* Q4 loss/shr $8.72
* Revenue fell 33 pct to $335.9 mln
* Title insurance revenue fell 28.1 pct
* Shares down pct 15 pct
(Adds details, analysts' comments, background, share movement)
By Anurag Kotoky
BANGALORE, Feb 19 Stewart Information Services
Corp (STC.N), which runs one of the largest U.S. title
insurers, posted a wider-than-expected quarterly loss due to
lower title insurance revenue given a precipitous drop in
real-estate prices, sending its shares down as much as 15
"We believe this quarter should certainly be viewed as a
"kitchen sink" quarter given the added loss provisioning,
restructuring, legal charges and securities write-downs, Keefe,
Bruytette & Woods analyst Nathaniel Otis said in a note to
The housing slump, worsened by tight credit and an economy
that contracted in the third quarter, has resulted in lower
demand for homes, cutting into title insurers' revenue.
Title insurance guarantees that property owners have title
to property and can legally transfer that title. Many lenders
require that buyers have the insurance before extending loans.
The provider of title insurance and related services to the
real-estate and mortgage industries posted a net loss of $158
million, or $8.72 a share, for the fourth quarter. Analysts
were expecting a loss of $1.03 a share, before items, according
to Reuters Estimates.
The company said results were hurt by a $32 million
increase in policy loss reserves due to unusually large claims
payments, and a reserve of $19.3 million for various pending
A lot of special items the company took during the quarter
seem to be only one time in nature, analyst Mark Dwell of RBC
Capital Markets said.
Analyst Otis said the company has likely taken significant
steps towards rebalancing its cost base as it enters 2009.
TOUGH TIMES AHEAD?
Stewart Information said it closed 167 offices and cut 34
percent jobs in 2008 at its direct title and real estate
information operations. It also cancelled more than 2,500
agencies to reduce the overhead costs associated with
low-premium volume agents.
If mortgage origination volumes do not improve in the near
term, the company could be forced to look at additional cost
cutting measures, RBC's Dwelle said.
Commercial and multifamily mortgage loan originations
dropped a whopping 80 percent in the fourth quarter alone,
according to the Mortgage Bankers Association's website.
However, former mortgage giants Fannie Mae and Freddie Mac
have projected that in 2009, volumes will be up substantially
from 2008 levels, and Stewart Information's future performance
would depend on whether the projections come true, Dwelle said.
The bankruptcy of LandAmerica LFGRQ.PK, formerly the No.
3 U.S. title insurer, is expected to provide a larger market
share for smaller title insurers, but it is too soon to say
whether Stewart had benefitted from it already, Dwelle added.
Shares of the company were down $2.34 at $13.29 Thursday
afternoon on the New York Stock Exchange. They have shed more
than 60 percent of their value from their highs in September.
(Additional reporting by Supantha Mukherjee in Bangalore,
Editing by Dinesh Nair, Amitha Rajan)