LandAmerica Financial Group, the nation’s third largest title insurer, filed for bankruptcy late last month, but said it hopes to sell its two principal units, Lawyers Title and Commonwealth Land Title Insurance, to Fidelity National Title Insurance by Dec. 31.
LandAmerica and Fidelity National signed a stock purchase agreement Nov. 26, under which Fidelity would pay LandAmerica $298 million for the businesses.
The units, which supply title insurance when homes and other properties are sold as well as related escrow services, have suffered from the mortgage meltdown along with the rest of the residential real estate industry.
Lloyd Osgood, spokesman for Richmond, Va.-based LandAmerica, said the pending sale represents 90 percent of its business.
“Clearly the bulk of our business is going to Fidelity,” said Osgood.
Jacksonville, Fla.-based Fidelity is the holding company of a number of well-known title companies, including Chicago Title and Fidelity National Title.
“Fidelity intends to have our underwriters run separately, like they do with Chicago and Fidelity National Title,” said Osgood. He said Fidelity intends to continue to operate the two LandAmerica units under their own nameplates.
“But it is too early to say what is going to happen location by location,” he said.
He would not say if Fidelity plans to close local offices.
Four Of The Top 10
LandAmerica’s title company units have a significant market share in San Diego. Four of the subsidiaries ranked in the top 10 of the San Diego Business Journal’s Title Companies list in 2007, which ranked 20 companies by the dollar value of mortgage transactions for the 12 months ending September 2007.
The largest, Southland Title, came in No. 4 on the list with 14,971 local transactions. The second largest, Commonwealth Land Title, at No. 5 on the list, had 11,712 local transactions. The third largest unit, Lawyers Title, No. 6 on the list, reported 7,958 transactions. United Title, No. 10 on the list, reported 5,056 transactions.
Because of the shake-up in the industry, the Business Journal did not survey title companies this year.
LandAmerica had 23 offices locally in 2007, according to the Business Journal list. The company’s own Web site now lists 10.
LandAmerica would not confirm the number of employees in San Diego, and local offices did not return phone calls.
Nationwide, LandAmerica closed 440 offices from Dec. 31, 2006, through Nov. 7. It shed 5,900 positions from Dec. 31, 2006, through Nov. 7.
Seeking Fast Action
LandAmerica said it hopes the Nebraska Department of Insurance, which regulates its title insurance business, along with other state and federal regulatory agencies, will help expedite the sale because of the bankruptcy.
LandAmerica said Lawyers Title and Commonwealth Title will continue to operate during the sale. Fidelity will reinsure LandAmerica transactions until the sale is complete at no cost to customers, said Osgood.
“We are glad to have that reinsurance treaty with Fidelity for any customer that may have reservations and hopefully that has calmed the market,” said Osgood.
Fidelity trades on the New York Stock Exchange under the symbol FNF. Shares closed at $13.24 on Dec. 9, down $1.07 from the previous day’s close. Its 52-week range was $6.66 to $20.96.
LandAmerica is not the only title concern struggling as a result of the recession. The Houston Chronicle reported that Texas-based Stewart Information Services shed 1,300 employees, or 15 percent of its work force, in the first nine months of 2008. Stewart said Dec. 8 that it was reorganizing to reduce costs.
Laura Ghosn, escrow office manager with San Diego-based Pickford Escrow, said LandAmerica’s bankruptcy filing has not affected Pickford. Ghosn said she usually uses California Title for her transactions.
Gregg Neuman of Neuman & Neuman, a downtown real estate brokerage, said the shake-up has not affected his deals.
“We have not seen an impact by this at all, except for the individuals that work for LandAmerica scrambling to tell us everything is wonderful,” said Neuman, who averages more than 200 sales a year.
“Title (insurance) is probably one of the least known portions of a real estate transaction,” said Neuman.
