.GET YOUR TICKET×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription