States Title to Acquire Underwriter North American Title
December 11, 2018
North American Title Group (NATG), a wholly-owned subsidiary of Lennar, announced plans to combine its underwriter and the majority of its retail title business with States Title Inc.
The deal, which is expected to close in January 2019 pending regulatory approval in California and Arizona, calls for States Title to acquire NATG's underwriter, North American Title Insurance Company (NATIC), and the majority of the retail business of NATG's national title agency, North American Title Company (NATC). The new company will continue to operate under the North American Title brand and Lennar will assume a substantial minority equity ownership stake.
"By partnering with North American Title, we accelerate our shared vision to build the title company of the future," said Max Simkoff, States Title's founder and CEO. "Buying a home, and refinancing that home, are among the most important financial decisions in a person's life. We believe that the experience of doing so should be fast, simple, safe and affordable. Title and settlement are critical to every real estate transaction. Modern technology and powerful analytics will supplement and enhance our associates' ability to deliver outstanding service to every single one of our customers."
The California Department of Insurance on Aug. 21 approved the license for States Title, which uses predictive analytics to underwrite title. The department said the Silicon Valley-based startup is the first insuretech title insurer licensed and domiciled in California. States Title became licensed in Arizona in September 2017. According to its website, NATIC holds a Certificate of Authority to operate in 39 states. NATIC generated $247 million in title premiums in 2017.
NATC's builder business, which delivers settlement services to Lennar's homebuyers, and a portion of its retail business, will remain with Lennar and operate as CalAtlantic Title. Approximately two-thirds of NATG's current associates will transition to the new company, while the balance will remain with CalAtlantic Title.
Simkoff will remain the CEO of the combined company, and the newly-formed management team will include current leadership from both States Title and North American Title, as well as new hires with relevant expertise. Title industry veteran Judd Hoffman, formerly president of the Direct Division at First American Title, has joined the new company as chief transformation officer and Noaman Ahmad will join as chief financial officer. Matt Zames, president of Cerberus Capital Management and former JP Morgan chief operating officer, has joined the board of directors.
"This transaction builds on our strategy of aligning with technology innovators to streamline and enhance the overall customer experience," said Eric Feder, senior Lennar executive, who will join States Title's board of directors. "Partnering with States Title keeps us at the forefront of innovation while maintaining the integrity of the title insurance that people have trusted us with for decades."
Fifth Wall, a real estate technology-focused fund, introduced States Title and Lennar (a Fifth Wall Strategic Limited Partner) after initially co-leading States Title's Series A financing round in 2016. Fifth Wall’s biggest holding is Opendoor, which promises quick home sales by buying properties without showings and was valued at $1.1 billion during an investment round last fall. In January, Fifth Wall and Lennar provided $135 million in funding to Opendoor. The additional money is on top of $35 million in equity financing Fifth Wall provided Opendoor in 2016. To learn more about Fifth Wall, check out Who Is Fifth Wall and Why You Should Care.
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