Shockwaves went through the title world when Fidelity National Financial announced its plan to acquire Stewart Information Services Corporation for $1.2 billion in cash and stock. The marriage between two of the four largest title insurance providers could have a significant impact on lenders, third-party providers and consumers. Here are three quick takeaways.

The nation’s largest title company just got even bigger. Jacksonville, Florida-based Fidelity has led the title insurance market since 1999, when it acquired Chicago Title Co. and furthered its lead in 2008 when it purchased several subsidiaries of failing LandAmerica Financial Group, Lawyers Title Insurance Corp., Commonwealth Land Title Insurance Co., and United Capital Title Insurance Co. These acquisitions brought the “Big Five” title companies down to the “Big Four” and gave Fidelity a 33 percent share of the title insurance market.

Galveston, Texas-based Stewart was founded in 1893 and provides title insurance policies and escrow services in more than 80 countries. After the acquisition, Fidelity’s market share will climb to 44 percent, establishing an unprecedented dominance in the market. First American, the second largest title insurance provider, has 26 percent of the market, followed by Old Republic.

The deal isn’t final. The Fidelity acquisition was unanimously approved by Stewart’s board, but it still needs the approval of the company’s shareholders as well as approval by the Federal Trade Commission. That last step isn’t automatic, as Fidelity has learned in the past.

Because the title industry is dominated by so few large companies, a merger between two giants could give the surviving company more influence over individual markets, which raises antitrust concerns. In 2010, Fidelity settled charges with the FTC alleging its acquisition of the three LandAmerica subsidiaries reduced competition in six areas in Oregon and Michigan. Fidelity agreed to sell several title plants and related assets in the Portland, Oregon, and Detroit, Michigan, metropolitan areas, and in four other Oregon counties. Fidelity has acknowledged the possibility that it will be asked to divest itself of certain businesses in order to gain approval for acquiring Stewart.

Consolidation can shake things up. In announcing the acquisition of Stewart, Fidelity CEO Raymond Quirk says the acquisition will create “significant operational efficiencies” that will save both companies up to $135 million. That could come in the form of office closings and staff cuts.

In 2008, after Fidelity acquired LandAmerica and took over the Commonwealth Land Title and Lawyer’s Title brands, it closed a number of offices, which had the result of freeing up a number of title insurance agents and policy underwriters. The Stewart acquisition could create a similar situation. However, it might also provide opportunities for smaller companies in the title market to pick up experienced title agents and underwriters.

It may be a while before we see a deal of this magnitude in the title industry. But we are likely to see more consolidation elsewhere in the industry as the purchase loan environment improves. Follow the reQuire blog for the latest updates!

About the Author

Shannon Cobb
Shannon is a seasoned innovator and trusted leader in the Mortgage and Settlement Services industry. Prior to his tenure as Chief Operating Officer at reQuire, Shannon held senior executive positions at WFG National Title Company and LandAmerica Financial Group.