Casualties of the real estate boom and bust of the past five years, four title insurers helped drive up the number of property/casualty financial impairments to seven in 2008 from five the previous year. A.M. Best Co. has had a negative outlook on the title insurance industry since 2008. A.M. Best rated none of the 2008 financially impaired companies. The four title insurers are primary examples of the top two causes of impairment?deficient loss reserves/inadequate pricing and rapid growth?for more than 50% of the financial impairments over the 40 years covered by this study.

Title insurer failures are more bad news for homeowners trying to sell or refinance property in the current down market, as such transactions can trigger a title search and a potential claim. Recourse for policyholders can be difficult and, at best, slow, as very few states cover title insurance under their guaranty funds.

Two of the financially impaired title companies, Commonwealth Land Title Insurance Co. and Lawyers Title Co., were subsidiaries of LandAmerica Financial Group, which went into Chapter 11 bankruptcy in November 2008. They were declared in hazardous financial condition by state insurance regulators and were purchased by Fidelity National Financial Inc. in December 2008.


The 109-year-old Guarantee Title and Trust Co. (GTTC) and Guarantee Title Insurance Co. (GTIC), subsidiaries of Reliant Holding Co., were placed in liquidation because of negative policyholders? surplus, and all policies were canceled. GTIC alone wrote 73,824 policies in 16 states from 2004 to 2008.

Three other P/C companies became financially impaired: Austin Indemnity Lloyds Insurance Co., a troubled Texas homeowners and automobile insurer brought down by losses from Hurricane Ike; Legal Mutual Insurance Society of Maryland, a lawyers liability company temporarily impaired by losses in its investment portfolio; and Transurance RRG, Arizona, a risk retention group liquidated because its parent, a long haul trucking operator, could not pay its premiums.

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