Glendale S&L; Acquires Title Insurance Firm

Glendale Federal Savings & Loan Assn. has acquired American Title Co., the nation’s largest independent title insurance brokerage, for more than $10 million in cash, officials of the thrift said Thursday.

The move by Glendale Federal is part of an effort to diversify its already sizable real estate services, the S&L;’s president, Norman M. Coulson, said. He said Glendale Federal had conducted an extensive search for a title insurance company before settling on Orange-based American Title.

Glendale Federal, the fifth-largest thrift in the country, has assets of $11 billion and earned $42.8 million in its 1984 fiscal year, which ended June 30. It operates 125 branches in California and 78 in Florida and has subsidiaries in commercial lending, mortgage banking and insurance and securities brokerages. Its real estate operations include investment, development, syndications and brokerage franchising.

American Title, a 28-year-old privately held firm with about 300 employees, has 14 offices in Los Angeles, Orange, San Diego, Riverside, San Bernardino, Ventura and Contra Costa counties.

Last year, American Title was the broker for more than $3 billion in title insurance policies on residential and commercial real estate transactions and earned about $20 million from premiums. It provides title insurance services to savings and loans, banks, mortgage companies and real estate brokers.

The purchase, which was completed Monday, already has received approval from the state Department of Insurance and Glendale Federal’s board of directors, officials of the S&L; said.

Glendale Federal’s move is another example of a trend among S&Ls; to diversify into a wider variety of real estate services, financial institution analysts say.

However, few S&Ls; have ventured into the title insurance brokerage field. And some analysts warn of conflict-of-interest problems.

A real estate buyer has a legal right to purchase title insurance from any company. But, “there could be an implied threat that you might not get a loan or a loan at good terms if you don’t buy the title insurance” from the title insurance company owned by the lending S&L;, Allan Bortel, an analyst with the investment brokerage firm of Shearson/Lehman American Express, said.

However, the California Department of Insurance, which approved Glendale Federal’s purchase of American Title last month, believes it has prevented potential conflicts of interest by stipulating that “a title company must derive 50% or more of its title orders” from non-affiliated companies, according to Angelo Ponterio, a senior counsel with the department.

American Title President Dennis Duffy and Chairman Kenneth Rideout, who bought American Title from Safeco Title Insurance Co. in 1982, sold their about 50% combined interest in the firm to Glendale Federal. They will continue to run the company as an independent subsidiary of Glendale Federal, Coulson said.