Stewart Information Services Corporation

views updated

Stewart Information Services Corporation

1980 Post Oak Boulevard, Suite 800
Houston, Texas 77056
U.S.A.
Telephone: (713) 625-8100
Toll Free: (800) 729-1900
Fax: (713) 552-9523
Web site: http://www.stewart.com

Public Company
Incorporated: 1908 as Stewart Title Guaranty Company
Employees: 8,961
Operating Revenues: $2.18 billion (2005)
Stock Exchanges: New York
Ticker Symbol: STC
NAIC: 524127 Direct Title Insurance Carriers

Headquartered in Houston, Texas, Stewart Information Services Corporation provides title insurance and related services through more than 8,000 offices and agencies in the United States and abroad. Through Stewart Title, National Title, and other subsidiaries, the company writes title insurance policies. Stewart Information Services also provides mortgage origination process services, including credit reports, property valuations, property information reports, and tax services, in addition to offering post-closing lender services and automated county clerk land records. The company's real estate information division comprises Stewart Transaction Solutions, which offers an Internet-based transaction management platform under the name SureClose. Stewart's REIData subsidiary provides electronic transaction services. The company offers its various title insurance and information services to a broad variety of customers, such as government entities, real estate developers, and mortgage lenders. Its international operations are located in more than a dozen countries, including Australia, Canada, Costa Rica, the Dominican Republic, Mexico, Poland, Turkey, and the United Kingdom.

ORIGINS

The origins of Stewart Information Services Corporation can be traced to 1893 in Galveston, Texas, after Mac Stewart, a young Galveston lawyer, bought the Gulf City Abstract Company and renamed it Stewart Law & Land Title Office. He operated the business of issuing abstracts until 1905, when he and his brother, Minor Stewart, offered the first title insurance in Texas by providing indemnity against loss due to title claims. In 1897, W. C. Morris, an Arkansas orphan who grew up to become a significant player in the company's future, joined the firm as a stenographer and later married into the Stewart family. In 1900, the great Galveston hurricane together with the discovery of oil in Beaumont in 1901 greatly accelerated the growth of the fledgling firm by creating an urgent need for accurate land documentation in Texas. Chartered in 1908, the Stewart Title Guaranty Company became the first title insurance underwriter in the state, and it soon began opening offices in Dallas, Houston, San Antonio, El Paso, and other cities under the leadership of W.C. Morris. In 1956, the company expanded beyond Texas, opening an office in New Mexico. By 1960, the company had operations in Arizona, California, Florida, and Louisiana under the leadership of Stewart Morris, Sr., who became president of Stewart Title when both his father and cousin died in 1950. At the same time, his brother Carloss Morris took over Stewart Guaranty. The company hit another milestone in 1965, when it established its first affiliation with a computerized title operation in Los Angeles. Two years later in 1967, Stewart assisted in forming another computerized title plant in Houston.

EXPANSION IN U.S. AND OVERSEAS BEGINS IN 1970

In 1970, Stewart Information Services Corporation was formed as a holding company, presaging future expansion into the broader field of real estate information. One year after the company went public in 1972, the firm built a new corporate office in Houston, a sign of Stewart's growing prosperity. In 1975, brothers Carloss Morris and Stewart Morris, Sr., who led the company's expansion after their father's death in 1950, assumed control of management with plans for greater expansion in the title insurance and real estate industry. The brothers subsequently invested $2.4 million in 1977 to develop computer services for the title industry in order to chart operations and real estate information. By 1981, Stewart Information Services Corporation was issuing policies through more than 1,000 offices in 38 states. Six years later in 1987, it was issuing polices through more than 2,000 U.S. offices as its Stewart affiliate, Landata Geo Services, the company's software research and development arm, was winning international contracts in the Caribbean, Egypt, Morocco, and Guatemala for geographic information systems and aerial photography. Landata Systems soon became the nation's largest provider of software for the title industry. When Stewart, Jr., struck a deal with Microsoft Chairman Bill Gates to adapt its system to Windows, it catapulted the firm well ahead of its competition.

Stewart entered the 1990s with 2,700 offices issuing polices throughout all 50 states. The company's expanding business included searching, examining, closing, and insuring titles to homes and other properties, Stewart's customers encompassed home buyers and sellers, attorneys, builders, developers, lenders, and real estate brokers. Stewart Information also sold computer-related services and information to the real estate industry from its database systems. Its Landata Systems was producing digitized map systems and other information for U.S. and foreign governments and private entities.

