Replies to post #371783 on Zeev's Turnips Patch-No Politics (ZEEV)

[marketmaven]

FAF, Other Title Insurers FORCED to Cut Prices

First American cuts California prices
Shares of title insurer, rivals drop on competition concern
By Alistair Barr, MarketWatch
Last Update: 6:40 PM ET March 18, 2005

http://www.marketwatch.com/news/yhoo/story.asp?source=
blq/yhoo&siteid=yhoo&dist=yhoo&guid=
%7BAEC77072%2D88AC%2D414A%2D9C0C%2D3E120F9725E0%7D

SAN FRANCISCO (MarketWatch) -- Shares of title insurers fell Friday on concerns that price cuts announced this week by First American will increase competition and dent profits in the industry. First American (FAF: news, chart, profile) , the second-largest title insurer, this week announced a 30 percent discount in the price of its title and escrow services for Californian customers who are refinancing their homes. Title insurance protects people against losses arising from disputes over the ownership of their property.

First American was responding to claims by regulators in California that title insurers have colluded with real estate agents, property developers and lenders to illegally increase the cost of title insurance. Regulators in Colorado and Washington have made similar allegations. See full story. "The near-term reaction from others will be to cut rates to remain competitive with First American's product," Brad Eichler, an analyst at Stephens Inc., wrote in a note to clients Friday. "This may not be in the best interest of margins."
Shares of First American, which has about a quarter of the California title insurance market, dropped 8.4 percent to $31.63 Friday. Fidelity National (FNF: news, chart, profile) , the largest U.S. title insurer that controls more than a third of the California market, fell 4.4 percent to $41.81. Landamerica Financial (LFG: news, chart, profile) , another title insurer, shed 6.3 percent to $50.50 Friday.

First American said the price cut will knock 6 cents a share off 2005 full-year earnings, assuming real estate prices and property sales stay at the same level as 2004. However, if the company gains market share, the impact on profit will be less, First American added. Stephens' Eichler said he's concerned that insurance regulators in other states will follow the example of California Insurance Commissioner John Garamendi in pushing for lower title insurance prices.

[PENNYPRINCE 1]

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