After conducting an extensive investigation of kickbacks to builders and lenders by LandAmerica Financial Group, the Colorado Division of Insurance has reached a settlement with the company.

At issue was LandAmerica's participation in captive reinsurance arrangements where Citigroup and Ryland Home subsidiaries or affiliates agreed to refer all of their refinance and new home sale business to LandAmerica, provided the business was "reinsured" with a reinsurance entity established for or by the lender or homebuilder.

Erin Toll, deputy commissioner for compliance with the division, said 922 Colorado consumers will get refunds, but she does not have that number broken out by city. The average refund, she said, will be about $150. Refunds will depend on the size of the loan or refinancing. LandAmerica has an office in Greeley, so Toll said it could be assumed area residents could be affected.

The insurance division contended the reinsurance entities were established to serve as vehicles for providing kickbacks for the lender and homebuilder's referral business. Kickbacks for referral of title insurance business are prohibited under state and federal law.

Under the agreement, LandAmerica -- which does business in Colorado as Commonwealth Land Title, Lawyers Title and Transnation Title and is the state's second largest title insurer -- will refund premiums to consumers whose policies were subject to the suspect reinsurance. In addition, LandAmerica, which is headquartered in Richmond, Va., will pay a penalty of $36,880, will reimburse the state's investigative costs of $15,000 and will contribute at least $50,000 to a local charity that focuses on low-income housing and foreclosure problems.

Toll said the Colorado is one of five states that have settled with LandAmerica, but said the company is "under investigation by many other states."

The insurance division started its investigation into the captive reinsurance arrangements in late 2004. In March of 2005, it issued a cease and desist order requiring LandAmerica to stop entering into the agreements with homebuilders and lenders. In early 2005, the division reached settlements with the other two companies accused of entering into these practices, First American and Fidelity National, totaling more than $26 million.

The division's records show LandAmerica started the practices about 10 years ago, and the other companies followed suit several years later. Unlike the previous settlements, the LandAmerica settlement concerns Colorado only and is not a multi-state agreement.

According to State Insurance Commissioner David Rivera, the arrangements may have affected the level of competition in the marketplace by creating entry barriers for smaller title companies.

Breakout: Information about LandAmerica Financial Group is available at www.dora.state.co.us/insurance/.

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Bill Jackson

bjackson@greeleytribune.com

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