The company formed Stewart Information International in 1992 to coordinate its various global enterprises. The international subsidiary was listed on the New York Stock Exchange in 1994, becoming the first stock quoted on the New York Exchange on the first trading day of 1995. The international subsidiary also provided some groundbreaking services to former Soviet republics and other emerging nations. In Moldavia, the company issued 53,000 deed certificates to peasants who worked the land that was previously owned by the Soviet government or communist communes. The firm also introduced a registry of mortgages on movable property in Hungary so that people could obtain credit from foreign banks to buy needed farm equipment.

COMPANY PERSPECTIVES

Stewart continually applies new technology to achieve its mission of enhancing the real estate transaction process. The end result is a magnificent experience for its customers and increased value for its shareholders. With the prognosis for continue strong real estate sales and lending volumes, Stewart's investment in developing leading technology is seen as key to its future.

By 1998, the firm was offering title insurance and other real estate information products and services through 150 subsidiaries and more than 3,800 U.S. offices and several foreign countries. The company had pioneered the use of computers in the industry, transforming a centuries-old system of hand-written land records into a fully automated system of electronic information storage and retrieval. In June 1998, with the acquisition of First Arkansas Title Corporation of Pine Bluff, Stewart Information announced that its subsidiary title insurers had begun offering services through more than 4,000 offices worldwide. As one of the country's leading title insurance companies, Stewart Information intended to make further acquisitions to spur growth and profitability. It also continued to invest heavily in technology to improve automated services to its numerous clients. With its electronic commerce tool, SureClose, clients could order via its network or the Internet a range of services, including flood determination, valuations and closing document preparation, as well as traditional title and closing services. The SureClose system worked by routing orders through Stewart's National Order Center and directing them to the appropriate agent within its national and international network. The company was on a profitable run by the end of 1998 with year-end record revenues approaching $1 billion. The company attributed these results to low interest rates, strong job growth, robust housing sales, and a wave of refinancings, all of which enabled it to open new offices, make new acquisitions, and compete in all domestic U.S. real estate markets.

In 1999, new leadership assumed control of Stewart Information Services Corporation when Malcolm S. Morris and Stewart Morris, Jr., sons of Carloss and Stewart, Sr., respectively, were elected co-CEOs. Malcolm was also elected chairman of the board of directors, while Stewart was elected to the additional position of president of the company. After resigning their posts, Carloss Morris and Stewart Morris were elected advisory directors. Having worked in every department of the company since they were very young, both Malcolm and Stewart, Jr., stepped up in 1991 to assume management of the company's core businesses. As Malcolm managed the underwriting subsidiaries, Stewart, Jr., had pioneered the technology end of the business since 1975. The company prospered throughout the 1990s, making Fortune Magazine's list of the 100 fastest growing companies in 1998 and 1999.

2000 AND BEYOND

In May 2000, Stewart Information announced that its title insurers were offering products through more than 5,000 offices in the U.S. and abroad. The company passed the 5,000 mark with the acquisition of Security Lake Title Guaranty, Inc. of Moses Lake, Washington. Stewart Information's strategy continued to call for the pursuit of acquisition and expansion opportunities that would strengthen its presence as the premiere national title and real estate information services provider.

For the year 2000, Stewart Information reported revenues of $935 million, a 12.7 percent decrease from 1999. The company attributed the results to softening market conditions from a slowing economy and expenditures to expand the company. Although the company had made sizeable cuts in staff in existing operations, its staffing numbers nevertheless remained flat because of new acquisitions and growth in the commercial and technology areas. Stewart had especially tried to position itself for growth in the higher-profit commercial lines of the business. To this end, the company expanded offices and personnel in its National Title Services unit, which served the national commercial and residential markets. The company anticipated better results ahead with new investments in e-commerce to expand its connectivity and productivity with clients.

In January 2001, Stewart International, the wholly owned subsidiary of Stewart Information Services opened a new office in the Dominican Republic to provide title guaranty, escrow, and closing services for buyers and sellers of residential and commercial property throughout the country. The company also announced plans in July to make a public offering of 2.5 million shares of its common stock. The company intended to use the proceeds of the offering for acquiring new companies or assets complimentary to its own business, as well for working capital and paying off debt.

