LandAmerica Goes Bankrupt

The nation’s real estate crisis has claimed its first title insurance giant, with Richmond, Va.-based LandAmerica Financial Group (LFG) saying Wednesday morning that it had filed for bankruptcy protection amid a burgeoning mortgage crisis that, as of yet, shows no sign of slowing down. The company said it and a subsidiary filed to reorganize under Chapter 11 of the U.S. bankruptcy code, and that it would sell its title underwriting subsidiaries, Lawyers Title Insurance Corporation and Commonwealth Land Title Insurance Company, as well as United Capital Title Insurance Company, to subsidiaries of Fidelity National Financial (FNF). Earlier this week, LandAm had shuttered LandAmerica 1031 Exchange Services, Inc., the subsidiary that also filed for bankruptcy protection. The bankrupties come just days after an earlier deal that would have seen Fidelity National acquire LandAmerica fell apart; that deal would have created the largest title insurer in the nation. See earlier coverage. FNF pulled out of the deal, however, after taking a closer look at LandAm’s books (and it’s pretty clear, now, why that was the case). Why pay a 70 percent premium for an entire company — the premium originally associated with the LandAm purchase agreement — when you can pick up the title businesses you really wanted on the cheap out of bankruptcy? Fidelity will now look to acquire both Commonweath Title and Lawyer’s Title for just $298.0 million, the company said in its own press statement Wednesday morning; in the end, the acquisitions will still make the Jacksonville, Fla.-based firm the nation’s largest title insurance operation. Regulators at the Nebraska Department of Insurance are likely to take over the two LandAmerica underwriting operations until their sale is completed later this year, both companies indicated. “I am deeply disappointed over the need to file for bankruptcy protection for the LandAmerica holding company and the 1031 company,” said Theodore Chandler, LandAmerica CEO, in a press statment. “However, this sale of our principal domestic title operations to Fidelity National in this coordinated Chapter 11 filing and Nebraska rehabilitation action offers our stakeholders the best result available in this brutal real estate, credit and capital market environment.” Write to Paul Jackson at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.