Stewart Information Services Corporation · NYSE:STC
Stewart Information Services — Investor Presentation (May 2016)
20 slides from Stewart Information Services's investor presentation, May 6, 2016
Slide 1: Stewart Information Services Corporation Investor Presentation Summer 2016
Stewart Information Services Corporation Investor Presentation Summer 2016
Slide 2: Forward-looking Statements
2 Forward-looking Statements Certain statements in this news release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to future, not past, events and often address our expected future business and fina
Slide 3: Non-GAAP Disclosures
3 Non-GAAP Disclosures This presentation may contain certain financial measures that are not presented in accordance with generally accepted accounting principles (GAAP), including but not limited to, losses and litigation expenses arising from non-predictable title losses and adjusted pretax title
Slide 4: Company Overview
Title Insurance • Leading provider of title insurance and settlement services • 12.2% domestic market share as of 4Q15, according to the American Land Title Association®, with #3 market share in direct channel (12.7%) and #4 market share in agency channel (11.8%) • #3 provider of commercial title in
Slide 5: Improved Margins and Profitability; Focused Strategies for Above Market Growth
Improved Margins and Profitability • Achieved plan to eliminate $100+ million in annual operating expenses following the financial crisis • Announced additional initiative in first quarter 2014 to eliminate $25 million of costs in 2014 and 2015; increased to $30 million of annualized savings later i
Slide 6: Reductions in Cost Structure
Reductions in Cost Structure • Post-crisis, Stewart changed its operating model and reduced operating costs by $100+ million to reflect the new market environment (origination volume has been between $1-2 trillion since 2008, dropping from $2-4 trillion from 2001 to 2007) °°Created a centralized, sh
Slide 7: Title Insurance – Market Share Map
Source: American Land Title Association, 4Q 2015 Market Share by Family Company and State 7 Title Insurance – Market Share Map 40.7% 33.7% 16.4% 13.1% 26.2% 20.5% 19.5% 15.8% 11.5% 16.5% 10.9% 6.1% 10.5% 11.1% 16.7% 6.2% 14.6% 16.8% 15.2% 12.6% 11.1% 6.6% 6.5% 4.6% 6.1% 12.2% 5.3% 10% 12.9% 12.4% 11
Slide 8: Growth Strategy
Growth Strategy • Stewart has targeted growth in commercial business for higher margin profile and cyclical diversity from residential real estate trends • Aligned sales teams to customer channels to increase capture rate of larger-liability and higher-margin transactions • Leveraged higher financia
Slide 9: Title Insurance – Loss Ratio by Policy Year
Actuarial Claims as a % of Net Statutory Premiums Written – U.S. Operations Only Source: ALTA®, Family-Company Aggregates 9 Title Insurance – Loss Ratio by Policy Year 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Claims Paid Stewart First America
Slide 10: Title Insurance – GAAP Loss Provision Ratios
Quarterly Title Loss Provision as a % of Revenues – Includes Prior Year True-ups Source: Company press releases and SEC filings 10 Title Insurance – GAAP Loss Provision Ratios 0% 5% 10% 15% 20% 25% 30% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Fidelity National First American Stewart
Slide 11: Agency Network – Revenues Net of Retention
Trailing 12 Months – $ Millions Note: Number of independent agencies based on number of contractual relationships rather than number of physical locations of agencies. 11 Agency Network – Revenues Net of Retention 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 $0 $50 $100 $150 $200 $250 2008 2009 2010
Slide 12: Underwriter, Business Model and Capital Priorities
Underwriter • Continue to strengthen balance sheet by growing $500+ million in statutory surplus consistent with pace of industry growth and in anticipation of increased commercial deal size • Maintain statutory liquidity ratio (liquid assets-to-liabilities) of at least 100% Business Model • Look to
Slide 13: Balance Sheet – March 31, 2016
Assets $ thousands Cash & Cash Equivalents 108,753 Investments - Statutory Reserve Funds 473,062 Investments - Other 195,309 Other Assets 292,979 Goodwill & Intangibles 234,345 Total Assets 1,304,448 Liabilities Debt 115,905 Loss Reserves 466,409 Other Liabilities 93,643 Total Liabilities 675,957 No
Slide 14: Investor Relations Contacts
14 Matt Morris CEO Allen Berryman CFO Nat Otis SVP, Finance and Director of Investor Relations nat.otis@stewart.com (713) 625-8360 direct (800) 729-1900, ext. 8360 toll free
Slide 15: Appendix
Stewart Information Services Corporation Appendix
Slide 16: Market Conditions
Market • Interest rates remain at low levels even as the Federal Reserve has started to gradually tighten the supply of money • Home prices continue to increase – 5% increase in home prices equates to an approximate 3.5%+ increase in revenue per transaction • Commercial real estate market remains so
Slide 17: Title Revenues by Regulatory Oversight
Stewart Family 2015 Title Industry 2015 Source: Form 9 filings (Schedule T) as compiled by ALTA 17 Title Revenues by Regulatory Oversight File and Wait 1% File and Use 37% Foreign 2% Rating Bureau 23% Promulgated 25% No Filing Required 12% File and Wait 1% File and Use 32% Foreign Rating Bureau 7% 2
Slide 18: Residential Lending Vs. Industry Premiums
Effective Lending = Purchase Lending + 60 Percent of Refinance Lending Data Sources: Lending = Fannie Mae®, Title Premiums = CDS Research, Demotech and ALTA 18 Residential Lending Vs. Industry Premiums $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 '90 '91
Slide 19: SISCO Organizational Structure
19 SISCO Organizational Structure SISCO STG STIC STL (UK) STG STC Mexico SLS Other Non-Title Title Offices
Slide 20: Corporate Governance
Market Conditions • Nine member Board of Directors is annually elected • Majority vote standard • Separate CEO and Chairman of the Board • Seven of nine members of the Board are independent • Shareholders can call special meetings • Declawed preferred stock • No supermajority requirements • Director
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