NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) today released its outlook report on the U.S. title insurance sector.
While 2016 was an excellent year for the U.S. mortgage industry with almost $2 trillion in new loan originations, KBRA believes it was also likely to be the peak in terms of lending volumes for years to come. The Mortgage Bankers Association is forecasting a sharp decline in refinancing volumes in Q1 2017.
Despite these pessimistic – yet realistic – projections, KBRA believes the title insurance industry is well positioned to manage this considerable decline. As of year-end 2016, the industry’s aggregated policyholders’ surplus (PHS) will be at an all-time high, driven by strong earnings in recent years. Piggybacking on the rebound of the housing market and commercial transactions following the financial crisis, title insurers have reported significantly improved financial metrics such as net written premium to PHS as well as expense ratios and loss ratios at or near 15-year lows.
Although the industry is much improved, some regulatory concerns remain such as market share concentration, licensing and consumer value. However, despite these persisting issues and the anticipated decline in mortgage originations, KBRA believes the title industry will be able to navigate through this environment. Additionally, companies with more favorable expense management and relatively lower fixed costs should continue to report strong operating results.
Please click here to view the report.
About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).