Revenue for the title insurance industry inched up 3 percent in the second quarter of 2005 compared to the same quarter last year, according to figures released Sept. 14 by the American Land Title Association.
"Total revenue for the second quarter of 2005 was up 3 percent when compared to the record year of 2004," said Richard McCarthy, ALTA director of research.. "Revenue figures for second quarter 2005 and 2004 were $8.2 billion and $7.9 billion, respectively."
The second quarter of 2005 fared somewhat better than the first quarter, during which revenue was relatively flat, increasing a mere 0.3 percent year-to-year.
Losses and loss adjustment expenses for the second quarter of 2005 increased by 24.5 percent to $401 million as compared to 2004's figure of $322 million.
"After the rise in business during 2002, 2003 and 2004, claims were expected to eventually catch up," McCarthy said. "The industry loss ratio rose from 4.05 percent to 4.89 percent."
According to McCarthy, the level of pre-tax profit (before investment income) was $268.5 million in 2005 as compared to $397.9 million during the same period in 2004 - a fall of 33 percent. On an after tax, after investment income basis, industry profits totaled $408 million, down from 2004's figure of $519 million.
Title insurance companies have been under investigation since February of this year when the state of Colorado launched a probe.
Most recently, Fidelity National Financial (NYSE: FNF) has settled Colorado's investigation of alleged title insurance-related kickbacks, agreeing to pay about $1.2 million to consumers nationwide, Colorado's Insurance Commission reported.
California Insurance Commissioner John Garamendi currently is investigating the industry for illegal kickbacks paid to captive reinsurance companies controlled by developers, lenders, builders and real estate firms.
In April, Garamendi fined Stewart Title of California $750,000 for involvement in the alleged schemes.
Title insurance probes also are ongoing in Washington state and Florida, as well as other states. The ALTA represents title insurance companies and their agencies nationwide on a variety of industry and legislative issues. Members of the association search and insure land titles to protect real estate investors including homebuyers and mortgage lenders.