Stewart Reports smaller Q2 Loss

by Dave Wirsching on July 30, 2009

Stewart Reports Financial Results for the Second Quarter 2009

Stewart reported a smaller Q2 loss, but still came in at ($1.14) per share.


  • Stewart appears to be continuing to aggressively cut agents – has the light finally gone on, that claims trump remittance?
  • These numbers reflect a significant boom in refinances during Q2, which appears to be drying up.  If the loss trends continue, Q3 and Q4 could be problematic.
  • Many defalcations are the result of Ponzi-like behavior.  They don’t appear until the income stream dries up.  If business tapers off again, don’t be surprised to see an increased in losses due to defalcation.


The second quarter of 2009 includes pretax charges of $19.2 million relating to reserve strengthening adjustments for prior policy years and $22.4 million relating to several agency defalcations and large title losses

The second quarter of 2008 includes a reserve adjustment of $10.0 million relating to prior policy years, $8.2 million relating to large claims and agency defalcations and a software impairment charge of $6.0 million.

For the second quarter of 2009, we reported a pretax loss, before noncontrolling interests, of $16.1 million compared with a pretax loss of $44.2 million in 2008.

From the Chairman: “In the first half of the year, we continued the aggressive restructuring of our agency network begun in 2008,” said Malcolm S. Morris, chairman and co-chief executive officer. “We canceled more than 700 higher-risk and underperforming agencies in the first half of 2009 and have canceled more than 3,200 agencies since the beginning of 2007. We continue to embrace the agency market, but we are increasing our diligence, inspection and expectations for these operations. In the first half of 2009, we signed up more than 330 new agencies-all of which were subjected to an extensive pre-signing qualification process. The annual revenues from the newly-signed agencies are expected to significantly exceed the revenues lost from the underperforming agencies canceled this year, and we anticipate that these new agencies will generate far fewer title losses based on our review of their historical loss data,”

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