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Fitch Ratings Affirms Stewart Title Group - Outlook Stable

October 29, 2004

Fitch Ratings has affirmed the 'A+' insurer financial strength ratings of Stewart Title Guaranty Company and its wholly owned subsidiary Stewart Title Insurance Company (collectively referred to as Stewart). The companies are ultimately owned by Stewart Information Services Corporation (STC). The Rating Outlook is Stable.

The primary factors supporting the affirmations are the company's strong risk-adjusted and absolute capital positions, conservative reserving practices, minimal debt leverage, high quality and very liquid investment portfolio, and moderate operating leverage. At year-end 2003, Stewart's 214% risk-adjusted capital (RAC) as measured by Fitch's ratio was the highest of the five national title groups.

Offsetting these positives, Fitch believes that during the current slowdown in the market, the company will be challenged to maintain profitability levels that have been generated in recent periods or are in line with national peer averages. Through the first six months of 2004, STC's GAAP revenue growth and pretax margins were 3.1% and 6.2%, respectively, compared with national peer averages at 11.6% and 9.5%, respectively.

For the current ratings, Fitch expects the company's balance sheet fundamentals to be among the best in the industry and in the worst of times, SISCO's GAAP pretax operating margins to be above 5% in all market conditions.

Stewart is one of the nation's largest title insurance groups with a national market share of just over 11% in 2003 (according to ALTA). Over half of Stewart's premiums come from its five largest states: Texas; California; New York; Florida; and Virginia. Stewart distributes its products through more than 7,800 locations on properties located in all 50 states and several foreign countries. Close to 45% of its business (title premiums plus escrow) comes from its affiliated agencies.

Stewart Title Guaranty

  • Insurer financial strength affirmed at 'A+'/Stable.

Stewart Title Insurance Company

  • Insurer financial strength affirmed at 'A+'/Stable.

Source: Fitch Ratings



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