Purchase Would Create Biggest U.S. Title Insurer

Lawyers Title Corp. on Thursday said it will pay $463 million for the title insurance units of Reliance Group Holdings Inc., forming the largest U.S. title insurer to surpass Santa Ana-based First American Financial Corp.

Lawyers Title, now the nation’s sixth-largest insurer of property titles, will pay $463 million in stock and cash for the Reliance subsidiaries, Commonwealth Land Title Insurance Co. and Transnation Title Insurance Co. The components of the new company, which will be called LandAmerica Financial Group, had combined 1996 revenue of more than $1.3 billion.

“From an operations perspective, it makes a tremendous amount of sense,” said John B. Keefe, an analyst at Ferris, Baker Watts Inc. “There’s an incredible amount of redundancy in their operating expenses.” The companies expect to cut $40 million from salaries, real estate and other costs in 1998.

Richmond, Va.-based Lawyers Title shares climbed 50 cents to close at $25.13 in New York Stock Exchange trading, while New York-based Reliance fell 38 cents to close at $12.50. First American shares rose 50 cents to close at $42.50, also on the NYSE.

More title insurance companies are likely to join forces as the industry tries to recover from slumping profits, Keefe said. “There’s too much supply in this industry; people were beating each other up, competing on the commissions paid to agents.”

The merger would create a company with more than 500 offices across the country.