<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission file number 1-12688
STEWART INFORMATION SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 74-1677330
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1980 POST OAK BLVD., HOUSTON, TEXAS 77056
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (713) 625-8100
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $1 PAR VALUE
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of March 1, 1996, 6,139,758 shares of Common Stock, $1 par value,
and 525,006 shares of Class B Common Stock, $1 par value, were outstanding.
The aggregate market value as of such date of the Common Stock (based upon the
closing sales price of the Common Stock as reported by the NYSE on March 8,
1996) of Stewart Information Services Corporation held by nonaffiliates of the
Registrant was approximately $125,865,039.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Stewart Information Services Corporation Annual Report
to Stockholders for the year ended December 31, 1995 are incorporated by
reference in Parts I and II of this document.
Portions of the definitive proxy statement (the "Proxy Statement"),
relating to the annual meeting of the Registrant's stockholders to be held
April 26, 1996, are incorporated by reference in Parts III and IV of this
document.
================================================================================
<PAGE> 2
FORM 10-K
ANNUAL REPORT
YEAR ENDED DECEMBER 31, 1995
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
ITEM
NO. PAGE
--- ----
<S> <C>
1. Business ....................................................................... 1
2. Properties ..................................................................... 3
3. Legal Proceedings .............................................................. 4
4. Submission of Matters to a Vote of Security Holders ............................ 4
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters .......... 5
6. Selected Financial Data ........................................................ 6
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations ................................................................... 6
8. Financial Statements and Supplementary Data .................................... 6
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ................................................................... 6
PART III
10. Directors and Executive Officers of the Registrant ............................. 7
11. Executive Compensation ......................................................... 7
12. Security Ownership of Certain Beneficial Owners and Management ................. 7
13. Certain Relationships and Related Transactions ................................. 7
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K .............. 8
Signatures ..................................................................... 10
</TABLE>
i
<PAGE> 3
P A R T I
ITEM 1. BUSINESS
Stewart's primary business is title insurance. Stewart issues policies through
3,549 issuing locations on homes and other real property located in all 50
states, the District of Columbia, Canada, Mexico, Belize (reinsurance), the
Bahamas, Guam, England and the Commonwealth of the Northern Marianas. Stewart
sells computer-related services and information, as well as mapping products
and geographic information systems to government and private entities, both
domestic and foreign.
Examination and closing. The purpose of a title examination is to ascertain
the ownership of the property being transferred, what debts are owed on it and
what the title policy coverage will be. This involves searching for and
examining documents such as deeds, mortgages, wills, divorce decrees, court
judgments, liens, paving assessments and tax records.
At the closing or "settlement", the seller executes a deed to the new owner.
The buyer signs new mortgage documents. Closing funds are then disbursed to
the seller, the prior mortgage company, real estate brokers, the title company
and others. The documents are then recorded in the public records. A title
policy is generally issued to both the lender and new owner.
Title policies. Lenders in the USA generally require title insurance as a
condition to making a loan on real estate, including securitized lending. This
is to assure lenders of the priority of their lien position. The purchasers of
the property want the assurance given in their policy against claims that may
arise against their ownership. The face amount of the policy is normally the
purchase price or the amount of the related loan.
Title insurance is substantially different from other types of insurance.
Fire, auto, health and life insurance protect against losses and events in the
future. In contrast, title insurance seeks to eliminate most risks through the
examination and settlement process.
Losses. Losses on policies occur because of a title defect not discovered
during the examination and settlement process. Other reasons for losses
include forgeries, misrepresentations, unrecorded construction liens, the
failure to pay off existing liens, mishandling of settlement funds, issuance by
agents of unauthorized coverages and other legal issues.
Some claimants seek damages in excess of policy limits. Such claims are based
on various legal theories usually alleging misrepresentation by an issuing
office. Although the Company vigorously defends against spurious claims, it
has from time to time incurred a loss in excess of policy limits.
Experience shows that most claims against policies and claim payments are made
in the first six years after the policy has been issued, although claims may be
made many years later. By their nature, claims are often complex, vary greatly
in dollar amounts and are affected by economic and market conditions and the
legal environment existing at the time of settlement of the claims.
Factors affecting revenues. Title revenues are closely related to the level of
activity in the real estate market and the prices at which real estate sales
are made. Real estate sales are directly affected by the availability and cost
of money to finance purchases. Other factors include demand by buyers,
consumer confidence and family incomes. These factors may override the
seasonal nature of the title business. Generally, the third quarter is the
most active in terms of real estate sales and the first quarter is the least
active.
-1-
<PAGE> 4
Selected information for the national real estate industry follows (1995
amounts are preliminary):
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
1995 1994 1993
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Housing starts - millions . . . . . . . . . . . 1.35 1.46 1.29
Housing resales - millions . . . . . . . . . . . 3.81 3.95 3.80
Housing resales - median sales price in $
thousands . . . . . . . . . . . . . . . . . . 112.9 109.8 106.8
</TABLE>
Customers. The primary sources of title business are attorneys, builders,
developers, lenders and real estate brokers. No one customer was responsible
for as much as five percent of Stewart's title revenues in any of the last
three years. Titles insured included residential and commercial properties,
undeveloped acreage, farms and ranches.
Service, location, financial strength, size and related factors affect customer
acceptance. Increasing market share is accomplished primarily by providing
superior service. The parties to a closing are concerned with personal
schedules and the interest and other costs associated with the delays in the
settlement. The rates charged to customers are regulated to varying degrees by
different states. = Market share. Estimating a title insurer's market share
is difficult. Stewart believes it is the leading title insurer in Texas and in
a number of cities across the USA. Based on unconsolidated statutory revenues
for 1994 (1995 amounts are not available), Stewart Title Guaranty Company
("Guaranty") is the fourth largest title insurer in America.
Competitors include (names are abbreviated) Chicago Title, Commonwealth,
Fidelity, First American, Lawyers Title and Old Republic. As do most title
insurers, Stewart also competes with abstractors, attorneys who issue title
opinions and attorney-owned title insurance bar funds. A number of home
builders, financial institutions, real estate brokers and others own or control
title insurance agents, some of which issue policies underwritten by Guaranty.
This "controlled" business also provides competition for Stewart's agents.
Offices. The number of locations issuing Stewart policies was 3,549 at
December 31, 1995, compared to 3,312 a year earlier and 2,979 two years
earlier. Of these totals, 3,302, 3,018 and 2,741 were independent agents at
December 31, 1995, 1994 and 1993, respectively. Affiliated offices produced 77%
to 80% of consolidated revenues from title premiums and fees during each of the
three years ended December 31, 1995.
Title revenues by state. The approximate amounts and percentages of Stewart's
consolidated title revenues (excluding other revenues) by state for the last
three years were:
<TABLE>
<CAPTION>
AMOUNTS
($MILLIONS) PERCENTAGES
----------------------- ----------------------
1995 1994 1993 1995 1994 1993
----------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Texas . . . . . . . . 62 73 85 25 27 27
California . . . . . 59 68 95 24 25 30
Florida . . . . . . . 21 22 27 9 8 9
Arizona . . . . . . 12 14 14 5 5 5
All others . . . . . 89 95 97 37 35 29
---- --- ---- ---- ---- ----
243 272 318 100 100 100
==== ==== ==== ==== ==== ===
</TABLE>
-2-
<PAGE> 5
Regulations. Title insurance companies are subject to extensive state
regulations covering rates, agent licensing, policy forms, trade practices,
reserve requirements, investments and the flow of funds between an insurer and
its parent or its subsidiaries and any similar related party transaction.
Kickbacks and similar practices are prohibited by certain state and federal
laws.
Employees. Stewart and its subsidiaries employed approximately 3,757 persons
at December 31, 1995.
ITEM 2. PROPERTIES
The Registrant and its wholly-owned subsidiary, Stewart Title Guaranty
Company and its subsidiaries ("Guaranty"), own or lease the following principal
properties:
The following table sets forth information about the Registrant's
principal properties:
<TABLE>
<CAPTION>
Location Type Use Size Acquired In
- ----------------------- ----------------------- ----------------------- --------------- -----------
<S> <C> <C> <C> <C>
Houston, Texas Leased office building Executive office of the 161,260 sq. ft. (1)
Registrant and Guaranty
Dallas, Texas Leased office building Office of Guaranty 25,117 sq. ft (2)
Austin, Texas Leased office building Office of Guaranty 15,805 sq. ft. (3)
Los Angeles, California Leased office building Office of Guaranty 22,466 sq. ft. (4)
San Diego, California Leased office building Office of Guaranty 20,020 sq. ft. (5)
Riverside, California Leased office building Office of Guaranty 20,968 sq. ft. (4)
San Antonio, Texas Owned office building Office of Guaranty 26,769 sq. ft. 1980 & 1982
Galveston, Texas Owned office building Office of Guaranty 50,000 sq. ft. 1905
Phoenix, Arizona Owned office building Office of Guaranty 24,459 sq. ft. 1981
Tucson, Arizona Owned office building Office of Guaranty 24,000 sq. ft. 1974
</TABLE>
(1) This lease terminates in 2004.
(2) This lease terminates in 1999.
(3) This lease terminates in 1996.
(4) These leases terminate in 1998.
(5) This lease terminates in 2000.
The Registrant leases offices at approximately 301 locations. The
average term for all such leases is approximately six years. The leases expire
from 1996 to 2005. The Registrant believes it will not have any difficulty
obtaining renewals of leases as they expire or, alternatively, leasing
comparable property. The aggregate annual rental expense under all leases was
approximately $17,284,000.
All buildings and equipment owned or leased by the Registrant are
considered by the Registrant to be well maintained, adequately insured and
generally sufficient for the Registrant's purposes. Substantially all of the
Registrant's owned real property above is subject to mortgages.
-3-
<PAGE> 6
ITEM 3. LEGAL PROCEEDINGS
Guaranty and 10 other title insurers are defendants in a consolidated
class action proceeding originating from complaints first filed in April 1990.
The suit is currently pending in the United States District Court for the
District of Arizona. The plaintiffs allege that the defendants violated
federal antitrust law by participating in title insurance rating bureaus in
Arizona and Wisconsin in the early 1980s through which they allegedly agreed
upon the prices and other terms and conditions of sale for title search and
examination services. The plaintiffs request treble damages in an unspecified
amount, costs and attorneys' fees.
The parties have negotiated and proposed to the court a settlement
pursuant to which members of the class would receive cash (not to exceed
approximately $4.1 million from all defendants) and additional coverage under,
and discounts on, title insurance policies. In addition, the defendants and
counsel for certain plaintiffs have proposed to the Court that it award such
counsel the negotiated sum of $1.3 million in fees and expenses. Following
hearings on these matters, the Court has certified the proceeding as a class
action and taken the remaining issues under advisement.
