The fourth quarter of 2018 revealed a 14% decline in title orders for the group, highlighting a shift in market activity in the first half of 2019. (Photo: Shutterstock)

Fitch Rating's outlook on the title insurance sector is stable with few rating changes anticipated for title insurers in the next 12-18 months.

The market is poised to become more concentrated later on as the four national underwriters that account for 85% of the total industry premiums — Fidelity National Financial Inc. (FNF), First American Financial Corp., Old Republic International Corp. and Stewart Information Services Corp. (STC) — will decline to three with the announced acquisition of STC by FNF. The New York Department of Financial Services disapproved the acquisition application of STC's New York subsidiary, but both companies are working to gain approval.

Market predictions

Modestly higher mortgage rates and emerging economic trends are anticipated to put pressure on both revenues and operating earnings in 2019, Fitch's report states. The fourth quarter of 2018 revealed a 14% decline in title orders for the group, highlighting a shift in market activity in the first half of 2019.

“Fitch Ratings expects that profitability will continue to be favorable and supportive of current ratings. Loss ratios are anticipated to remain below historical averages, and title insurers' ability to manage expenses will be a key driver in maintaining operating margins as origination volumes come under pressure,” concludes the report.

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Title insurance sector is stable, expenses to be key driver: Fitch Ratings

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