Stewart Information Services Corporation · NYSE:STC
Stewart Information Services — Investor Presentation (November 2012)
24 slides from Stewart Information Services's investor presentation, Nov 26, 2012
Slide 1: Fall 2012 Investor Presentation
Fall 2012 Investor Presentation Stewart Information Services Corporation
Slide 2: Forward-looking Statements
2 Forward - looking Statements Certain statements in this presentation 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 a
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 ti
Slide 4: Investment Highlights
4 Investment Highlights • Extensive Industry Platform – Established market share in $10 billion domestic industry – Well - balanced geographic national footprint – Conservative management style – Industry leading expertise in serving all segments of the real estate services market – Publicly held bu
Slide 5: Income Statement Non-GAAP Presentation
5 Income Statement Non-GAAP Presentation (in thousands) 2011 2012 % Change 2011 2012 % change Revenues Direct 164,411 189,155 15.1% 469,482 528,363 12.5% Agency Premiums 228,350 281,587 23.3% 633,988 729,047 15.0% REI 22,494 43,098 91.6% 76,443 116,059 51.8% Total Operating Revenues 415,255 513,840
Slide 6: Business Lines
6 Business Lines • Title Insurance and Related Services – Title insurance to the residential and commercial sectors through direct and independent agencies domestically and globally – Includes the functions of searching, examining, closing and insuring the condition of the title to real property • R
Slide 7: 2011 Underwriter Family Market Share
7 2011 Underwriter Family Market Share Indicates Stewart Family of Underwriters Ranks in Top T hree in Market S hare Stewart Ranks in Top F our F amilies in Market S hare in All 50 States Family of Title Insurance Underwriters Quarterly Market Share STC FAF FNF ORI 2008 11.65% 28.76% 27.14% 5.46% Q2
Slide 8: Stewart Operating Revenues
8 Trailing Twelve Months - $ Millions Stewart Operating Revenues $0 $500 $1,000 $1,500 $2,000 $2,500 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 Direct Title Agency Title REI
Slide 9: Percentage Change in Operating Revenues and Expenses
9 Percentage Change in Trailing 12 Month Moving Average Operating Revenues and Expenses -10.0% -7.5% -5.0% -2.5% 0.0% 2.5% 5.0% 7.5% 10.0% '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 Net Operating Revenue EE & Other Operating
Slide 10: Direct Title Revenues and Orders
10 Trailing Twelve Months - $ Millions Direct Title Revenues and Orders $500 $600 $700 $800 $900 $1,000 $1,100 '02'03'04'05'06'07'08'09'10'11'12 200,000 400,000 600,000 800,000 1,000,000 Direct Title Revenue Orders Opened Files Closed
Slide 11: Independent Agency Network
11 Independent Agency Network • Managing network to emphasize quality and profitability over market share growth. – Since 2008, average annual remittance per independent agency increased more than 85 percent while the number of independent agencies has been reduced by approximately half. – Policy lo
Slide 12: Focused Non-title Revenues and Profits
12 $0 $20 $40 $60 $80 $100 $120 $140 $160 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 Trailing Twelve Months - $ Millions Focused Non - title Revenues and Profits Stewart REI Operating Revenues
Slide 13: Expenses as a Percent of Operating Revenues
13 Other Operating Expenses 0% 5% 10% 15% 20% 25% STC FAF FNF Employee Costs Expenses As a Percent of Operating Revenues 2012 YTD 2011 0% 5% 10% 15% 20% 25% 30% 35% 40% STC FAF FNF
Slide 14: Claims Expense vs. Cash Claims Paid
14 Trailing Twelve Months - $ Millions Claims Expense Vs. Cash Claims Paid Net of Recoveries $25 $75 $125 $175 $225 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 $25 $75 $125 $175 $225 Anticipate accruals of 7.5 to 8.0 percent by year end 2012 Claims Expense Cash Claims Paid
Slide 15: Actuarial Claims as a Percentage of Net Premiums Written
15 Actuarial Claims as a Percentage of Net Statutory Premiums Written – U.S. Operations Only Ultimate Loss Ratios by Policy Year 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 Source: ALTA, Family - Company Aggregates Stewart First American Fidelity Claims Paid
Slide 16: Market Conditions
16 Market Conditions • Housing sales continuing recovery with estimated 8 percent increase in total new and existing sales in 2013 • Home prices increasing -- a 5 percent rise in prices increases revenue per transaction by an average mid - 3 percent • Orders , driven by record - low rates and HARP 2
Slide 17: U.S. Existing Housing Sales Forecast
17 0 1 2 3 4 5 6 7 8 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 $8,000 Tax Credit Normal Market Bubble Fannie Mae October 2012 Seasonally Adjusted Annualized Rate - Millions U.S. Existing Housing Sales Forecast National Association of REALTORS ®
Slide 18: Strategic Commitments
18 Strategic Commitments 1. Simplification and Alignment 2. Profitable and Scalable Operations 3. Claims Reduction and Risk Avoidance Initiatives 4. Grow Shared Services 5. Sales Growth
Slide 19: Management and Investor Relations Contacts
19 CEO Matt Morris CFO Allen Berryman Ted C. Jones, PhD Chief Economist Director of Investor Relations ted@stewart.com 713.625.8014 direct 800.729.1900, extension 8014
Slide 20: Appendix
Fall 2012 Investor Presentation Appendix Stewart Information Services Corporation
Slide 21: Residential Lending vs. Industry Title Premiums
21 Effective Lending - $ Trillions Residential Lending Vs. Industry Title Premiums Statutory Title Premiums $ Billions $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 $3 $5 $7 $9 $11 $13 $15 $17 Forecast Fannie Mae October 2012 2011 - 2013 Lending Likely Understate
Slide 22: Stewart Net Operating Revenues
22 Trailing Twelve Months - $ Millions Stewart Net Operating Revenues $0 $250 $500 $750 $1,000 $1,250 $1,500 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 Direct Title Agency Net of Retention REI
Slide 23: Employee Expenses
23 Trailing Twelve Months Employee Expenses 20% 25% 30% 35% 40% '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 As a Percentage of Operating Revenues
Slide 24: Other Operating Expenses
24 Other Operating Expenses 10% 13% 15% 18% 20% 23% 25% '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 Trailing Twelve Months As a Percentage of Operating Revenues
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