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UPDATE 2-Stewart Information posts Q2 loss, shares drop 13 pct
July 30, 2009 / 12:23 PM / 8 years ago

UPDATE 2-Stewart Information posts Q2 loss, shares drop 13 pct

* Results include $41.6 mln in charges

* Q2 expenses drop 5 percent

* Shares fall as much as 13 pct

By Abhinav Sharma and Archana Shankar BANGALORE, July 30 (Reuters) - Stewart Information Services Corp (STC.N), which runs one of the largest U.S. title insurers, posted a narrower second-quarter loss helped by cost cuts, but its shares fell 13 percent as results lagged its larger rivals.

“Over the last several quarters, there has been little bit more stabilization in the industry losses and Stewart’s main competitors report earnings with no prior year trust preferred securities or excess large losses,” KBW analyst Nathaniel Otis said.

The provider of title insurance and related services to the real-estate and mortgage industries, said net loss attributable to shareholders was $20.6 million, or $1.14 a share, compared with a loss of $28.6 million, or $1.58 a share, a year ago.

Earlier in the day, Stewart’s larger rival, First American Corp (FAF.N) said its quarterly profit more than tripled, helped by a pickup in refinancing and lower expenses.[ID:nN30512644]

On Monday, Fidelity National Financial Inc (FNF.N), which controls one of the largest U.S. title insurers, posted a 13-fold increase in quarterly profit, as acquisitions and falling mortgage rates contributed to a surge in business.

“It’s a concern for Stewart, for it’s tough because it’s a smaller company. So, large single losses can impact earnings on a greater standpoint than for Stewart’s larger competitors,” Otis added.

Stewart said quarterly results include pre-tax charges of $19.2 million tied to reserves and $22.4 million related to several agency defalcations and large title losses.

Total expenses fell 5 percent to $446.9 million. Quarterly revenue rose marginally to $430.8 million.

Employee costs were down 16.2 percent at $122 million and its other operating expenses dropped 18.4 percent to $70.5 million in the quarter.

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.

Shares of the company were trading down 8 percent at $14.20 in afternoon trade Wednesday on the New York Stock Exchange. (Additional reporting by Supantha Mukherjee, Editing by Ratul Ray Chaudhuri, Dinesh Nair)

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