The Registrant is a party to routine lawsuits incidental to its
business most of which involve disputed policy claims. In many of these suits,
the plaintiff seeks exemplary or treble damages in excess of policy limits
based on the alleged malfeasance of an issuing agent of the Registrant.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
-4-
<PAGE> 7
P A R T II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock began trading on the New York Stock Exchange ("NYSE") on
January 5, 1994 under the symbol "STC". The following table sets forth the
high and low sales prices of the Common Stock for each fiscal period indicated,
as reported by NYSE, and the amount of cash dividends paid per share.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
---- --- ---------
<S> <C> <C> <C>
1995:
First quarter . . . . . . . . . . . . . . . . 17.63 15.13 .05
Second quarter . . . . . . . . . . . . . . . 20.00 17.13 .05
Third quarter . . . . . . . . . . . . . . . . 20.25 18.63 .05
Fourth quarter . . . . . . . . . . . . . . . . 22.50 18.63 .06
1994:
First quarter . . . . . . . . . . . . . . . . 21.42 18.92 .05
Second quarter . . . . . . . . . . . . . . . 20.25 17.38 .05
Third quarter . . . . . . . . . . . . . . . . 18.63 15.38 .05
Fourth quarter . . . . . . . . . . . . . . . . 17.75 14.38 .05
</TABLE>
The Company has paid regular quarterly cash dividends on its Common Stock
since 1972. The Company's Certificate of Incorporation provides that no cash
dividends may be paid on the Class B Common Stock.
While it is the current intention of the Board of Directors to continue to
pay quarterly cash dividends on its Common Stock, the payment of future
dividends necessarily will depend on the earnings and financial needs of the
Company, as well as applicable legal restrictions.
-5-
<PAGE> 8
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data have been included on Page 18 of the Registrant's
Annual Report to Stockholders for the year ended December 31, 1995, and such
information is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information required by this Item is set forth on Pages 18 through 21
of the Registrant's Annual Report to Stockholders for the year ended December
31, 1995, and such information is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
1995 Annual Report
to Stockholders
Page No.
-------
<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . 21
Consolidated Statements of Earnings and Retained Earnings for the
Years Ended December 31, 1995, 1994 and 1993 . . . . . . . . . . 22
Consolidated Balance Sheets as of December 31, 1995 and 1994 . . 23
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . 24
Notes to Consolidated Financial Statements . . . . . . . . . . . 25
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
-6-
<PAGE> 9
P A R T III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is set forth in the Registrant's
Proxy Statement relating to the annual meeting of the Registrant's stockholders
to be held April 26, 1996, under the captions "Election of Directors" and
"Executive Compensation", and such information is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is set forth in the Registrant's
Proxy Statement relating to the annual meeting of the Registrant's stockholders
to be held April 26, 1996, under the caption "Executive Compensation", and such
information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this Item is set forth in the Registrant's
Proxy Statement relating to the annual meeting of the Registrant's stockholders
to be held April 26, 1996, under the caption "Security Ownership of Certain
Beneficial Owners and Management", and such information is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is set forth in the Registrant's
Proxy Statement relating to the annual meeting of the Registrant's stockholders
to be held April 26, 1996, under the caption "Executive Compensation", and such
information is incorporated herein by reference.
-7-
<PAGE> 10
P A R T IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. and 2. Financial Statements and Financial Statement Schedules
Item 8 of this Report on Form 10-K lists certain consolidated financial
statements of the Registrant and its subsidiaries incorporated by
reference to the Annual Report to Stockholders for the year ended
December 31, 1995, which includes a reference to appropriate
page numbers in such Annual Report.
<TABLE>
<CAPTION>
Form 10-K
Page No.
--------
<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Reports of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Schedule II - Financial information of the Registrant (Parent Company) . . . . . . 37
- Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . 41
Schedule V - Valuation and qualifying accounts . . . . . . . . . . . . . . . . . . 42
</TABLE>
All other schedules are omitted, as the required information is inapplicable or
the information is presented in the consolidated financial statements or
related notes.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended December 31,
1995.
(c) Exhibits
<TABLE>
<S> <C>
3.1 - Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1987)
3.2 - By-Laws of the Registrant (incorporated by reference to Exhibit 3.2
of the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1991)
4 - Rights of Common and Class B Common Stockholders (incorporated by
reference to Exhibits 3.1 and 3.2 hereto)
10.1 - Summary of agreements as to payment of bonuses to certain executive
officers
10.2 - Deferred Compensation Agreements dated March 10, 1986 between the
Registrant and certain executive officers (incorporated by
reference to Exhibit 10.2 of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1987)
</TABLE>
-8-
<PAGE> 11
<TABLE>
<S> <C>
13. - Annual Report to Stockholders for 1995 (the financial text of the
annual report incorporated herein by reference in Item 6 of Part
II of this report)
21. - Subsidiaries of the Registrant
23. - Consents of Independent Certified Public Accountants, including
consents to incorporation by reference of their reports into
previously filed Securities Act registration statements
27. - Financial Data Schedule
</TABLE>
-9-
<PAGE> 12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C>
STEWART INFORMATION SERVICES CORPORATION
(Registrant)
By: Carloss Morris
----------------------------------------------------------
Carloss Morris, Co-Chief Executive Officer and Chairman of
the Board of Directors
By: Stewart Morris
----------------------------------------------------------
Stewart Morris, Co-Chief Executive Officer, President and
Director
By: Max Crisp
----------------------------------------------------------
Max Crisp, Vice President-Finance, Secretary, Treasurer,
Director and Principal Financial and Accounting Officer
</TABLE>
Dated: March 18, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934 this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
<TABLE>
<S> <C> <C>
Max Crisp Director March 18, 1996
- -------------------------------
(Max Crisp)
E. Douglas Hodo Director March 18, 1996
- -------------------------------
(E. Douglas Hodo)
C. M. Hudspeth Director March 18, 1996
- -------------------------------
(C. M. Hudspeth)
Carloss Morris Director March 18, 1996
- -------------------------------
(Carloss Morris)
Stewart Morris Director March 18, 1996
- -------------------------------
(Stewart Morris)
</TABLE>
-10-
<PAGE> 13
Independent Auditors' Report
To the Board of Directors and Stockholders
of Stewart Information Services Corporation:
Under date of February 7, 1996, we reported on the consolidated balance sheets
of Stewart Information Services Corporation and subsidiaries as of December 31,
1995 and 1994, and the related consolidated statements of earnings and retained
earnings and cash flows for each of the years in the three-year period ended
December 31, 1995, as contained in the 1995 annual report to stockholders.
These consolidated financial statements and our report thereon are incorporated
by reference in the annual report on Form 10-K for the year 1995. In connection
with our audits of the aforementioned consolidated financial statements, we
also audited the related financial statement schedules as listed in the
accompanying index. These financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.
/s/ KPMG PEAT MARWICK LLP
Houston, Texas
February 7, 1996
-11-
<PAGE> 14
REPORT OF INDEPENDENT ACCOUNTANT
Stewart Title Company
El Paso, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1995 and 1994, prepared from the accounts
maintained at your office at 500 N. Mesa, Suite 300, El Paso, Texas.
This financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Company, El
Paso, Texas, as of December 31, 1995 and 1994, in conformity with generally
accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ M. TIMOTHY O'ROARK
M. TIMOTHY O'ROARK, C.P.A.
El Paso, Texas
March 14, 1996
12
<PAGE> 15
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Stewart Title
We have audited the balance sheet of Stewart Title as of December 31, 1994, and
the related statements of operations and retained earnings, and cash flows for
each of the two years in the period ended December 31, 1994 (not presented
separately herein). These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to able present fairly, in
all material respects, the financial position of Stewart Title at December 31,
1994, and the results of its operations and its cash flows for each of the two
years in the period ended December 31, 1994 in conformity with generally
accepted accounting principles.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Century City
Los Angeles, California
January 20, 1995
13
<PAGE> 16
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Stewart Title & Trust of Phoenix, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income and retained earnings and of cash flows as of
and for each of the two years in the period ended December 31, 1994 present
fairly, in all material respects, the financial position, results of operations
and cash flows of Stewart Title & Trust of Phoenix, Inc. and its subsidiary and
affiliate as of and for each of the two years in the period ended December 31,
1994, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above. We have not audited the consolidated financial
statements of Stewart Title & Trust of Phoenix, Inc. and its subsidiary and
affiliate for any period subsequent to December 31, 1994.
/s/ PRICE WATERHOUSE LLP
Price Waterhouse LLP
Phoenix, Arizona
January 20, 1995
14
<PAGE> 17
To the Board of Directors
Stewart Title of California
San Jose, California
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Stewart Title of
California at December 31, 1995 and 1994 and the related statements of income,
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Stewart Title of California
as of December 31, 1995 and 1994, and the results of its operations and its
cash flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/ GRANT BENNETT ACCOUNTANTS
GRANT BENNETT ACCOUNTANTS
A PROFESSIONAL CORPORATION
Certified Public Accountants
January 23, 1996
-15-
<PAGE> 18
To the Board of Directors
Stewart Title of Monterey County
Monterey, California
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Stewart Title of
Monterey County as of December 31, 1995 and 1994 and the related statements of
income, retained earnings and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Stewart Title of Monterey
County as of December 31, 1995 and 1994, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/ GRANT BENNETT ACCOUNTANTS
GRANT BENNETT ACCOUNTANTS
A PROFESSIONAL CORPORATION
Certified Public Accountants
January 5, 1996
-16-
<PAGE> 19
To the Board of Directors
Stewart Title of Modesto
Modesto, California
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of Stewart Title of
Modesto at December 31, 1995 and 1994 and the related statements of income,
retained earnings and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Stewart Title of Modesto
as of December 31, 1995 and 1994, and the results of its operations and its
cash flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/ GRANT BENNETT ACCOUNTANTS
GRANT BENNETT ACCOUNTANTS
A PROFESSIONAL CORPORATION
Certified Public Accountants
January 5, 1996
-17-
<PAGE> 20
To the Board of Directors
Stewart Title of Fresno County
Fresno, California
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Stewart Title of
Fresno County at December 31, 1995 and 1994 and the related statements of
income, stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Stewart Title of Fresno
County as of December 31, 1995 and 1994, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/ GRANT BENNETT ACCOUNTANTS
GRANT BENNETT ACCOUNTANTS
A PROFESSIONAL CORPORATION
Certified Public Accountants
January 4, 1996
-18-
<PAGE> 21
EXHIBIT A
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Stewart Title Dallas, Inc.
dba: Stewart Title North Texas, Inc.
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1995, prepared from the accounts maintained at your
office at 5728 LBJ Freeway, Dallas, Texas.
This financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Dallas, Inc.
dba: Stewart Title North Texas, Inc. as of December 31, 1995 in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and are not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ WILKERSON & ARTHUR, P.C.
Wilkerson & Arthur, P.C.
January 19, 1996
-19-
<PAGE> 22
EXHIBIT A
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Priority Title Company of Dallas, L.L.C.
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1995, prepared from the accounts maintained at your
office at 5728 LBJ Freeway, Dallas, Texas.
This financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Priority Title Company of
Dallas, L.L.C. as of December 31, 1995 in conformity with generally accepted
accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and are not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ WILKERSON & ARTHUR, P.C.
Wilkerson & Arthur, P.C.
January 19, 1996
-20-
<PAGE> 23
REPORT OF INDEPENDENT ACCOUNTANTS
To: Stewart Title Austin, Inc.
Austin, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Stewart Title Austin, Inc. as of December 31, 1995, prepared
from the accounts maintained at your office at Austin, Texas.
This financial statement is the responsibility of the company's management.
Our responsibility is to express an opinion on this financial statement based
on our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Austin, Inc.,
as of December 31, 1995, in conformity with generally accepted accounting
principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report is presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole.
January 10, 1996
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-21-
<PAGE> 24
REPORT OF INDEPENDENT ACCOUNTANTS
To: Stewart Title Company - Galveston
Galveston, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Stewart Title Company - Galveston as of December 31, 1995 and
1994, prepared from the accounts maintained at your office at Galveston, Texas.
This financial statement is the responsibility of the company's management.
Our responsibility is to express an opinion on this financial statement based
on our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Company -
Galveston, as of December 31, 1995 and 1994, in conformity with generally
accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole.
January 15, 1996
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-22-
<PAGE> 25
REPORT OF INDEPENDENT ACCOUNTANTS
To: Stewart Title of Montgomery County, Inc.
The Woodlands, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Stewart Title of Montgomery County, Inc. as of December 31,
1995 and 1994, prepared from the accounts maintained at your office at The
Woodlands, Texas.
This financial statement is the responsibility of the company's management.
Our responsibility is to express an opinion on this financial statement based
on our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title of Montgomery
County, Inc., as of December 31, 1995 and 1994, in conformity with generally
accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole.
January 16, 1996
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-23-
<PAGE> 26
REPORT OF INDEPENDENT ACCOUNTANTS
To: Stewart Title Company - Fort Bend
Sugarland, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Stewart Title Company - Fort Bend as of December 31, 1995 and
1994, prepared from the accounts maintained at your office at Sugarland, Texas.
This financial statement is the responsibility of the company's management.
Our responsibility is to express an opinion on this financial statement based
on our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Company - Fort
Bend, as of December 31, 1995 and 1994, in conformity with generally accepted
accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report is presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole.
January 18, 1996
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-24-
<PAGE> 27
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Stewart Title Guaranty Company
I have audited the Statement of assets and liabilities of trust (escrow) fund
accounts as of December 31, 1995, and 1994, prepared from the accounts
maintained at your office in Houston, Texas.
This financial statement is the responsibility of the Company's management. My
responsibility is to express an opinion on this financial statement based on my
audit. I conducted the audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the statement of assets and liabilities of trust (escrow) fund
accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Guaranty
Company as of December 31, 1995 and 1994, in conformity with generally accepted
accounting principles.
My audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplementary information included in
Exhibits C through F, inclusive and Exhibit H, of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the auditing procedures
applied in the audit of the basic statement of assets and liabilities and, and
in my opinion, is fairly stated in all material respects in relation to the
basic statement of assets and liabilities, taken as a whole.
January 16, 1996 /s/ GINNY SANDERS MAY, CPA
-25-
<PAGE> 28
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Stewart Title - Houston Division
I have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts as of December 31, 1995, and 1994, prepared from the accounts
maintained in your office at 1980 Post Oak Boulevard, Houston, Texas.
This financial statement is the responsibility of the company's
management. My responsibility is to express an opinion on this financial
statement based on my audit. I conducted my audit in accordance with generally
accepted auditing standards. Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the financial statement
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis for
my opinion.
In my opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by the Houston Division of
Stewart Title as of December 31, 1995 and 1994, in conformity with generally
accepted accounting principles.
My audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
January 16, 1996 /s/ GINNY SANDERS MAY, CPA
-26-
<PAGE> 29
INDEPENDENT AUDITORS' REPORT
Managers
Priority Title Company of Houston, L.L.C.
I have audited the Statement of Assets and Liabilities of Trust (Escrow)
Accounts as of December 31, 1995, and 1994, prepared from the accounts
maintained in your office at 1980 Post Oak Boulevard, Houston, Texas.
This financial statement is the responsibility of the company's
management. My responsibility is to express an opinion on this financial
statement based on my audit. I conducted the audit in accordance with generally
accepted auditing standards. Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the financial statement
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis for
my opinion.
In my opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Priority Title Company of
Houston, L.L.C. as of December 31, 1995 and 1994, in conformity with generally
accepted accounting principles.
My audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
January 19, 1996 /s/ GINNY SANDERS MAY, CPA
-27-
<PAGE> 30
EXHIBIT A
INDEPENDENT AUDITORS' REPORT
Board of Directors
Stewart Title Company--Beaumont Division
Beaumont, Texas 77706
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1995 prepared from the accounts maintained at your
office at 2390 N. Dowlen Road, Beaumont, Texas.
This financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title
Company--Beaumont Division as of December 31, 1995, in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
Very truly yours,
/s/ EDGAR, KIKER & CROSS, L.L.P.
EDGAR, KIKER & CROSS, L.L.P.
Certified Public Accountants
RTE/lg
-28-
<PAGE> 31
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Stewart Title Company
Houston, Texas
I have examined the statement of assets and liabilities of trust (escrow) fund
accounts as of December 31, 1995 and 1994, prepared from the accounts
maintained at your office in San Antonio, Texas.
My examination, which was limited to such accounts, was made in accordance with
generally accepted auditing standards, and accordingly included such tests of
the accounting records and such other auditing procedures as I considered
necessary in the circumstances.
In my opinion, the aforementioned statements of assets and liabilities of trust
(escrow) fund accounts (not separately presented herein) present fairly
the assets and liabilities of such accounts handled by the San Antonio Division
of Stewart Title Company, as of December 31, 1995 and 1994, in accordance with
generally accepted accounting principles, applied on a consistent basis.
/s/ JIM S. WALKER
----------------------------------------
Jim S. Walker
Certified Public Accountant
Beaumont, Texas
January 96, 1996
-29-
<PAGE> 32
INDEPENDENT AUDITORS' REPORT
Board of Directors
Stewart Title Company
Amarillo, Texas District Office
We have audited the accompanying Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts as of December 31, 1995, prepared from the accounts
maintained at your office at Amarillo, Texas. This financial statement is the
responsibility of the Company's management. Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit of the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts provides a reasonable basis for our opinion.
In our opinion, the accompanying Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts referred to above presents fairly, in all material
respects, the assets and liabilities of such accounts handled by Stewart Title
Company, for the year then ended in conformity with generally accepted
accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the audit of the basic Statement of Assets and Liabilities, and is fairly
stated in all material respects in relation to the basic Statement of Assets
and Liabilities, taken as a whole.
/s/ DOSHIER, PICKENS & FRANCIS, P.C.
DOSHIER, PICKENS & FRANCIS, P.C.
January 12, 1996
-30-
<PAGE> 33
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Stewart Title Company
Corpus Christi, Texas
We have audited the Statements of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1995 and 1994, prepared from the accounts
maintained at your office at Corpus Christi, Texas. These financial statements
is the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the Statements of Assets and Liabilities of Trust [Escrow] Fund
Accounts referred to above present fairly, in all material respects, the assets
and liabilities of such accounts managed by Stewart Title Company, Corpus
Christi Branch, as of December 31, 1995 and 1994, in conformity with generally
accepted accounting principles.
Our audits have been made a conducted for the purpose of forming an opinion of
the basic financial statements taken as a whole. The supplemental information
contained in Exhibits C through F, inclusive, and Exhibit H of these reports is
presented as additional information and is not a required part of the basic
financial statements. Such information has been subjected to the audit
procedures applied in the examinations of the basic statements of assets and
liabilities, and is fairly stated in all material respects in relation to the
basic statements of assets and liabilities, taken as a whole.
/s/ FANCHER AND COMPANY
FANCHER AND COMPANY
January 24, 1996
-31-
<PAGE> 34
REPORT OF INDEPENDENT ACCOUNTANT
Board of Directors
Stewart Title of Lubbock, Inc.
7802 Indiana Avenue
Lubbock, TX 79423
I have audited the Statements of Assets and Liabilities of Trust (Escrow)
Fund Accounts as of December 31, 1995, and 1994, prepared from the accounts
maintained at your office 7802 Indiana Avenue, Lubbock, Texas.
These financial statements is the responsibility of the company's
management. My responsibility is to express an opinion on this financial
statement based on my audit. I conducted the audit in accordance with generally
accepted auditing standards. Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the financial statement
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audits provide a reasonable basis for
my opinions.
In my opinion, the Statements of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title of Lubbock,
Inc. as of December 31, 1995 and 1994, in conformity with generally accepted
accounting principles.
My audits has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive and Exhibit H of these reports are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities and, and in
may opinion, is fairly stated in all material respects in relation to the basic
statements of assets and liabilities, taken as a whole.
/s/ JESUS YEPEZ
Jesus Yepez
Certified Public Account
Lubbock, Texas
-32-
<PAGE> 35
REPORT OF INDEPENDENT ACCOUNTANT
Board of Directors
Stewart Title Guaranty Company
Houston, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts of Stewart Title Company - Fort Bend as of December 31, 1995 and 1994,
prepared from the accounts maintained at your office at 218 Main Street,
Texarkana, Texas.
These financial statements is the responsibility of the company's management.
Our responsibility is to express an opinion on this financial statement based
on our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinions.
In our opinion, the Statements of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Company - Fort
Bend, as of December 31, 1995 and 1994, in conformity with generally accepted
accounting principles.
Our audits have been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole.
/s/ WILLIAMS & PEARCY, P.C.
Williams & Pearcy, P.C.
January 10, 1996
-33-
<PAGE> 36
INDEPENDENT AUDITOR'S REPORT
Stewart Title Company of Rockport, Inc.
Rockport, Texas 78382
We have audited the Statements of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1995 and 1994 prepared from the accounts maintained
at your office at Rockport, Texas.
The financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statements of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title
Company of Rockport, Inc. as of December 31, 1995 and 1994, in conformity with
generally accepted accounting principles.
