STATE OF THE COMPANY REPORT 2014
Transcription
STATE OF THE COMPANY REPORT 2014
STATE OF THE COMPANY REPORT 2014 This report is divided into five sections: ORGANIZATION: Includes information about our business plan, organizational structure, operating footprint and the biographies of our executive management team. FINANCIAL STABILITY: Background of our majority shareholder; financial trends; insurance underwriter and a high-level view of our balance sheet and ratings information. The purpose of this report is to introduce you to Williston Financial Group; its title insurance underwriter and operating companies. We have included a comprehensive overview of our operations including financial stability, risk management and compliance. Our goal is to help you feel secure with the financial backing of our title policies and to engage your interest. We want to collaborate with you to better serve your customers in a mutually beneficial way. COMPLIANCE AND CORPORATE GOVERNANCE: Detail on our agent certification process, trust accounting controls, corporate governances, HR and risk management policies. Cooperational structure, financial strength and regulatory compliance is the first step toward building trust with you. We believe that providing this level of transparency will lead to a spirit of collaboration allowing us to work closely with your staff to give your customers an exceptional service experience. UNDERWRITING AND CLAIMS: An overview of our claims and underwriting operations as well as an introduction to our management team and contact list. INFORMATION TECHNOLOGY: Includes a comprehensive overview of our IT operations, progress and future goals. Ultimately, you should know that our success is dependent on being an integral part of your value proposition. Thank you for your consideration. We are eager to work with you. Sincerely, PATRICK F. STONE, President & CEO MICHAEL T. GALLAHER, CFO JOSEPH V. MCCABE, General Counsel 1 MISSION STATEMENT -EXIST WFG is built upon the directive to communicate, collaborate and co-exist represented in its is dependent entirely upon the success of its partners and customers. Client focus manifests itself through constant communication and an unconditional willingness to collaborate at every opportunity. By exercising communication and collaboration, WFG integrates with its client processes and co- OUR MISSION Take time and cost out of real estate transactions. The Williston Financial Group family of businesses (WFG) are dedicated to taking time and cost out of real estate transactions. By focusing on the client and their processes, WFG will help compress the time required to close a loan and/or transfer real property ownership. By empowering industry professionals with integrated technologies, WFG will provide efficient high quality products and services. By enabling client processes, WFG will increase closing rates. By minimizing corporate infrastructure, WFG will avoid operating a costly hierarchical organization. 2 ORGANIZATION ORGANIZATION Company Overview Williston Financial Group (WFG) is a holding company that operates a national title insurer and multiple complementary operating companies. WFG began operations in late 2010. Golden Gate Capital is its largest shareholder. WFG Title Insurance Company is currently licensed and operating in 46 states. WFG operates three distinct business divisions: Company-Owned Title Operations (Direct Operations); Agency Operations; and Enterprise Solutions. WFG has direct operations in Washington, all vendors of WFG title policies are certified and Oregon, Arizona, Nevada, Texas and California. dependable. Prior to approving an agent, WFG Administration, Legal, Finance, Marketing With our fully implemented business plan, runs credit, criminal and background checks Information Technology, Human Resources, WFG will own operations in seven western and reviews operating processes and financial Purchasing and Real Estate. Our ability to states, and utilize independently owned title results. Unlike any competitor, WFG maintains a centralize these functions enables us to agents to fulfill a national platform. Our direct firewall between agency operations and agency minimize costs by operating with a flat operations subscribe to automated title indexes approval, ensuring there are no internal conflicts management structure. The executive and employ technologically enabled production leadership of WFG has extensive experience systems. Management is metric driven with composed of Lender Services, Default Services, and is available to clients to provide rapid and client service and satisfaction as the primary Equity Title Services, National Title Production effective problem resolution. goal. Services and National Appraisal Management Services. This group deals principally with Currently, WFG has over 1000 independent title institutionally controlled businesses looking insurance agents issuing WFG title policies in for a centralized provider who is capable of 46 states. This agency network is connected by providing and coordinating title and closing The WFG culture is defined by our mission Communicate, Collaborate, Co-exist services nationally. Because of the centralized As you will note on the following pages, we Electronic Partner Network (EPN) that allows and automated nature of these products, clearly understand that we have no purpose our clients to electronically order and receive WFG is able to offer highly competitive pricing, other than to enable your success. title information and products in the top 75 unparalleled service and rigorous quality SMSAs. Agency approval and on-boarding is control and follow through. an extensive and detailed process ensuring that Please let us know how and when we can be of assistance. 