Stewart Information Services Corporation · NYSE:STC
Stewart Information Services — Investor Presentation (2014)
25 slides from Stewart Information Services's investor presentation, 2014
Slide 1: Stewart Information Services Corporation Investor Presentation – Winter 2014
Stewart Information Services Corporation Investor Presentation – Winter 2014 1
Slide 2: Forward-looking Statements
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 financ
Slide 3: Non-GAAP Disclosures
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 ma
Slide 4: Investment Highlights
Investment Highlights • Corporate focus on margin expansion by building on new business model • Well positioned with our high-service, trusted third party platform to capitalize on further strengthening of the real estate market and heightened regulatory environment • Significant market share (12.7%
Slide 5: Strategic Priorities
Strategic Priorities • Lead the market in providing compliant, trusted and tailored real estate services in concert with changing regulatory environment • Pursue smart, disciplined growth by expanding commercial business nationally and internationally and increasing market share of Direct Operations
Slide 6: Title Insurance – Overview
Title Insurance – Overview Residential Commercial International • Provide independent, • Significant experience and • #1 market share in third-party closing and underwriting expertise in Canadian markets served settlement services major markets poised for and presence in the U.K., future growth Cont
Slide 7: Title Insurance – Market Share Map
Title Insurance – Market Share Map 13% 15.4% 4.7% 16.2% 31.2% 20.1% 6.7% 18% 12.9% 11.7% 9.9% 19.6% 23.1% 15.5% 10.6% 9% 12% 11.7% 7.1% 11.2% 12.4% 6.2% 11.9% 5.2% 13.5% 17% 8.4% 11.7% 10.7% 12.8% 5.9% 10.7% 16.1% 3.7% 6.8% 11.5% 5.6% 13.3% 7% 17.3% 12.7% 22.1% 17% 15.4% 9.4% 17.7% 10.9% 12.2% 34.5%
Slide 8: Title Insurance – Direct Revenues and Orders
Title Insurance – Direct Revenues and Orders Trailing 12 Months – $ Millions Revenue Orders $1,200 1,100,000 $1,000 900,000 $800 700,000 $600 500,000 $400 300,000 $200 100,000 $0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Direct Title Revenue Open Orders Closed Files 8
Slide 9: Title Insurance – Loss Ratio by Policy Year
Title Insurance – Loss Ratio by Policy Year Actuarial Claims as a % of Net Statutory Premiums Written – U.S. Operations Only 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Claims Paid Stewart First American Fidelity National Source: ALTA®,
Slide 10: Title Insurance – GAAP Loss Provision Ratios
Title Insurance – GAAP Loss Provision Ratios Quarterly Title Loss Provision as a % of Revenues – Includes Prior Year True-ups 30% 25% 20% 15% 10% 5% 0% 2007 2008 2009 2010 2011 2012 2013 2014 Fidelity National First American Stewart Source: Company press releases and SEC filings 10
Slide 11: Agency Network – Overview
Agency Network – Overview • Focus on quality and profitability over market share growth • Leading the industry in assisting independent agencies as they prepare for CFPB and other regulatory compliance requirements • Emphasis on capturing a higher percentage of business from current agencies and sig
Slide 12: Agency Network – Revenues Net of Retention
Agency Network – Revenues Net of Retention Trailing 12 Months – $ Millions Net Revenue Number of Independent Agents $250 7,000 6,000 $200 5,000 $150 4,000 3,000 $100 2,000 $50 1,000 $0 0 2008 2009 2010 2011 2012 2013 2014 Net Agency Revenues Independent Agents Note: Number of independent agencies ba
Slide 13: Mortgage Services – Overview
Mortgage Services – Overview Business Lines • Title Insurance: Underwriting, escrow, centralized title solutions, REO and default title solutions and title curative • Loan Origination Services: Valuation solutions, post-closing support and loan quality control • Capital Market Solutions: Servicing o
Slide 14: Mortgage Services – Core Products
Mortgage Services – Core Products Title Insurance Stewart Fidelity Title First American Title Old Republic Title Underwriting ü ü ü ü Escrow ü ü ü ü Centralized Title Solutions ü ü ü ü REO and Default Title Solutions ü ü ü ü Title Curative ü ü ü ü Loan Origination Services Valuation Solutions ü ü ü
Slide 15: Capital Priorities
Capital Priorities Underwriter Business Model Other • Continue to strengthen • Look to increase direct • $70 million share repurchase balance sheet by growing residential and commercial program to be completed by $500+ million in statutory title operations’ presence year-end 2015 surplus consistent
Slide 16: YTD 2014 & Full Year 2013 Highlights
YTD 2014 & Full Year 2013 Highlights • Pretax earnings of $35.8 million through 3Q14 and pretax earnings of $101.1 million in full year 2013 • Net earnings attributable to Stewart of $17.9 million through 3Q14 ($0.76 per share) and net earnings attributable to Stewart of $63.0 million in 2013 ($2.60
Slide 17: Revenues and Pretax Earnings Trends
Revenues and Pretax Earnings Trends $ Millions Revenue Pretax Earnings $2,500 $500 $2,000 $400 $1,500 $300 $1,000 $200 $500 $100 $0 $0 -$500 -$100 -$1,000 -$200 -$1,500 -$300 2006 2007 2008 2009 2010 2011 2012 2013 Total Revenues Pretax Earnings 17
Slide 18: Matt Morris, Allen Berryman and investor relations contacts
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 18
Slide 19: Appendix
Stewart Information Services Corporation Appendix 19
Slide 20: SISCO Organizational Structure
SISCO Organizational Structure SISCO STG STG STIC STL (UK) STC Mexico Title Other SLS Offices Non-Title 20
Slide 21: Market Conditions
Market Conditions • Home prices continue to increase – 5% increase in home prices equates to a 3.5%+ increase in revenue per transaction • Commercial real estate market remains solid • Interest rates remain at historically low levels • HARP extension to 2015 • Full benefit of 2013 state pricing incr
Slide 22: U.S. Existing Housing Sales
U.S. Existing Housing Sales National Association of REALTORS® Seasonally Adjusted Annualized Rate – $ Millions 8 Normal Bubble Market 7 Last Normal Market Fannie Mae® 2002 Forecast 6 $8,000 Tax Credit 5 4 3 2 1 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: National
Slide 23: Residential Lending Vs. Industry Premiums
Residential Lending Vs. Industry Premiums $ Trillions $ Billions $3.0 $18.0 $16.0 $2.5 2011-2014 Lending Likely Fannie Mae® Understates Title Revenues Forecast $14.0 Due to Elevated Cash Sales $2.0 $12.0 $10.0 $1.5 $8.0 $1.0 $6.0 $4.0 $0.5 $2.0 $0.0 $0.0 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '
Slide 24: Balance Sheet – September 30, 2014
Balance Sheet – September 30, 2014 Assets $ thousands Ratios Cash & Cash Equivalents 168,445 Return on Equity, TTM* 16.6% Investments - Statutory Reserve Funds 438,714 Debt-to-Equity 13.7% Investments - Other 163,914 Debt-to-Capital 12.0% Other Assets 332,687 Book Value Per Share Goodwill & Intangib
Slide 25: Title Revenues by Regulatory Oversight
Title Revenues by Regulatory Oversight Stewart Family 2013 Title Industry 2013 File and Wait File and Wait 1% 2% No Filing No Filing Required Required 11% 13% File and Use 31% File and Use 38% Promulgated Promulgated 23% 23% Foreign Rating 10% Rating Bureau Bureau 24% 22% Foreign 2% Source: Form 9 f
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