Stewart Information Services Corporation · NYSE:STC
Stewart Information Services — Investor Presentation (November 2015)
27 slides from Stewart Information Services's investor presentation, Nov 17, 2015
Slide 1: Investor Presentation – Winter 2015
Stewart Information Services Corporation Investor Presentation – Winter 2015
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: Company Overview
Company Overview Stewart Information Services Title Insurance Segment Provide independent, third-party closing and settlement services Search, examine and insure the condition of the title to real estate property, providing security of ownership and reduced liability to lenders Offer products to bot
Slide 5: Achievements Since Housing Crisis
Achievements Since Housing Crisis Strengthen Balance Sheet Increased shareholder’s equity from $448 million in 2010 to $676 million in 2014 Raised $65mm in convertible notes in 2009 to refinance bank debt that was callable at any time, with the notes subsequently converted into equity in 2014 Streng
Slide 6: Increasing Shareholder Value
Increasing Shareholder Value Improve Margins Continue to execute initiatives around centralization, optimization, offshoring and technology rationalization Leverage balance sheet and ratings to drive continued growth in higher margin commercial business Achieve 50/50 direct to independent agency tit
Slide 7: Focused Growth
Focused Growth Title Operations Increase direct market share in higher growth states and top MSAs where Stewart is below its national market share through organic sales growth and accretive acquisitions Independent agency growth in higher remittance rate states Commercial Title Operations Completed
Slide 8: Improving Efficiency Post-Crisis
Improving Efficiency Post-Crisis Reductions in Cost Structure Post-crisis, Stewart changed 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)C
Slide 9: 2014-2015 Cost Reduction Plan
2014-2015 Cost Reduction Plan Cost Saving Initiative Action Centralization/Automation Completed headcount reductions in claims operation with additional reductions by year-end 2015 Consolidate work into key offices Automate wire transfer operations for escrow functions Outsourcing Completed outsourc
Slide 10: Title Insurance – Market Share Map
Title Insurance – Market Share Map Source: American Land Title Association, 1H 2015 Market Share by Family Company and State
Slide 11: Commercial Title Growth Strategy
Commercial Title 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 high
Slide 12: 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 Source: ALTA ® , Family-Company Aggregates
Slide 13: 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 Source: Company press releases and SEC filings
Slide 14: Agency Network – Overview
Agency Network – Overview Focus on quality and profitability over market share growth Leading the industry in assisting independent agencies as they preparefor CFPB and other regulatory compliance requirements Emphasis on capturing a higher percentage of business from current agencies and signing ne
Slide 15: Agency Network – Revenues Net of Retention
Agency Network – Revenues Net of Retention Trailing 12 Months – $ Millions Net Revenue Number of Independent Agents Note: Number of independent agencies based on number of contractual relationships rather than number of physical locations of agencies.
Slide 16: Capital Priorities
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% – liquid
Slide 17: Revenues and Pretax Earnings Trends
Revenues and Pretax Earnings Trends $ Millions Revenue Pretax Earnings * Excludes one-time charges and benefits
Slide 18: Balance Sheet – September 30, 2015
Balance Sheet – September 30, 2015 Ratios Return on Equity, TTM 2.6% Debt-to-Equity 12.7% Debt-to-Capital 12.2% Book Value Per Share Book Value/Share $28.86 Tangible Book Value/Share $16.90 Statutory $ thousands Surplus 505,321 Liquidity Ratio 97% Premium Leverage 2.65x Assets $ thousands Cash & Cas
Slide 19: Matt Morris CEO Allen Berryman CFO Nat Otis SVP, Finance and Director of Investor
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 20: Appendix
Stewart Information Services Corporation Appendix
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 with expectations for increased refinancings Interest rates remain at historically low levels – although possibility for
Slide 22: Stewart Revenues vs. Mortgage Origination Cycle
Stewart Revenues vs. Mortgage Origination Cycle U.S. Mortgage Origination / Refinancings ($tn) Gross Revenues ($bn) Source: MBA
Slide 23: U.S. Existing Housing Sales
U.S. Existing Housing Sales National Association of REALTORS ® Seasonally Adjusted Annualized Rate – $ Millions Source: National Association of REALTORS® and Fannie Mae
Slide 24: Residential Lending Vs. Industry Premiums
Residential Lending Vs. Industry Premiums $ Trillions $ Billions Effective Lending = Purchase Lending + 60 Percent of Refinance Lending Data Sources: Lending = Fannie Mae®, Title Premiums = CDS Research, Demotech and ALTA
Slide 25: Title Revenues by Regulatory Oversight
Title Revenues by Regulatory Oversight Stewart Family 2014 Title Industry 2014 Source: Form 9 filings (Schedule T) as compiled by ALTA
Slide 26: SISCO Organizational Structure
SISCO Organizational Structure
Slide 27: Corporate Governance
Corporate Governance 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 Shareholders can act by written consent Declawed preferred stock No supermaj
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