EX-99.1 2 v112232_ex99-1.htm
NEWS from:
 
STEWART INFORMATION SERVICES CORPORATION
 
P.O. Box 2029, Houston, Texas 77252-2029
 
www.stewart.com
 
Contact:
Ted C. Jones
   
Director - Investor Relations
   
(713) 625-8014
 
 
FOR RELEASE AT 6AM CDT
 
Stewart Reports Operating Results for the First Quarter 2008

HOUSTON, April 30, 2008 - Stewart Information Services Corporation (NYSE-STC) today reported the results of its operations for the quarter ended March 31, 2008. (Dollar amounts in the table below are in millions, except for per share figures.)

   
First Quarter
  
   
2008
  
2007(a)
  
           
Total revenues
  
$
394.1
  
$
531.7
  
Pretax loss before minority interests
    
(36.3
)
  
(4.6
)
Net loss
    
(22.3
)
  
(4.8
)
Net loss per share
    
(1.24
)
  
(0.26
)

(a)
Includes a $3.2 million gain ($2.1 million after taxes, or $0.11 per share) from the sale of two subsidiaries. Also includes a charge of $5.1 million ($3.3 million after taxes, or $0.18 per share) relating to four large title losses.


Financial Highlights

▪ Revenues decreased 25.9 percent to $394.1 million in the first quarter of 2008 compared with $531.7 million for the first quarter of 2007. The Company reported a loss before taxes (and before minority interests) of $36.3 million for the first quarter of 2008 compared with a loss of $4.6 million for the same period in 2007.

▪ The revenue decline in 2008 was due to a significant decrease in title orders resulting from a decline in home sales and reduced financing activity relating primarily to tightening of mortgage lending practices and issues in the credit market, as well as lower home prices.

▪ The Company continues to respond aggressively to the decline in the real estate market and is taking appropriate steps to restore profitability. In addition to workforce reductions, the Company continues to consolidate branch offices and locations, and is pursuing the completion of title search and production efficiencies company-wide. The Company’s shared services initiative also remains on target and will generate benefits during 2008 in the areas of procurement and information technology infrastructure by reducing costs and enhancing service levels.

 
▪ Excluding acquisitions, divestitures and startups, the Company has reduced its employee count since December 31, 2005 by approximately 2,500, or 24.8 percent. The Company reduced its employee count during the first quarter of 2008 by approximately 460, or 5.4 percent. The Company will continue to incur significant costs relating to conversion of its technology to more efficient platforms. Although other operating expenses have declined, they have not declined at the same rate as revenues due to the relatively fixed nature of some of these costs, such as rent and other occupancy expenses, and costs associated with our growing, profitable international and commercial businesses.

▪ Stewart's book value per share decreased to $40.48 at March 31, 2008 compared with $41.82 at December 31, 2007.

▪ Title orders declined in the first quarter of 2008 by 13.0 percent from the same period a year ago. Orders were 26.3 percent lower in March 2008 than in March 2007.

“The first quarter of 2008 has been a challenging environment for profitability given the current adverse economic conditions, as well as the traditional negative impact of the seasonality of real estate sales,” said Stewart Morris, Jr., co-chief executive officer and president. “Fannie Mae’s current estimate is that a total of $499 billion of one-to-four family lending was completed in the first quarter of 2008 versus $612 billion in the first quarter of 2007 — an 18.5 percent decline. In view of this, we continued our reduction in staffing levels in the first quarter of 2008.

“We continue the process of converting our legacy production systems to a new web-based production platform on our centralized ASP and data center. As this progresses during the year, we will eliminate three data centers, reduce the required level of personnel and reduce maintenance costs,” said Morris.

“SureClose®, our industry-leading transaction management system, has been adopted by the Arizona Association of Realtors®, the seventh largest state association in the country,” added Morris. It will serve more than 5,000 brokerage companies statewide. More than 80 percent of homebuyers already utilize the web to search for a home to purchase. The use of SureClose will now allow the buyer, seller, lender and Realtor® to track the progress of the closing via the web.

“Stewart Title Guaranty Company (Guaranty) now has the largest statutory policyholders’ surplus of any title insurance underwriter and was the only underwriter with surplus greater than $100 million to increase surplus in 2007,” said Malcolm S. Morris, co-chief executive officer and chairman. “For a record 33rd consecutive year Guaranty has grown surplus, even in 2007, which was one of the most difficult years on record. Policyholders’ protection provided by increasing financial strength is facilitating our growth in the commercial segment.

“We are making progress in reducing our risk exposure by evaluating and potentially cancelling agencies that our models indicate are at the higher-end of the risk spectrum,” added Morris. “While we continue to add new agencies, we have increased our qualifying requirements. In addition to our standard background checks on agency personnel and other due diligence, we are now completing full pre-signing audits of agencies,” said Morris.