4 ORGANIZATION Insurance Underwriter States of Operation 5 ORGANIZATION Office Locations 6 ORGANIZATION Management Team PATRICK F. STONE, President and CEO positions with three public companies and as a director on two Fortune 500 Boards. The senior title insurance company, and Chairman and Co-CEO of a real estate related data and information company. Pat also served as Vice-Chairman of Metrocities Mortgage, a 2005 top twenty mortgage lender and as Chairman of The Stone Group, an Austin, Texas based tenant-rep brokerage company. Additionally, Pat served on the boards of World Minerals, DigitalMap, Homegain, RedVision, and as a Director of the Portland Art Museum. Currently, he is the Chairman of the Oregon State University Foundation, and Co-Chair of its Billion Dollar Capital Campaign. Patrick resides in Portland, Oregon with wife Vicki, and youngest daughter, Samantha. MICHAEL T. GALLAHER, Chief Financial Officer Mike is Chief Financial Officer for Williston Financial Group (WFG). Mike has nearly 20 years of experience in the title insurance industry, having served prior to WFG in a range of financial management positions within Fidelity National Financial, and most recently with United General Title Insurance Company and the First American Corporation. Prior to Fidelity, Mike was with KPMG as an Audit Manager in its financial services sector. Mike is a graduate of California State Polytechnic University, Pomona; and is a member of the American Institute of Certified Public Accountants and California Society of Certified Public Accountants. 7 ORGANIZATION Management Team JOSEPH V. MCCABE JR., Executive Vice President and General Counsel Joe began his career in the title insurance industry more than 20 years ago with Fidelity National Title Insurance Company. While at Fidelity, Joe gained experience in a number of areas including claims and litigation management, mergers and acquisitions, and corporate and regulatory compliance. Since leaving Fidelity in 1996, Joe has held the positions of General Counsel and President of other title insurance underwriters, most recently TransUnion National Title Insurance Company. Joe is a graduate of the University of the Pacific, McGeorge School of Law in Sacramento, CA. JOE DRUM, Executive Vice President, Agency Operations Joe has over 35 years experience in the title insurance industry. He was President of United General Title Insurance Company and EVP at First American Title Insurance Company and Fidelity National Title Insurance Company where he was in charge of all agency operations and strategic initiatives for several brands. In 1971, Joe received his undergraduate degree from Hiram Scott College/University in Nebraska, Advisory Committee on the Student Riots of Kent State. He received his Juris Doctorates from University of Bridgeport and The Quinnipiac College of Law, New Haven, CT and successfully completed the executive postJoe currently resides in Santa Barbara, California, where he is one of California's twenty-eight Fellows of the American College of Mortgage Attorneys ("ACMA"), a national honorary organization that recognizes outstanding lawyers who specialize in the field of real estate mortgage lending and related activities. 8 ORGANIZATION Management Team , Executive VP Institutional Services Chief Compliance Officer Executive Management Committee. Prior to joining WFG, Don served as Chief Operating Officer and Associate General Counsel for Solutions. Previously, Don was Group President and CEO for Stewart Title Company - one of the Don is licensed to practice law in Utah and Washington State and is a member of the United States Supreme Court Bar Washington D.C. He received his Juris Doctorate and MBA from Gonzaga University. LANCE C. MELBER, Chief Executive Officer of Valutrust Lance Melber has been an innovator and executive in the real estate technology space for the entirety of his career. In 2001, Lance founded eSmartloan.com. In 2005, after building it to over $1.5 billion in loan volume, Lance sold the company to Capital One, where he served as Mortgage Chief until 2007, and as Senior VP until 2008. Lance served as an investor and active board member of Archer Technologies from 2008 until 2010. In 2010, Lance founded Valutrust Solutions, an appraisal management company, as well as a highly integrated transaction-management portal for the settlement services industry. Valutrust became part of the Williston Financial Group family of companies in the spring of 2013. Lance majored in Information Systems at Kansas State University and has an extensive background as a technology innovator and financial services expert. His passion is building IT infrastructures and automated processes