The New York attorney general penalized one of the nation’s biggest title insurance companies for anti-competitive labor practices.
Stewart will pay $2.5 million in a settlement with Letitia James’ office, HousingWire reported. James accused the company — the smallest of the “Big Four” title insurers — of entering into no-poaching agreements with competitors, thwarting employees’ salary hikes and career advancement.
The payment represents a tiny fraction of the publicly traded company’s revenue, which exceeded $716 million last quarter. Stewart reported a third-quarter profit of $29.4 million, down from $88.7 million in the same period last year.
The company issues title insurance policies either directly or through independent title insurance agencies. Direct title agents and independent agencies are allowed to compete for employees under this model, but Stewart’s no-poach agreements prevented that — limiting pay, benefits and career opportunities, according to the attorney general.
Beyond the fine, Stewart is required to end its remaining no-poach agreements and cooperate in any investigations into the industry. It issued a statement that seemed to deny wrongdoing yet acknowledged it had no-poaching pacts.
“The company has a policy against anti-competitive practices of any kind and has agreed to terminate any existing no-poach agreements and to pay a monetary settlement of $2.5 million to put this matter behind us,” a spokesperson for the company told the publication.
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Title insurance’s Big Three are not to be: Fidelity, Stewart call off $1.2B merger
Stewart, founded in Texas in 1893, ranks as one of the biggest title insurers in the country, competing with the likes of Fidelity, First American and Old Republic.
Old Republic also faced scrutiny from the attorney general’s office last year for no-poach agreements.
In March 2018, Fidelity agreed to buy Stewart for $1.2 billion, which would have made it the nation’s largest title company. But the firms pulled the plug on the deal in September 2019, with Fidelity paying Stewart a $50 million reverse termination fee.
The merger fell apart after the Federal Trade Commission moved to stop the deal. Among the agency’s concerns were that the consolidation would sharply reduce competition in state and local markets.
— Holden Walter-Warner