Fidelity National Financial: Shocking Numbers Could Kill Title Insurer Merger

CFA

“This much seems clear: Premiums are growing fast, to $14.8 billion in 2017  from $9.4 billion in 2011, according to data The Palm Beach Post requested from an industry group, the American Land Title Association. That included more than $1.4 billion in premiums in Florida last year.

Yet the share of premiums spent to cover insured losses has been falling steadily. Only four cents out of every U.S. premium dollar paid in 2016 went to insured losses, down from nearly 11 cents in 2011. Hunter called that “shockingly low.” Loss ratios in other kinds of insurance such as home, car and health often run closer to 80 percent.”

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Fidelity National Financial: Shocking Numbers Could Kill Title Insurer Merger

Industry executives in Florida sing the merits, but the Consumer Federation of America says a proposed merger of two of the top four U.S. title insurance giants represents bad news for home buyers from West Palm Beach to Walla Walla, Wash.

CFA wrote letters to the U.S. Department of Justice and state regulators urging them to stop the marriage of Jacksonville-based Fidelity National Financial, the nation’s largest title insurance concern, with No. 4 Houston-based Stewart Information Services. The combined corporate families would control about 44 percent of a nearly $15 billion market, according to 2017 industry figures.

“The combined entity would control almost half of the title insurance market and make an over-concentrated, excessively-priced market even more expensive and abusive to American home buyers,” said J. Robert Hunter, CFA’s director of insurance. He is a former Texas insurance commissioner and past adviser to Florida regulators.

In announcing the planned merger March 19, Fidelity National said it “intends to achieve at least  $135 million in operational cost synergies” and boost earnings. The deal is subject to Stewart stockholder approval and federal and state regulatory approvals. If it is approved, closing might not come until the first or second quarter of 2019.

FNF Chairman  William P. Foley II said in a statement “we see tremendous potential” to grow the Stewart brand “as part of our long-time, successful strategy of operating multiple title insurance brands under the FNF umbrella.”

There’s no mention of potential benefits or savings to home buyers in the release, but FNF CEO  Raymond Quirk noted “we believe there are significant operational efficiencies we can bring to bear by leveraging FNF’s shared services infrastructure that will provide meaningful long-term value creation opportunities for our shareholders.”

Hunter, who testified before Congress on the issue more than a decade ago, argues the deal threatens to make matters considerably worse in an industry he says has long fleeced consumers.

Be sure to check out the rest of the report here…

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Cfa Letter Fidelity Stewart Merger

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