Stewart Information Services has acquired two more companies in line with its goal to expand offerings for housing finance players that manage mortgage assets on a long-term basis.
The acquisitions of ProTitleUSA and its document services affiliate follows a string of other mortgage-related transactions at Stewart, including the purchases of
"These businesses expand our scale in title services, strengthen our lender and servicer offerings for investors and capital market clients and add innovative analytic and document generation capabilities," Stewart CEO Fred Eppinger said in a press release.
Acquisition terms were not disclosed. Solomon Partners was the exclusive financial advisor for the two acquired companies.
"ProTitle and DocSolution were built around a commitment to service, innovation and helping customers unlock additional transaction value through analytics, product creation, and automation. Joining Stewart gives us the opportunity to expand that mission," Alex Goldovsky, the CEO of both companies, said in a press statement.
The purchases of the title company and its DocSolutionUSA affiliate could strengthen Stewart's position within a group of businesses vying to control the mortgage services market as recent policymaker statements have
An investor presentation Stewart circulated last month shows that it plans to use expanded mortgage servicers to grow its market share and cross-selling among top enders and servicers, potentially generating $1 billion in revenue in the next three years from this activity.
"We remain focused on continuing to expand our coverage and servicing of the top 300 lenders, and our suite of products and services is in a good position and is giving us an even better ability to cross-sell and win business," Eppinger said during a recent earnings call.
The higher rate activity that has surfaced since Stewart published that report may make it more challenging to originate in a way that could reduce mortgage title search activity/
"Interest rates remain a critical factor for potential homebuyers, determining when they enter the market," Eppinger said during the second-quarter earnings call, noting later in a response to an analyst's question that he expects "title will be tighter" this year.
However, servicing units some lenders have can benefit from higher financing cost and offset this concern.
Stewart's CEO also noted during that call that the company has found the market to be ripe for merger and acquisition activity in ways that could add to its earnings potential.
"We have seen a meaningful pickup in attractive opportunities in our acquisition pipeline," Eppinger said.
He acknowledged that acquisition activity through the second quarter had added some operational expenses but said that it has provided a net benefit to the organization.
"We have increased our staffing in all our segments in line and with our organic growth initiatives and have grown our headcount via acquisition, which has resulted in an increase of our employee costs of about 17% year-to-date. Even with this increased investment year-to-date, we have grown revenues by 26% and adjusted pretax income by 45%," he said.
Stewart's stock was up by 1.51% on the day in early afternoon trading on Tuesday at $69.70 per share.
