Merger of title insurance giants dead in the water

by Ryan Smith11 Sep 2019

The proposed merger of two of the country’s largest title insurers is dead in the water after a complaint by the Federal Trade Commission.

Fidelity National Financial announced on Tuesday that its proposed $1.2 billion acquisition of Stewart Information Services Corporation has been terminated. The announcement came just days after the FTC had moved to block the acquisition.

Fidelity National Financial provides title insurance and transaction services to the mortgage and real estate industries. It is the nation’s largest title insurance company through its underwriters, Fidelity National Title, Chicago Title, Commonwealth Land Title, Alamo Title and National Title of New York. More than a year ago, Fidelity announced plans to acquire Stewart, another of the nation’s largest title insurance companies.

On Friday, the FTC issued an administrative complaint to block the merger on grounds that it would “substantially reduce competition in state markets for title insurance underwriting for large commercial transactions, and in several local markets for title information services.”

According to the FTC, the proposed acquisition would have reduced the number of “significant competitors” who offered underwriting for large commercial transactions from four to three. It also would have eliminated “significant head-to-head competition between Fidelity and Stewart in 45 states and the District of Columbia,” the agency said. In many states, Fidelity and Stewart’s combined market share for large commercial transactions is greater than 50%, and it is greater than 40% in most states, the FTC said.

“Today’s announcement from Fidelity National Financial Inc. and Stewart Information Services Corporation that they will abandon their proposed transaction is good news for everyone who requires title insurance when purchasing real estate in the United States,” said Bruce Hoffman, director of the FTC’s Bureau of Competition. “These customers will continue to benefit from vigorous competition for title insurance underwriting and title information services.”

Under the terms of the merger agreement, Fidelity will pay Stewart $50 million for terminating the proposed acquisition.