Our audits have been made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information contained in
Exhibits C through H, inclusive, of this report are presented as additional
information and is not a required part of the basic financial statement. Such
information has been subjected to the audit procedures applied in the
examination of the basic statements of assets and liabilities, and is fairly
stated in all material respects in relation to the basic statements of
assets and liabilities, taken as a whole.
/s/ FLUSCHE, VAN BEVEREN, KILGORE, P.C.
Flusche, Van Beveren, Kilgore, P.C.
Certified Public Accountants
January 23, 1996
Corpus Christi, Texas
-34-
<PAGE> 37
INDEPENDENT AUDITOR'S REPORT
Stewart Title Company of San Patricio County, Inc.
Rockport, Texas 78382
We have audited the Statements of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1995 and 1994 prepared from the accounts maintained
at your office at Portland, Texas.
The financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statements of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Company of San
Patricio County, Inc. as of December 31, 1995 and 1994, in conformity with
generally accepted accounting principles.
Our audits have been made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information contained in
Exhibits C through H, inclusive, of this report are presented as additional
information and is not a required part of the basic financial statement. Such
information has been subjected to the audit procedures applied in the
examination of the basic statements of assets and liabilities, and is fairly
stated in all material respects in relation to the basic statements of
assets and liabilities, taken as a whole.
/s/ FLUSCHE, VAN BEVEREN, KILGORE, P.C.
Flusche, Van Beveren, Kilgore, P.C.
Certified Public Accountants
January 23, 1996
Corpus Christi, Texas
-35-
<PAGE> 38
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Stewart Title Dallas, Inc.
d/b/a Stewart Title North Texas, Inc.
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1994, prepared from the accounts maintained at your
office at 5728 LBJ Freeway, Dallas, Texas.
This financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above present fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Dallas, Inc.
as of December 31, 1994, in conformity with generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and are not required parts of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic Statement of
Assets and Liabilities of Trust (Escrow) Fund accounts.
/s/ [ILLEGIBLE]
January 20, 1995
-36-
<PAGE> 39
SCHEDULE II
STEWART INFORMATION SERVICES CORPORATION
(PARENT COMPANY)
INCOME AND RETAINED EARNINGS INFORMATION
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1995 1994 1993
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
Revenues
Investment income . . . . . . . . . . . . . . . . . . . . $ 224 $ 201 $ 131
Other income . . . . . . . . . . . . . . . . . . . . . . . 12 28 22
--------- -------- --------
236 229 153
Expenses
Employee costs . . . . . . . . . . . . . . . . . . . . . . 211 288 533
Other operating expenses . . . . . . . . . . . . . . . . . 1,634 1,211 855
Depreciation and amortization . . . . . . . . . . . . . . . 101 21 29
--------- -------- --------
1,946 1,520 1,417
Loss before taxes and equity in earnings of investees . . . (1,710) (1,291) (1,264)
Income taxes (benefit) . . . . . . . . . . . . . . . . . . . (592) (444) (549)
Equity in earnings of investees . . . . . . . . . . . . . . 8,125 10,525 24,374
--------- -------- --------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . 7,007 9,678 23,659
Retained earnings at beginning of year . . . . . . . . . . . 112,754 106,262 83,575
Cash dividends on Common Stock ($.21, $.20 and $.17 per
share) . . . . . . . . . . . . . . . . . . . . . . . . . (1,214) (1,118) (972)
Stock dividend . . . . . . . . . . . . . . . . . . . . . . . - (2,068) -
--------- -------- --------
Retained earnings at end of year . . . . . . . . . . . . . . $ 118,547 $112,754 $106,262
========= ======== ========
</TABLE>
See accompanying note to financial statements.
(Schedule continued on following page.)
-37-
<PAGE> 40
SCHEDULE II
(CONTINUED)
STEWART INFORMATION SERVICES CORPORATION
(PARENT COMPANY)
BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
December 31,
------------
1995 1994
---- ----
(In thousands)
<S> <C> <C>
Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 54 $ 184
--------- ---------
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,373 4,520
--------- ---------
Receivables:
Notes, including $7,057 and $6,868 from affiliates . . . . . . . . . . . . . . 7,251 7,018
Other, including $5,000 and $1,260 from affiliates . . . . . . . . . . . . . . 6,873 5,611
Less allowance for uncollectible amounts . . . . . . . . . . . . . . . . . . . - (8)
14,124 12,621
Furniture and equipment at cost . . . . . . . . . . . . . . . . . . . . . . . . 167 166
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . (67) (46)
--------- ---------
100 120
Title plants, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 48
Investments in investees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,408 141,806
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,241 2,256
--------- ---------
$ 177,348 $ 161,555
========= ==========
Liabilities
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . $2,496 $5,202
Contingent liabilities and commitments
Stockholders' equity
Common - $1 par, authorized 15,000,000, issued and outstanding 5,864,758 and
5,686,706 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,865 5,687
Class B Common - $1 par, authorized 1,500,000, issued and outstanding 525,006 . . 525 525
Additional paid-in-capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,945 42,750
Net unrealized investment gains (losses), net of deferred taxes . . . . . . . 3,970 (5,363)
Retained earnings (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,547 112,754
--------- ---------
Total stockholders' equity ($27.36 and $25.17 per share) . . . . . . . . . . . . 174,852 156,353
--------- ---------
$ 177,348 $ 161,555
========= ==========
</TABLE>
(1) Includes undistributed earnings of subsidiaries of $126,480 in 1995 and
$124,005 in 1994.
See accompanying note to financial statements.
(Schedule continued on following page.)
-38-
<PAGE> 41
SCHEDULE II
(CONTINUED)
STEWART INFORMATION SERVICES CORPORATION
(PARENT COMPANY)
CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1995 1994 1993
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
Cash flow from operating activities (Note) . . . . . . . . . $ 1,169 $ (281) $ 2,167
Cash flow from investing activities:
Purchases of furniture and equipment and title plants -
net . . . . . . . . . . . . . . . . . . . . . . . . . - (56) (23)
Proceeds from investments sold . . . . . . . . . . . . . 7,011 4,076 772
Purchases of investments, excluding mortgage loans . . . (6,865) (4,901) (1,661)
Increases in mortgages and other notes receivable . . . . (262) - (70)
Collections on mortgages and other notes receivable . . . . 31 698 617
-------- ------- -------
Cash used by investing activities . . . . . . . . . . . . . . (85) (183) (365)
-------- ------- -------
Cash flow from financing activities:
Dividends paid . . . . . . . . . . . . . . . . . . . . . . (1,214) (1,118) (972)
Proceeds from issuance of stock . . . . . . . . . . . . . - 837 23
-------- ------- -------
Cash used by financing activities . . . . . . . . . . . . . . (1,214) (281) (949)
-------- ------- -------
(Decrease) increase in cash and cash equivalents . . . . . . $ (130) $ (745) $ 853
======== ======= =======
Note: Reconciliation of net income to the above amounts:
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 7,007 $ 9,678 $23,659
Add (deduct):
Depreciation and amortization . . . . . . . . . . . . . 101 21 29
Provision for uncollectible amounts - net . . . . . . . 64 - (200)
(Increase) decrease in accounts receivable - net . . . (1,326) (378) 284
(Decrease) increase in accounts payable and accrued
liabilities - net . . . . . . . . . . . . . . . . . . (2,668) 195 1,126
Equity in net earnings of investees . . . . . . . . . . (8,125) (10,525) (24,374)
Dividends received from unconsolidated subsidiaries . . 5,650 1,340 890
Stock bonuses . . . . . . . . . . . . . . . . . . . . . - 61 729
Other - net . . . . . . . . . . . . . . . . . . . . . . 466 (673) 24
-------- ------- -------
Cash provided (used) by operating activities . . . . . . . . $ 1,169 $ (281) $ 2,167
======== ======= =======
Supplemental information:
Income taxes paid . . . . . . . . . . . . . . . . . . . . - - -
Interest paid . . . . . . . . . . . . . . . . . . . . . . - - -
</TABLE>
See accompanying note to financial statements.
(Schedule continued on following page.)
-39-
<PAGE> 42
SCHEDULE II
(continued)
STEWART INFORMATION SERVICES CORPORATION
(PARENT COMPANY)
NOTE TO FINANCIAL STATEMENT INFORMATION
The Registrant operates as a holding company transacting substantially all
business through its subsidiaries. The consolidated financial statements for
the Registrant and its subsidiaries are included in Part II, Item 8 of Form
10-K. The Parent Company financial statements should be read in conjunction
with the aforementioned consolidated financial statements and notes thereto and
financial statement schedules.
Total dividends received from unconsolidated subsidiaries for 1995, 1994
and 1993 were $9,390,000, $2,600,000 and $890,000, respectively.
-40-
<PAGE> 43
SCHEDULE II
(CONTINUED)
STEWART INFORMATION SERVICES CORPORATION AND SUBSIDIARIES
SHORT-TERM BORROWINGS
THREE YEARS ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
==========================================================================================================
Col. A Col. B Col. C Col. D Col. E Col. F
==========================================================================================================
Maximum Average Weighted
Weighted amount amount average
Balance average outstanding outstanding interest rate
Category of aggregate at end interest during the during the during the
short-term borrowings (1) of period rate period period (2) period (3)
==========================================================================================================
<S> <C> <C> <C> <C> <C>
December 31, 1993:
Banks . . . . . . . . . . . . $ 1,900,066 5.92% $ 1,900,066 $ 1,398,131 6.03%
============ ===== ============ ============ =====
December 31, 1994:
Banks . . . . . . . . . . . . $ 4,456,107 8.58% $ 4,456,107 $ 2,739,508 7.38%
============ ===== ============ ============ =====
December 31, 1995:
Banks . . . . . . . . . . . . $ 3,380,430 8.61% $ 5,055,807 $ 4,487,714 8.82%
============ ===== ============ ============ =====
</TABLE>
- -----------------
(1) Bank borrowings represent short-term notes due within one year of the
loan's origination.
(2) Computed by summing each month-end balance and dividing the total by
twelve.
(3) Computed by dividing total yearly interest expense by the average of the
month-end principal balances.
