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Title Underwriter Review

Financial stability can be independent of size. Small, well-managed Title underwriters can be more financially stable than larger, highly leveraged title underwriters.

Demotech, Inc. is the first company to review the financial stability of the Title insurance industry and publish independent financial opinions. Since 1992, Demotech has continued to analyze the financial stability of the Title insurance industry and has assigned Financial Stability Ratings® to virtually all Title underwriters, largest to smallest.

Financial Stability Ratings® of A″, A′, A, and S are accepted by the major participants in the secondary mortgage marketplace, which in turn facilitates the acceptance of Title underwriters rated S or better.

Demotech reviews and assigns Financial Stability Ratings® to start-up as well as established Title underwriters. The review of start-up underwriters or underwriters that have less than five years of representative historical operating history requires additional information to be submitted for the assignment of a Financial Stability Rating®.

Our rating process is based on an analysis of a series of quantitative ratios and certain qualitative considerations.

Typical information reviewed by Demotech for an established insurer may include:

  • Quarterly and annual statutory financial statements
  • Management discussion and analysis
  • Statement of actuarial opinion
  • Actuarial opinion summary
  • Audit report
  • Reinsurance information

Typical information reviewed by Demotech for a newly capitalized insurer may include

  • Pro forma financial statements and business plans
  • Biographical information on principals, key employees, or service providers
  • Job descriptions or summaries of the duties of key personnel
  • Proposed underwriting guidelines and application
  • Initial rate, rule, and form filings and underlying information
  • Description of agency relationships
  • Description of Title plant ownership and access
  • Investment guidelines
  • Administrative agreements with principals and third parties
  • Reinsurance information
  • Proposed marketing and sales materials
  • Producer contracts including commission structure and contingency commission criteria
  • Other information to familiarize us with the company and its operations.

After Demotech’s review and analysis process is completed, the company will be presented with the opportunity to finalize the preliminary Financial Stability Rating®.

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