ALTA Releases 2008 Industry Financial Results
Land Title Industry Encouraged by 2009 Refinance Activity After Down 2008 Market
WASHINGTON--(BUSINESS WIRE)--A poor year in the national real estate market left the land title industry posting losses in 2008. The continued slowing of real estate sales and refinances is directly related to the reduction of title insurance transactions and revenues, and a continuing rise in loss and loss adjustment expenses for the land title industry in 2008. The industry posted a 2008 operating loss of $710.3 million, compared to an operating loss of $87.8 million for 2007.
“The land title industry is beginning to see an increase in orders and is anticipating growth based on a growing market for refinance transactions”
“The land title industry is beginning to see an increase in orders and is anticipating growth based on a growing market for refinance transactions,” said Kurt Pfotenhauer, CEO of the American Land Title Industry. In April, the Mortgage Bankers Association’s revised its forecast of mortgage originations in 2009, increasing their forecast by over $800 billion. MBA now expects originations to total $2.78 trillion, which would make 2009 the fourth highest originations year on record, behind only 2002, 2003, and 2005. “This is welcome news following a very tough market in 2008,” Pfotenhauer continued.
The reduction in operating gain, combined with a 46% decrease in net investment gain, was somewhat offset by a significant reduction of income taxes and resulted in a Net Loss for 2008 of $434.2 million, as compared to Net Income of $315.1 million for 2007.
Despite the financial struggles of 2008, the land title industry remains in a strong financial position with Admitted Assets of almost $9 billion, including more than $7 billion in Cash and Invested Assets. Also, Statutory Reserves were in excess of $5.3 billion and Statutory Surplus was over $2.0 billion.
The 4th Quarter of 2008 marked the 11th consecutive quarter in which title premiums written declined from the prior year’s equivalent quarter, indicating that poor markets not only continued through 2008, but were still worsening through year end.
Furthermore, each year-over-year quarter’s decline was greater than the previous quarter. In 2007, the 3rd Quarter declined more than 15% over the prior year’s 3rd Quarter, and the 4th Quarter decline was 22% over the prior year’s 3rd Quarter. In 2008, the 1st Quarter declined 26% from the prior year’s 1st Quarter; the 2nd Quarter declined almost 28%; the 3rd Quarter more than 30%; and the 4th Quarter declined over 34%.
On a state-by-state basis, 28 states plus the District of Columbia were down over 30% in the 4th Quarter of 2008 from the prior year’s equivalent quarter. Only six states showed increases, with North Dakota, Arkansas and South Dakota up 53, 37 and 24%, respectively; and Alaska, Vermont and Iowa up less than 15%. The four largest states in terms of written premiums, California, Texas, Florida and New York, were down 23, 34, 46 and 47%, respectively. The fifth largest state, New Jersey, was down 30%; the seventh largest, Pennsylvania, down 40%; and the eighth largest, Virginia, was down 31%.
Title Insurance Industry Market Share and Statistical Analysis compilations for the 4th Quarter and the full year, 2008 are now available on the ALTA website at www.alta.org/industry/financial.cfm.
The American Land Title Association®, founded in 1907, is the national trade association and voice of the abstract and land title insurance industry. ALTA® members search, review and insure land titles to protect home buyers and mortgage lenders who invest in real estate. ALTA® is headquartered in Washington, DC.