-41-
<PAGE> 44
SCHEDULE V
STEWART INFORMATION SERVICES CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
====================================================================================================================
Col. A Col. B Col. C Col. D Col. E
Additions
====================================================================================================================
Balance Charged Charged to
at to other Balance
beginning cost and accounts -Deductions- at end
Description of period expenses describe described of period
====================================================================================================================
<S> <C> <C> <C> <C> <C>
Stewart Information Services
Corporation and subsidiaries:
Year ended December 31, 1993:
Estimated title losses . . . . . $ 87,575,367 $58,573,916 - $28,563,724(A) $117,585,559
Allowance for uncollectible
amounts . . . . . . . . . . . . . 4,689,425 3,784,675 - 3,205,681(B) 5,268,419
Year ended December 31, 1994:
Estimated title losses . . . . . 117,585,559 40,211,895 - 23,481,018(A) 134,316,436
Allowance for uncollectible
amounts . . . . . . . . . . . . 5,268,419 2,233,675 - 1,379,045(B) 6,123,049
Year ended December 31, 1995:
Estimated title losses . . . . . 134,316,436 29,590,891 - 25,594,793(A) 138,312,534
Allowance for uncollectible
amounts.. . . . . . . . . . . . . 6,123,049 1,333,744 - 957,846(B) 6,498,947
Stewart Information Services
Corporation - Parent:
Year ended December 31, 1993:
Allowance for uncollectible amounts $ 208,198 $ (200,000)(C) - - $ 8,198
Year ended December 31, 1994:
Allowance for uncollectible amounts 8,198 - - - 8,198
Year ended December 31, 1995:
Allowance for uncollectible amounts 8,198 64,382 - 72,580(D) -
</TABLE>
(A) Represents payments of policy losses and loss adjustment expenses during
the year, less salvage collections.
(B) Represents uncollectible accounts written off.
(C) Represents recoveries on accounts previously reserved.
(D) Represents an adjustment to accounts receivable previously reserved and
current year write-off of uncollected accounts.
-42-
<PAGE> 45
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibit Page
- ------- ----
<S> <C>
3.1 - Certificate of Incorporation of the Registrant (incorporated by reference to
Exhibit 3.1 of the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1987)
3.2 - By-laws of the Registrant (incorporated by reference to Exhibit 3.2 of the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1991)
4 - Rights of Common and Class B Common Stockholders (incorporated by reference to
Exhibits 3.1 and 3.2 hereto)
10.1 - Summary of agreements as to payment of bonuses to certain executive officers
10.2 - Deferred Compensation Agreements dated March 10, 1986 between the Registrant
and certain executive officers (incorporated by reference to Exhibit 10.2 of
the Registrant's Annual Report on Form 10-K for the year ended December 31,
1987)
13. - Annual Report to Stockholders for 1995 (the financial text of the annual report
incorporated herein by reference in Item 6 of Part II of this report)
21. - Subsidiaries of the Registrant
23. - Consents of Independent Certified Public Accountants, including consents to
incorporation by reference of their reports to previously filed Securities Act
registration statements
27. - Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.1
STEWART INFORMATION SERVICES CORPORATION AND SUBSIDIARIES
MATERIAL CONTRACTS
DECEMBER 31, 1995
For 1996, Executive Compensation from all Stewart Companies, including base
salaries and any bonus payments, for any officer listed within unless otherwise
noted in the body of this report, shall not exceed $290,000.
STEWART MORRIS, JR., as Chairman of the Board, shall receive in addition to his
salary, 1% of the consolidated income before taxes of Stewart Title Guaranty
Company as reported to its shareholders. For the calendar year 1995, Mr.
Morris received $117,790 in bonus compensation. Total compensation shall
exclude payments made by the company for insurance premiums, board fees or
stock options granted.
MALCOLM S. MORRIS, as President and Chief Executive Officer, shall receive in
addition to his salary, 1% of the consolidated income before taxes of Stewart
Title Guaranty Company as reported to its shareholders. For the calendar year
1995, Mr. Morris received $117,790 in bonus compensation. Total compensation
shall exclude payments made by the company for insurance premiums, board fees
or stock options granted.
CARLOSS MORRIS, as Chairman of the Executive Committee, shall receive in
addition to his salary, 3% of the consolidated net income of Stewart Title
Guaranty Company as reported to its shareholders. For the calendar year 1995,
Mr. Morris received $160,000 in bonus compensation. Total compensation shall
exclude any insurance premiums, board fees or stock options granted.
STEWART MORRIS, as Vice Chairman of the Executive Committee, shall receive in
addition to his salary, 3% of the consolidated net income of Stewart Title
Guaranty Company as reported to its shareholders. For the calendar year 1995,
Mr. Morris received $160,000 in bonus compensation. Total compensation shall
exclude any insurance premiums, board fees or stock options granted.
<PAGE> 1
EXHIBIT 13
SELECTED FINANCIAL DATA
(Ten year summary)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
In millions of dollars:
Total revenues . . . . . . . . . 282.5 302.2 348.6 290.0 217.1 210.5 188.5 176.9 183.2 178.5
Title premiums, fees and
other revenues . . . . . . . . 266.7 289.3 334.2 275.6 202.3 197.9 173.8 165.1 173.5 167.8
Total operating expenses (1) . . 269.6 287.0 308.8 266.9 214.7 208.1 187.3 171.2 177.0 165.1
Title losses, included above . . 29.6 40.2 58.6 54.1 40.7 38.2 33.0 25.6 25.9 25.0
Investment gains (losses),
after taxes . . . . . . . . . . 0.6 (0.5) 0.3 0.1 1.4 -- 1.0 0.1 (0.2) --
Net earnings (2) . . . . . . . . 7.0 9.7 23.7 14.6 1.7 0.2 0.1 3.7 11.7 7.8
Cash from operating activities . 20.6 27.7 54.3 36.3 18.6 11.0 10.2 8.9 10.8 28.0
Total assets . . . . . . . . . . 351.4 325.2 313.9 251.9 219.1 201.3 197.8 193.9 182.4 178.5
Long-term debt . . . . . . . . . 7.3 2.5 3.0 4.2 6.8 6.6 5.3 7.3 5.0 5.5
Stockholders' equity (3) . . . . 174.9 156.4 156.2 128.6 114.8 113.9 115.0 116.8 115.2 106.8
Ratios (%):
Net earnings/total revenues . . 2.5 3.2 6.8 5.0 0.8 0.1 0.1 2.1 6.4 4.4
Title losses/title premiums, etc. 11.1 13.9 17.5 19.6 20.1 19.3 19.0 15.5 14.9 14.9
Per share data:(4)
Average shares (in thousands) . . 6,292 6,198 6,119 6,096 6,096 6,096 6,096 6,071 6,047 5,625
Net earnings (2) . . . . . . . . 1.11 1.56 3.87 2.40 0.27 0.03 0.01 0.61 1.93 1.39
Cash dividends . . . . . . . . . 0.21 0.20 0.17 0.15 0.13 0.23 0.33 0.51 0.51 0.49
Stockholders' equity (3) . . . . 27.36 25.17 25.37 21.10 18.84 18.69 18.87 19.17 19.05 17.67
Market price -
High . . . . . . . . . . . . . 22.50 21.42 20.33 14.50 9.67 12.33 14.00 12.00 17.17 19.33
Low . . . . . . . . . . . . . . 15.13 14.38 12.50 8.67 5.17 4.50 11.17 9.17 7.17 12.33
Year-end . . . . . . . . . . . 21.50 15.38 20.00 13.67 9.17 5.25 11.33 11.92 9.17 13.17
</TABLE>
(1) Excludes interest expense and minority interests.
(2) Includes the following items, after providing for taxes:
1992 - a reserve established for title losses over ten years old of $2.2
million, or $.36 per share.
1991 - a fresh start tax credit of $1.3 million, or $.21 per share.
1988 - a gain on the termination of pension plan of $0.5 million, or $.08
per share.
1987 - a tax benefit of $7.4 million, or $1.22 per share, granted by the
Tax Reform Act of 1986.
(3) Includes unrealized gains and losses upon adoption of FAS 115 in 1993.
(4) Restated for one-for-two stock split in April 1994.
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS
A comparison of the results of operations of the Company for 1995 with 1994 and
1994 with 1993 follows.
General. The Company's dominant segment of operations is the land title
business. In general, the principal factors that contribute to increases in
title revenues include declining mortgage interest rates (which usually
increase home sales), increases in refinancing transactions, rising home
prices, higher premium rates, increased market share, additional revenues from
new offices and increased revenues from nonresidential, commercial
transactions. Although relatively few in number, large commercial transactions
usually yield higher premiums.
18
<PAGE> 2
Mortgage interest rates declined throughout most of 1993. However, in
early 1994, rates rose dramatically. By the end of 1994, rates were roughly two
percentage points higher than they were at the end of 1993. As a result, real
estate activity fell in 1994. The increase in rates also reduced refinancing
transactions to normal levels. The widely publicized refinancing boom, which
began in late 1991, came to an end in the second quarter of 1994.
In the early months of 1995, interest rates began a downward trend that
continued for the rest of the year. By May 1995, rates had fallen to below
year-earlier levels. This improvement in interest rates helped increase real
estate activity. Company revenues for the third and fourth quarters of 1995
exceeded revenues for the same quarters in 1994.
Title revenues. The Company's revenues from premiums, fees and other revenues
decreased 7.8% in 1995 and 13.4% in 1994. The number of orders opened and
closed by the Company and the average revenue per order closed follow:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Number of orders opened (000s) . . . . . . . 268 270 397
Number of orders closed (000s) . . . . . . . 197 223 289
Average revenue per order closed(1) . . . . $ 945 $ 907 $ 839
- -----------------------------------------------------------------------------
</TABLE>
(1) Based on revenues from title operations of $243.3 million, $271.9 million
and $317.7 million, less amounts earned from independent agents of $57.1
million, $69.7 million and $75.2 million for 1995, 1994 and 1993,
respectively.
Total closings decreased 11.7% in 1995 and 22.8% in 1994. The average
revenue per closing increased 4.2% in 1995 and 8.1% in 1994. The average rate
was increased each year by higher home prices and fewer refinancing
transactions (which are discounted). There were no major rate increases in
1995 or 1994.
Title revenues by state. The approximate amounts and percentages of Stewart's
consolidated title revenues (excluding other revenues) by state for the last
three years were:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Amounts ($ millions) Percentages
1995 1994 1993 1995 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Texas . . . . . . . . . . . . . . . . . . . 62 73 85 25 27 27
California . . . . . . . . . . . . . . . . . 59 68 95 24 25 30
Florida . . . . . . . . . . . . . . . . . . 21 22 27 9 8 9
Arizona . . . . . . . . . . . . . . . . . . 12 14 14 5 5 5
All others . . . . . . . . . . . . . . . . . 89 95 97 37 35 29
- ---------------------------------------------------------------------------------------------
243 272 318 100 100 100
- ---------------------------------------------------------------------------------------------
</TABLE>
Other revenues. Investment income increased 9.5% in 1995 and 20.2% in 1994,
primarily because of increases in the average balances invested and, in 1995,
higher market yields.
The investment gains in 1995 were realized as part of the ongoing
management of the investment portfolio for the purpose of improving
performance. Investment losses in 1994 include a sale of certain portfolio
bonds to use tax loss carrybacks that otherwise would have expired. The pretax
loss on the sale was $1.3 million. There were no significant gains or losses in
1993.