KEY DATES

1893:: Company founded as Stewart Law & Land Title Office.
1908:: Stewart Title Guaranty Company is chartered and becomes first title insurance underwriter in Texas.
1950:: Stewart Morris, Sr., become president of Stewart Title and brother Carloss Morris takes over management of Stewart Guaranty.
1970:: Stewart Information Services Corporation is formed as a holding company.
1972:: Company goes public.
1992:: Stewart Information International is formed.
1999:: Malcolm S. Morris and Stewart Morris, Jr., are elected as co-CEOs.
2002:: Company opens new subsidiary in Mexico, becoming first licensed title insurance underwriter approved by the Mexican government.
2003:: Company expands into Asia with purchase of majority stake in Escrow A&K in Seoul, Republic of Korea.
2005:: Stewart Title Ltd. opens office in London, England.

In January 2002, Stewart Information Services opened a new subsidiary in Mexico City, becoming the first licensed title insurance underwriter approved by the government of Mexico. By bringing its international efforts to Mexico, the company aimed to create a network of representatives across the country to facilitate the title investigation process. Stewart Information believed that having title insurance available for Mexican property would serve to move more foreign capital into the country. At the same time, Landata Group Inc., another Stewart subsidiary, announced the formation of a new operating subsidiary, Ultima Corporation, to develop and deliver the industry standard for title plant software through technological innovation, product integration, and information distribution via the Internet. Landata Group also joined with IBM to modernize public land records for the Romanian government. In April 2002, moreover, the company's subsidiary, Landata Research, Inc., changed its name to Stewart Business Information to better inform customers of its Stewart affiliation.

In January 2003, Landata Group merged two operating entities to form Stewart Geo Technologies, an international provider of geospatial solutions, including mapping services, geographic information systems (GIS) application development, GIS consulting, and Internet data integration and publication. Stewart Geo Technologies also acquired the assets of GlobeXplorer Inc., a provider of satellite images and aerial photography via the Internet. Stewart Geo Technologies subsequently set up GlobeXplorer as an operating subsidiary, which then acquired Citipix aerial imagery from Eastman Kodak Company. The acquisition of Citipix imagery allowed GlobeXplorer to continue to meet customer requirements for new imagery. Stewart Information Services expanded into Asia in September with the purchase of a majority stake in Escrow A&K, located in Seoul, Republic of Korea. The company was subsequently renamed Stewart Korea Ltd, which would provide escrow services, title searches, and reinsurance to enhance investment opportunities. In October, the company formed a new corporation, Stewart REI Data Inc. to provide comprehensive information solutions to title agents, lenders, real estate agents, and brokers, federal, state and local governments, and other markets. By year's end, Stewart Information Service's revenues rose to a record $2.24 billion. The company also hit records for profits, earnings per share, title orders, and book value per share.

Stewart Title Guaranty Co. announced the formation of a wholly owned subsidiary, Stewart Realty Solutions, in January 2004. The new subsidiary aimed to develop and market a bundle of information services, technology applications, title insurance and closing services, and Internet-based real estate transaction management solutions for U.S. realty firms.

During this time, Stewart International opened a new office in Istanbul, Turkey, offering escrow, title guaranty and closing services to foreign buyers and lenders in Turkey. The company also issued its first commercial title guaranty in Slovakia. The title guaranty covered a portfolio of office buildings in Bratislava with an estimated value of 90 million euros or $120 million dollars. This transaction represented a general move on the part of the company to pursue opportunities in the emerging economies of Central and Eastern Europe, especially after the acceptance of these countries into the European Union.

In April 2005, Stewart Mortgage Information began offering a suite of origination and post-closing products and services to assist mortgage brokers making the transition to becoming mortgage bankers. In November of that year, Stewart Title Ltd., the European title insurance unit of Stewart Title Guaranty Company, expanded into London, England. The new office was established to oversee Stewart Title Ltd.'s U.K. operations and business in Spain, Czech Republic, Poland, Slovakia, Slovenia, Turkey, Romania, and Australia.

PRINCIPAL SUBSIDIARIES

Stewart Title Company; Stewart Title Guaranty Company; Stewart Mortgage Information; Stewart REI Data Inc.; Landata Group Inc.; Landata Systems Inc.; GlobeXplorer LLC; InterCity Companies; Asset Preservation Inc.; Stewart Water Information; Stewart Information International Inc.