Fitch: U.S. Title Insurance Outlook Revised to Stable

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has changed its outlook on the U.S. title insurance industry to stable from negative, as current ratings reflect the influence of unfavorable market conditions on profitability and capital.

Uncertainty related to potential earnings and capital losses from adverse loss reserve development has diminished. However, Fitch anticipates continued top-line pressure for the U.S. title insurance industry in 2012 amidst persistent weakness in the economy and housing market, with no clear catalyst for change likely in the near term.

The U.S. housing market continues to be challenged by anemic economic growth and falling home values, which are currently suppressing the favorable mortgage rate environment. Additionally, banks have tightened lending standards following the economic crisis, making it difficult for potential homebuyers to obtain mortgages.

Industry operating leverage improved modestly in 2011, due to continued profitable operations and less new business written, thus enhancing its ability to withstand adverse conditions. Fitch expects incremental capitalization improvement in 2012, although capital levels will likely remain below historical levels.

Large title insurers with scale and those with a more variable cost structure should continue to outperform their smaller and less efficient peers. Fitch anticipates the industry will remain profitable in 2012 despite top-line pressures.

A sustained downturn may lead to further industry consolidation among smaller underwriters as companies seek scale and cost efficiencies. With high market concentration among the largest two industry players, near-term consolidation among national companies appears less likely.

The full report '2012 Outlook: U.S. Title Insurance Industry' is available at 'www.fitchratings.com.'

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: 2012 Outlook: U.S. Title Insurance Industry
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=656949

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Fitch, Inc.Dafina M. Dunmore, CFA, +1-312-368-3136
Director
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Chicago, IL 60602
orDouglas M. Pawlowski, CFA, +1-312-368-2054
Senior Director
or
Media RelationsBrian Bertsch, +1-212-908-0549 (New York)
[email protected]

Source: Fitch Ratings