Other income declined slightly in 1995 and $2.4 million in 1994. The
decrease in 1994 was primarily due to a reduction in earnings of affiliates
accounted for on an equity basis.
Expenses. The Company incurs a substantial portion of its total expenses when
orders are received and processed, but revenues are not recognized until the
orders are closed. Most orders are closed, or canceled, within 90 days of
receipt.
19
<PAGE> 3
Employee costs decreased 5.1% in 1995 and 2.6% in 1994. The average number
of employees decreased in both years. The average compensation paid to
employees increased in 1995 but decreased in 1994.
The number of persons employed by the Company at December 31, 1995, 1994
and 1993 was 3,757, 3,470 and 4,382, respectively. The increase in staff in
1995 was primarily in the automation area and new offices. The decrease in
staff in 1994 was primarily in California, Texas and Florida, offset in part by
new offices.
While the Company has reduced overall employee expenses, it has chosen to
increase cost levels in automation and real estate information areas. The
Company believes the development and sale of new products and services for new
and existing customers is important to its future. Through automating operating
processes, the Company expects to add customer revenue and reduce operating
expenses and title losses in the future.
Other operating expenses decreased slightly in 1995 and 1994. Excluding the
effect of new offices, the decrease was 5.3% in 1995 and 2.2% in 1994. The
overall decrease in both years was caused primarily by lower transaction
volumes. Bad debts, premium taxes and supplies decreased both years. Rent
expense increased in 1994, which included canceled leases on closed branch
offices and the addition of new offices. Other operating expenses also include
policy forms, delivery costs, title plant expenses, business promotion,
telephone and travel. Most of these expenses follow, to varying degrees, the
changes in transaction volume and revenues.
Provisions for title losses, as a percentage of title premiums, fees and
other revenues, were 11.1%, 13.9% and 17.5% in 1995, 1994 and 1993,
respectively. The provision in 1995 was reduced by larger-than-usual
recoveries and management's reduction of its estimate of exposure to loss on
certain major claims. The continued improvement in industry trends and the
Company's recent experience in claims has also led to smaller provisions for
title losses. The Company has made significant improvements in its procedures
to curtail claims.
The Company's labor and certain other operating costs are sensitive to
inflation. Increases in cost of living are considered in granting pay raises.
To the extent inflation causes increases in the prices of homes and other real
estate, premium revenues are also increased. Premiums are determined in part
by the insured values of the transactions handled by the Company.
Premium taxes. In December 1994 the California Board of Equalization (CBOE)
ruled in favor of the Company concerning an assessment of additional premium
taxes for the year 1987. However, an assessment of $2.5 million, excluding
interest and penalties, for retaliatory taxes for 1987 was left pending. A
hearing before the CBOE is expected in the near future.
Five other states have also assessed the Company additional premium taxes.
The assessments, excluding interest and penalties, aggregate $1.8 million. The
years of assessments cover 1984 through 1994.
The Company cannot predict whether additional taxes of this nature will be
assessed by California, the five states or any other states. State taxing
authorities are under increasing pressure to collect additional tax revenues.
The Company intends to vigorously oppose any assessments and believes its tax
payments are correct.
However, there can be no assurance the Company will prevail in these
controversies. If it does not prevail, the tax assessments may, in the
aggregate, result in a material reduction in the Company's earnings in future
years.
Income taxes. The provisions for income taxes represented an effective tax
rate of 34.7%, 30.1% and 37.0% in 1995, 1994 and 1993, respectively. The 1994
tax rate was lower primarily because dividends remitted by investees in 1994
exceeded the earnings of investees. In the other two years, earnings exceeded
dividends. The effective tax rate in each of the three years was lowered by
nontaxable income from municipal bonds.
Uncertainty. A major bank holding company introduced a plan in 1994
guaranteeing the performance of its subsidiary mortgage lending company to cure
any title defects relating to loans sold by it to the secondary market, or else
repurchase the loans. The Company believes the plan constitutes the business
of title insurance and may violate various state insurance laws and
regulations. If the plan followed such laws and regulations, the operation
would be subject to state licensing, payment of premium taxes and the setting
aside of required reserves. The insurance departments of various states have
asserted the plan is insurance and should not be permitted. In Nebraska, a
trial court has determined that such a program constitutes title insurance and
is not permitted.
The Company does not believe the plan will materially reduce the demand for
title insurance; however, the Company cannot predict the ultimate effect of
this plan, or similar plans, on the title insurance industry.
Liquidity and capital resources. Cash provided by operations was $20.6
million, $27.7 million and $54.3 million in 1995, 1994 and 1993, respectively.
Internally-generated cash flow has been the primary source of funds for
additions to property and equipment, expanding operations, dividends to
shareholders and other requirements. This source may be supplemented by bank
borrowings.
20
<PAGE> 4
A substantial majority of consolidated cash and investments is held by
Stewart Title Guaranty Company (Guaranty) and its title insurance subsidiary,
Stewart Title Insurance Company. Cash transfers between Guaranty and its
subsidiaries and the Company are subject to certain legal restrictions. See
Notes 4 and 5 to the financial statements.
The liquidity of the Company itself, excluding Guaranty and its
subsidiaries and excluding notes receivable from affiliates, consisted of cash
and investments of $4.4 million, a dividend receivable of $5.0 million from
Guaranty (received in February 1996) and short-term liabilities of $0.7 million
at December 31, 1995.
The Company knows of no commitments or uncertainties which are likely to
materially affect the ability of the Company and its subsidiaries to fund their
cash needs. See Note 15 to the financial statements.
The Company's capital resources, represented primarily by long-term debt of
$7.3 million and stockholders' equity of $174.9 million at December 31, 1995,
are considered adequate.
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of Stewart Information Services
Corporation
We have audited the accompanying consolidated balance sheets of Stewart
Information Services Corporation and subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of earnings and retained earnings
and cash flows for each of the years in the three-year period ended December
31, 1995. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. For the years ended
December 31, 1994 and 1993 we did not audit the financial statements of certain
subsidiaries and a majority of the escrow funds referred to in Note 1. The
financial statements of these subsidiaries reflect total assets constituting 7%
in 1994 and total revenues constituting 19% and 20% in 1994 and 1993,
respectively, of the related consolidated totals. Those statements were audited
by other auditors whose reports have been furnished to us, and our opinion,
insofar as it relates to the amounts included for the subsidiaries and the
escrow funds, is based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the reports of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit for the year ended December 31, 1995 and
on our audits and the reports of other auditors for the years ended December
31,1994 and 1993, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Stewart
Information Services Corporation and subsidiaries as of December 31, 1995 and
1994, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1995 in conformity with
generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Company adopted the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities", and Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of", as of January 1, 1993, December 31, 1993 and
December 31, 1995, respectively.
KPMG Peat Marwick LLP
Houston, Texas
February 7, 1996
21
<PAGE> 5
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Years ended December 31 1995 1994 1993
- -------------------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C> <C>
Revenues
Title premiums, fees and other revenues . . . . . . . . . . . . 266,728 289,265 334,187
Investment income . . . . . . . . . . . . . . . . . . . . . . . 13,564 12,382 10,304
Investment gains (losses) - net . . . . . . . . . . . . . . . . 956 (842) 404
Other income, including equity earnings . . . . . . . . . . . . 1,257 1,350 3,733
- -------------------------------------------------------------------------------------------------------
282,505 302,155 348,628
Expenses
Employee costs . . . . . . . . . . . . . . . . . . . . . . . . 140,795 148,325 152,231
Other operating expenses . . . . . . . . . . . . . . . . . . . 89,408 90,704 90,883
Title losses and related claims . . . . . . . . . . . . . . . . 29,591 40,212 58,574
Depreciation and amortization . . . . . . . . . . . . . . . . . 9,855 7,801 7,094
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,194 586 526
Minority interests . . . . . . . . . . . . . . . . . . . . . . 933 687 1,744
- -------------------------------------------------------------------------------------------------------
271,776 288,315 311,052
Earnings before taxes . . . . . . . . . . . . . . . . . . . . . . 10,729 13,840 37,576
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 3,722 4,162 13,917
- -------------------------------------------------------------------------------------------------------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,007 9,678 23,659
Retained earnings at beginning of year . . . . . . . . . . . . . . 112,754 106,262 83,575
Cash dividends on Common Stock ($.21, $.20 and $.17 per share) . . (1,214) (1,118) (972)
Stock dividend . . . . . . . . . . . . . . . . . . . . . . . . . . -- (2,068) --
- -------------------------------------------------------------------------------------------------------
Retained earnings at end of year . . . . . . . . . . . . . . . . . 118,547 112,754 106,262
- -------------------------------------------------------------------------------------------------------
Average number of shares outstanding (000 omitted) . . . . . . . . 6,292 6,198 6,119
Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . 1.11 1.56 3.87
- -------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
22
<PAGE> 6
Consolidated Balance Sheets
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
December 31 1995 1994
- -------------------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C>
Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,698 16,214
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,238 26,740
Investments in debt securities, at market:
Statutory reserve funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,040 104,697
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,716 58,532
- -------------------------------------------------------------------------------------------------------
185,756 163,229
Receivables:
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,242 8,281
Premiums from agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,418 9,654
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,079 20,937
Less allowance for uncollectible amounts . . . . . . . . . . . . . . . . . . (6,499) (6,123)
- -------------------------------------------------------------------------------------------------------
30,240 32,749
Property and equipment, at cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,359 1,359
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,576 5,249
Furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,115 54,719
Less accumulated depreciation and amortization . . . . . . . . . . . . . . . (44,779) (36,549)
- -------------------------------------------------------------------------------------------------------
24,271 24,778
Title plants, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,243 14,369
Real estate, at lower of cost or net realizable value . . . . . . . . . . . . . 3,303 3,896
Investments in investees, on an equity basis . . . . . . . . . . . . . . . . . 6,123 6,688
Goodwill, less accumulated amortization of $3,881 and $3,308 . . . . . . . . . 11,029 4,979
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,108 20,477
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,350 11,057
- -------------------------------------------------------------------------------------------------------
351,359 325,176
- -------------------------------------------------------------------------------------------------------
Liabilities
Notes payable, including $7,334 and $2,472 long-term portion . . . . . . . . . 12,589 7,865
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . 20,559 21,175
Estimated title losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138,312 134,316
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 482 793
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,565 4,674
Contingent liabilities and commitments
Stockholders' equity
Common - $1 par, authorized 15,000,000, issued and outstanding
5,864,758 and 5,686,706 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,865 5,687
Class B Common - $1 par, authorized 1,500,000, issued and outstanding 525,006 . 525 525
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . 45,945 42,750
Net unrealized investment gains (losses), net of deferred taxes . . . . . . . 3,970 (5,363)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,547 112,754
- -------------------------------------------------------------------------------------------------------
Total stockholders' equity ($27.36 and $25.17 per share) . . . . . . . . . . 174,852 156,353
