Stewart Information Posts 3Q Loss
October 25, 2007
HOUSTON (AP) -- Stewart Information Services Corp. lost money in the third quarter as the slumping housing market hamstrung demand for real estate services, the title insurer said Thursday.
Stewart Information Services lost $14.3 million, or 79 cents per share, in the third quarter, compared with profit of $14.2 million, or 77 cents per share, in the third quarter of 2006. Analysts polled by Thomson Financial forecast profit of 55 cents per share. Stewart Information sells title insurance, which reimburses a homeowner or a lender in case there is an error in the deed transferring property from one owner to the other. This insurance is typically purchased only when someone buys property, so with fewer people buying homes the need for this insurance has diminished.
Stewart Information's revenue shrank 22 percent to $501.9 million from $641.5 million. Analysts polled by Thomson Financial forecast sales of $550 million.
Stewart Information pointed to particularly weak housing markets in California and Florida, and said the shakeout in the mortgage industry is crimping home sales by blocking access to home loans for potential buyers.
Until August, Stewart Information said its orders for insurance were tracking about 10 percent to 14 percent lower than the comparable period last year. In August, orders fell nearly 21 percent and in September orders were down more than 19 percent.
For the quarter, orders for title insurance slipped 17.3 percent.
"The sudden drop in orders in August and September made it more difficult to control expenses quickly to meet our desired results," Chief Executive Malcolm S. Morris said in a statement.
Morris said a lot of customers canceled their orders during the quarter, especially in California. This is particularly costly because not only does Stewart Information Services lose the business, but it spends the time and money to arrange a policy that never closes.