CHICAGO, May 17 /PRNewswire/ -- Duff & Phelps Credit Rating Co. (DCR) has
reaffirmed the 'A-' (Single-A-Minus) claims paying ability rating of
Attorneys` Title Insurance Fund, Inc. (The Fund). The rating is based on The
Fund`s strong franchise in the Florida title insurance market, adequate
capital position, and conservative reserving practices.
Offsetting these positive factors are The Fund's above-average investment
position in equity securities, limited geographic diversification, and limited
access to outside capital funds due to its ownership structure. The Rating
Outlook is Stable.
The Fund reported statutory admitted assets of $147.9 million and
policyholders` surplus of $56.6 million at December 31, 1999. The company is
the nation`s sixth-largest title insurance organization and is the largest
title insurer in Florida based on premium volume. The Fund has the largest
title plant in Florida and generates significant revenue from the sale of
computerized title information to other underwriters. Approximately 92 percent
of The Fund's premium volume originates in Florida. The company is also
licensed in 11 other states and is actively pursuing strategic expansion
opportunities in other states.
The company recently entered into a strategic alliance with two other
regional insurers, Connecticut Attorneys Title Insurance Co. (CATIC) and
United General Title Insurance Co. This alliance is expected to allow the
firms to expand service and support capabilities through the alliances'
cooperative efforts and to make the companies more attractive sources of title
business for national lenders due to greater combined geographic scale. As
part of the alliance, The Fund and CATIC made a significant minority
investment in United General's parent.
The Fund is owned by a business trust that, in turn, is owned by attorneys
who serve as agents for the company. All licensed attorneys in Florida are
eligible to become agent/owners of The Fund, following the completion of The
Fund`s application process and payment of a modest annual fee. The company has
approximately 6,000 attorney member agents in Florida. While this ownership
structure and distribution system is a primary factor behind the company's
long-term operating success, there is no formal mechanism for the owners to
provide additional capital to the company in the event of adverse losses or
reductions in surplus.
Statutory operating revenues increased by 10 percent to $230 million in
1999. Operating profitability improved significantly in 1999 as statutory net
income was $18.4 million compared to $2.0 million in 1998. Earnings for 1999
were favorably impacted from a one-time reserve release of $13.6 million
pretax due to changes in Florida reserving statutes. Revenue and earnings
growth are likely to decline in 2000 due to less favorable title insurance
market conditions related to higher interest rates.
Policyholders' surplus increased by 16 percent in 1999 to $56.6 million. A
large part of this surplus increase is due to the previously mentioned reserve
adjustment. Overall capitalization is adequate based on DCR's risk-adjusted
capital formula.
DCR is the nation's leading full-service rating agency of claims paying
ability in the title insurance industry, with ratings on all five national
title insurance groups and several of the leading regional title insurers.
For additional information, visit DCR's Web site at http://www.dcrco.com.
DCR`s research is also available on Bloomberg at DCR, FirstCall's BondCall
Direct/Research Direct at http://www.firstcall.com and Multex at
http://www.multex.com, as well as through other third-party providers.
SOURCE Duff & Phelps Credit Rating Co.
 back to top
Related links:
http://www.dcrco.com
CONTACT:
James B. Auden, CFA, 312-368-3146,
auden@dcrco.com, or Douglas M. Pawlowski, 312-368-2054,
pawlowski@dcrco.com, both of Duff & Phelps
|
