FUND ALERT: Message From Charles J. Kovaleski to All Fund Members

To:         Fund Members

From:     Charles J. Kovaleski, President, Attorneys’ Title Insurance Fund, Inc.

The Fund’s ratings agency, Fitch, announced today its downgrade of The Fund’s financial strength from A- to BBB. Fitch expressed continuing concern that may lead to an additional downgrade. As a member of The Fund, unlike being a mere customer of another title insurance underwriter, you are invited to control your own destiny with The Fund, beginning with understanding these facts:

• Fitch has downgraded other title insurance underwriters, as it did last December in lowering some of Fidelity National Financial, Inc.’s title insurance subsidiaries from A- to BBB (and two to BBB-), and we anticipate similar actions to follow across the industry.
• The Fund shares Fitch’s concern about the decline in our statutory surplus, to which no underwriter is immune, caused by last year’s perfect storm of greater than anticipated:
  • decline in investment portfolio;
  • decline in revenue; and
  • increase in claims.
• The Fund understands Fitch’s concern about the limitations of our:
  • geographic focus on Florida;
  • ownership by our member attorneys; and
  • dedication to preserving as much human capital as long as possible through this downturn.
• But we respectfully and confidently stand by our mission:
  • The Fund is in business to promote, preserve and facilitate the real estate practices of its members in their protection of the public. And we earn the loyal support of our Florida-based members by, among other things, encouraging growth and development of our employees.
• And we can assure you The Fund is:
  • committed to a sound, long-term investment strategy, having taken losses as part of prudent 2008 tax planning;
  • balancing operational costs with an eye toward maintaining every possible support of technology, marketing, education and protection of your legislative and regulatory interests to ensure that you – and, in turn, The Fund – will recover as the market does;
  • continuing to reserve for claims even more conservatively than ever, anticipating that we will be in line with the industry’s return to 2001 surplus levels; and
  • confident that those reserves will continue to be sufficient to protect your clients.

The Fund is literally your underwriter. As members of The Fund, you own The Fund. Your support of The Fund is your investment in protecting your ability to continue your practice of real estate law into the future. As we continue to navigate these challenging times together, you can control your destiny with The Fund by:

• continuing to write policies on The Fund;
• working diligently with The Fund to avoid claims;
• alerting The Fund to suspicious behavior you see in the marketplace; and
• paying attention to required Errors & Omissions coverage, our Service Support Fee, Escrow Account Reconciliations, and Past Due Balances.

Now more than ever, why would you support any underwriter that is willing to compete with you – or that must balance its obligation to its investors and customers? You and your clients are The Fund’s only obligation. You and your clients are our only focus.

We will continue to update you, as always. We welcome your ideas, concerns and questions. Thank you for your support of The Fund.

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