Stewart Information Services (STC) 8-K Stewart Reports Earnings for First Quarter 2007

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

Stewart Reports Earnings for First Quarter 2007

HOUSTON, April 26 /PRNewswire-FirstCall/ -- Stewart Information Services Corporation (NYSE: STC) today reported the results of its operations for the quarter ended March 31, 2007. (Dollar amounts in the table below are in millions, except for per share figures.)

	First Quarter
	2007			2006
Total revenues	$	531.7		$	539.4
Pretax (loss) earnings before
minority interests		(4.6	)  (a)		8.3
Net (loss) earnings		(4.8	)  (a)		2.6
Net (loss) earnings per
diluted share		(0.26	)  (a)		0.14

(a) Includes a $3.2 million gain ($2.1 million after taxes, or $0.11 per diluted share) from the sale of two subsidiaries, GlobeXplorer® and AirPhotoUSA®, in the first quarter of 2007. Also includes a charge to earnings of $5.1 million ($3.3 million after taxes, or $0.18 per diluted share) for title loss provisions relating to four large title losses.

Financial Highlights

· Revenues decreased approximately 1.4 percent to $531.7 million in the first quarter of 2007 compared with $539.4 million for the first quarter of 2006. The Company reported a loss before taxes (and before minority interests) of $4.6 million for the first quarter of 2007 compared with earnings of $8.3 million for the same period of 2006. As described in the preceding footnote, the first quarter of 2007 includes a gain on the sale of two subsidiaries and a charge to earnings for large title losses.

· The revenue decline was due to decreasing home sales and prices, adverse weather conditions and reduced financing activity related in part to a weakening in the subprime lending market. Revenues were favorably impacted by commercial and international transactions. Acquisitions increased revenues by $4.3 million and pretax earnings by $0.3 million for the quarter.

· Excluding acquisitions, divestitures and startups, the Company has reduced its employee headcount since December 31, 2006 by approximately 470, or 4.7 percent. The Company has, however, increased the number of employees in its better-performing operations, including its commercial business. In addition, the current conversion and roll-out phases of the Company’s AIM+ technology will temporarily require above-normal staffing levels. The Company maintains staffing levels sufficient to continue to provide superior customer service and gain market share through a highly-trained, dedicated employee work force. The Company continues to incur significant costs related to its technology advancements.

· Stewart’s book value per share decreased to $43.81 at March 31, 2007 compared with $44.00 at December 31, 2006.

· Title orders declined in the first quarter of 2007 by 10.4 percent from the same period a year ago. Orders were 13.6 percent lower in March 2007 than in March 2006. The continued softening of the housing market was the primary reason for the decline in title orders.

“During the quarter, we continued the alignment of technology services with our Company strategy, including changing the leadership of our technology services group and incorporating responsibilities for PropertyInfo.com, Stewart’s real estate information portal, under the same leadership,” said Stewart Morris, Jr., co-chief executive officer. “The migration of ASP users to our new state-of-the-art data center is progressing well, which we expect will allow us to shut down multiple older data centers by the end of the third quarter.

“We are also looking forward to contributions from Murshid Khan, our new chief information officer, who joined Stewart this month,” said Stewart Morris, Jr. “His experience managing complex IT operations at Disney will be important in leading our IT efforts as we target efficiencies and increased service levels, all with the ultimate goal of enhancing the real estate transaction process.”

“While small in size, contracts signed this past quarter to install and service our LandFolio® system in the governmental land recording offices in Belize and Bermuda illustrate Stewart’s ability to provide industry-leading real estate transaction services globally,” said Malcolm S. Morris, co-chief executive officer.

“For the second year in a row, FORTUNE magazine named us one of ‘America’s Most Admired Companies’, maintaining fourth place on the mortgage services industry list,” said Malcolm S. Morris. “Our focus continues in growing the higher-profit commercial services and achieving substantial improvement in our international operations. In addition, our direct operations and acquisitions in recent years, which include operations servicing New York’s commercial customers, are producing excellent results.”

Stewart Information Services Corporation is a customer-oriented, technology-driven, strategically competitive, real estate information and transaction management company. Stewart provides title insurance and related information services required for settlement by the real estate and mortgage industries through more than 9,500 policy-issuing offices and agencies in the United States and 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 http://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

STATEMENTS OF EARNINGS

(In thousands of dollars, except per share amounts)

	Three months ended
	March 31
	2007			2006
Revenues
Title insurance:
Direct operations		229,614			227,818
Agency operations		272,254			281,654
Real estate information		16,533			20,019
Investment income		9,051			8,537
Investment and other gains - net(1)		4,222			1,394
		531,674			539,422
Expenses
Amounts retained by agencies		222,390			226,876
Employee costs		176,793			179,102
Other operating expenses		93,643			89,804
Title losses and related claims		31,859			25,258
Depreciation and amortization		9,885			8,688
Interest		1,668			1,429
		536,238			531,157
(Loss) earnings before taxes and minority
interests		(4,564	)		8,265
Income tax (benefit) expense		(2,621	)		1,750
Minority interests		2,819			3,869
Net (loss) earnings		(4,762	)		2,646
Average number of diluted shares (000)		18,329			18,304
(Loss) earnings per diluted share		(0.26	)		0.14
Segment information:
Title revenues		515,141			519,403
Title pretax (loss) earnings before
minority interests		(8,056	)		6,765
REI revenues		16,533			20,019
REI pretax earnings before minority
interests(1)		3,492			1,500
Selected financial information:
Cash used by operations		(15,116	)		(14,015	)
Title loss payments - net of recoveries		25,453			27,490
Changes in other comprehensive earnings -
net of taxes		833			(3,001	)
Number of title orders opened (000):
January		55.9			60.3
February		53.3			59.5
March		63.6			73.4
Quarter		172.8			193.2

	Mar 31		Dec 31
	2007		2006
Stockholders' equity		799,781		802,262
Number of shares outstanding (000)		18,254		18,231
Book value per share		43.81		44.00

(1) Includes a gain of $3.2 million in 2007 related to the sale of subsidiaries.

STEWART INFORMATION SERVICES CORPORATION

BALANCE SHEETS (condensed)

(In thousands of dollars)

	March 31			December 31
	2007			2006
Assets
Cash and cash equivalents		104,074			136,137
Short-term investments		147,419			161,711
Investments - statutory reserve funds		503,192			490,540
Investments - other		65,188			78,249
Receivables - premiums from agencies		49,150			58,023
Receivables - other		57,299			61,556
Less allowance for uncollectible amounts		(8,330	)		(9,112	)
Property and equipment		101,002			99,325
Title plants		74,119			70,324
Goodwill		202,348			204,302
Intangible assets		20,902			15,444
Other assets		104,177			91,708
		1,420,540			1,458,207
Liabilities
Notes payable		106,057			109,549
Accounts payable and accrued liabilities		94,726			130,589
Estimated title losses		390,802			384,396
Deferred income taxes		11,982			14,139
Minority interests		17,192			17,272
		620,759			655,945
Contingent liabilities and commitments
Stockholders' equity
Common and Class B Common Stock and
additional paid-in capital		149,487			148,517
Retained earnings		645,314			649,598
Accumulated other comprehensive earnings		8,894			8,061
Treasury stock		(3,914	)		(3,914	)
Total stockholders' equity		799,781			802,262
		1,420,540			1,458,207