Title Insurers Ending Captive Re Arrangements

With regulators clamping down on captive title reinsurance arrangements, three of the nation's largest title insurers say they have ended or will end these arrangements.First American, Fidelity National, and LandAmerica have been in the crosshairs of regulators in Colorado, California, and Washington over such arrangements. John Garamendi, California's insurance commissioner, has described the arrangements as "phony" and said homeowners have been victimized in the amount of over $1,000 per home. LandAmerica struck back, challenging the comments as untrue and misleading. Michelle Gluck, LandMark's executive president and general counsel, declared that the arrangements "have not resulted in any injury to consumers" but that the company has "voluntarily ended these arrangements in Colorado and is in the process of doing so nationwide." First American filed a statement with the Securities and Exchange Commission Feb. 18 saying it had entered into an agreement with Colorado regulators without admission of liability or wrongdoing. It will pay affected policyholders nationwide "to avoid even the appearance of mistaken or improper conduct," and as a result will take a $24.0 million pretax charge to its fourth-quarter 2004 earnings. Fidelity said it will continue to cooperate with Mr. Garamendi's office and noted that it had previously announced its voluntary discontinuance of all reinsurance agreements.