Insights On Investing In Title Insurance Companies

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03/20/2021 Redacted Redacted

searcher University of Pennsylvania - The Wharton School Brown University

INSIGHTS ON INVESTING IN TITLE INSURANCE COMPANIES

hello
I am looking at backing/partnering with a searcher who is evaluating a profitable title insurance company. Seller is looking to retire so clear rationale for exit (and the fact that 2020 was a bumper year for RE deals). Owner is apparently "absentee" with a solid management team in place. Opportunity comes from more aggressive business development. 

Would be interested in any experiences or insights on what to think about when assessing the opportunity. Specific questions:
1. what are the biggest risks in such businesses?
2. what are typical multiples in the industry?
3. the industry seems quite fragmented. is that correct and if so why?

thanks everyone

0 likes 113 views 4 comments

searcher Hofstra University - 03/21/2021

We have looked at a few opportunities that were title companies. We are a non-bank lender to the real estate investment community and have many dealings with title companies of all kinds.

The insurance field including title insurance often operates with large insurance companies who work with smaller local sales offices often independently owned. Title insurance in many ways is the same. There are companies that are called abstract companies (front line sales) and then the large 'under

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searcher Harvard University - Harvard Business School Stevens Institute of Technology - 03/22/2021

Agree with Lou. Bear case: limited intrinsic value. Hyper local businesses highly dependent on fickle referral networks with zero switching costs. You have to be entirely entrenched in the real estate ecosystem out of the gate. Limited retention further compounded by cyclical end market. Would only consider if you partner with someone who knows the local market well and can cultivate / retain referral channels. Bull case: if you get it right, its highly profitable.

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searcher Harvard University - Harvard Business School New York University - 03/23/2021

Would love to learn more

like reply | 0 likes

searcher Fordham University Tufts University - 03/29/2021

Don't you mean a insurance broker that sells title insurance? This is different than a Title Insurance Company. I have looked into the industry quite a bit a few years ago.

like reply | 0 likes

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