In a significant win for distressed insurers, the U.S. Court of Appeals for the Eleventh Circuit has affirmed a bankruptcy court’s ruling that Old Republic National Title Insurance Company’s 2015 acquisition of a Florida title insurer’s assets for $47.5 million represented fair value. The decision, handed down on November 24, 2025, in Stermer v. Old Republic, resolves a long-standing challenge from creditors and reinforces protections for restructurings aimed at averting insolvency. This outcome highlights the judiciary’s deference to expert valuations in complex bankruptcy disputes.
Background: ATIF’s Financial Crisis and the Lifeline Deal
American Title Insurance Company (ATIF), a Florida-based title insurer, teetered on the brink of collapse amid the 2008 financial crisis. Attorney-agents allegedly absconded with funds, investments plummeted, and premium income dried up. By 2015, state regulators threatened receivership unless ATIF restructured.
Enter Old Republic Title, which proposed assuming ATIF’s policy liabilities—estimated at $45 million to $57.2 million—in exchange for ATIF’s tangible assets valued at approximately $47.5 million. The deal, structured as an asset transfer under a joint venture agreement, eliminated ATIF’s ability to issue new policies but preserved its operations. ATIF’s board approved the transaction, viewing it as a survival strategy.
ATIF filed for Chapter 11 bankruptcy in 2017, triggering scrutiny from creditor trustee Daniel Stermer, who argued the exchange shortchanged the estate by undervaluing intangibles like goodwill.
The Lower Court Battle: Exclusion of Expert Testimony Proves Pivotal
In the U.S. Bankruptcy Court for the Middle District of Florida, Stermer relied on valuation expert Michael Pfeiffer, who estimated ATIF’s enterprise value at over $100 million by projecting hypothetical revenue from new policies—despite the joint venture barring such activity—and lumping intangibles into a single figure.
Old Republic countered with expert Steven Hazel, who critiqued Pfeiffer’s approach as deviating from standard practices under IRS Revenue Ruling 59-60 and lacking market comparables. The bankruptcy judge excluded Pfeiffer’s testimony as unreliable under Federal Rule of Evidence 702 and Daubert standards, then ruled the deal provided reasonably equivalent value based on the parties’ stipulations.
The district court affirmed on appeal, leading Stermer to escalate to the Eleventh Circuit.
Eleventh Circuit’s Ruling: Deference to Bankruptcy Expertise
In a unanimous opinion authored by Chief Judge William Pryor Jr., a three-judge panel upheld the lower courts on November 24, 2025. The court deferred to the bankruptcy judge’s gatekeeping role on expert evidence, finding no abuse of discretion in barring Pfeiffer’s projections.
Key holdings included:
- Valuation Stipulations Control: The parties agreed the tangible assets were worth $47 million, with Old Republic’s liability assumption ranging from $45-57.2 million—establishing fair consideration without need for speculative intangibles.
- Hypothetical Projections Flawed: Pfeiffer’s model ignored the joint venture’s restrictions, rendering it irrelevant to ATIF’s actual post-deal posture.
- No Fraudulent Transfer: Under 11 U.S.C. § 548, the exchange wasn’t a constructively fraudulent conveyance, as ATIF received value exceeding its obligations.
The ruling, docketed as No. 23-10850, emphasizes that bankruptcy courts aren’t bound by rigid formulas but can rely on holistic, business-reality assessments.
Key Implications for Insurers and Creditors
This decision offers reassurance to carriers navigating distress sales, particularly in regulated sectors like title insurance where liability assumptions are common. It validates “going-concern” valuations over liquidation scenarios, potentially reducing litigation risks in asset transfers.
For creditors, it underscores the hurdles in challenging deals post-approval: proving bad faith or gross undervaluation requires robust, Daubert-compliant evidence. Industry watchers predict fewer § 548 claims against restructurings, especially where regulators endorse the path.
| Aspect | Impact on Insurers | Impact on Creditors |
|---|---|---|
| Valuation Flexibility | Allows practical assessments, including liability offsets | Demands concrete proof of overreach |
| Expert Scrutiny | Rewards adherence to standards like Rev. Rul. 59-60 | Heightens bar for speculative models |
| Regulatory Backing | Bolsters state-approved deals against later challenges | Limits second-guessing of solvency threats |
Broader Context in Title Insurance M&A
Old Republic, a subsidiary of Old Republic International Corp. (NYSE: ORI), continues aggressive expansion, with recent announcements like the pending 2026 acquisition of Everett Cash Mutual in a demutualization deal. This Eleventh Circuit affirmance aligns with a post-2008 trend of consolidation, where distressed assets fetch premiums for their liability portfolios.
Legal analysts note the ruling could influence similar disputes in the Eleventh Circuit’s footprint—Florida, Georgia, and Alabama—where title insurers hold significant market share.
The Eleventh Circuit’s affirmation in Stermer v. Old Republic cements the $47.5 million deal as a model of fair value in crisis-driven transactions, shielding Old Republic from further liability and affirming bankruptcy courts’ discretion. For the title insurance sector, it signals judicial support for pragmatic restructurings that prioritize continuity over creditor windfalls, potentially stabilizing M&A amid economic uncertainties.
For deeper analysis, read the full opinion at Justia – Stermer v. Old Republic. Track industry reactions on X via Old Republic’s account.