Net income rose sharply from a year earlier during the fourth quarter at Stewart Information Services Corp., while it held steady at First American Financial Corp.
Stewart reported fourth-quarter net income of $16.7 million, which represents more than a fivefold increase from the $2.6 million it earned during the same period in 2015. The company's results a year ago were affected by $2.7 million in charges related to its exit from delinquent loan servicing operations.
The company's title insurance segment generated $511.6 million in revenue, up 8.2% from the fourth quarter of 2015. The title segment's pretax margin, which represents the income before taxes as a percentage of the total revenue, was 7.4%, which is an increase from the 4.9% margin reported a year earlier.
There were 88,074 residential title insurance orders opened during the quarter, down from 90,705 the year before.
"We are very pleased with our fourth-quarter 2016 title segment results, which generated pretax earnings growth of 65% on overall revenue growth of 8%," Stewart CEO Matthew Morris said in a news release. "Purchase transactions grew nicely compared to the prior year quarter, and domestic commercial revenues were the highest seen in the last 16 quarters."
Domestic commercial revenue rose 1.7% year over year to $52.7 million, while international commercial revenue dropped 16.9% to $5.4 million. On the non-commercial side, domestic revenue increased 4.1% to $146.7 million, and international revenue jumped 16.5% to $25.4 million.
Morris noted that Stewart expects to weather industrywide headwinds related to the decline in refinancing transactions well, as the company's transaction mix is weighed more toward purchases.
Expenses at Stewart rose nearly 2% year over year to $502.7 million, despite lower employee-related costs.
Stewart also announced that the company's chief financial officer, Allen Berryman, has announced his plans to retire. Berryman joined the company in 2008, and Morris said he played "an integral role both in successfully guiding us through our post-downturn recovery and repositioning Stewart as an operating company focused on improving delivery to our customers, shareholders and associates."
Stewart plans to begin the formal search for a new CFO immediately.
First American, meanwhile, had net income of $81 million for the fourth quarter, down slightly from $81.6 million in the same period in 2015.
The company's title insurance business reported total revenue of $1.38 billion, up 10.5% from $1.25 billion, with a pretax margin of 10.8% compared with 10.3% a year ago. There were 265,800 direct orders opened, up from 278,700 in the fourth quarter of 2015.
Paid title claims were up slightly year over year at $51.1 million versus $49.1 the year before.
Additionally, First American's specialty insurance division's revenue rose 18.2% to $118.6 million.
First American further reported $1.42 billion in expenses during the fourth quarter, up 14.8% from 2015 mainly on higher personnel costs.
