KBRA Releases U.S. Title Insurance 2019 Outlook
NEW YORK--(BUSINESS WIRE)--Jan 23, 2019--Kroll Bond Rating Agency (KBRA) releases its 2019 U.S. Title Insurance Outlook as title underwriters aim to top $1 billion in net income, levels not seen since before the 2008-09 financial crisis. KBRA’s Stable Outlook reflects the industry’s earnings power and policyholders’ surplus growth in recent years. However, net income also benefited from the lower corporate tax rate in 2018. KBRA expects 2019 net income will not be materially different from the previous year.
Highlighting this view is the stability of operating performance measured against the potential for a sluggish macroeconomic environment and real estate headwinds. Despite declining mortgage lending volumes since 2016, title underwriters have exhibited resilience with increased premium writings. Additionally, underwriting leverage is considerably lower compared to the pre-crisis period. However, this positive consideration in financial strength is somewhat weakened by the change in asset composition. KBRA believes improved risk management and expense efficiencies through technology should enable title insurers to better handle additional declines in mortgage originations.
In line with KBRA forecasts, M&A was active in 2018, the largest deal of which is Fidelity National Financial, Inc.’s pending $1.2 billion acquisition of Stewart Information Services Corporation. Also notable was the continued advancement of technology initiatives in the industry. Leading the way in 2018 was the increased relevance of eNotary (notably Remote Online Notarization or RON), which gained traction through new regulatory efforts and state legislation. KBRA believes this trend will continue in 2019 and potentially accelerate over the coming years. KBRA believes that $1 billion in title industry net income is attainable in the near and medium term through technology-driven efficiencies.
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KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.
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Fred De Leon, Director
Patrick Curboy, Associate Director
Andrew Edelsberg, Managing Director
Donna Halverstadt, Managing Director
KEYWORD: UNITED STATES NORTH AMERICA NEW YORK
INDUSTRY KEYWORD: PROFESSIONAL SERVICES BANKING FINANCE
SOURCE: Kroll Bond Rating Agency
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PUB: 01/23/2019 02:31 PM/DISC: 01/23/2019 02:31 PM