for various Fortune 500 companies including Aon Corp, First Horizon National Corp and Seaboard Corp, in Kansas City. 9 UNDERWRITING AND CLAIMS Management Team MARK ADAMS, Chief Information Officer Mark currently serves as EVP and Chief Information officer (CIO) of Williston Financial Group, a Golden Gate Capital backed company. Previously, Mr. Adams was CIO and VP of Engineering for HireRight where he was responsible for leading global software development, information technology, information security, and business intelligence. Mark brings more than 19 years of enterprise technology strategy and innovation to the Golden Gate team. From 2008 to 2010, he was Group Manager of Enterprise Delivery Services for Auto Club of Southern California (AAA) where he led teams focused on the engineering of highly scalable, real-time, transactional systems. His duties included overseeing software and infrastructure engineering projects as related to improving the customer experience; especially in the areas of contact centers and highly transactional self-service applications. From 2006 to 2008, Mr. Adams led technology teams for Red 5 Studios; a global massively multi-player online game (MMOG) development studio. Prior to that, from 2002 to 2006 at Lending Tree Loans, Mr. Adams held leadership positions including serving as its Vice President of Information Technology. His prior experience includes software development and IT leadership roles for a variety of technology integration firms and universities. Mr. Adams holds a Bachelor of Science degree in Computer Science from California State University, Fullerton. 10 ORGANIZATION Operations Hierarchy ORGANIZATION Enterprise Structure 12 ORGANIZATION Company History December 1925 Northern Counties Title Insurance Company commences business, domiciled in the State of California. November 1974 South Carolina Title Insurance Company commences business, domiciled in the State of South Carolina. January 2010 Williston Financial Group commences operations, and acquires New Millennium Title Group, now known as WFG Lender Services. February 2010 WFG acquires Transunion National Title Insurance Company, formerly known as South Carolina Title Insurance Company and now named WFG National Title Insurance Company; the Company is licensed in 31 states. November 2010 WFG National Title Insurance Company is licensed in New York. January 2011 WFG National Title Insurance Company is licensed in Rhode Island. March 2011 WFG National Title Insurance Company is licensed in Wisconsin. May 2011 WFG Title Insurance Company establishes Default Services operation. July 2011 WFG acquires Seattle, Washington based Northpoint Escrow and Title, now named WFG National Title Company of Washington. WFG National Title Insurance Company is licensed in New Jersey. November 2011 March 2010 WFG acquires Transunion Title Insurance Company, formerly known as Northern Counties Title Insurance Company and now named WFG Title Insurance Company; the Company is licensed in the state of California. WFG launches TitleNet. March 2012 WFG Title Insurance Company opens Southern California direct branch. April 2012 WFG National Title Insurance Company is licensed in Pennsylvania. May 2010 WFG National Title Insurance Company is licensed in Oregon and launches its Portland tri-county direct operations. August 2012 WFG Title Insurance Company launches Santa Clara County, California operation. August 2010 WFG National Title Insurance Company is licensed in Washington and Missouri. November 2012 WFG acquires California- based Investors Title Company. April 2013 WFG acquires Valutrust Solutions, a national appraisal and vendor management company. May 2013 WFG acquires Nevada-based Community Title Services. June 2013 WFG National Title Insurance Company is licensed in Wyoming. September 2013 WFG launches Central Coast, California operation. WFG National Title Insurance Company is licensed in California. WFG National Title Insurance Company is licensed in Connecticut. October 2013 WFG launches Phoenix, Arizona operations. January 2014 WFG acquires Texas-based Universal Land Title of Texas. April 2014 California based WFG Title Insurance Company merges into WFG National Title Insurance Company. October 2014 WFG National Title Insurance Company is licensed in Alaska and Hawaii. ORGANIZATION Office Locations CORPORATE HEADQUARTERS Williston Financial Group 12909 SW 68th Parkway, Suite 350 Portland, OR 97223 ARIZONA Peoria Phoenix CALIFORNIA Aliso Viejo Glendale Irvine La Mirada Palm Springs San Bernardino San Jose Santa Barbara Santa Clara Temecula Westlake Village KANSAS Overland Park OHIO Cincinnati LOUISIANA Metairie OREGON Beaverton Clackamas Lake Oswego Lloyd Center NW Portland Tigard MASSACHUSETTS Boston MINNESOTA Bloomington Minneapolis NORTH CAROLINA Charlotte Greensboro FLORIDA Coral Springs Lake Mary Panama City Vero Beach NEW MEXICO Albuquerque GEORGIA Atlanta NEW YORK Freeport Valley Stream NEVADA Las Vegas PENNSYLVANIA Mohnton Pittsburgh SOUTH CAROLINA Columbia TEXAS Bedford Dallas Fort Worth Grand Prairie Houston Katy Plano San Antonio Southlake Sugarland VIRGINIA Richmond WASHINGTON Bellevue Everett Gig Harbor Kent Puyallup Seattle Tacoma WISCONSIN Green Bay FINANCIAL STABILITY