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Stewart Information Services Tops Q4 Earnings Ests

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Stewart Information Services Corporation’s (STC - Free Report) fourth-quarter 2013 earnings came in at 30 cents per share, surpassing the Zacks Consensus estimate by a nickel. Results, however, declined 32% year over year.  

Behind the Headlines

Fourth-quarter operating revenues of Stewart Information Services totaled $445.1 million, decreasing 13.7% year over year while total revenue declined 13.6% to $450.2 million. The operating revenue figure however missed the Zacks Consensus Estimate of $484 million. The decline was largely attributable to lower title insurance revenues (down 10.6%) as well as lower mortgage service revenues (down 46.5%).  A decrease in revenues from direct operations (down 7.3%) and agency operations (down 13%) led to reduced title insurance revenues.            

Mortgage service revenues suffered due to weak demand for services related to distressed properties, as housing market continued to witness improvement.

Employee costs decreased 2.9% year over year.  As a percentage of total operating revenues, employee costs increased 350 basis points to 31.6% in the reported quarter.

Pretax earnings of Stewart Information Services dropped nearly 42% year over year to $15.5 million attributable to soft performance at the Mortgage services segment.

Number of title orders opened in 2013 were 0.392 million, down from 0.430 million in 2012. Number of title orders closed were 0.296 million, comparing unfavorably with 0.316 million in 2012.

Full-Year Highlights

For full-year 2013, Stewart Information Services posted earnings of $2.73 per share which declined 41% year over year.

The top line came in at $1.93 billion, improving 1.4% year over year.

Financial Update

Stewart Information Services exited 2013 with cash worth $194.3 million, down 6.7% from 2012-end.

Notes payable were $5.8 million at the end of 2013, down 10.1% from 2012-end.

Cash provided by operations was $87.2 million in 2013, down 27.7% year over year.

Cost Savings Update

Stewart Information Services expects pre-tax savings of $25 million annually by 2015 on the back of its ongoing streamlining efforts.

Share Repurchase Update

Stewart Information Services intends to pay back its shareholders about $70 million through share buybacks. Following the review of its capital plans, it envisions share repurchases in the second half of 2014 with the majority scheduled in 2015.

Zacks Rank

Stewart Information Services presently carries a Zacks Rank #5 (Strong Sell)

Results of Other Insurers

AmTrust Financial Services Inc. (AFSI - Free Report) reported operating earnings per share of $1.03 for the fourth quarter of 2013. The results outpaced the Zacks Consensus Estimate of 80 cents and the year-ago figure of 70 cents.

Navigators Group Inc. (NAVG - Free Report) reported fourth-quarter 2013 operating earnings of $1.13 per share, outpacing the Zacks Consensus Estimate of 88 cents. The results also surged from 59 cents per share earned in the year-ago quarter.

American Financial Group Inc. (AFG - Free Report) reported fourth-quarter operating earnings per share of $1.28, which comfortably beat the Zacks Consensus Estimate of $1.23. On a year-over-year basis, earnings surged 91%.

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