The nation’s third-largest title insurance company, LandAmerica Financial Group, has been forced to file for Chapter 11 reorganization, with the sale of its underwriting subsidiaries to Fidelity National Financial.
The announcement, made Wednesday of last week, marked yet another tremendous loss to the mortgage crisis, on a national level.
Having already lost its subsidiary LandAmerica 1031 Exchange Services, Inc, to bankruptcy earlier this week, the Richmond-based corporation decided to sell its two largest and most profitable subsidiaries, Lawyers Title Corp and Commonwealth Land Title Insurance Co.
LandAmerica had a merger deal on the table with Fidelity National as recently as November 7. Fidelity National, however, backed out of that deal within two weeks of its announcement, apparently after assessing LandAmerica’s financial condition.
Instead of assuming such debt, Fidelity National retreated and then returned to pick up the ailing insurance giant’s underwriting subsidiaries which constitute 90% of LandAmerica’s profitability.
There wasn’t much choice for LandAmerica. Trading for the company stock on the New York Stock Exchange had been suspended, since it had sunk to $.20 per share.
LandAmerica’s worth, as recently as last summer, was $1.6 billion. However, as many other companies in this industry and economic climate are discovering, the mortgage squeeze is sapping credit and savings as few other downturns have.
For those with large investitures in real estate-minded affairs, it’s going to be difficult to retrench far enough to save their limbs.
Joseph A Giannone, Reuters, “LandAmerica Files For Bankruptcy, Sells Businesses”, Nov 26, 2008
Paul Jackson, NuWire Investor, “LandAmerica Declares Bankruptcy”, Nov 26, 2008
Richmond Times-Dispatch, “LandAmerica Files For Bankruptcy”, Nov 26, 2008