Title industry revenue dropped 19% year over year in 2022, according to data released Thursday by Fitch Ratings.
This 19% decline is on a GAAP basis for the Fitch Ratings title universe which includes Fidelity National Financial, First American, Old Republic and Stewart.
According to the Fitch report, the decline in revenue was driven by economic headwinds in the latter half of the year as mortgage rates doubled between early 2022 and fall of 2022. Despite these challenges, Fitch says the title revenues generated in 2022 still represent the second-highest level in the past 10 years, which Fitch attributes to the strong first half of the year.
As revenue dropped in 2022, so did operating margins, which fell from a high of 17% in 2021 to 12% in 2022. Although 2022 was weaker than the preceding year, Fitch reports that it was still the fourth best year of the past decade. Fitch attributes the 2022 results to the “dramatic decline in refinance volumes” and “decline demand for purchase orders as rates and affordability concerns affected consumers.”
Looking forward to 2023, Fitch said it expects that underwriters will report further reductions in overall profits, but that the performance of the firms will remain strong with margins ranging from high single digit to low double digits for the full year. The group believes pressure on margins will be moderated by continued focus by the title insurers on expense management, however, Fitch said it does not expect a dramatic reduction in costs over the near term.
As of September 30, 2022, Fidelity was the largest title insurer in the country with 32% of the market share, followed by First American (25%), Old Republic (15%) and Stewart (10%), according to data from the American Land Title Association. The remained 18% of the market share is made up of independent title firms.