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LandAmerica Announces First Quarter Results

April 28, 2005

RICHMOND, Va., /PRNewswire-FirstCall/ -- LandAmerica Financial Group, Inc. (NYSE: LFG) reported operating results for the first quarter ended March 31, 2005.

  First Quarter 2005 First Quarter 2004
Operating revenue $814.7 Million $759.9 Million
Net income $30.3 Million $20.9 Million
Net income per diluted share $1.68 $1.11


FINANCIAL HIGHLIGHTS

  • Consolidated operating revenue increased $54.8 million, or 7% for first quarter 2005 compared with first quarter 2004. Acquisitions
    contributed approximately $29.5 million to the increase for first quarter 2005.
  • Operating revenue for the Title Insurance segment for first quarter 2005 was $730.1 million, an increase of 3% over first quarter 2004.
    Direct revenue increased 14% for first quarter 2005 over first quarter 2004 primarily due to strong commercial and buy/sell markets and the
    effect of acquisitions. Agency revenue decreased 5% from first quarter 2004 to first quarter 2005 primarily due to acquisitions of title
    agencies reflected as direct revenue in first quarter 2005 and reduced levels of refinancing activity.
  • Title Insurance revenue from commercial operations, which the Company has typically defined as being premiums from policies providing
    coverage over $1 million in liability, was $175.0 million for first quarter 2005, an increase of 39% over the first quarter 2004.
  • Pretax earnings for the Title Insurance segment for first quarter 2005 included an increase in the claims provision of $7.5 million from a large claim of approximately $7.4 million, or $4.8 million after income taxes. The claims provision in the Title Insurance segment increased to 6.4% of operating revenues in first quarter 2005 from 5.5% in first quarter 2004. The remaining pretax expenses decreased to 89.2% of operating revenues in the first quarter of 2005 from 89.8% in the first quarter of 2004 due primarily to cost reduction initiatives partially offset by the increase in non-cash amortization expenses.
  • The Lender Services segment reported $63.6 million of operating revenue for first quarter 2005 compared to $40.2 million for first quarter 2004. First quarter 2005 results included the recognition of approximately $25.8 million, or $15.3 million after income taxes, of deferred revenue as our obligation to provide future life of loan servicing requirements for two customers of the tax and flood business has terminated.
  • Realized investment gains decreased to $0.8 million in first quarter 2005 from $3.1 million in first quarter 2004 due to the reallocation of portfolio investments which occurred in first quarter 2004.
  • Loans receivable for the Financial Services segment increased $6.7 million from December 31, 2004 to $347.5 million at March 31, 2005, and customer deposits increased to $377.9 million at March 31, 2005.
  • "Income before taxes in first quarter 2005 of $49.3 million included the recognition of $25.8 million of deferred revenue in our tax and flood business as we terminated relationships with two customers. Income before taxes also included an increase in the claims provision for a large claim of approximately $7.4 million," noted G. William Evans, Chief Financial Officer. "We are pleased with the solid results reported in the first quarter of 2005 and the performance of the title insurance operations, despite a decline in overall mortgage volumes. We benefited from our continued focus on our customers, a strong commercial market, and our ongoing emphasis on optimizing our cost structure," said President and Chief Executive Officer Theodore L. Chandler, Jr.

SEGMENT RESULTS

Title Insurance -- -- Operating revenue from direct title operations increased $39.2 million, or 14%, in first quarter 2005 over first quarter 2004. The increase in first quarter 2005 was primarily the result of acquisitions made in 2004 and an increase in the revenue per order. These increases were offset in part by a decrease in the number of title policies issued by the Company's direct title operations. During first quarter 2005, the Company continued to experience strong commercial and buy/sell activity, which tends to have higher revenue per order, and reduced refinance activity, which tends to have lower revenue per order. Closed orders for the Company's direct title operations were 195,100, with an average fee of $1,656 per closed order, during first quarter 2005 and 201,900, with an average fee of $1,407 per closed order, during first quarter 2004. Operating revenue from agency title operations decreased $19.4 million, or 5%, in first quarter 2005 from first quarter 2004. This decrease was primarily due to acquisitions of title agencies reflected as direct revenue in first quarter 2005 and reduced levels of refinancing activity. Pretax earnings for the Title Insurance segment were $45.2 million for first quarter 2005 compared to $46.8 million for first quarter 2004. The claims provision in the Title Insurance segment increased to 6.4% of operating revenues in first quarter 2005 from 5.5% in first quarter 2004 due primarily from a large claim of approximately $7.4 million. The remaining pretax expenses decreased to 89.2% of operating revenues in the first quarter of 2005 from 89.8% in the first quarter of 2004 due primarily to cost reduction initiatives partially offset by the increase in non-cash amortization expenses.

Lender Services -- Operating revenue in the Lender Services segment increased $23.4 million, or 58%, in first quarter 2005 over first quarter 2004. During first quarter 2005, Lender Services recognized approximately $25.8 million of deferred revenue resulting from the cancellation of tax certification servicing contracts for two customers of the Company's tax and flood business. These cancellations eliminated the remaining obligation for life of loan servicing and therefore the deferred revenue associated with these contracts was recognized into revenue during first quarter 2005. Additionally, revenue from the remaining businesses in this segment increased $4.0 million in first quarter 2005 over first quarter 2004 due primarily to acquisitions made in fourth quarter 2004.

Financial Services -- The Financial Services segment had pretax earnings of $2.9 million in first quarter 2005 compared to $2.2 million in first quarter 2004. This increase was due to growth of the loan and investment portfolio of 51%, which exceeded the increase in its interest bearing liabilities and resulted in higher operating income.

Source: LandAmerica Financial Group, Inc.



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