Stewart Information Services Corporation is a customer-driven, technology-enabled, strategically competitive, real estate information, title insurance and transaction management company. Stewart provides title insurance and related information services required for settlement by the real estate and mortgage industries throughout the United States and in international markets. Stewart also provides post-closing lender services, automated county clerk land records, property ownership mapping, geographic information systems, property information reports, document preparation, background checks and expertise in tax-deferred exchanges. More information can be found at www.stewart.com.
 
This press release may contain forward-looking statements, which include all statements other than statements of historical facts. Forward-looking statements are not guarantees of performance and no assurance can be given that Stewart's expectations will be achieved. In particular, historical order counts do not necessarily indicate future revenues since Stewart cannot predict the number of orders that will result in closings.

###


STEWART INFORMATION SERVICES CORPORATION
STATEMENTS OF OPERATIONS
(In thousands of dollars, except per share amounts)
 
   
Three months ended
  
   
March 31
  
 
  
2008
  
2007
  
Revenues
          
Title insurance:
          
Direct operations
    
180,587
    
229,614
  
Agency operations
    
191,053
    
272,254
  
Real estate information
    
14,716
    
16,533
  
Investment income
    
8,078
    
9,051
  
Investment and other (losses) gains - net
    
(297
)
  
4,222
  
      394,137    
531,674
  
               
Expenses
              
Amounts retained by agencies
    
155,562
    
222,390
  
Employee costs
    
151,962
    
176,793
  
Other operating expenses
    
86,836
    
93,643
  
Title losses and related claims
    
25,121
    
31,859
  
Depreciation and amortization
    
9,091
    
9,885
  
Interest
    
1,815
    
1,668
  
     
430,387
    
536,238
  
               
Loss before taxes and minority interests
    
(36,250
)
  
(4,564
)
Income tax benefit
    
(15,161
)
  
(2,621
)
Minority interests
    
1,203
    
2,819
  
Net loss
    
(22,292
)
  
(4,762
)
               
Average number of shares (000)
    
18,046
    
18,237
  
               
Net loss per share
    
(1.24
)
  
(0.26
)
               
Segment information:
              
Title revenues
    
379,421
    
515,141
  
Title pretax loss before minority interests
    
(36,944
)
  
(8,056
)
               
REI revenues
    
14,716
    
16,533
  
REI pretax earnings before minority interests
    
694
    
3,492
  
               
Selected financial information:
              
Cash used by operations
    
(31,447
)
  
(15,116
)
Title loss payments - net of recoveries
    
30,482
    
25,453
  
Changes in other comprehensive earnings - net
    
159
    
833
  
               
Number of title orders opened (000):
              
January
    
50.9
    
56.0
  
February
    
52.7
    
53.4
  
March
    
47.0
    
63.8
  
Quarter
    
150.6
    
173.2
  
               
Number of title orders closed - quarter(000):
    
89.5
    
109.4
  

 
 
  
March 31
2008
  
Dec 31
2007
  
           
Stockholders’ equity
    
733,412
    
754,059
  
Number of shares outstanding (000)
    
18,120
    
18,031
  
Book value per share
    
40.48
   
41.82
  


STEWART INFORMATION SERVICES CORPORATION
BALANCE SHEETS (condensed)
(In thousands of dollars)

   
March 31
  
December 31
  
   
2008
  
2007
  
Assets
          
Cash and cash equivalents
    
90,903
    
109,239
  
Short-term investments
    
77,648
    
79,780
  
Investments - statutory reserve funds
    
516,613
    
518,586
  
Investments - other
    
93,424
    
98,511
  
Receivables - premiums from agencies
    
37,379
    
48,040
  
Receivables - other
    
99,972
    
93,335
  
Allowance for uncollectible amounts
    
(12,001
)
  
(11,613
)
Property and equipment
    
91,151
    
96,457
  
Title plants
    
78,650
    
78,245
  
Goodwill
    
209,628
    
208,824
  
Intangible assets
    
15,950
    
17,157
  
Other assets
    
104,751
    
105,413
  
               
     
1,404,068
    
1,441,974
  
               
Liabilities
              
Notes payable
    
116,223
    
108,714
  
Accounts payable and accrued liabilities
    
89,639
    
108,658
  
Estimated title losses
    
434,509
    
441,324
  
Deferred income taxes
    
15,314
    
13,509
  
Minority interests
    
14,971
    
15,710
  
     
670,656
    
687,915
  
               
Contingent liabilities and commitments
              
               
Stockholders' equity
              
Common and Class B Common Stock and additional paid-in capital
    
142,682
    
141,196
  
Retained earnings
    
574,826
    
597,118
  
Accumulated other comprehensive earnings
    
20,001
    
19,842
  
Treasury stock
    
(4,097
)
  
(4,097
)
               
Total stockholders' equity
    
733,412
    
754,059
  
               
     
1,404,068
    
1,441,974
  
 
April 30, 2008