The title insurance industry should remain stable for the next one to two years, despite a dash of uncertainty and some setbacks. 

Fitch Ratings announced its belief that the U.S. title insurance sector should remain stable for the next 12 to 24 months. The ratings agency came to this conclusion for several reasons. First was the potential for an increase in origination purchases in 2015. Also taken into account was the increase in earnings stability that came subsequent the maturation of policies from the years between 2005 and 2008. 

The Mortgage Bankers Association of America projected mortgage originations to surge to $1.2 trillion in 2015. In 2014 the MBA placed origination totals at $1.1 trillion. Purchase originations are forecast to increase by 15 percent, and refinances are projected to drop by 3 percent. 

Not everything about the title insurance industry is good
Despite the bright horizons for next year, not everything has gone well. Though the title insurance industry is fairly stable and well capitalized, it hasn’t been all sunny. The American Land Title Association found that title insurance premium volume dropped 10.8 percent during the third quarter of 2014, when compared with the same period a year prior. 

During the third quarter of 2014 the title insurance industry generated $3 billion, which is drop from the same period last year, when the sector saw $3.4 billion. Despite this, the industry was able to post its highest net operating gain since the third quarter of 2006 at $231.6 million. 

“With the purchase market struggling to gain traction due to weak demand and a continued decline in refinance activity, title insurance premiums dropped again this quarter,” said Michelle Korsmo, ALTA’s chief executive officer. “Despite a decrease in written title insurance premiums, the industry continues to be in a strong financial position posting more than $200 million in net income this quarter. Additionally, the industry has admitted assets of $8.7 billion, including more than $7.8 billion in cash and invested assets.”

The strong capitalization of the industry – despite the fact that capitalization varies widely from company to company – is one reason why Fitch has a stable outlook for it. Even the expected continued  decline of operating revenues hasn’t been enough to discourage Fitch’s view of the industry.