Three out of the four national title insurance underwriters reported improved results for the first quarter, with two of them—First American and Old Republic—turning year-ago losses into profits.
At Old Republic, its defunct mortgage insurance business remains a drag on company results, even though the unit's results improved by 19% over the first quarter.
The parent company had a profit of $400,000, compared with a net loss of $13 million one year prior. The MI unit lost $82 million, an improvement over the $101 million loss in 1Q11. ORI is in the process of separating out its mortgage insurance business from the holding company, placing it into a new holding company, Republic Financial Indemnity Group Inc.
ORI's title insurance business had pretax operating income of $9.4 million, up 260% from 1Q11's $2.6 million. Old Republic Title Insurance Co. has been the primary beneficiary of a shift in market share away from Fidelity National Financial after the latter company's acquisition of LandAmerica.
Speaking of FNF, even though it has been losing market share, it earned $74 million in the first quarter, up from $43 million one year prior. Among the reasons for the improvement: a 19% gain in commercial title insurance revenue. CEO George Scanlon said it is FNF's strongest first quarter performance in a number of years.
At FAF, 1Q12 net income was $52 million, compared with a $23 million loss for 1Q11. But last year's results included a $45.3 million reserve-strengthening adjustment for its Canadian business.
CEO Dennis Gilmore said FAF enjoyed its best first quarter title margin since 2006, as new orders were the strongest in three years. Those new orders were driven primarily by refinancings, but there was also "a modest but encouraging increase in resale transactions," he said.
The laggard among the title underwriters remains Stewart Information Services Corp. It posted a net loss of $12.2 million in 1Q, compared to a loss of $10.3 million in the year ago period.
Stewart CEO Matthew Morris said, "While we continue to grow our real estate information revenue, our margins were compressed as we ramped up our capability necessary to service recently awarded contracts. Further, the revenue mix generated in the REI segment has shifted over the last 12 months from higher-margin loan modification services to lower margin servicing support and real estate owned related services."
Still, he said the pretax loss in the title insurance business had improved by nearly 28% over 1Q11.
