Fitch Ratings said the nation’s title insurance underwriters strongly capitalized as of the end of 2012, with a risk-adjusted capital score of 163%, compared with 144% one year prior. RAC is a proprietary measure Fitch created to measure title insurers’ capital adequacy.
The industry RAC is a weighted average calculation, Fitch said, and the nation’s two largest underwriters, Fidelity National Financial and First American Financial Corp., have a great influence on its results. These two companies, based on
Last year was the first time RAC benefitted from a statutory reserve redundancy at all four rated underwriters. The industry had surplus growth of 34% because of stronger earnings.
Fitch noted that inadequately priced policies made during periods of lower underwriting standards that experienced sharp deficiencies have for the most part matured. Plus improved underwriting practices and reduced volume have cut the potential for losses from the more recent books of business.
Other items benefitting RAC include leaner expense structures at underwriters, and increased revenue.
Back in March Demotech,
As for 2013, Fitch sees “a modest improvement” in title insurers’ capital position.
“Continued profitable operations will likely drive modestly higher industry surplus, while expenses will remain relatively flat and in line with projected revenue volume. Fitch expects dividends paid to holding companies to vary by insurer but remain largely in line with historical levels,” said Gerry Glombicki, director at Fitch Ratings and title insurance sector head.