- -------------------------------------------------------------------------------------------------------
351,359 325,176
- -------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
23
<PAGE> 7
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Years ended December 31 1995 1994 1993
- -------------------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C> <C>
Cash provided by operating activities (Note) . . . . . . . . . . . 20,568 27,702 54,344
Investing activities:
Purchases of property and equipment and title plants - net . . (6,700) (12,177) (8,733)
Proceeds from investments matured and sold . . . . . . . . . . 81,674 113,777 52,215
Purchases of investments . . . . . . . . . . . . . . . . . . . (90,385) (145,273) (85,772)
Increases in notes receivable . . . . . . . . . . . . . . . . . (1,081) (2,408) (3,555)
Collections on notes receivable . . . . . . . . . . . . . . . . 2,069 3,962 2,989
Cash paid for the purchase of subsidiaries - net . . . . . . . (5,175) (1,042) (142)
Proceeds from issuance of stock . . . . . . . . . . . . . . . . -- 296 23
- -------------------------------------------------------------------------------------------------------
Cash used by investing activities . . . . . . . . . . . . . . . . (19,598) (42,865) (42,975)
Financing activities:
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . (1,214) (1,118) (972)
Proceeds of notes payable . . . . . . . . . . . . . . . . . . . 7,937 5,125 3,309
Payments on notes payable . . . . . . . . . . . . . . . . . . . (7,209) (3,514) (4,289)
- -------------------------------------------------------------------------------------------------------
Cash (used) provided by financing activities . . . . . . . . . . . (486) 493 (1,952)
- -------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents . . . . . . . . . 484 (14,670) 9,417
- -------------------------------------------------------------------------------------------------------
Note: Reconciliation of net earnings to the above amounts -
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . 7,007 9,678 23,659
Add (deduct):
Depreciation and amortization . . . . . . . . . . . . . . . . 9,855 7,801 7,094
Provisions for title losses in excess of payments . . . . . . 3,996 16,730 30,011
Provision for uncollectible amounts - net . . . . . . . . . . 376 855 579
Decrease (increase) in accounts receivable - net . . . . . . 2,814 3,265 (4,520)
(Decrease) increase in accounts payable and accrued
liabilities - net . . . . . . . . . . . . . . . . . . . . . . (1,834) (2,909) 4,166
Provision for deferred income taxes . . . . . . . . . . . . . 1,344 (1,794) (6,548)
Decrease in income taxes payable . . . . . . . . . . . . . . (708) (7,042) (72)
Minority interest expense . . . . . . . . . . . . . . . . . . 933 687 1,744
Equity in net earnings of investees . . . . . . . . . . . . . (700) (801) (3,077)
Realized investment (gains) losses - net . . . . . . . . . . (956) 842 (404)
Stock bonuses . . . . . . . . . . . . . . . . . . . . . . . . 303 61 729
Increase in other assets . . . . . . . . . . . . . . . . . . (846) -- --
Other - net . . . . . . . . . . . . . . . . . . . . . . . . . (1,016) 329 983
- -------------------------------------------------------------------------------------------------------
Cash provided by operating activities . . . . . . . . . . . . . 20,568 27,702 54,344
- -------------------------------------------------------------------------------------------------------
Supplemental information:
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . 3,283 13,794 20,532
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . 1,199 446 476
</TABLE>
See notes to consolidated financial statements.
24
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Three years ended December 31, 1995)
NOTE 1
A. Nature of operations. Stewart Information Services Corporation's dominant
segment of operations is the land title business. The Company's revenues are
materially affected by the volume of real estate activity in the United States.
Mortgage interest rates are a major factor underlying real estate activity.
B. Summary of significant accounting policies. The accompanying financial
statements were prepared by management which is responsible for their integrity
and objectivity. The statements have been prepared in conformity with
generally accepted accounting principles, including management's best judgments
and estimates, with due consideration given to materiality. Actual results
could differ from estimates.
C. Reclassification. Certain amounts in the 1994 and 1993 consolidated
financial statements have been reclassified to the 1995 reporting presentation
for comparative purposes.
D. Consolidation. Consolidated financial statements include all subsidiaries
in which the Company owns more than 50% voting rights in electing directors.
Unconsolidated investees, owned 20% through 50%, and over which the Company
exercises significant influence, are accounted for by the equity method. All
significant intercompany accounts and transactions are eliminated and provision
is made for minority interests.
E. Statutory accounting. The accounts of Stewart Title Guaranty Company
(Guaranty) and its subsidiary, Stewart Title Insurance Company, also a title
insurer, are maintained on a statutory basis, in accordance with practices
required or permitted by regulatory authorities. The statutory accounts are
restated in consolidation to conform with generally accepted accounting
principles.
In restating to generally accepted accounting principles, the amounts for
statutory premium reserve and reserve for reported title losses are eliminated
and, in substitution, amounts are established for estimated title losses (see
below). The net effect, after providing for deferred income taxes, is included
in consolidated retained earnings. In calculating the amount owed on federal
income tax returns, the statutory premium reserve and reserve for reported
title losses must be discounted to their present values.
F. Title premiums and fees. Revenues from services rendered in closing and
insuring titles are considered earned at the time of the closing of the related
real estate transactions.
G. Title losses and related claims. Estimating future title loss payments is
difficult because of the complex nature of title claims, the long periods of
time over which claims are paid, significantly varying dollar amounts of
individual claims and other factors.
For losses under $750,000 each, the Company estimates the aggregate amount
that will be paid in future years on title policies issued in the current year.
The estimated amount is charged to earnings currently (when the related
revenues are recognized). In making the estimates, the Company uses moving
average ratios of recent actual policy loss payment experience, net of
recoveries, to premium revenues.
Policy losses in excess of $750,000 each are individually evaluated and
charged to earnings when they become known. A general reserve is maintained
for unknown major losses. Escrow and other losses incurred in office
operations are accounted for separately.
Amounts shown as the Company's estimated liability for future loss payments
are continually reviewed for reasonableness and adjusted as appropriate. In
accordance with industry practice, the amounts have not been discounted to
their present values.
H. Income taxes. The Company adopted FAS 109 in the first quarter of 1993.
The cumulative effect of the change was negligible. Deferred tax assets and
liabilities are recognized for future tax consequences attributable to
differences between the tax bases and the book carrying values for certain
assets and liabilities. Valuation allowances are provided as may be
appropriate. Enacted tax rates are used in calculating amounts.
I. Earnings per share. Earnings per share amounts are calculated using the
weighted average number of shares of Common Stock and Class B Common Stock
outstanding during each year. The dilutive effect of Common Stock equivalents
is insignificant.
J. Cash equivalents. Cash equivalents are highly liquid investments that are
convertible to cash or mature on a daily basis as part of the Company's
management of day-to-day operating cash.
25
<PAGE> 9
K. Investments. The Company adopted FAS 115 effective December 31, 1993.
There was no adverse effect on the consolidated financial condition of the
Company. The Company has classified all of its investments in debt securities
as available for sale. Any net unrealized gains or losses on securities, less
taxes, are included in stockholders' equity. Any permanent decline in fair
value of securities is charged to earnings.
L. Property and equipment. Depreciation is computed principally by the
straight-line method at the following rates: buildings - 30 to 40 years and
furniture and equipment - 3 to 10 years. Maintenance and repairs are expensed
as incurred while improvements are capitalized. Gains and losses are
recognized at disposal.
M. Title plants. Title plants include compilations of a county's official land
records, prior examination files, copies of prior title policies, maps and
related materials which are geographically indexed to a specific property. The
costs of acquiring existing title plants and building new ones, prior to the
time such plants are placed in operation, are capitalized. Such costs are not
amortized because there is no indication of any loss of value. The costs of
maintaining and operating title plants are expensed as incurred. Gains and
losses on sales of copies of title plants or interests in title plants are
recognized in the year of sale.
N. Goodwill. Goodwill is the excess of the purchase price over the fair value
of net assets of subsidiaries acquired and is amortized by charges to earnings
over 10 to 40 years.
O. Long-lived assets. The Company adopted FAS 121 effective December 31, 1995.
The cumulative effect of the change was negligible. The Company continuously
reviews the carrying value of its title plants, goodwill and other long-lived
assets for possible impairment. Where applicable, the book amounts are reduced
to fair market values.
P. Escrow funds. Cash held in escrow for customers is excluded from the
balance sheets.
NOTE 2
Gross revenues. In the accompanying financial statements, premiums earned on
policies issued by independent agents are shown net of amounts charged by
agents for their services. Under statutory accounting, premium revenues
include agent charges, with an offsetting charge to expense for the same
amount.
On a statutory basis, revenues and expenses would be increased by like
amounts and would be stated as shown below. There would be no effect on net
earnings.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C> <C>
Title premiums, fees and
other revenues (gross) . . . . . . . . . . . . . . . . . . . . . 518,792 598,179 669,142
Less amounts retained
by agents . . . . . . . . . . . . . . . . . . . . . . . . . . . (252,064) (308,914) (334,955)
- -------------------------------------------------------------------------------------------------------
Title premiums, fees and
other revenues (net) . . . . . . . . . . . . . . . . . . . . . . 266,728 289,265 334,187
- -------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 3
Income taxes. The following reconciles federal income taxes computed at the
statutory rate with income taxes as reported.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C> <C>
Expected income taxes at 35% . . . . . . . . . . . . . . . . . . . 3,755 4,844 13,152
State income taxes . . . . . . . . . . . . . . . . . . . . . . . . 393 494 1,422
Tax effect of permanent differences:
Tax-exempt interest . . . . . . . . . . . . . . . . . . . . . . (1,657) (1,648) (752)
Nondeductible items . . . . . . . . . . . . . . . . . . . . . . 606 665 215
Equity income . . . . . . . . . . . . . . . . . . . . . . . . . (251) (280) (1,077)
Minority interests . . . . . . . . . . . . . . . . . . . . . . 327 240 610
Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . 549 (153) 347
- -------------------------------------------------------------------------------------------------------
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,722 4,162 13,917
- -------------------------------------------------------------------------------------------------------
Effective income tax rate (%) . . . . . . . . . . . . . . . . . . 34.7 30.1 37.0
- -------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE> 10
Deferred tax assets and liabilities at December 31, 1995 and 1994 were as
follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
1995 1994
- -------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C>
Deferred tax assets:
Book over tax title loss provisions . . . . . . . . . . . . . . 16,464 17,830
Unrealized losses on investments . . . . . . . . . . . . . . . -- 2,888
Net operating losses . . . . . . . . . . . . . . . . . . . . . 619 550
Allowance for bad debts . . . . . . . . . . . . . . . . . . . . 1,086 1,339
Salvage recoverable . . . . . . . . . . . . . . . . . . . . . . -- 520
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 938 918
- -------------------------------------------------------------------------------------------
19,107 24,045
Less valuation allowance . . . . . . . . . . . . . . . . . . . . (1,221) (1,157)
- -------------------------------------------------------------------------------------------
17,886 22,888
Deferred tax liabilities:
Unrealized gains on investments . . . . . . . . . . . . . . . (2,137) --
Tax over book depreciation . . . . . . . . . . . . . . . . . . (356) (802)
Investments in partnerships . . . . . . . . . . . . . . . . . . (90) (685)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,195) (924)
- -------------------------------------------------------------------------------------------
(3,778) (2,411)
- -------------------------------------------------------------------------------------------
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . 14,108 20,477
- -------------------------------------------------------------------------------------------
</TABLE>
The Company's valuation allowance relates to portions of certain subsidiary
operating loss carryforwards and other deferred tax assets. Management
believes future earnings levels will be sufficient to permit the Company to
realize net deferred tax assets.
