Fitch: U.S. Title Insurance Industry Capital Position to Improve Modestly in 2012

May 29, 2012

Fitch Ratings' 2011 U.S. title industry's risk-adjusted capital (RAC) ratio for year-end 2011 was flat at 144 percent compared to 143 percent in 2010 and remains below its 15-year average of 167 percent, according to a report published by Fitch.

However, Fitch estimates a relatively modest improvement in the industry's capital position in 2012, as measured by the RAC ratio.

"Fitch anticipates that several catalysts for growth including reduced housing inventory, historical low interest rates and government programs such as the Home Affordable Refinance Program (HARP 2.0) could increase mortgage originations and ultimately industry surplus," said Gerry Glombicki, director at Fitch Ratings and title insurance sector head.

Fitch calculates the industry RAC on a weighted-average basis, thus Fidelity National Financial, Inc. and First American Financial Corp.—with a combined market share of 62 percent—have a strong influence on the industry ratio. Fitch views the industry as adequately capitalized, although results vary considerably among individual companies.

The full report, “Title Insurers 2011 Risk-Adjusted Capital Adequacy,” is available at www.fitchratings.com. Analysis of company-specific variances in capital adequacy is also included in the report.