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Fitch: Home Prices Buoy Stable 2018 Outlook for U.S. Title Insurers
November 30, 2017 / 1:53 PM / 11 days ago

Fitch: Home Prices Buoy Stable 2018 Outlook for U.S. Title Insurers

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: Fitch 2018 Outlook: U.S. Title Insurance Industry (Market Fundamentals Point to Continued Strong Performance) here CHICAGO, November 30 (Fitch) Strengthening home price growth throughout the country will be a positive driver for U.S. title insurers heading into next year, according to Fitch Ratings in its 2018 outlook report. Fitch maintains a stable rating outlook for the U.S. title insurance industry. Title insurer profits have risen 10% thus far with an 11% title segment GAAP pretax operating margin in the first nine months of this year. Fitch projects title margins will be flat to slightly lower in 2018. "Profit margins remain favorable while title insurers' expense structures are at levels that can withstand near-term revenue volatility," said Director Gerry Glombicki. "The large adverse reserve movements seen during the troublesome policy years of 2005-2008 are also an increasingly distant memory." Title insurers balance sheet strength has improved in recent years under several measures, including Fitch's proprietary Risk Adjusted Capital (RAC) model. Prospect for modestly higher mortgage interest rates in the near term will dampen growth potential. Fitch projects premium revenues in aggregate to slightly decline in 2018. Future revenue weakness is foreseen through recent declines in title order counts, attributable largely to fewer mortgage refinancing transactions, as well as anticipated reductions in commercial mortgage market activity. "Offsetting a higher interest rate environment somewhat, recent stronger economic growth and business investment that is boosting new home construction, and housing purchases is favourable for title insurers," said Glombicki. Title underwriters also continue to benefit from growth in home values, which positively affect revenues per title order. Real estate service provider CoreLogic projects home prices will appreciate by nearly 5% over the next year. 'Fitch 2018 Outlook: U.S. Title Insurance Industry' is available at 'www.fitchratings.com' or by clicking on the above link. Contact: Gerald B. Glombicki, CPA Director +1-312-606-2354 Fitch Ratings, Inc. 70 W. Madison Street Chicago, IL 60602 Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278, Email: sandro.scenga@fitchratings.com. Additional information is available on www.fitchratings.com ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. 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