The landscape of title insurance firms is changing just as the financial services landscape is. This week Fidelity National Financial has put in a bid to purchase its rival LandAmerica Financial Group, based in Richmond, Va. The deal is reportedly worth about $126 million. If approved the merger would bring together the second- and third-largest U.S. title insurance groups and become a major player in the space.
In 2007, both firms encompassed about 46% of the insurance market and have posted combined revenue of more than $5 billion in the first 9 months of the year. The merged company would have a $5.5 billion investment portfolio and $2.6 billion in reserves, according to published reports.
Under terms of the deal, Fidelity's title insurance subsidiaries will provide liquidity equal to some of LandAmerica's subsidiaries. LandAmerica could then use the proceeds to pay down its revolving credit facility and private placement senior notes. The merger could reduce the firm's combined debt by $250 million.
The main issues is the type of impact this move will have on other firms as they attempt to bring is business in what has been a struggling economy this quarter.
