Fidelity National Cuts 13 Jobs In N.c. After Buying Landamerica Units

Wednesday 18th February 2009

Title insurer Fidelity National Title Insurance, which last year bought the remnants of struggling competitor LandAmerica, has since cut 13 jobs across the state.

Fidelity National Title Insurance has kept open the Charlotte, Greensboro and Raleigh offices of LandAmerica Financial Group, which did business in North Carolina mostly as Lawyers Title. But the combined staff of those operations has been cut, to eight, from 21 before the purchase.

“There did, of necessity, have to be some downscaling,” says Ken Stone, Fidelity's North Carolina manager.

Fidelity National Title is a subsidiary of Fidelity National Financial (NYSE: FNF). In December, the parent company bought units – including Lawyers Title – from LandAmerica, a title insurer that had filed for bankruptcy in 2008 amid the slumping housing market.

Some 1,500 jobs across the country were cut as part of that deal, according to Fidelity National Financial.

Stone says most of the lost jobs in North Carolina involved back-office operations.

Still, in North Carolina, the three Lawyers Title operations will continue to do business under that name. Fidelity also will keep open its 10 branches across the state, including branches in Raleigh, Cary, Pinehurst, Greensboro and Charlotte.

Title insurance companies protect property owners from defects in a title, liens on a property and similar issues. They are susceptible to a declining volume in property sales, and title insurers have said they're struggling in the current housing slump.

It took a while for that slump to take hold in North Carolina, Stone says. But companies across the state are now feeling its effect.

“North Carolina, at least through the third quarter of 2008, had been fairly resilient and had not seen the declines that occurred elsewhere in the country,” Stone says. “Things are slowing down, unfortunately.”

Claims also are on the rise, Stone says, thanks to mechanic’s liens being placed on new or renovated homes. If a residential homebuilder finishes and sells a house but can’t pay all the subcontractors that did work on the property, the liens fall to the new homeowner – and title insurers are frequently left on the hook.

Stone says Fidelity, as well as other title insurers, have started to insist on what are known as long-form lien waivers from every subcontractor that worked on a property. That helps protect both property owners and title insurance companies.

“It is a tough underwriting risk to manage,” Stone says. “… The combination of transactions being down significantly and a high volume of claims, especially on the new construction side, are combining to place some real challenges out there for the title insurance companies.”

As far as a recovery, Stone says, Fidelity is eyeing the fourth quarter of 2009 as the bottoming out of the North Carolina market, with “a very, very slow recovery” after that. But don’t hold him to that prediction, he says: Calling a housing bottom is akin to trying to catch a falling knife.

Fidelity’s largest competition in the Triangle comes from various subsidiaries of First American Corp., another national title insurer, and Chapel Hill-based Investors Title.

On Tuesday, Investors Title (Nasdaq: ITIC) said that a few large claims wiped out the company’s profit in the fourth quarter of 2008. First American (NYSE: FAF) reports earnings next week.

Investors have been pleased with Fidelity National Financial’s pickup of LandAmerica assets on the cheap. The company’s stock has doubled since late November, a time that’s seen nearly a 10 percent drop in the S&P 500 stock index, after falling by nearly half in the trailing 12 months.

Fidelity National is a separate publicly traded company from Fidelity Investments, the mutual fund company that had 2,500 Triangle employees prior to a round of job cuts announced in November.

Triangle Business Journal - by Chris Coletta