FINANCIAL STABILITY Golden Gate Capital Majority shareholder Golden Gate Capital brings significant financial resources and multi-faceted experience to Williston Financial Group. Golden Gate Capital is a leading private equity firm with $12 billion in committed capital under management. They generate superior returns for their investors through buyout and growth equity investments across a wide variety of industries, partnering with world-class management teams to make equity investments in situations where there is a demonstrable opportunity to significantly 16 FINANCIAL STABILITY Financial Stability Ratings DEMOTECH WFG National Title Insurance Company has earned a Financial Stability Rating ® Prime Unsurpassed) from Demotech, Inc. of the severity of a general economic downturn or deterioration in the insurance cycle, insurers an earning Financial Stability Rating® of A' (A prime) possess Unsurpassed financial stability KROLL Kroll Bond Rating Agency, a Nationally Recognized Statistical Rating Organization (NRSRO) and a Credit Rating Provider (CRP), was established by Jules Kroll to restore trust in credit ratings by establishing new standards for assessing risk and by offering accurate, clear and transparent ratings. The Kroll name is synonymous with integrity. They are accountable directly to investors because Kroll Bond Ratings is 40% owned by pension funds and foundations, providing a built-in safeguard against conflicts of interest. 17 FINANCIAL STABILITY Q4 2014 Insurance Underwriter Trends 18 FINANCIAL STABILITY Q4 2014 Insurance Underwriter Trends 19 FINANCIAL STABILITY Q4 2014 Statutory Balance Sheets 20 FINANCIAL STABILITY Underwriter Comparison WFG NATIONAL TITLE INSURANCE COMPANY FIDELITY NTIC CHICAGO NTIC FIRST AMERICAN TIC OLD REPUBLIC NTIC STEWART TGC Demotech Financial Stability Rating (A' Prime Unsurpassed or Higher) YES YES YES YES YES YES KROLL Financial Stability Rating B- B B+ B A B+ Premiums Written to Policyholders' Surplus (2) 11.3 2.8 1.9 3.1 4.1 2.4 Policyholders' Surplus to Admitted Assets (1) 30% 38% 51% 44% 46% 49% Cash & Invested Assets to Total Liabilities (1) 123% 144% 182% 153% 165% 181% Parent Institutional Debt (1) as a % of Equity NONE 0% $3.343 Billion 52% $3.343 Billion 52% $454 million 18% $566 million 14% $93 million 14% Claim Reserve Coverage (2) (Total Claim Reserves / Payments) 148 months 74 months 83 months 53 months 108 months 73 months Excess Statutory Reserves (3) (Statutory Actual above Actuary Reserves) 9.1% 13.4% 28.3% 10.4% 4.8% 13.7% (1) As of June 30, 2014 (2) YTD June 30, 2014 (3) As of December 31, 2013 21 FINANCIAL STABILITY Insurance Coverages GENERAL, E&O AND BOND INSURANCE SYNOPSIS POLICY TYPE LIMIT OF LIABILITY POLICY PERIOD INSURING COMPANY General Liability $1M Mar 2014 Mar 2015 Great Northern/Chubb Umbrella $10M Mar 2014 Mar 2015 Federal Insurance/Chubb Financial Institution Bond $5M Mar 2014 Mar 2015 Underwriters at Lloyds Privacy/Cyber Protection $3M Jun 2013 Dec 2014 Hiscox Errors & Omissions $5M Mar 2014 Mar 2015 Maxum Specialty REINSURANCE PARTNERS Stewart Title Guaranty Company Under this agreement, WFG retains the first $3 million of any single risk, and automatically reinsures from $3 million to $5 million. This agreement also reinsures from $5 million to $10 million with written consent. Stewart will reinsure larger risks upon request and review on a case by case basis. 22 FINANCIAL STABILITY Accounting and Finance Oversight FINANCE AND ACCOUNTING TEAM centralized processes, systems and management oversight: financial accounting; trust accounting; statutory and regulatory accounting; banking and investment management and financial planning and analysis. Our team includes Certified Public Accountants, industry experienced personnel and other credentialed professionals. INDEPENDENT AUDITS annual audits, multi-year domiciliary Department of Insurance audits and periodic limited financial and controls peer audits. of Insurance. of WFG underwriter and other affiliates since 2010. 23 COMPLIANCE COMPLIANCE Overview The WFG group of companies takes compliance very seriously. Whether federal, state or WFG maintains a Compliance Department headed by General Counsel located at its corporate office in Portland, Oregon. The Compliance Department consists of at least one dedicated professional from each of the following departments: Information Technology; Human Resources; Legal/Claims; Direct Operations; Institutional Services; National Underwriting; and Agency. Senior level managers within their given departments are responsible for ensuring communication, implementation, and requisite training of all compliance policies and procedures. In addition to and in support of the Compliance Department, the company maintains a standing Compliance Committee. Currently there are twelve state or regional legal counsels serving on the Compliance Committee, each maintaining his or her own unique areas of expertise and experience. This committee serves to advise, inform and educate the Compliance Department and WFG staff as a whole with regards to current regulatory activity as well as current market trends that may give rise to compliance issues or concerns. The efforts of both the Compliance Department and the Compliance Committee are supported by a dedicated compliance paralegal also located at the In light of recent developments in connection with the Consumer Financial Protection Bureau (CFPB), the most significant areas of focus for the Compliance Department include (I) Title Agency Management; and (II) Direct Operations Trust Accounting controls. 