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Wednesday, Nov 29, 2023

Southland Title Purchased Amid Probe by State

Southland Title Purchased Amid Probe by State By SHELLY GARCIA Senior Reporter Southland Title Corp., which has just paid two fines totaling $2 million in two years for alleged improprieties, has been acquired by LandAmerica Financial Group Inc., one of the four largest title insurers in the country. Richmond, Va.-based LandAmerica paid $90,500 for Burbank-based Southland and its Orange County and San Diego units, according to Securities and Exchange Commission documents, about 5 percent of the amount Southland paid in fines to the California Department of Insurance as a result of charges that it offered illegal rebates and other inducements to real estate brokers. “With the conclusion and this final settlement we are glad to be given clarity as to acceptable marketing practices in this competitive market,” Southland said in a prepared statement. Southland and LandAmerica began negotiations in January, prior to the most recent Insurance Commission investigation. The companies have long worked together LandAmerica companies are among several underwriters Southland uses. “There’s four major companies that comprise about 80 percent of the title insurance issued in the country,” said Mark Dwelle, an equity analyst with Ferris, Baker Watts, Inc. in Baltimore. “So these companies make acquisitions of title agencies in order to ensure their pipeline. They identify agencies that are well placed in attractive, growing markets and acquire them to ensure those agencies continue to place policies with them rather than a different insurer.” Dwelle was not familiar with the insurance commission case. Southland, which operates 30 title and escrow offices in L.A., Orange County, Riverside, San Bernardino, Ventura and San Diego, had revenues from operations of almost $137 million last year, according to LandAmerica. The acquisition means the company can operate on a far larger playing field with more products and services. LandAmerica plans to leave the management of Southland in place and operate the company as a subsidiary under the moniker LandAmerica Southland Title. “This gives us the opportunity to service our clients on a completely national basis,” said David Cronenbold Jr., president of Southland. “As our clients expanded outside our operational markets, we have not been able to take advantage of our relationships to grow as fast as our clients need us to. The one stop shop and bundling of products and services is a must for them in their markets.” Southland in 2002 paid a $1.5 million fine to the state insurance commission after the company was charged with violating the insurance code by offering “illegal rebates” to real estate brokers who steered business to the company. As part of that settlement, Southland was required to place another $500,000 in escrow to be seized if the company were to be found engaging in further illegal rebate activities over a two-year period. Complaints received Norman D. Williams, a spokesman for the Dept. of Insurance, said that all companies licensed by the department are investigated periodically, but the examination into Southland was reopened in March when the commission received complaints about its activities. “We got numerous complaints that they were again doing rebates and kickbacks that they were doing several years ago,” Williams said. According to a release issued by the commission, an investigation of the complaints revealed “the compensation of employees for fraudulent and/or fabricated invoices and expense reports in excess of $47,000; providing food, beverages and entertainment in excess of $174,000, providing gifts and gift certificates in excess of $62,000; and providing business support services in excess of $218,000, all to benefit real estate agents and brokers.” The escrow account was seized as a result. “If an agent is enticed to submit all his business to one company, you can’t get the best deal,” said Williams. “The intent of what we are trying to accomplish is good for the consumer.” In its statement, Southland said that it was “one of many major title companies that went through a market conduct investigation by the Department of Insurance. We have cooperated fully with the Department during this process and per our settlement agreement of 2002 we have released the $500,000 held in escrow At no point has the consumer been negatively impacted by any of the marketing practices of Southland or any of our competitors. We will continue to focus on the superior service our company provides the real estate industry and consumers.”

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