by The off and on combination of Land America Financial Group with Fidelity National Title Title is back again. LandAmerica press release: LandAmerica Signs Stock Purchase Agreement for Underwriters.
The two signed a merger, then Fidelity terminated, now they restructured the transaction again. This time, Fidelity is purchasing the Lawyers Title and Commonwealth Land Title subsidiaries.
The parent holding company and its 1031 exchange company are filing for bankruptcy. That sounds like bad news for anyone with cash sitting in a LandAmerica 1031 account. It turns out that the company had $290 million invested in auction rate securities as part of the its 1031 business.[Fitch Downgrades LandAmerica’s IFS to ‘BB’; on Watch Negative] Perhaps that is what Fidelity saw during its diligence and decided to cancel the original deal.
That means Commonwealth Land Title Insurance Company and Lawyers Title Insurance Corporation will combine with Fidelity National Title, Chicago Title, Ticor Title, Security Union Title and Alamo Title.
Its unclear how the transactions will impact employees and agents of LandAmerica, Lawyers Title and Commonwealth Title. David Stejkowski of the The Dirt Lawyer’s Blog thinks it will be good for agents to “have the backing of the 800 pound gorilla in writing policies.”
The combined company will have almost half of the real estate title insurance market, based on the Demotech Performance of Title Insurance Companies 2008 Edition.
See my prior posts:
I can only imagine what that will do to competition in the industry. All of sudden independent title agents may find that their gigantic mega broker owned title companies are using the same underwriter. Will the clout of those mega brokers allow them to influence the underwriter to act negatively towards the smaller agents who might be beating them on price? Just a few words from a mega broker and the underwriter might decide to pull one of their low cost underwriters so that the independent can no longer undercut them. The implications are staggering for an industry that already lacks decent competitive motivations.
It may affect competition. The question will be whether the other title insurance companies can jump on the opportunity to grab some market share. Mergers inevitably have some rough spots integrating the two companies.
In the alternative, it looked like LandAmerica had gotten itself into trouble with those auction rate securities. I sure hope nobody is delayed in getting their money back or loses parked 1031 money.