A.M. Best Special Report: Results Partially Recover in 2009 and 2010; Job Market to Influence 2011

The title industry’s operating results partially recovered in 2009, after reporting weak premium volumes and profitability in 2008. Although 2009 total industry written premiums declined from 2008 levels, premiums written trended upward in the third and fourth quarters from the same period of the prior year. During the first half of 2010, title insurance revenues stayed relatively unchanged from the first half in 2009—aided by federal policy and tax incentives—which helped most major underwriters post positive operating margins for the first six months of 2010.

— Still, the title industry faces a tough road ahead as the weak housing market continues to be hampered by economic and employment conditions. Sustaining the recent improvement in operating and capitalization trends will depend largely on the length and depth of those conditions.

— Results partially recovered in 2009 as reflected by the following:

— The industry posted a far smaller pretax operating loss of $129.5 million compared with a $711.0 million loss in 2008.

— Although total operating revenue was down somewhat in 2009 ($10.6 billion) compared with 2008 ($11.2 billion), the industry’s declining expense levels ($9.7 billion in 2009 versus $10.8 billion in 2008) more than made up for the drop in revenue.

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