RICHMOND — The State Corporation Commission (SCC) has been named receiver of Southern Title Insurance Corporation by the Circuit Court of the City of Richmond. Southern Title and the Commission determined that the receivership was necessary to protect the interests of policyholders and creditors.

Southern Title, a regional title underwriter, is a Virginia-domiciled insurer writing title insurance coverage. Southern Title is headquartered in Richmond, Virginia and licensed to do business in 21 states.

A title insurance company issues policies in conjunction with the sale of property. The company conducts a thorough search of property records for documents affecting the property in question, particularly defects of title. If a defect is found, then remedial action is necessary before a policy is issued. Title insurance coverage protects the policyholder if, at some time in the future, a defect is claimed and proven true.

Southern Title voluntarily suspended the issuance of new title policies on September 15, 2011. The SCC issued an order of suspension on September 19. An impairment order was issued by the SCC on November 4 because the company no longer met minimum capital and reserve requirements. Southern Title experienced financial difficulties because of agent defalcations in Texas and the rise in title insurance claims arising from that alleged misuse of funds.

Virginia Commissioner of Insurance Jacqueline K. Cunningham has been appointed deputy receiver in an effort to rehabilitate the company. A moratorium has been placed on the payment of claims until the deputy receiver completes an evaluation of Southern Title’s financial condition.

Policyholders with questions about the receivership are encouraged to call the SCC’s Bureau of Insurance. From within Virginia, the toll-free number is (800) 552-7945. Callers may also dial directly at (804) 371-1502.

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SCC case number INS-2011-00239
Circuit Court file CL11-5660-RDT