First American gaining share in shrinking title insurance market

First American Financial's primary underwriting unit gained market share in the first quarter, while the three units of Fidelity National Financial combined had a lower percentage of the business versus the prior year, the latest American Land Title Association data found.

But the total dollar volume of premiums written fell about 44% from the prior year, to $3.37 billion from a revised $5.94 billion in the first quarter of 2022. That's also lower than the $4.4 billion generated in the fourth quarter last year. For the publicly traded companies, the reduced premium activity affected first quarter earnings.

Given that title insurance activity is highly dependent on mortgage origination volume, that is not a surprise. Total mortgage production in the first quarter was $333 billion or 816,000 units, versus $398 billion (973,000 units) in the fourth quarter and $689 billion or 1.94 million units one year ago, the Mortgage Bankers Association said. The higher drop off in volume versus premiums written is due to the fact that title companies charge more for new-purchase policies, while most of the decline in originations is from refinancings.

First American's primary underwriting unit, First American Title Insurance, did 23% of the first quarter total, with a second business, First American Title Guaranty, contributing 1.9%, ranking 11th overall, the ALTA data showed. This compared with 21.5% on a year-over-year basis for FATIC only.

The second largest individual underwriter remains Old Republic Title Insurance, whose 15.5% share in the period is slightly higher than the first quarter of 2022's 15.2%.

In positions three and four are two units of Fidelity National Financial, which is the largest holding company by total premiums written by operating units.

Fidelity National Title Insurance reported 12.7% of all premiums written in the first quarter and Chicago Title did a 12.4% share; a third FNF underwriting business, Commonwealth Land Title, ended the period with a 3.3% share.

One year prior, Fidelity National did 14% of all title insurance premiums written and Chicago Title did 13.4%. Commonwealth failed to make the top 10 for the period.

In total, FNF did 28.4% versus 24.9% for First American in the first quarter. For the full year of 2022, FNF had 30.4% of the business, versus 22.1% for First American.

The smallest of the four large underwriters, Stewart Title Guaranty, gained share, rising to 9.6% from 8.9% for the first quarter of 2022.

While Westcor Land Title Insurance remains the largest independent underwriter, its share continues to slip. In the first quarter, it was 3.7%, versus 5.3% in the first quarter of 2022. For the full year, it had a 4.4%. As recently as the third quarter of 2020, Westcor had a 6% market share.

Doma remained ranked 10th among underwriters, growing its share to 2%, versus 1.1% on a year-over-year basis.  

That growth is likely to halt, as the financially troubled company in May sold 22 retail title locations and operations centers in Northern and Central California to Williston Financial Group for $24.5 million. WFG ended the first quarter with a 2.5% share, down from 2.7% for the same period in 2022.

Also, Doma recently announced a one-for-25 reverse stock split scheduled for after the market closes on June 29. The stock closed at above 17 cents per share on June 23. 

The company went public via special purpose acquisition company merger at the end of July 2021. It closed at $6.84 per share at that time and began sinking right away, slipping under $1 per share nearly a year later.