Stewart Reports Earnings for Third Quarter 2005
October 27, 2005
HOUSTON -- 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.
Source: Stewart Information Services Corporation