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For Immediate Release

Columbus, OH - July 12, 2007

According to data published in Demotech Performance of Title Insurance Companies, a portfolio of industry financial analysis, the Title industry raised its Net Income more than five percent from last year despite a housing slump, GAO scrutiny and increased pressure from states on rates and business practices.While loss ratios improved slightly from last year, at 4.9% the industry loss ratio remains near its 10-year high.

The improvements instead appeared to come from the shifting of business from Affiliated Agencies to Direct Operations. As an industry, premiums written from Direct Operations made up 14.4 percent of Total Operating Income, the largest share in 10 years, and more than double the share from 2004.Writing a greater share of premiums internally led to a reduction in the level of agents' commission expenses while increasing other revenue streams.Combined, the shift in premium channel contributed roughly $200 million towards Net Operating Gains.How sustainable these gains are remains to be seen.Written premiums were down $400 million overall this year.In the state of California, where the housing market has been hit hardest, premiums dropped almost $600 million.Without a rebound in California, Florida will surpass it as the largest state, based on premiums written, by the end of 2007.

The five-year trend reports introduced in the latest edition of Demotech's publication, show that the current setbacks in premiums written, if corrected, would represent no more than a pause in an otherwise steady climb.However, the current rise in mortgage rates, coupled with further foreclosures and reduced capital in the subprime market, could contribute to a more prolonged slump in industry performance.Careful attention to quarterly results will be essential to keeping abreast of the industry's strategic responses and long-term direction.

Demotech Performance of Title Insurance Companies provides financial details and analysis on each Title underwriter which facilitates assessment of how individual underwriters fared in these adverse market conditions.For example, the four largest underwriters in California, First American TIC, Chicago TIC, Fidelity National TIC and Stewart Title Guaranty, reported a combined reduction in policyholders' surplus of almost $80 million in 2006, whereas in 2005 they reported an increase of $170 million.Across all markets, 39 companies posted combined ratios of over 100 percent in 2006 as opposed to only 24 in 2005.

Other underwriters, through market placement, diversification or consolidation, managed significant gains.Title Resources Guaranty increased its Total Operating Income over 30 percent, Guarantee Title & Trust expanded into 6 new jurisdictions and United General Title Insurance Company increased Net Premiums Written by 67 percent after joining the First American Family.

Compared to 2005, industry Operating Income was down 1.1% while Net Investment Income was up over 20 percent.A third of Title underwriters managed a better Net Operating Gain to Total Operating Income ratio than they did in 2005 but 42 underwriters reported a Net Operating Loss as opposed to 27 in 2005.

All signs seem to point to a continued dampening of Title industry results, but not a major collapse, suggesting a more sophisticated market better able to weather market fluctuations. Identifying the markets that are healthy (16 jurisdictions grew more than 10 percent) as well as those that are not (7 shrank by more than 10 percent) is of paramount importance to avoid missing opportunities or getting surprised.

For more information regarding Demotech Performance of Title Insurance Companies and Quarterly Updates or to place an order, visit or contact Demotech at (800) 354-7207.


Joseph L. Petrelli, Jr.
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