In a tough operating environment, the title insurance industry persevered with improvements in many major financial and operational categories in 2011, including composite ratio, and in a new special report, A.M. Best expects these successes to be surpassed in 2012.

In 2011, title insurance premiums fell to their lowest level in the past 10 years. According to A.M. Best, despite low mortgage rates, revenues remained under pressure due to soft economic conditions characterized by sluggish growth, high unemployment and tight credit standards.

An underwriting loss of about $29 million was reported for the year, which was much less than what had been reported in any of the prior five years. While net premiums written declined by less than 5 percent, underwriting income improved by more than 86 percent. As a result, the industry reported an improved composite ratio—similar to the combined ratio in the property/casualty industry—of 101.5 percent, which is the lowest it has been in the past four years and the third consecutive yearly improvement.

Now, with slight, yet noticeable improvements in the housing market as well as home prices, which increased 9.5 percent this August compared to the numbers from August 2011, A.M. Best anticipates not only a rebound year, but even stronger results from 2012. 

Indeed, promising signs have already begun to appear. Title premiums have increased 10 percent in the second quarter of 2012, compared with the same period in 2011. In addition, underwriting performance has significantly improved through the second quarter of 2012, as losses from prior years have begun to moderate.

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