25 COMPLIANCE Independent Title Insurance and Closing Agent Certification WFG agency appointment and management processes include the agent application; on-boarding if approved; periodic audits; continual monitoring; and recertification or termination should issues arise. WFG is committed to strengthening each of these processes in establishing a compliant agent-certification program. AGENT APPLICATION The WFG agent approval/appointment guidelines include requests for and review of the following information: Review agency financials General information regarding the agency E&O, Fidelity and Surety bond coverage Agency history Agency qualifications Personal information Review criminal/credit background checks Description of mix of business Description of accounting and escrow processes Business and bank references Agency organizational documents Trust account reconciliations AUDITING Agency Audit Services Division conducts audits of each agent as scheduled on a regular basis or in accordance with state statutory guidelines where applicable. procedures in order to ensure the accuracy and reliability of escrow trust accounts, reconciliations, files and general closing procedures. In addition, the review is designed to assist in the protection of WFG and WFG customers from potential fraud, potential losses and to ensure the integrity of the agents operations. ON-BOARDING Once approved, all agents go through a detailed on boarding process that starts with the review and execution of an Agency Agreement. The Agency Agreement contains and restrictions. 26 MONITORING WFG continually monitors and reports certain key indicators based upon agent trends, including but not limited to correlations between issuance of closing protection letters and policy remittance; non or low remitters; timing of remittances compared to policy effective dates; other unusual remittance trends and claims-to-premium ratios. WFG firmly believes the best approach to maintaining a quality agency network and minimizing risk is by having first-hand knowledge of each specific agent, as well as maintaining ongoing relationships with the agents, including their principals and key personnel. Because of these important relationships, WFG strives to maintain appropriate agent-to-agency representative ratios. COMPLIANCE Trust Accounting Controls Daily Trust Account reconciliations are a key control covering the safety of client fiduciary funds. bank transaction data to its title and escrow production systems, for identification of unmatched or unauthorized transactions. Any discrepancy is researched and accounted for promptly. Month- - bank, book and escrow trial balances, ensuring funds have been accounted for properly at an individual client file level. Outstanding check listings and trial balances are reviewed regularly by escrow administration personnel for timely research and resolution of reconciling items, stale checks and dormant funds. These reconciliations are reviewed and approved by a management level individual other than the preparer. WFG utilizes positive pay systems for added valid transaction protection. 27 COMPLIANCE Corporate Governance The WFG Board of Directors is elected by the shareholders to oversee management and to ensure that the long-term interests of the shareholders are being served. In consideration of the long-term interests of shareholders, the Board recognizes the importance of considering and addressing the interests of the company's practices, goals and objectives, including policyholders, employees and the marketplace in which the company conducts its business. The Board holds four or more regularly scheduled meetings during the year, at which it reviews and discusses reports by management on the performance of the company, its plans and prospects, as well as immediate issues facing the company. In addition to its general oversight of management, the Board or its committees also perform a number of specific functions, including: Reviewing, advising, approving and monitoring fundamental financial and business strategies and major corporate actions; Assessing major risks facing the company, and reviewing options for their mitigation; Selecting, evaluating and compensating the CEO and overseeing CEO succession planning; Providing advice and counsel to the CEO and senior management; Providing counsel and oversight on the selection, evaluation, development and compensation of senior management; and Ensuring processes are in place to maintain the integrity of the Company, including the integrity of the financial statements, regulatory compliance and reporting. The Board assesses the company's risk management processes and procedures, and coordinates and integrates committee responsibilities relating to risk oversight. The Board periodically discusses the company's risk management and oversight, and receives and reviews reports on risk management, compliance and oversight from its committees and management at each Board meeting. 