Richmond-based Southern Title Insurance Corp. has voluntarily stopped issuing new policies while it deals with expensive claims resulting from the actions of fired former agents.
The company’s officers and directors said it is solvent and has an adequate surplus to play claims by current policyholders.
In its news release, the regional title insurance underwriter said that it has “continued to incur higher than normal claims arising from policies issued by now-cancelled agents between 2005 and 2008. That situation, in conjunction with a substantial recent agent defalcation, made a suspension of operations the most prudent course of action.”
A defalcation is a misappropriation of funds by a person acting in a fiduciary capacity. No further explanation of the incident was immediately available.
“We’re incredibly proud of our employees, and the effort they’ve invested in the operational transformation of Southern Title. However, until we understand the full magnitude of those claims and defalcations, the decision to suspend operations was a difficult but necessary one,” Gene McCullough, the president of Southern Title, said in a statement.
Southern Title suspended issuance of new policies on Thursday. On Friday, Demotech Inc., a Columbus, Ohio-based financial analysis firm, withdrew the Financial Stability Rating of “A, exceptional” previously assigned to Southern Title.
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