Our reserve for title claim losses includes reserves for known claims as well as for losses that have been incurred but not yet reported to us (“IBNR”), net of recoupments. We reserve for each known claim based on our review of the estimated amount of the claim and the costs required to settle the claim. Reserves for IBNR claims are estimates that are established at the time the premium revenue is recognized and are based upon historical experience and other factors, including industry trends, claim loss history, legal environment, geographic considerations, and the types of policies written. We also reserve for losses arising from escrow, closing and disbursement functions due to fraud or operational error. As of December 31, 2011 and 2010, our reserve for title claim losses was $1.9 billion and $2.2 billion, respectively.
The provision for title claim losses includes an estimate of anticipated title and title-related claims and escrow losses. The estimate of anticipated title and title-related claims is accrued as a percentage of title premium revenue based on our historical loss experience and other relevant factors. We monitor our claims loss experience on a continual basis and adjust the provision for title claim losses accordingly as new information becomes known, new loss patterns emerge, or as other contributing factors are considered and incorporated into the analysis of the reserve for claim losses. The claim loss provision for title insurance was $222.3 million, $248.9 million, and $264.7 million for the years ended December 31, 2011, 2010, and 2009, respectively. These amounts reflected average claim loss provision rates of 6.8% for 2011 and 2010, and 5.1% of title premiums for 2009. The claim loss provision in each year is net of a reduction in claim loss expense related to the amortization of an acquisition-date fair value adjustment from the LFG Underwriters acquired in December 2008. The year ending December 31, 2009 also included additional credits/charges as follows:
In August 2011, we borrowed $200.0 million on our revolving credit agreement and subsequently repaid the remaining $165.6 million principal amount of our outstanding 7.30% notes due August 2011. Our outstanding debt also includes $236.4 million aggregate principal amount of our 5.25% notes due March 2013 and $299.8 million aggregate principal amount of our 6.60% notes due May 2017. The indenture governing the 5.25% notes also contains customary events of default. These events of default include a cross default provision, with respect to any other debt of the Company in an aggregate amount exceeding $20 million for all such debt, arising from (i) failure to make a principal payment when due or (ii) the occurrence of an event which results in such debt being due and payable prior to its scheduled maturity.
Investments in unconsolidated affiliates are recorded using the equity method of accounting and, as of December 31, 2011 and 2010, consisted of the following (in millions):
In response to the favorable development on recent year claims, the average title loss provision rate decreased in 2010 from 2009 and remained consistent for 2011. During the year ended December 31, 2009, we released excess title reserves of $74.4 million in addition to recording an average 7.3% provision for claims losses. The release of excess reserves was due to analysis of the reserve position in light of consistently lower claim payments since 2008.
did not seek a specified amount of damages as to each of the plaintiffs but is seeking damages to plaintiffs and potential class members measured by the loss of their property, consequential damages and other elements of damages including punitive and treble damages. A hearing on the motion to dismiss was held on January 17, 2012 but no ruling has been issued. We are uncertain as to the total volume of claims against LES that remain unsatisfied; however in a related case, on January 26, 2012 the LES liquidation trust filed a motion to approve a settlement agreement between the LES liquidation trust, the LFG liquidation trust and certain underwriters at Lloyd's of London with the Bankruptcy Court for the Eastern District of Virginia. The motion asks the bankruptcy court to approve the settlement, which would have the effect of exhausting all insurance coverage for the LandAmerica Financial Group, Inc. (“LFG”) entities, including the entities FNF purchased ("FNF entities") from LFG that are named as defendants in the Hays action. The FNF entities are co-insureds under the Lloyds policies, had made claims based on the LES 1031 litigation, and other claims as a result of operations. Despite having made these claims as co-insureds, and having requested notice, and an opportunity to negotiate with Lloyds and the LES liquidation trust to find a mutually acceptable resolution to all claims, Lloyds and LES excluded the FNF entities from the swettlement negotiation. On February 17, 2012 the FNF entities filed an objection to approval of the settlement. The FNF entities argued that the self-insured retention amounts and potential coverage have not been sufficiently disclosed and/or are incorrectly calculated, as well as that it is inequitable to exhaust coverage under the policy by settling with the LES liquidation trust leaving our claims unsatisfied. The matter is scheduled for hearing on February 23, 2012. In the settlement agreement, LES asserts total losses in excess of $300 million for exchange funds and taxes lost as well as defense costs of more than $12 million. According to the settlement agreement, the LES liquidation trust or the LFG liquidation trust have already paid more than $200 million of the total losses to claimants. If the settlement agreement is approved, $38 million would be distributed under certain Lloyds insurance coverages pursuant to the settlement agreement. Based on the facts of the settlement agreement, and assuming the Lloyds settlement is approved, which it may not be, $74 million of losses and attorney's fees remain unpaid. In order to make any meaningful estimate of our potential exposure, if any, under this case, we must consider multiple variables, including the following. First, it is uncertain what, if any, of the causes of action plead will remain after the court rules on our motion to dismiss. Also, at this time, no discovery has been undertaken or exchanged between the parties. The potential population of plaintiffs and/or class members under each cause of action alleged against us has not been determined and therefore neither has the amount of the potential compensatory loss for the exchange amount or other interest and tax savings allegedly lost. Our potential exposure will also be affected by the approval of the LES settlement agreement discussed above as well as other related cases that are outstanding. Due to these factors, among others, and the early stage of this case, it is not possible to make a meaningful estimate of the amount or range of loss to the Company, if any, that could result from this case at this time. We intend to continue to vigorously defend this action.
Our underwritten title companies are also subject to certain regulation by insurance regulatory or banking authorities, primarily relating to minimum net worth. Minimum net worth requirements for each underwritten title company are as follows: $7.5 million for Fidelity National Title Company, $2.5 million for Fidelity National Title Company of California, $3.0 million for Chicago Title Company, and $0.4 million for Ticor Title Company of California, Commonwealth Land Title Company, and Lawyers Title Company. These underwritten title companies are in compliance with all of their respective minimum net worth requirements at December 31, 2011.
On April 14, 2009, we offered 15,800,000 shares of our common stock at an offering price of $19.00 per share, pursuant to an effective registration statement previously filed with the Securities and Exchange Commission. The underwriters were granted and chose to exercise an option to purchase additional shares equal to 15% of the offering, or 2,370,000 shares, at the offering price. A total of 18,170,000 shares were issued on April 20, 2009, for net proceeds of approximately $331.4 million. The proceeds were used as follows: $135.0 million to repay borrowings under our $1.1 billion revolving credit facility, $71.5 million to repurchase our public bonds, $50.8 million to repurchase shares of our common stock, $25.0 million as part of a $57.1 million capital infusion into Lawyers Title and Commonwealth Land Title, and the remainder for general corporate purposes.
The corporate and other segment consists of the operations of the parent holding company, certain other unallocated corporate overhead expenses, other smaller operations, and our share in the operations of certain equity investments, including Ceridian and Remy and our former investment in Sedgwick in 2010 and 2009.