28 COMPLIANCE Corporate Governance BOARD OF DIRECTORS KEN DIEKROEGER, Managing Director Golden Gate Capital JAKE MIZRAHI, Managing Director Golden Gate Capital JIM RAUH, Principal Golden Gate Capital PATRICK STONE, President and Chief Executive Officer Williston Financial Group STEVE OZONIAN, Chief Real Estate Officer Carrington Capital 29 COMPLIANCE Conflicts of Interest In accordance with Department of Insurance guidelines, all WFG officers, directors and key management personnel are required to submit Board of Directors in order to report any potential conflicts of interest. 30 COMPLIANCE Enterprise Risk Management (ERM) TOP 5 RISKS TARGETED BY MANAGEMENT Agent defalcation. Audits of agent trust accounts and financial data. Borrower and forgery fraud. Training of agents and requiring review of certain transactions such as titles that appear to have no mortgage, mortgage releases without any connection to another transaction, and significant cash out transactions. authority, and management reporting relationships for risk managers. The WFG Board regularly receives, discusses, and understands reports on risk positions and the company's risk-management programs. Risk-management policies and procedures are clearly stated and broadly communicated internally and externally to company management, employees and stakeholders. Agent escrow errors. Training of agents and aggressively seeking recoupment. Market forces in the overall real estate market. Making use of metrics-driven data to closely monitor and control costs in an effort to withstand market fluctuations. Competitor predatory actions to gain market share at the expense of sound business practices and assuming unwise risks. Making sound financial decisions to maintain policyholder protection and sound underwriting. 31 COMPLIANCE Fraud Prevention and Reporting AGENCY As outlined earlier in this report, WFG has a strict application process for agents who wish to become WFG agents. All applicants must submit a five page application that requires information personnel. The application requires a list of all bank accounts used by the agent. The applicant must submit three references and their contact information. ON-SITE AUDIT WFG requires an onand claims practices, policy inventory, security arrangements and files. BULLETINS TO AGENTS/EDUCATION OF WFG EMPLOYEES WFG employs experienced auditors who recognize fraudulent practices by title agents. WFG managers and counsel regularly review newsletters and articles relating to escrow practices and title insurance published by American Land Title Association, October Research and others. Whenever reports of fraudulent schemes appear in these publications, WFG sends a bulletin via email to all WFG agents and instructs them to be mindful of such fraudulent practices. FRAUD INVESTIGATION/REPORTING If WFG receives a report of a suspected fraudulent act, an auditor is assigned to investigate the matter the appropriate law enforcement and other regulatory authorities engaged in the investigation and prosecution of insurance fraud. RESTITUTION WFG will pursue restitution for financial loss caused by insurance fraud when appropriate if there is a realistic expectation of recovery from the person or entity that caused the loss. 32 COMPLIANCE Human Resources At WFG, we understand that the importance of being a good employer starts with an How we bring a potential new employee into our company. WFG is an equal opportunity employer and adheres to EEOC guidelines. The company complies with applicable state and local laws governing nondiscrimination in every location in which the company has facilities. This is made evident by our uniform hiring practices, careful recruiting and application process and standardized application forms. Managers are schooled in proper interviewing techniques. They are trained to avoid asking discriminatory questions and advised on how to gather required documentation (such as those required by I9 forms). Additionally, as required by the Fair Credit Reporting Act. WFG utilizes the ADP Workforce Now platform for its Human Resource Information System (HRIS). This platform makes available numerous virtual training sessions that employees and managers can attend. Easy access to training programs allows WFG to support the growth of our staff and prioritize our corporate commitment to compliance. 33 COMPLIANCE Security and Sensitive Information WFG restricts access to confidential information to only authorized individuals WFG maintains physical, electronic, and procedural safeguards that protect confidential information. WFG does not disclose information about its current or former customers to anyone, except as permitted or required by law. WFG ensures the privacy of communications between its customers and WFG servers via encryption. Because of the potential risk to WFG, its employees and customers, data loss and identity theft is of significant concern. WFG has adopted a sensitive information policy to help protect the Company, its employees, customers and vendors from damages related to loss or misuse of sensitive information. WFG makes every effort to comply with federal and state guidelines to protect personal employee, customer and vendor information. WFG further provides it employees with a mandatory identity theft training program regarding the various forms of identity theft to help reduce the risk of such security breaches and identity theft. 