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Stewart Announces Record Year 2003

February 17, 2004

HOUSTON, Stewart Information Services Corporation (NYSE: STC) reported results for the fourth quarter and year end 2003. For the second year in a row, annual revenues, net earnings, orders and earnings per share were the largest in the company's history.

Revenues for the year 2003 were $2.2 billion, a 26 percent increase from 2002. Net earnings for the year 2003 were $123.8 million, or $6.88 per diluted share, compared with net earnings of $94.5 million, or $5.30 per diluted share, for 2002. Stewart's assets now exceed $1 billion for the first time in the company's history.

Stewart earned $20.8 million, or $1.15 per diluted share, for the fourth quarter of 2003, compared with earnings of $43.8 million, or $2.46 per diluted share, for the fourth quarter of 2002. Revenues for the fourth quarter increased to $614.9 million compared with $551.3 million a year ago.

Although revenues for the fourth quarter increased by 12 percent over the fourth quarter of 2002, earnings declined by 53 percent. The fourth quarter included a significantly higher proportion of revenues from agency operations in 2003 (66 percent) compared with the 2002 period (59 percent). In high- volume years like 2003, agency operations generate a lower percentage of earnings to revenues than do direct operations. Employee costs for the rollout of SureClose(R) to more than 400 company locations in 2003 also affected the full year and the fourth quarter. Additionally, reserves taken on litigation in progress and a loss on a mapping / automation contract reduced earnings per share by approximately $0.13 in the fourth quarter. Refinancing transactions declined in the second half of 2003 as a result of an overall increase in mortgage interest rates. Most industry experts project current interest rates to continue or move slightly higher and are forecasting significantly fewer refinancing transactions for 2004.

Stewart's incoming orders in the fourth quarter of 2003 were down 29 percent from the same quarter a year ago. Fourth quarter orders were off 26 percent from the third quarter. Stewart Morris, Jr., president and co- chief executive officer, said, "We monitor our incoming orders daily and weekly. Our employee counts at the end of the year had been reduced by approximately 10 percent from the peak month of July 2003. Our employee costs for the fourth quarter were approximately 13 percent less than the employee costs for the third quarter. We are continuing to lower staff levels and expenses to allow for reduced revenues, while maintaining superior core service to our customers.

Source: Stewart Information Services Corporation

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