Bankrupt LandAmerica Financial Group Inc.'s plan announced Wednesday to sell three subsidiaries to Fidelity National Financial Inc. might lead to job reductions in Western Pennsylvania -- where both employ 1,400 -- at least until the real estate market rebounds, said one local expert.
Both companies have local operations that perform some of the same functions.
"Over time, Fidelity could meld the two together," said Jeff Schurman, executive director of the industry trade group Title Appraisal Vendor Management Association in Moon.
LandAmerica, which owns the third-largest group of title insurers in the United States, filed for Chapter 11 bankruptcy yesterday in Richmond, Va., where it is headquartered.
Fidelity, under an agreement worked out this week, will buy Lawyers Title Insurance and United Capital Title Insurance for $139.4 million. And one of its title insurance underwriters, Chicago Title Insurance Co., will buy another LandAmerica subsidiary, Commonwealth Land Title Insurance, for $158.6 million.
The deal was announced five days after Jacksonville, Fla.-based Fidelity scrapped a plan to acquire all of LandAmerica for $130 million.
LandAmerica CEO Theodore L. Chandler Jr. said yesterday that the bankruptcy filing and sale "offers our stakeholders the best result available in this brutal real estate, credit and capital market environment." The two units making the acquisitions will assume $195 million in LandAmerica liabilities.
Here are details of LandAmerica Financial Group's and Fidelity National Financial's local presence:
LandAmerica has a Nationwide Appraisal & Title Services business in Washington, Pa., and a smaller Lenders Services unit in Moon.
Together, they employ 420 workers, spokeswoman Lloyd Osgood of LandAmerica said, adding she didn't know how many Pittsburgh-area workers were in the three subsidiaries sold.
Fidelity National Financial, the nation's second-biggest title insurer, has a Service Link business with 500 employees in Moon and in Hopewell as well as an LSI unit with another 500 workers in Coraopolis. Representatives couldn't be reached for comment yesterday.
Title insurers use their databases and public records to verify a seller is the home's true owner and that the property is free from liens.
LandAmerica reported losses in four consecutive quarters, and its bankruptcy petition lists $3.3 billion in assets and debt totaling $2.9 billion. The company blamed the filing on the "significant decline in mortgage financing."
Among the top four title insurers, Fidelity National Financial alone made a profit last year. But the company is shrinking payroll and said this fall it might cut about 10 percent of the jobs in its main business, or about 900 positions, by the end of the year.
LandAmerica stock plunged 88 percent Monday after the original deal with Fidelity crumbled, LandAmerica closed yesterday at 20 cents, down 71 cents. Fidelity shares ended the day at $12.38, up $2.19.
Schurman said LandAmerica and Fidelity operations here both perform title and closing services -- all "back-office stuff" that is critical, yet time-consuming, and that Fidelity could look to eliminate duplication.
When home sales become more robust, "they will be bringing people back on. This is all cyclical, depending on what the mortgage industry is doing," he said.
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