Fitch: U.S. Title Insurers Raise Capital Position Despite Operating Headwinds
July 9, 2024
Capital positions at the four largest U.S. title insurance underwriters improved materially at year-end 2023 despite continued pressure on top-line revenues, according to a new report from Fitch Ratings.
Expense reductions amid declining title insurer revenues in 2022 and 2023 and low levels of title claims drove an improvement in both risk and non-risk-adjusted capital metrics. The aggregate risk-adjusted capital (RAC) ratio for the four largest U.S. title insurance underwriters increased to 190% from 168% in the prior year.
“Title insurer capital levels are expected to remain broadly consistent in 2024 as mortgage originations are nearing the low point of the cycle,” said Senior Director Christopher Grimes.
The longer-term picture for title insurers is expected to improve as forecasts are calling for a 10% increase in mortgage originations driven by expectations for a decline in the 30-year mortgage rate and a slight drop in median new home prices.
“Relatively stable home prices will be modestly favorable for title premium growth rates, which when combined with capital levels will remain supportive of U.S. title insurance ratings,” Grimes said.
Contact ALTA at 202-296-3671 or [email protected].