Stewart Reports First Annual Loss Since '74

Stewart Information Systems Corp., Houston, has reported a loss of $31.3 million ($1.74 per share) for the fourth quarter, compared with net earnings of $10.7 million ($0.59 per share) a year earlier. For the full year, Stewart lost $40.2 million ($2.21 per share), compared with net earnings of $43.3 million ($2.36 per share) in 2006. It is the first full-year net loss recorded by Stewart since 1974, the company said. The full-year loss includes a pretax charge of $40.9 million to increase reserves due to large title claims. In the fourth quarter, there were nine large title claims totaling $15 million, and Stewart took an additional adjustment of $5 million relating to incurred but not reported reserves resulting from an increase in the frequency of large title claims. Malcolm S. Morris, chairman and co-chief executive, said Stewart's methodology for estimating its provision for future title losses is basically unchanged. "However, applying that methodology in light of our worse-than-expected claims payment experience related to policies issued in 2004-2006, together with a number of large claims, resulted in an increase in our provision for future losses, as a percentage of title operating revenues, to 8.5% in 2007 from 6.0% in 2006," he said.