LandAmerica, one of the nation's largest real estate title insurance conglomerates, blamed slowing real estate markets in key markets nationwide for a 40 percent drop in the company's annual earnings.
Net income fell to $98.8 million in 2006 from $165.6 million in 2005, while fourth quarter earnings fell 42 percent to $34.3 million.
Net income was negatively impacted by lower volumes in LandAmerica's residential title business, duplicate staffing and other costs associated with the company's acquistion of Capital Title during 2006, a higher claims provision ratio in title operations and a write-down in the value of certain title plants.
Echoing comments made by rival Stewart Financial Services, who reported a 51 percent drop in annual earnings last week
, LandAmerica pointed to growth in its commercial title business quarter over quarter as a partial offset to the company's less-than-stellar performance in residential title underwriting.
Market share improves
Sidestepping a discussion of the company's steep decline in earnings, chairman and CEO Theodore Chandler focused instead on the company's improved market share in the title industry during the year.
"Excluding the impact of the merger with Capital Title, our national market share position, which is reported on a quarter lag, improved from 18.2 percent in third quarter 2005 to 18.6 percent in third quarter 2006," he said. "The addition of Capital Title increased our national market share to 19.5% in third quarter 2006 and strengthened our presence in critical western states."
Driven by the acquisition, operating revenue from direct title operations increased by $54.1 million, or 13.7 percent, in fourth quarter 2006. Annual revenue increased by $4.4 million, or 0.3 percent, for the full year 2006 from the comparable period in 2005.
Excluding the impact of the Capital Title merger, however, operating revenue from direct operations increased by just $1.0 million, or 0.3 percent, in fourth quarter 2006 from fourth quarter 2005. Full-year revenues decreased by $62.5 million, or 4.1 percent, during 2006 compared to one year prior.
Smaller business units, including the company's lender services segment, which provides default management services for mortgage servicing operations, reported slight earnings improvements that helped offset larger losses in LandAmerica's core title operations.
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