Stewart Information Services Corp. returned to profitability in the second quarter as it earned $9.4 million, versus a loss of $20.6 million for the same period one year ago.
The Houston-based company said the improved performance was a result of profits from its direct operations as well as a $28.4 million decrease in charges attributable to title losses.
Stewart also recorded a pretax gain of $6.3 million as it "monetized" software it had developed. It also had a $1.2 million pretax gain due to the buyout of a royalty agreement and a pretax credit of $2.3 million due to a change in the estimate of a reserve to cover a legal matter.
Although total orders closed declined from over 104,400 in the second quarter 2009 to 77,300 in the most recent period, revenue per order increased 22% to $1,109. This is because of the heavy share of purchase loan closings in the quarter (as opposed to refinancings).
Many of the closings were due to the now-expired homebuyer tax credit. The expiration of the credit affected purchase transaction title orders opened in May and June. The decline was only partially offset by title orders opened because of refinancings (driven by low interest rates).
Stewart added the extension of the closing deadline for contracts signed that qualify for the tax credit to Sept. 30 will positively influence the company's results for the current quarter.
Commercial title revenues grew 20% to $23 million in the period.
Claims payments, while trending downward, are still elevated when looked at compared to historic levels. Title losses and related claims were 9.3% of title revenues for the quarter, compared with 16.4% one year prior.
