EX-99.1 2 si3890ex991.htm EXHIBIT 99.1

Exhibit 99.1

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 Earnings for Third Quarter 2005

HOUSTON, October 27, 2005 -- Stewart Information Services Corporation (NYSE-STC) reported net earnings of $31.8 million, or $1.74 per diluted share, for the three months ended September 30, 2005, versus net earnings of $21.1 million, or $1.16 per diluted share, for the third quarter of 2004. Revenues in the third quarter of 2005 increased 21 percent to $639.4 million from $529.7 million for the same period last year.

Total revenues for the first nine months of 2005 were $1.8 billion, up 15 percent from the same period a year ago. Earnings for the first nine months totaled $79.7 million, or $4.37 per diluted share, versus $62.2 million, or $3.42 per diluted share, for the first nine months of 2004.

Title orders in the third quarter of 2005 were 16 percent greater than the same quarter a year ago. Orders in the month of September were 12 percent greater than the same month last year.

Revenues increased in the third quarter of 2005 over the same period in 2004 due to continuing favorable long-term interest rates, which positively impacted residential and commercial closings. However, long-term interest rates for the month of September 2005 were slightly higher than in September 2004.  Rates rose slightly in early October 2005. Acquisitions also contributed to the increase in revenues. The company’s pretax profit margin increased in the third quarter of 2005 compared to the same quarter a year ago. The increase was primarily due to a higher mix of revenues from direct operations compared to lower margin agency business.  This was offset somewhat by ongoing technology costs, which the company continues to believe will provide for the potential growth in future profits, productivity and market share.

“We are systematically delivering on our strategic plan to increase the effectiveness of our associates, improve customer satisfaction and enhance operating efficiencies – all focused on increasing revenues, margins and shareholder value. Our offices are undergoing a complete process workflow review to apply new technology to increase productivity and reduce costs,” said Stewart Morris, Jr., president and co-chief executive officer. “Book value has increased 11 percent since the end of 2004 to $42.58 per share,” added Morris. 



New operations in the quarter included the launching of Stewart Insurance and Financial Services in California.   Recently approved by the California Department of Insurance, this group represents a comprehensive portfolio of property and casualty insurance carriers, including Allied Insurance, The Hartford and Travelers.

Stewart Default Solutions is now offering BackInTheBlack® software for mortgage default and foreclosure services, meeting needs in a key segment of the market that should grow as interest rates rise.  This service includes loss mitigation on non-performing mortgage loans, as well as actual foreclosure and remarketing of the pledged assets.

“Stewart is again serving as the exclusive program sponsor of the Technology Learning Center (TLC) presented at the National Association of Realtors® (NAR) Conference in San Francisco ongoing through October 31,” said Malcolm S. Morris, chairman and co-CEO.  “This will be the sixth consecutive year that we will have sponsored and managed the TLC.  More than 8,000 Realtors will be introduced to new technology enabling them to provide the best service to their buyers and sellers and increase their individual productivity.” 

Stewart continues to make strategic acquisitions contributing to its future growth.  The previously announced acquisition of Monroe Title Insurance Corporation of Rochester, New York, is awaiting Monroe shareholder consent and necessary regulatory approval. 

Effective September 1, 2005 and retroactive to the start of the year, the Texas Legislature reduced statutory reserve requirements for Stewart’s major title insurer.  This released for other uses a portion of low-yielding statutory reserve investments in the amount of approximately $18.3 million, after taxes, in the third quarter of 2005.

Stewart Information Services Corporation is a technology driven, strategically competitive, real estate information and transaction management company providing title insurance and related information services through more than 8,000 policy-issuing offices and agencies in the United States and a number of international markets.  Stewart also provides post-closing lender services, automated county clerk land records, property ownership mapping, geographic information systems, property information reports, flood certificates, 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 because Stewart cannot predict the number of orders that will result in closings.

###



Stewart Information Services Corporation

 

 

Three months
ended September 30

 

 

 


 

 

 

2005

 

2004

 

 

 



 



 

Revenues

 

$

639,442,000

 

$

529,663,000

 

Net earnings

 

$

31,771,000

 

$

21,138,000

 

Average shares – diluted

 

 

18,259,000

 

 

18,195,000

 

Earnings per share:

 

 

 

 

 

 

 

Basic

 

$

1.75

 

$

1.17

 

Diluted

 

$

1.74

 

$

1.16

 


 

 

Nine months
ended September 30

 

 

 


 

 

 

2005

 

2004

 

 

 



 



 

Revenues

 

$

1,801,483,000

 

$

1,560,011,000

 

Net earnings

 

$

79,664,000

 

$

62,239,000

 

Average shares – diluted

 

 

18,236,000

 

 

18,190,000

 

Earnings per share:

 

 

 

 

 

 

 

Basic

 

$

4.39

 

$

3.44

 

Diluted

 

$

4.37

 

$

3.42

 




STEWART INFORMATION SERVICES CORPORATION
STATEMENTS OF EARNINGS
(In thousands of dollars, except per share amounts)

 

 

Three months
ended Sept 30

 

Nine months
ended Sept 30

 

 

 


 


 

 

 

2005

 

2004

 

2005

 

2004

 

 

 



 



 



 



 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Title insurance:

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operations

 

 

287,607

 

 

224,814

 

 

779,422

 

 

648,913

 

Agency operations

 

 

320,545

 

 

282,988

 

 

935,730

 

 

841,470

 

Real estate information services

 

