How current events impact business & real estate

Friday, September 16, 2011

The Biggest Title Company or the BEST

While at BB Kings this week I got into a heated discussion about the largest title companies & it got me thinking is bigger always better?

Before we get to that thought, a great resource to learn about title companies & their respective market shares is the American Land Title Association's website - There you will learn that many of the title companies are just subsidiaries of larger parent companies. For example, during my conversation someone argued that Chicago Title is the largest and therefore the best. Well it turns out that Chicago is only the largest when its included with Fidelity, Commonwealth and Alamo within the Fidelity Family of Companies. Nonetheless, First American Title Insurance Company has 24.6% market share standing alone while Chicago only has 16.9%. This renders First Am the largest. So, the numbers can be skewed to your liking.

Yet, is bigger better? In a way it is. You see in title companies, which are insurance companies size does matter. Except we are not concerned with market share, but instead assets. The reason is the company with the largest assets has the greatest ability to meet its insured's needs. Although this may also be skewed to your liking because assets may be compromised by risk. Therefore, one should really look at a company's Best's Capital Adequacy Ratio (BCAR), which evaluates and qualifies the adequacy of a company's risk-adjusted capital position. To learn more about rating title insurance companies see information about Best's Rating Methodology by clicking here.

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