Title Insurers Thrive as Q4 Refinances Surge Amid Rate Decline
Title insurance companies experienced a positive fourth quarter in 2024, largely due to the decline in mortgage rates during August and September. This trend led to increased refinance activity, which boosted the financial performance of these companies.
Refinances accounted for a significant portion of mortgage originations during the final three months of the year. According to Fannie Mae, refinances made up 32% compared to the Mortgage Bankers Association’s estimate of 38% of the total origination volume. Forecasts for both organizations indicated that the fourth quarter was the strongest period for originations in 2024. Fannie Mae reported total originations of $475 billion, while the MBA estimated $494 billion for the quarter. This contrasted with the historical pattern where the fourth quarter is typically weaker than the second or third quarters because of the spring home-buying season. Purchase volume was actually lower during the fourth quarter compared to the prior periods.
Demand for title insurance is closely tied to mortgage origination. Purchase transactions generally have higher fees than refinances. Consequently, the increase in refinance activity brought positive results for most of the publicly traded title companies, who saw year-over-year gains in the fourth quarter, and annual profits that were higher, with the exception of First American.
Here’s how the four primary national title underwriter parent companies performed, along with Investors Title which is the only remaining publicly traded independent after Doma was acquired by Title Resource Group. Mortgage insurers Radian and Essent also own title underwriters.
Fidelity National Financial Sees a Refinance Order Increase of 46%
Fidelity National Financial (FNF), which holds the largest market share among title insurers, recovered from a loss the prior year in the fourth quarter. The company’s net income for the quarter totaled $450 million, improving from $266 million in the third quarter and a net loss of $69 million in the fourth quarter of 2023. The 2023 loss included a mentioned 50 basis point reduction on its margin resulting from a data breach. Full-year 2024 net income reached $1.3 billion, more than doubling the $517 million from the previous year.
Refinance orders for title searches saw dramatic growth, increasing by 46% year-over-year during the fourth quarter. However, the majority of FNF’s new business still came from purchase activity, representing 72% of orders during the period; a year earlier, this figure was 78%. Total opened orders for the quarter were 299,000, down from 352,000 in the third quarter but up from 257,000 in the fourth quarter of 2023.
“This fourth quarter seasonality was modestly better than the typical 20% sequential decline that we have seen in recent years,” CEO Mike Nolan stated during the earnings call. He noted that while volumes remain below the levels seen in early 2021, “borrowers have been responsive as 30-year mortgage rates fluctuated during the course of the year.”
While daily refi orders averaged 1,300 in the fourth quarter, they dipped to 1,100 in January. This, according to Nolan, “reflect[s] how refinance volumes can change with modest movement in mortgage rates.” Still, January’s opened orders per day were 3% higher than December’s.
First American’s Full-Year Earnings Decline
First American’s net income more than doubled in the fourth quarter compared year-over-year, although its earnings for the full year of 2024 were lower than in 2023. The company, which operates the largest individual underwriter (according to American Land Title Association statistics), reported net income of $72.4 million, compared to a loss of $104 million in the third quarter, and net income of $34.1 million for the fourth quarter of 2023.
CEO Ken DeGiorgio said that despite what he described as “challenging conditions” in the title industry, “at the end of the year, we did, however, benefit from a surge in our commercial business and began realizing the full benefit of our strategic investment portfolio rebalancing project” during the earnings call. Looking ahead, First American anticipates “modest improvement” in both residential purchase and refinance, despite elevated mortgage rates. The company also projects a strong 12 months for its commercial title business.
“Though still early, we are already seeing this in our results,” DeGiorgio said. “For the 4 weeks ending February 7, our purchase orders were up 1% and our refinance orders were up 43% compared with the same period in the prior year.” Opened orders of 143,100 for the fourth quarter compare to 166,100 for the third quarter and 124,600 for the prior year period. For all of 2024, First American had opened orders 634,400, a slight gain from 629,100 one year prior.
Stewart Focuses on Expansion
Stewart Information Services has been actively expanding its direct operations in recent years, primarily through strategic acquisitions. This activity slowed down in the third quarter due to market instability. Much of this growth has followed the failed effort to sell the business to FNF. Management has indicated that it will continue during 2025.
“We remain focused on expansion efforts in targeted MSAs through both organic and inorganic means and keep a pulse on all the markets we are in, as well as those we are not to ensure we are operating to our fullest potential across the country,” said Fred Eppinger, CEO, during the earnings call.
In the fourth quarter, Stewart, which had previously faced financial difficulties, reported net income of $22.7 million, a decrease from the third quarter’s $30.1 million but an increase from $8.8 million in the same period a year earlier. It earned $73.3 million for the full year 2024, compared to $30.4 million in the prior year. Opened orders for the fourth quarter totaled 69,339, a decrease from the previous three months (87,646) however up on a year-over-year comparison, when Stewart had 68,583.
Refis Comprise One-Third of Old Republic’s Volume
While open orders rose 26% year-over-year in the fourth quarter, refinances accounted for nearly one-third of the activity, as noted by Carolyn Monroe, president and CEO of Old Republic International’s title business and a senior vice president at the parent company. During a January 23rd earnings call, Monroe hinted at upcoming technological changes. “We are refocusing our technology efforts on integrated solutions that enable our agents to seamlessly connect to our customer portal,” she said. “This will make it easier to do business with us regardless of which closing software is being used by our title agent. There will be more to come throughout 2025 on these technology solutions.”
A week later, Old Republic announced the sale of its Ramquest title production business to Qualia Labs along with an e-closing platform. In the fourth quarter, the title insurance segment generated pretax operating income of $55.4 million, reflecting an increase from $40.2 million in the third quarter and from $43.9 million in the fourth quarter of 2023. Pretax income for the full year 2024 was $144.1 million, compared to $133.5 million in 2023. Opened orders were 46,685 for the period, compared to 56,202 in the third quarter and 37,167 for the 2023 fourth quarter. The company revised its methodology for reporting orders in the second quarter of 2024.
Net income at the parent company, which also operates a specialty insurance segment, was $105.1 million for the fourth quarter, a decrease from $190.6 million in the previous year.
Expansion Initiatives Propel Investors Title
Investors Title reported fourth-quarter net income of $8.4 million, which was less than the $9.3 million reported in the previous quarter. However, this was an improvement from the $5.8 million earned in the same quarter a year earlier. Net income for the entire year was similarly improved, totaling $31.1 million, up $9.4 million versus $21.7 million for 2023. Revenue totaled $258.3 million in 2024, the highest in two years for Investors, according to J. Allen Fine, chairman, in a press release.
“Profitability was aided by ongoing cost control measures which kept overhead costs flat when compared to the prior year,” Fine commented. Net premiums written at the end of 2024 totaled $204.3 million, compared to $171.2 million one year earlier. In the fourth quarter alone, they totaled $57.8 million, an increase from $38.4 million in the same period of 2023. The company attributed this growth to its ongoing expansion initiatives.
Fine concluded with an optimistic outlook, stating that while conditions continue to present challenges in the real estate market, “Any stabilization or decrease in mortgage interest rates along with ongoing improvement in the supply of homes available for sale should be supportive of increased activity.” He added, “We continue to seek opportunities to expand our distribution network, make prudent investments in capital improvement projects, and maintain a disciplined approach to expense control while real estate activity remains subdued.”
