First American Up on Rival's Bankruptcy, Unit Sales

Shares of Santa Ana-based title insurer First American Corp. surged Wednesday on word that a rival is filing for bankruptcy protection.

Virginia's LandAmerica Financial Group Inc. filed for bankruptcy reorganization and said it is selling three subsidiaries to Fidelity National Financial Inc., a Florida-based title insurer and primary rival of First American.

Earlier this month, Fidelity said it planned to buy all of struggling LandAmerica for $126 million. That deal was called off on Nov. 21.

Investors see First American, the top title insurer, gaining business from LandAmerica's bankruptcy and the sale of its Lawyers Title Insurance Corp., Commonwealth Land Title Insurance Co. and United Capital Title Insurance Co. units to Fidelity.

Fidelity stands to rival First American in size with the acquisitions. But First American could pick up any business lost by the combined companies, according to observers.

First American's shares, which have a market value of about $2 billion, closed up 26%.

Most companies tied to the housing market saw their stock rise for the day on news of federal assistance aimed at loosening credit markets.

Title insurers write policies that protect the buyers of homes and other real estate from claims contesting their ownership.

The industry is struggling with the housing downturn and a slow commercial real estate market.