34 COMPLIANCE Suspicious Activity Reporting (SAR) Although title insurance companies are not subject to the Financial Crimes Enforcement Network (FinCen) provisions or Bank Secrecy Act, WFG recognizes that real estate, title and escrow companies are not immune to unscrupulous actors who seize opportunities to commit fraud. WFG maintains a policy of voluntary compliance by filing a SAR with FinCen to report fraudulent or suspicious activity. 35 COMPLIANCE Enterprise Risk Management (ERM) UNDERWRITING AND CLAIMS UNDERWRITING AND CLAIMS UNDERWRITING AND CLAIMS Overview WFG is available coast to coast to serve your title insurance underwriting and claims needs. WFG has experienced legal staff throughout the nation available to aid in the resolution of any title problems that may arise. At a time when large companies are automating, off-shoring and depersonalizing their systems, WFG is committed to building a company founded on personal attention provided by experienced title experts that is unparalleled in the title industry. Our underwriting staff averages over 25 years of experience in the title insurance business. With experienced underwriters from California to Massachusetts, there is always someone available to respond to any underwriting issues. Our claims division is able to personally, cooperatively, competently and quickly respond to any pressing title claim concerns. WFG does not forget you when the insured transaction is completed. WFG is there when needed, long after the closing when the most difficult problems often arise. 37 UNDERWRITING AND CLAIMS Management Team STEVEN H. WINKLER, Chief Underwriting Counsel/Secretary With over 40 years in the title insurance business, Steve was most recently the Corporate Underwriting Counsel for United General Title Insurance Company. He has previously held a variety of legal and management positions with national underwriters, including Fidelity National Steve is a graduate of Union College, Schenectady, N.Y. (B.A.) and the University of Michigan Law School (J.D.). He is a member of the American Bar Association, the Connecticut Bar Association where he serves as an Emeritus Member of the Executive Committee of the Real Property Section, and is a Member of the Committee on Unauthorized Practice of Law. In addition to various county Bar Associations, Steven is also a member of the Association of Corporate Counsel and a member of the ALTA form committee. In 1992, he was elected a Fellow of the College of Real Estate Lawyers and, in 1998, a Fellow of the American College of Mortgage Attorneys. ROGER BLAUVELT, National Agency Counsel Roger Blauvelt is Vice President and Counsel for WFG National Title Insurance Company. He began his career in the title insurance industry in 1971 and has held a variety of positions including Sr. VP and Regional Counsel for LandAmerica in 23 states in the Northeast and Southeast. He also practiced law in New Jersey and prior to joining WFG was counsel at FDIC. Roger is a graduate of Boston College and received a J.D. degree from Fordham University School of Law. He is a member of the bar in New York, New Jersey and Florida. He is a member of the Real Property and Probate Section of the Florida Bar and the American Bar Association as well as a member of the American Bankruptcy Institute. He formerly served on the ALTA Forms Committee, the NY TIRSA Rate Committee, the NJ Title Insurance Rating Bureau, and two terms as President of the NJ Land Title Association. 38 UNDERWRITING AND CLAIMS Management Team JEFFREY DONDANVILLE, National Claims Manager Jeffrey Dondanville is the National Claims Manager for Williston Financial Group. He has managed regional claims operations for the major title insurance companies for many years and has been a Jeff is a graduate of California State University, Northridge (B.A.) and California State University, Fullerton, (M.S.). He received a J.D. degree from Western State University College of Law, Fullerton. He is a member of the California Bar Association US District Court Central District of CA, 9th Circuit Court of Appeals, and The Forms and Practices Committee of the California Land Title Association. 39 UNDERWRITING AND CLAIMS Contact List Authority Issues, Corp., LLC, Etc. Joe McCabe (503) 387-3636 [email protected] Bankruptcy Ward Graham (781) 587-0172 [email protected] Commercial Finance Steve Winkler (203) 314-4614 [email protected] Condominiums and HOAs Steve Winkler (203) 314-4614 [email protected] Easements (Common Law) Ward Graham (781) 587-0172 [email protected] Federal Tax Liens Steve Winkler (203) 314-4614 [email protected] Fraud & Escrow Issues Jeff Dondanville (714) 452-1308 [email protected] Indian Land Claims Joe Drum (617) 899-4717 [email protected] Mechanics Liens Tom Klein (804) 467-1648 [email protected] NW Regional Underwriting Mary Thuemmel (503) 387-3636 [email protected] RESPA Chuck Cain (513) 543-4545 [email protected] Agency Operations Joe Drum (617) 899-4717 [email protected] SE Agency Operations Tom Klein (804) 467-1648 [email protected] SE Regional Underwriting Roger Blauvelt (407) 562-1946 [email protected] Tidelands-Western Jeff Dondanville (714) 452-1308 [email protected] Torrens Chuck Cain (513) 543-4545 [email protected] Torrens MA Ward Graham (781) 587-0172 [email protected] Truth in Lending Chuck Cain (513) 543-4545 [email protected] Water Rights Jeff Dondanville (714) 452-1308 [email protected] 40 INFORMATION TECHNOLOGY INFORMATION TECHNOLOGY Overview WFG, being a relatively new and agile player in the title and settlement services, has the ability and capacity to make significant strategic investments in its IT platform that drive client value. We have already taken robust steps towards our goal of a secure, flexible and scalable transactional platform that allows for low friction integrations between WFG, its clients and its partners. CoIT platform has been built. We have invested in transaction, retrieval and reporting systems that either natively allow for a wide range of integration between WFG and its partners and clients, or we have chosen those that are readily extensible to provide similar capabilities. Through automation, we strive to decrease the cost of a real estate transaction by allowing for the removal of manual, high expense processes through automation and provide for a seamless end-to-end order submission and delivery experience. As every transaction is different, we relentlessly aim to improve any and all processes that can be successfully automated, allowing our experienced operations staff to focus on the tough outliers that need a deft touch. In the last calendar year, we launched a brand new title and settlement services transaction platform for our direct operations in Oregon and California, and standardized our Lender Services division on a scalable, cloud-based system specifically designed to handle high volume lender transactions. The two systems have been integrated to allow for a single point of contact for our clients and a wide variety of options for the production of the order and its delivery. deliver the ultimate target of lowering the cost of a real estate transaction by allowing effective communication via secure access to current and of choice. WFG has a broad range of third party data and service providers for ancillary products such as document retrieval and property profiles whose services are integrated to its own transactional systems and client facing delivery portals. In 2013, we launched our Lender Dashboard, which allows for loan officers and processors to track every loan as it moves through our title and settlement service platform. It will be shortly followed by a Funder Dashboard which 42 allows for electronic funding of loans and provides a workflow streamlining opportunity for our lender clients. We have also integrated with a number of Loan Origination Systems to allow for electronic order placement and retrieval to provide a consistent experience. WFG anticipates new opportunities with changes in the industry brought about by the Dodd-Frank legislation and the Consumer Financial Protection Bureau. One of the most substantial and opportune aspects of these changes will be to utilize technology to tie lenders ever closer with title and settlement services providers and WFG is ready to offer solutions to its clients that take advantage of this increased proximity. Certified agents and closing, document vaults and secondary market integrations, which, taken together, will allow for the validation of the provenance of a refinance transaction from the origination to the sale to the investor, lowering lender risk due to potential fraud and noncompliance, thus reducing incidents of repurchase. We are excited and eager to work with you to help you expand your market share in what promises to be a very different lending landscape. INFORMATION TECHNOLOGY Disaster Recovery and Business Continuity act to its clients, should adverse events impact its normal business operations. Adverse events are classified into the following categories based primarily upon anticipated duration and potential monetary loss: The company hosts its mission-critical operational software and data in the following environments: Adverse events impacting these technology Single server outage Loss of network connectivity Loss of data storage Loss of power Loss of availability zone Loss of data center Total loss of software services Total loss of data at data center location Low impact Medium impact High impact Highest impact facilities and workflow are addressed in a progressive manner, by shifting critical functions to alternate company production facilities. Collocated data center, including N+1 network and power redundancy, strong access controls, and off-site replication to a geographically separated partner Amazon Web Services (AWS) cloud, including multiple redundancies, near real-time failover, and Service Level Agreement for uptime of 99.95% per year Hosting providers continuity plan in order of increasing severity: WFG recognizes the importance of communication and has included in its business continuity plan a communication strategy that is tailored to the impact level classification. 43