Kroll Bond Rating Agency Releases 2017 U.S. Title Insurance Sector Outlook

January 12, 2017

Despite projections that mortgage origination volume will decrease in 2017, Kroll Bond Rating Agency (KBRA) reported the title insurance industry is well positioned to manage this considerable decline.

As of year-end 2016, KPBRA reported that the industry’s aggregated policyholders’ surplus (PHS) will be at an all-time high, driven by strong earnings in recent years. Piggybacking on the rebound of the housing market and commercial transactions following the financial crisis, title insurers have reported significantly improved financial metrics such as net written premium to PHS as well as expense ratios and loss ratios at or near 15-year lows.

Although the industry is much improved, Kroll reported that some regulatory concerns remain such as market share concentration, licensing and consumer value. However, despite these persisting issues and the anticipated decline in mortgage originations, KBRA believes the title industry will be able to navigate through this environment. Additionally, companies with more favorable expense management and relatively lower fixed costs should continue to report strong operating results.

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