 

22,760

 

 

16,001

 

 

61,075

 

 

51,340

 

Investment income

 

 

8,016

 

 

5,920

 

 

21,473

 

 

16,242

 

Investment and other gains (losses) – net

 

 

514

 

 

(60

)

 

3,783

 

 

2,046

 

 

 



 



 



 



 

 

 

 

639,442

 

 

529,663

 

 

1,801,483

 

 

1,560,011

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts retained by agencies

 

 

259,557

 

 

229,525

 

 

762,781

 

 

684,980

 

Employee costs

 

 

183,863

 

 

149,542

 

 

513,353

 

 

436,345

 

Other operating expenses

 

 

97,963

 

 

79,600

 

 

270,927

 

 

235,328

 

Title losses and related claims

 

 

31,434

 

 

25,194

 

 

83,778

 

 

70,281

 

Depreciation and amortization

 

 

8,592

 

 

7,723

 

 

24,642

 

 

22,981

 

Interest

 

 

883

 

 

309

 

 

2,278

 

 

799

 

Minority interests

 

 

5,499

 

 

3,707

 

 

14,019

 

 

9,715

 

 

 



 



 



 



 

 

 

 

587,791

 

 

495,600

 

 

1,671,778

 

 

1,460,429

 

Earnings before taxes

 

 

51,651

 

 

34,063

 

 

129,705

 

 

99,582

 

Income taxes

 

 

19,880

 

 

12,925

 

 

50,041

 

 

37,343

 

 

 



 



 



 



 

Net earnings

 

 

31,771

 

 

21,138

 

 

79,664

 

 

62,239

 

 

 



 



 



 



 

Average number of diluted shares outstanding (000)

 

 

18,259

 

 

18,195

 

 

18,236

 

 

18,190

 

Earnings per share - diluted

 

 

1.74

 

 

1.16

 

 

4.37

 

 

3.42

 

 

 



 



 



 



 

Segment information:

 

 

 

 

 

 

 

 

 

 

 

 

 

Title revenues

 

 

616,682

 

 

513,662

 

 

1,740,408

 

 

1,508,671

 

Title pretax earnings

 

 

46,579

 

 

34,093

 

 

120,652

 

 

98,504

 

REI revenues

 

 

22,760

 

 

16,001

 

 

61,075

 

 

51,340

 

REI pretax earnings (loss)

 

 

5,072

 

 

(30

)

 

9,053

 

 

1,078

 

Selected financial information:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from operations

 

 

45,903

 

 

58,887

 

 

133,272

 

 

143,697

 

Title loss payments – net of recoveries

 

 

26,336

 

 

13,237

 

 

59,777

 

 

46,216

 

Changes in other comprehensive earnings (losses - net of taxes)

 

 

(4,099

)

 

5,880

 

 

(5,244

)

 

(2,493

)

Number of title orders opened (000):

 

 

 

 

 

 

 

 

 

 

 

 

 

July

 

 

76.9

 

 

69.2

 

 

 

 

 

 

 

August

 

 

86.0

 

 

68.7

 

 

 

 

 

 

 

September

 

 

74.8

 

 

66.7

 

 

 

 

 

 

 

 

 



 



 

 

 

 

 

 

 

Quarter

 

 

237.7

 

 

204.6

 

 

 

 

 

 

 

 

 



 



 

 

 

 

 

 

 


 

 

Sept 30
2005

 

Dec 31
2004

 

 

 



 



 

Stockholders’ equity

 

 

772,487

 

 

697,313

 

Number of shares outstanding

 

 

18,142

 

 

18,121

 

Book value per share

 

 

42.58

 

 

38.48

 




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

 

 

Sept 30
2005

 

Dec 31
2004

 

 

 



 



 

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

131,584

 

 

121,383

 

Short-term investments

 

 

219,922

 

 

181,195

 

Investments – statutory reserve funds

 

 

427,920

 

 

401,814

 

Investments – other

 

 

81,272

 

 

68,793

 

Receivables

 

 

86,097

 

 

80,277

 

Property and equipment

 

 

84,912

 

 

83,391

 

Title plants

 

 

57,130

 

 

52,679

 

Goodwill

 

 

151,909

 

 

124,636

 

Intangible assets

 

 

15,527

 

 

16,988

 

Other assets

 

 

73,110

 

 

62,197

 

 

 



 



 

 

 

 

1,329,383

 

 

1,193,353

 

 

 



 



 

Liabilities

 

 

 

 

 

 

 

Notes payable

 

 

78,938

 

 

49,930

 

Accounts payable and accrued liabilities

 

 

111,106

 

 

101,544

 

Estimated title losses

 

 

324,766

 

 

300,749

 

Deferred income taxes

 

 

24,643

 

 

29,335

 

Minority interests

 

 

17,443

 

 

14,482

 

 

 



 



 

 

 

 

556,896

 

 

496,040

 

Contingent liabilities and commitments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

Common and Class B Common Stock and additional paid-in capital

 

 

144,889

 

 

144,135

 

Retained earnings

 

 

622,959

 

 

543,295

 

Accumulated other comprehensive earnings

 

 

8,544

 

 

13,788

 

Treasury stock

 

 

(3,905

)

 

(3,905

)

 

 



 



 

Total stockholders’ equity

 

 

772,487

 

 

697,313

 

 

 



 



 

 

 

 

1,329,383

 

 

1,193,353

 

 

 



 



 

October 27, 2005