Exhibit 99.1
Stewart Reports Earnings for Third Quarter
HOUSTON, Oct. 27 /PRNewswire-FirstCall/ -- Stewart Information Services
Corporation (NYSE: STC) reported net earnings of $21.1 million, or $1.16 per
diluted share, for the three months ended September 30, 2004, versus net
earnings of $42.1 million, or $2.34 per diluted share, for the third quarter
of 2003. Revenues in the third quarter decreased 16 percent to $530 million
from $629 million for the same period last year. The growth in book value
continued to $37.76 per share as of September 30, 2004 -- an all time record.
Total revenues for the first nine months of 2004 were $1.6 billion, down
4 percent from the same period a year ago. Earnings for the first nine months
totaled $62.2 million, or $3.42 per diluted share, versus $103.0 million, or
$5.74 per diluted share, for the first nine months of 2003.
"SureClose(R), our transaction management system, continues to grow in
number of users and is our vehicle to go paperless in the title office," said
Stewart Morris, Jr., president and co-chief executive officer. "It is also
our method of delivering products, communicating on files and archiving closed
files. SureClose is the most significant new technology in our tool kit. We
make enhancements continually. We are now adding more than 20,000 documents
to SureClose each working day. The system also proved itself as to security
during the three hurricanes that recently tracked across Florida. Although
twenty-one of our Florida offices incurred some operational interruption from
hurricane damage, our customers and associates had immediate access to their
files via the Internet. Paperless transactions are now a reality when using
the latest SureClose release. Our company continues to enhance current
systems and add new applications to improve customer service and associate
effectiveness."
"Accolades for our financial performance continued in this past quarter,"
said Malcolm S. Morris, chairman of the board and co-chief executive officer.
"Stewart was ranked 31st in Fortune magazine's list of the 100 fastest growing
companies. We have been included on the Forbes Platinum 400 Companies -- the
best big companies in the US, and as a member of the Fortune 1000, Russell
2000, 2500 and 3000 Value Indexes and Russell 2000, 2500 and 3000 Indexes. We
also are on the S&P Small Cap 600. Sandler O'Neill & Partners, L.P. included
Stewart in their first-ever Premium Players List for 2004, made up of the top
30 insurance companies that have consistently demonstrated exceptional growth
and profitability and above-average performance in the past five years."
"Although tight inventory levels in many high end residential markets have
moderated, the forecast for the upscale market continues to be strong,"
reported Laurie Moore-Moore, Stewart advisory director and president of The
Institute for Luxury Home Marketing. "The affluent are still shifting dollars
into real estate from other investments, home prices are rising, and luxury
home demand is very healthy."
Title orders per working day for the third quarter of 2004 were down
13 percent from the same period in 2003 primarily due to the decrease in
refinancing transactions. Beginning in July 2003, orders fell to lower levels
because of an increase in mortgage interest rates. However, in August and
September 2004, interest rates averaged 30 to 40 basis point less than the
same period last year. In September 2004, orders were up 4 percent over the
same month a year ago.
Operating profit margins decreased year-over-year due primarily to the
fixed nature of most of the company's operating costs. Margins were also
reduced due to the company's investments in growth, technology, new services
and new offices. Employee costs are the largest component of the company's
operating costs, excluding title agency retentions. Employee counts and order
counts are monitored on a regular basis. However, the company's strategy is
not to overreact to either increases or decreases in transaction volumes.
Instead, the company works to maintain good service to its customers through a
reasonably stable, dedicated employee work force allowing for continued
growth.
The company continues to emphasize gaining commercial business, acquiring
companies with higher margins and expanding internationally. The company
believes these strategies will position it for future growth, diversification
and strength.
Stewart Information Services Corporation is a technology driven,
strategically competitive, real estate information and transaction management
company. Stewart provides title insurance and related information services
through more than 7,800 issuing locations in the United States and several
international markets. Stewart meets the needs of the real estate and
mortgage industries through the delivery of information services required for
settlement using e-commerce. These services include title reports, flood
determinations, document preparation, property reports and background checks.
Stewart also supplies post-closing services to lenders, automated county clerk
land records, property ownership mapping, and geographic information systems
for governmental entities. Stewart provides expertise in tax-deferred
exchanges. More information about Stewart can be found at 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.
