Illinois-based title insurance underwriter Attorneys’ Title Guaranty Fund (ATG) has entered into an agreement to merge with mortgage lender Guaranteed Rate. ATG president and CEO Peter Birnbaum announced the plans for the merger in early January in an email to ATG agents and shareholders.
The transaction is still subject to regulatory and shareholder approval, but it is expected to close later this month. Attorney members who joined ATG between 1964 and 2007 and their successors have been asked to vote on the merger.
Birnbaum and the other members of the firm’s senior team plan to stay on after the merger. The financial terms of the deal have not been disclosed.
“The ATG Board and Senior Management have debated issues related to ATG’s ownership for several years,” Birnbaum wrote in the email. “In the end, we concluded that a change in ownership was not only advisable, but necessary.”
ATG was founded in 1964 by Stan Balbach, who hoped to create a “guaranty fund” (today known as a title underwriter) owned by members of the Illinois Bar.
“Stan envisioned the creation of this ‘guaranty fund’ to give lawyers the ability to issue title opinions backed by an insurance underwriter,” Birnbaum wrote. “After we raised enough money in the ‘guaranty fund’ to qualify as a title underwriter, we continued to sell shares to individual lawyers and firms. For a variety of reasons, we stopped selling shares in 2007. Today, we have roughly 1,900 shareholders; because there is no market for those shares, shareholders have been unable to unlock the significant increase in their value.”
Birnbaum cited shareholder’s inability to unlock the value of their shares, a desire to preserve the lawyer’s role in real estate transactions (Illinois is not a so-called “attorney state,” requiring a lawyer to be present at a closing, however it is customary to have a lawyer review the purchase agreement.) and the potential to grow the business, as the primary motivators for the merger with Guaranteed Rate.
Guaranteed Rate, one of America’s largest retail lenders, already offers title insurance services to clients; it owns Guaranteed Rate Insurance and Ravenswood Title Company.