Stewart shatters first quarter revenues, earnings and earnings per share records and sets all-time high order count

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HOUSTON, April 25, 2003 -- Stewart Information Services Corporation (NYSE: STC - News) reported all-time record highs for revenues, earnings and earnings per share for any first quarter in the 110-year history of the company. Earnings for the three months ended March 31, 2003 were $19.9 million compared with $11.3 million for the first quarter of 2002. On a diluted per share basis, net earnings were $1.11 for the first quarter of 2003 compared with $.63 for the first quarter of 2002. Revenues in the first quarter increased 27 percent to $441 million from $348 million in the same period last year.

Title orders in the first quarter of 2003 were 263,000, an all-time high for any quarter in the company's history. Orders for the month and quarter ended March 31, 2003 were 69 percent and 52 percent higher, respectively, than the same periods a year ago, indicating a strong carry-over of business into the second quarter of 2003.

"We have increased our revenues, earnings and earnings per share, in comparing results to the same quarter a year earlier, for the seventh consecutive quarter," said Stewart Morris, Jr., president and co-chief executive officer. "While our core commercial and residential sales segments performed extremely well in the quarter, explosive refinance activity created the largest total order count in any quarter in Stewart's 110-year history. Loan applications for one to four family residences, as reported by the Mortgage Bankers Association, were up more than 130 percent in the first quarter when compared to the same period last year. Through the use of proprietary technology we have been able to service unprecedented demand while controlling our underlying cost structures to keep a sharp focus on profit margins and productivity.

"SureClose®, Stewart's e-delivery and e-commerce transaction management platform, is now installed and running in more than 165 offices and agencies across the country. SureClose provides the Realtor®, lender, buyer and seller with detailed information as to the progress of the transaction. The dramatic improvement in customer service results with informed participants and improved closing experience as the documents are made available via the Internet in advance of closing," said Morris. "In addition, SureClose provides a vehicle for the paperless title office, deleting the need for physical files."

"The tally of 2002 title industry data shows Stewart posting the largest growth in the title industry in national market share," said Malcolm S. Morris, chairman and co-chief executive officer. "Our growth strategy includes opening new offices, ongoing acquisition of title agencies, adding new agencies, increasing commercial market share and expanding internationally. Australia is our latest addition to the stable of international operations in which title insurance reduces risks and dramatically compresses the time required to close real estate transactions.

"While title insurance represents our largest single line of business, we continue to expand our higher-margin ancillary services, many of which are included in the bundle of services for the lending industry," added Malcolm Morris. "Technology is increasing our productivity across all business lines. More than 86 percent of our flood determinations are immediately delivered electronically from the more than 130 million property geocoded flood database. While others continue to talk about the future possibilities of electronic documents, Stewart's Online Documents subsidiary delivers complete eMortgageDocs today using the MISMO standards and Fannie Mae's XHTML document technology requirements, moving one step closer to the paperless real estate transaction.

"GlobeXplorer, Stewart's Internet-based satellite and aerial photograph subsidiary, acquired Citipix aerial imagery from Eastman Kodak Company this past quarter," added Malcolm Morris. "These new high resolution images include 65 metropolitan areas. GlobeXplorer satellite images encompass nearly 300 terabytes of data, which is three times the data in the Library of Congress. The vast array of GlobeXplorer's images can be seen at http://www.globexplorer.com ."

 

Stewart Information Services Corporation is a technology driven, strategically competitive, global real estate information company. Stewart provides title insurance and related information services through more than 6,600 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 insurance, title reports, flood determinations, property appraisals, surveys, document preparation, electronic real estate auctions, property reports, background checks and online property auctions. Stewart also supplies post-closing services to lenders, automated county clerk land records 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.

Stewart Information Services Corporation

Three months

ended March 31

2003   2002


Revenues

$440,924,000

$347,974,000

Net earnings

$19,875,000

$11,344,000

Average shares - diluted

17,831,000

17,831,000

Earnings per share:

   

Basic

$1.12

$0.64

Diluted

 

$1.11

$0.63


 

STEWART INFORMATION SERVICES CORPORATION
STATEMENTS OF EARNINGS
(In thousands of dollars, except per share)

Three months

ended March 31

2003   2002

Revenues

Title Insurance

   
Direct operations
193,293

146,405

Agency operations

224,002

180,272

Real estate information services

19,050

16,042

Investment income
4,783
4,903
Investment (losses) gains - net
(204)
352
 

440,924

347,974

Expenses

Amounts retained by agencies

184,749

148,289

Employee costs

132,002

104,565

Other operating expenses

66,848

55,204

Title losses and related claims

17,956

14,366

Depreciation

5,909

5,385

Interest

215

255

Minority interests

2,338

1,530

 

410,017

329,594

     

Earnings before taxes

30,907

18.380

Income taxes

11,032

7,036

Net earnings

19,875

11,344

     

Average number of duluted shares (000)

17,831

17,957

Earnings per share - diluted

1.11

.63

Segment information:

Title revenues

421,874

331,932

Title pretax earnings

27,896

17,716

     

REI revenues

19,050

16,042

REI pretax earnings

3,011

664

Selected financial information (000):

Cash flow from operations

22,538

17,115

Title loss payments - net
of recoveries

11,590

10,304

Other comprehensive earnings (loss) -net of taxes

872

(2,330)

Average number of basic shares

17,742

17,810

Number of title orders opened

263

171

STEWART INFORMATION SERVICES CORPORATION
BALANCE SHEETS (condensed)

(In thousands of dollars)

 

 

March 31

December 31

 

2003

2002

Assets

Cash and cash equivalents

122,813

139,156

Short-term investments

52,117

50,673

Investments-statutory reserve funds

327,042

306,501

Investments-other

74,429

69,260

Receivables

61,360

69,041

Property and equipment

63,851

60,592

Title plants

41,332

40,307

Goodwill

72,779

66,885

Other assets

40,568

39,858

 

856,291

842,273

Liabilities

Notes payable

18,373

14,195

Accounts payable and
accrued liabilities

62,510

82,248

Estimated title losses
237,624
230,058

Deferred income taxes

11,326

11,284

Minority interests

11,331

10,896

Contingent liabilities and commitments

Stockholders' equity

Common and Class B Common Stock and
additional paid-in capital

135,715

134,927

Retained earnings

373,101

353,226

Accumulated other comprehensive
earnings

10,216

9,344

Treasury stock

(3,905)

(3,905)

Total stockholders' equity

515,127

493,592

 

856,291

842,273

April 25, 2003


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