SUMMARY OF OPERATIONS
Stewart Information Services Corporation
Three months
ended September 30
2004 2003
Revenues $529,663,000 $629,388,000
Net earnings $21,138,000 $42,068,000
Average shares - diluted 18,195,000 18,006,000
Earnings per share:
Basic $1.17 $2.35
Diluted $1.16 $2.34
Nine months
ended September 30
2004 2003
Revenues $1,560,011,000 $1,628,387,000
Net earnings $62,239,000 $102,973,000
Average shares - diluted 18,190,000 17,937,000
Earnings per share:
Basic $3.44 $5.78
Diluted $3.42 $5.74
STEWART INFORMATION SERVICES CORPORATION
STATEMENTS OF EARNINGS
(In thousands of dollars, except per share amounts)
Three months Nine months
ended Sept 30 Ended Sept 30
2004 2003 2004 2003
Revenues
Title insurance:
Direct operations 224,814 261,063 648,913 692,938
Agency operations 282,988 340,961 841,470 858,545
Real estate information
services 16,001 21,683 51,340 61,567
Investment income 5,920 5,262 16,242 14,580
Investment gains (losses) -
net (60) 419 2,046 757
529,663 629,388 1,560,011 1,628,387
Expenses
Amounts retained by
agencies 229,525 279,678 684,980 703,462
Employee costs 149,542 157,192 436,345 436,372
Other operating expenses 79,600 86,727 235,328 226,174
Title losses and related
claims 25,194 25,894 70,281 66,561
Depreciation 7,723 6,422 22,981 18,499
Interest 309 202 799 563
Minority interests 3,707 4,755 9,715 11,237
495,600 560,870 1,460,429 1,462,868
Earnings before taxes 34,063 68,518 99,582 165,519
Income taxes 12,925 26,450 37,343 62,546
Net earnings 21,138 42,068 62,239 102,973
Average number of shares
outstanding (000) 18,195 18,006 18,190 17,937
Earnings per share -
diluted 1.16 2.34 3.42 5.74
Segment information:
Title revenues 513,662 607,705 1,508,671 1,566,820
Title pretax earnings 33,724 63,865 97,127 153,281
REI revenues 16,001 21,683 51,340 61,567
REI pretax earnings 339 4,653 2,455 12,238
Selected financial
information (000):
Cash flow from operations 58,887 73,050 143,697 156,656
Title loss payments -
net of recoveries 13,237 15,564 46,216 39,340
Other comprehensive income
(loss), net of taxes 5,880 (2,316) (2,493) 4,326
Average number of basic
shares 18,102 17,893 18,092 17,826
Number of title orders
opened 205 238 649 816
Sept 30 Dec 31
2004 2003
Stockholders' equity 683,556 621,389
Number of shares outstanding 18,102 18,026
Book value per share 37.76 34.47
STEWART INFORMATION SERVICES CORPORATION
BALANCE SHEETS (condensed)
(In thousands of dollars)
Sept 30 Dec 31
2004 2003
Assets
Cash and cash equivalents 113,878 114,202
Short-term investments 192,014 153,322
Investments - statutory reserve funds 399,131 375,421
Investments - other 71,726 59,035
Receivables 64,605 79,025
Property and equipment 78,296 74,174
Title plants 52,109 43,216
Goodwill 112,012 79,084
Other 62,601 54,388
1,146,372 1,031,867
Liabilities
Notes payable 40,035 24,583
Accounts payable and accrued liabilities 91,663 82,147
Estimated title losses 292,154 268,089
Deferred income taxes 24,439 22,440
Minority interests 14,525 13,219
Contingent liabilities and commitments
Stockholders' equity
Common and Class B Common Stock and
additional paid-in capital 143,589 141,168
Retained earnings 531,346 469,107
Accumulated other comprehensive earnings 12,526 15,019
Treasury stock (3,905) (3,905)
Total stockholders' equity 683,556 621,389
1,146,372 1,031,867
October 27, 2004
SOURCE Stewart Information Services Corporation
-0- 10/27/2004
/CONTACT: Ted C. Jones, Director-Investor Relations of Stewart
Information Services Corporation, +1-713-625-8014/
/Web site: http://www.stewart.com /
(STC)
CO: Stewart Information Services Corporation
ST: Texas
IN: FIN RLT
SU: ERN