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March 21 (The following statement was released by the rating agency)
Fitch Ratings today has released its review of U.S. Title Insurer operating performance in a special report entitled 'Title Insurance Industry 2013 GAAP Financial Results'.
'The five publicly traded U.S. title insurers, which make up almost 90% of the industry, reported 8% growth in title operating revenues to $14.4 billion at year-end 2013,' said Gerry Glombicki, Director at Fitch Ratings and Title Insurance Sector Head.
Profitability remained solid for this group in 2013. However, the aggregate underwriting combined ratio increased by one percentage point to 93.7%. This change in underwriting performance led to a decline in the group's pre-tax profit margin from title operations to 10.4% from 10.8% a year earlier.
Several factors contributed to revenue growth including favorable housing market trends, strength in both purchase originations and commercial markets along with rising real estate prices. These positive trends were slightly offset by the reduction in refinance volume, which is expected to decline further in 2014.
Significant economic uncertainty remains around several major macroeconomic factors such as inflation, employment, taxes, public sector debt levels, and U.S. monetary and fiscal policies. The level and path these variables take can greatly influence title insurance results for 2014.
Fitch anticipates premium levels to decline but stable profit margins, as expense management will continue as a prevailing theme for companies in 2014 in addition to a robust commercial policy order pipeline.
The report 'Title Insurance Industry 2013 GAAP Financial Results' is available at 'www.fitchratings.com' under 'Insurance' and 'Special Reports'.
Link to Fitch Ratings' Report: Title Insurance Industry 2013 GAAP Financial Results