LOS ANGELES -- Chicago Title and Trust Co., the biggest U.S. title insurer, said this week it plans to buy its largest competitor, Ticor Title Insurance Cos.
The deal continues a consolidation trend among title insurers, who check property records and guarantee to buyers and lenders that a seller actually owns the property.
Ticor, once the largest such insurer, has lost money recently along with the $4 billion industry. Price squeezing, claims inflation and sagging real estate markets have contributed to the problems.
A previous agreement to buy Ticor, by General Motor Corp.'s data processing unit, fell apart last month, reportedly because Ticor's problems were worse than anticipated.
Chicago Title, a unit of Alleghany Corp. in New York, said in a statement that it signed a letter of intent to buy Ticor. The deal is expected to be closed during the first quarter of 1991, subject to approval by various regulators and other conditions.
Joann Shanley, a spokeswoman for Ticor's parent Westwood Equities Corp., said no antitrust or other difficulties were expected to interfere with the purchase.
The merger would create a company with annual revenue of nearly $1 billion. Chicago Title's revenues were about $561 million in 1989 and the Ticor companies' were $408 million, Shanley said.
Ticor is privately owned and doesn't break out profit and loss figures, but Shanley acknowledged it lost money in 1989. "The same would be the case in 1990, especially with the real estate situation the way it is," she said.
The Ticor title insurers -- Ticor Title Insurance Co. of California, Ticor Title Insurance Co. and New York-based Ticor Title Guarantee Co. -- are based in Los Angeles along with Westwood Equities.
Westwood also owns Ticor Realty Tax Services, which handles the impound accounts in which taxes are placed and then forwarded to the government when property is sold. TRTS accounted for a bit more than a quarter of Westwood's $549 million in 1989 revenues. It is not being bought by Chicago Title.
The title insurance industry reported losses on operations of $112 million in 1988 and $154 million in 1989, although investment income cushioned the losses, according to the American Land Title Association.
Ticor will become the fourth of the largest 12 companies in the industry to go out of business or be taken over since 1987.
Toft and other Chicago Title officials declined to discuss any details of the purchase.
Electronic Data Systems Corp., the data processing unit of General Motors, and a group led by Chicago investor Jay Pritzker signed a letter of intent in September to buy all of Westwood, but the deal was called off last month. The Wall Street Journal reported that EDS had underestimated Ticor's problems.