As an integral part of the real estate sector of the economy, the
title insurance industry's revenues are highly
interest-rate-and-housing-activity sensitive. When the real
estate sector slows down, activity in the title insurance
industry decreases and vice versa. The last refinancing boom
which ended in May of 1994 provided increased volumes of
business; however, because of the discounts afforded the
refinancers, the volume increase was not matched by an equal
increase in revenues.
Title Resources Guaranty Company is better able to cope with the periodic fluctuations in volumes and revenues because it is not involved in the functions performed by title insurance agents which require so many people and multiple offices. On the other hand, when the volumes are highest and the "retail" end of the title industry is most profitable, Title Resources does not benefit as much as we might if we owned and operated "retail" outlets as affiliated agents or direct operations.
While interest rates affect the real estate sector nationally, other factors cause the real estate sector to react differently from state-to-state and within different areas of each state. Demographic factors such as population growth, job growth, the maturing of the baby boomer generation and quality-of-life issues such as crime rates, housing affordability, etc. affect the local real estate sector and thereby the local title insurance industry. In 1993, the industry earned $5.9 billion in revenues nationally and had a statutory net operating gain of $268 million; whereas in 1994, the revenues were $5.8 billion and the statutory net operating gain was $88 million.
Note: Thanks to the American Land Title Association for these concepts.
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1996, Title Resources Guaranty Company
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Last modified by EF on May 15, 2006