Chicago title takes steps to buy Westwood Equities, Ticor parent.

Chicago Title takes steps to buy Westwood Equities, Ticor parent

Chicago Title & Trust Co. has inked a letter of intent to buy Westwood Equities Inc., the owner of Ticor Title Insurance of California, one of Los Angeles' oldest and best-known companies, the Los Angeles Business Journal has learned.

A sale would mean an end to an independently operated Ticor Title, a fixture of the local corporate landscape since 1893. Some consumers of property information and title insurance worried last week that such a merger would decrease local competition within the industry.

Title insurance companies insure property title transfers or provide information about a property's history, primarily about existing liens and tax encumbrances.

A Westwood Equities spokesman last week declined to confirm or deny that an intent letter with Chicago Title has been signed. "We have made no public release of information and we do not intend to do so," said Erich Everbach, executive vice president and general counsel at Ticor's parent, Westwood Equities. "However, Chicago Title and several other companies have expressed an interest in our situation."

Westwood Equities also owns Ticor Title Insurance Co. and Ticor Title Guarantee Co., which provide title insurance services outside California, and Ticor Realty Tax Services, a tax service.

Chicago Title, the nation's largest title insurance company, is a wholly owned subsidiary of New York-based Alleghany Corp. Officials at Chicago Title, in Chicago, declined to comment last week.

In going ahead with Chicago Title, Westwood Equities is apparently is stiff-arming a joint bid made by the wealthy Pritzker family of Chicago and Electronic Data Systems Corp. of Dallas, the computer company founded by Ross Perot, but now part of the General Motors Corp.

On July 23 Winston Morrow, president and chief executive of Westwood Equities, wrote the Pritzkers and EDS that the joint bid was "inadequate" and that "requisite creditor consents would not be obtainable."

In the letter Morrow also wrote that he was restricted "under the terms of (a) letter of intent from inducing any third party to make a proposal for the acquisition of Westwood," but that if the Pritzkers and EDS wanted to talk more, he would be available.

Morrow also sent a copy of the letter to Herman Glatt, name-plate partner at Stutman, Treister & Glatt, a Mid-Wilshire law firm specializing in corporate reorganization and bankruptcy law. Westwood counsel Everbach declined to explain why a copy of the letter was sent to Glatt.

Everbach, however, repeatedly stated that Westwood Equities' financial problems are limited to debt load and liabilities of New TC Holding Corp., of which Westwood Equities is a subsidiary, and not to the operating subsidiary Ticor Title Insurance of California, or other subsidiaries.

"Our operating subsidiaries are not struggling for survival, nothing could be further from the truth," said Everbach. "Our operating results, although not stellar within the last two years, are not materially different from the results of other title insurance companies."

Ticor Title Insurance Co. of California reported a net operating loss of $5.3 million on operating income of $72.3 million, and a net loss of $2.3 million in this year's first quarter.

The company reported net losses in 1988 and 1989 of $10.8 million and $13.2 million respectively.

But Ticor Title Insurance of California had $92.4 million in reserves as of March 31 to meet policyholder claims, and is solvent and operating in all respects, said Everbach. The company had $144.7 million in reserves at year-end 1985. Everbach said losses are being reduced.

The parent company of Ticor Title, the New TC Holding Corp., had a net loss of $40 million on revenues of $492 million in 1989, and has not made interest payments on $58 million worth of bank debt since May 1987. Total principal and accrued interest owed to the bank group surged to more than $100 million in the first quarter.

New TC Holding Co.'s financial position reflects heavy borrowing the company made to buy Ticor Title in 1985, a $271 million buyout, as well as losses sustained in the EPIC mortgage insurance debacle of 1985.

A Ticor subsidiary, TMIC, had insured home mortgages by the thousands in Texas. When the real estate market there collapsed, Ticor got caught on the hook for hundreds of millions in mortgage insurance losses. The company has not been able to honor the bank group's loans since then.