Fidelity National Buys Title Insurance Rival

The $1.2 billion purchase of Stewart Information Services will strengthen Fidelity's position as the No. 1 title insurance underwriter in the U.S.
Matthew HellerMarch 19, 2018

Fidelity National Financial, the largest U.S. title insurance underwriter, is taking over one of its biggest competitors, agreeing on Monday to acquire Stewart Information Services for about $1.2 billion.

The acquisition will boost Fidelity’s offerings in a title insurance market that, according to actuarial firm Demotech, grew from approximately $12.2 billion in operating income in 2012 to $14.9 billion in 2016.

Houston-based Stewart provides residential and commercial title insurance, closing and settlement services, appraisal and valuation services, and other offerings to the real estate industry. It reported $1.9 billion in revenues for the full year 2017, down slightly from $2.1 billion in 2016, and $49 million net income, compared to $56 million in 2016.

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Fidelity said it would pay $25 in cash and 0.6425 common shares of Fidelity for each Stewart share, giving Stewart shareholders a value of $50.20 per share that represents a 23% premium above Friday’s closing price.

“The venerable Stewart brand has a long and respected history in the title insurance industry and we see tremendous potential in working with the Stewart management team to invest in and grow the Stewart brand on a national basis as part of our long-time, successful strategy of operating multiple title insurance brands under the FNF umbrella,” Fidelity Chairman William P. Foley said in a news release.

After Stewart’s revenues declined in 2016, its board formed a strategic committee to assess strategic alternatives.

“After an extensive process, we determined that capitalizing on the Fidelity platform will best enable us to support the Stewart brand and continue providing the service our customers have come to expect,” Stewart’s chairman, Thomas G. Apel, said.

“Combining with Fidelity National Financial will create a strong portfolio of customers and business relationships, and will provide us with the ability to grow the Stewart brand,” he added.

According to Demotech, the top four title insurance groups accounted for 85% of net premiums written in 2016. Fidelity led the market with a 33% share and $7.2 billion in revenue.

“We … see multiple areas where we can assist and accelerate Stewart’s growth plans,” Fidelity CEO Raymond Quirk said.