There was a deferred tax expense of $1,344,000 and deferred tax benefits of
$1,794,000 and $6,548,000 for the years ended December 31, 1995, 1994 and 1993,
respectively.
NOTE 4
Restrictions on cash and investments. The "statutory reserve funds" included
in the accompanying financial statements have been set aside to comply with
legal requirements for statutory premium reserves and state deposits. These
funds were not available for any other purpose.
A substantial majority of investments and cash at each year end was held by
title insurer subsidiaries. Generally, the types of investments a title
insurer can make are subject to legal restrictions. Furthermore, the transfer
of funds by a title insurer to its parent or subsidiary operations, as well as
other related party transactions, are restricted by law and generally require
the approval of state insurance authorities.
NOTE 5
Dividend restrictions. Substantially all of consolidated retained earnings at
each year end was represented by the retained earnings of Guaranty, which owns
directly or indirectly substantially all of the subsidiaries included in the
consolidation.
Guaranty cannot pay a dividend in excess of certain limits without the
approval of the Texas Insurance Commissioner. The maximum dividend which could
have been paid without such approval in 1995 was $24,001,000. Guaranty paid or
declared cash dividends of $9,390,000 in 1995. Guaranty also paid
significantly less than maximum legal limits for dividends in 1994 and 1993.
Dividends from Guaranty were also voluntarily restricted primarily to
maintain statutory surplus and liquidity at competitive levels. The ability of
a title insurer to pay claims can significantly affect the decision of lenders
and other customers when buying a policy from a particular insurer.
27
<PAGE> 11
NOTE 6
Investments. The amortized cost and market value of investments in debt
securities at December 31 follow:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
1995 1994
- ------------------------------------------------------------------------------------------------------------
Amortized Market Amortized Market
cost value cost value
- ------------------------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C> <C> <C>
Municipal . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,042 95,049 91,598 85,267
Mortgage-backed . . . . . . . . . . . . . . . . . . . . . . . . 26,630 27,499 28,114 26,872
US Government . . . . . . . . . . . . . . . . . . . . . . . . . 28,393 29,636 40,105 39,728
Corporate, utilities . . . . . . . . . . . . . . . . . . . . . . 31,584 33,572 11,663 11,362
- ------------------------------------------------------------------------------------------------------------
179,649 185,756 171,480 163,229
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The gross unrealized gains and losses at December 31 were:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
1995 1994
- ----------------------------------------------------------------------------------------------------------
Gains Losses Gains Losses
- ----------------------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C> <C> <C>
Municipal . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,117 110 166 6,497
Mortgage-backed . . . . . . . . . . . . . . . . . . . . . . . . 1,684 815 157 1,399
US Government . . . . . . . . . . . . . . . . . . . . . . . . . 1,286 43 24 401
Corporate, utilities . . . . . . . . . . . . . . . . . . . . . . 2,033 45 138 439
- ----------------------------------------------------------------------------------------------------------
7,120 1,013 485 8,736
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Debt securities at December 31, 1995 mature, according to their contractual
terms, as follows (actual maturities may differ because of call or prepayment
rights):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Amortized Market
cost value
- --------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C>
In one year or less . . . . . . . . . . . . . . . . . . . . . . 1,519 1,532
After one year through five years . . . . . . . . . . . . . . . 27,522 28,344
After five years through ten years . . . . . . . . . . . . . . . 78,379 80,916
After ten years . . . . . . . . . . . . . . . . . . . . . . . . 45,599 47,465
Mortgage-backed securities . . . . . . . . . . . . . . . . . . . 26,630 27,499
- --------------------------------------------------------------------------------------
179,649 185,756
- --------------------------------------------------------------------------------------
</TABLE>
The Company believes its investment portfolio is diversified and expects no
material loss to result from the failure
to perform by issuers of the debt securities it holds. Investments made by the
Company are not collateralized. The mortgage-backed securities are insured by
GNMA and FNMA.
NOTE 7
Investment income. Income from investments and net realized gains (losses)
from sales of investments for the three years follow:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C> <C>
Income:
Short-term investments and
cash equivalents . . . . . . . . . . . . . . . . . . . . . 2,025 1,745 1,587
Debt securities -
Municipal . . . . . . . . . . . . . . . . . . . . . . . . . 4,805 4,639 2,089
Mortgage-backed . . . . . . . . . . . . . . . . . . . . . . 2,204 2,526 3,577
US Government . . . . . . . . . . . . . . . . . . . . . . . 2,042 1,156 557
Corporate, utilities . . . . . . . . . . . . . . . . . . . 1,936 1,740 1,827
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 552 576 667
- ----------------------------------------------------------------------------------------------
13,564 12,382 10,304
- ----------------------------------------------------------------------------------------------
Net realized gains (losses):
Debt securities . . . . . . . . . . . . . . . . . . . . . . . 1,072 (1,093) 404
Other investments . . . . . . . . . . . . . . . . . . . . . . (116) 251 --
- ----------------------------------------------------------------------------------------------
956 (842) 404
- ----------------------------------------------------------------------------------------------
</TABLE>
The sales of debt securities in 1995 resulted in proceeds of $41,911,000,
gross gains of $1,258,000 and gross losses of $186,000. The sales of debt
securities in 1994 resulted in proceeds of $70,442,000, gross gains of $914,000
and gross losses of $2,007,000. In 1994, certain securities were sold to use
tax loss carrybacks that would have otherwise expired.
Expenses assignable to investment income were insignificant. There were no
significant investments at December 31, 1995 that did not produce income during
the year.
28
<PAGE> 12
NOTE 8
Notes payable.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
1995 1994
- -------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C>
Banks:
Secured by mortgages on real estate,
primarily at prime (8.5%
at December 31, 1995),
payable lump sum and serially . . . . . . . . . . . . . . . 994 1,122
Unsecured, 6.0% to 10.5%, varying
payments . . . . . . . . . . . . . . . . . . . . . . . . . 10,453 5,241
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616 661
Other than banks:
Secured by equipment, office buildings,
real estate and subsidiary stock,
8.0% to 12.0%, varying payments . . . . . . . . . . . . . . 526 841
- -------------------------------------------------------------------------------------
12,589 7,865
- -------------------------------------------------------------------------------------
</TABLE>
The above notes mature $5,255,000 in 1996, $1,611,000 in 1997, $2,530,000 in
1998, $2,716,000 in 1999, $445,000 in 2000 and $32,000 subsequent to 2000.
NOTE 9
Estimated title losses. Provisions accrued, payments made and liability
balances for the three years follow:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C> <C>
Balances at January 1 . . . . . . . . . . . . . . . . . . . . . 134,316 117,586 87,575
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,591 40,212 58,574
Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25,530) (22,172) (29,615)
(Decrease) increase in salvage . . . . . . . . . . . . . . . . . (65) (1,310) 1,052
- ----------------------------------------------------------------------------------------------------
Balances at December 31 . . . . . . . . . . . . . . . . . . . . . 138,312 134,316 117,586
- ----------------------------------------------------------------------------------------------------
</TABLE>
Provisions include amounts related to the current year of approximately
$27,554,000, $39,642,000 and $51,634,000 for 1995, 1994 and 1993, respectively.
Payments related to the current year, including escrow and other loss payments,
were approximately $5,613,000, $8,216,000 and $11,209,000 for 1995, 1994 and
1993, respectively.
The above current year provision totals include provisions made for claims
which are based on historical ratios of losses-to-premium revenues. See Note
1(G) for the principles followed in accounting for title losses and related
claims.
NOTE 10
Fair values. The Company's financial instruments include cash and cash
equivalents, short-term investments, investments in debt securities (carried at
market value), notes receivable, accounts receivable, notes payable, accounts
payable and commitments.
The fair value of financial instruments is determined by reference to various
market data and other valuation techniques, as appropriate. The fair values of
financial instruments approximated their carrying values at December 31, 1995
and 1994.
NOTE 11
Common Stock and Class B Common Stock. Holders of Common and Class B Common
Stock have the same rights, except no cash dividends may be paid on Class B
Common Stock. The two classes vote separately when electing directors and on
any amendment to the Company's certificate of incorporation that affects the
two classes unequally.
A provision of the by-laws requires an affirmative vote of at least
two-thirds of the directors to elect officers or to approve any proposal which
may come before the directors. This provision cannot be changed without a
majority vote of each class of stock.
Holders of Class B Common Stock may, with no cumulative voting rights, elect
four directors if 525,000 or more shares of Class B Common Stock are
outstanding; three directors if between 300,000 and 525,000 shares are
outstanding; and none if less than 300,000 shares of Class B Common Stock are
outstanding. Holders of Common Stock, with cumulative voting rights, elect the
balance of the nine directors.
Class B Common Stock may, at any time, be converted by its shareholders into
Common Stock on a share-for-share basis, but all of the holders of Class B
Common Stock have agreed among themselves not to convert their stock prior to
January 2005. Such conversion is mandatory on any transfer to a person not a
lineal descendant (or spouse, trustee, etc. of such descendant) of William H.
Stewart.
At December 31, 1995 and 1994, there were 84,482 shares (cost $294,000) of
Common Stock held by a subsidiary of the Company. These shares are considered
retired but may be issued from time to time in lieu of new shares.
On April 28, 1994, the Company effected a one-for-two stock split recorded in
the form of a 50% stock dividend. All share and per share data presented in
these financial statements have been restated for the effects of the stock
split.
29
<PAGE> 13
NOTE 12
Changes in Common Stock. Changes in Common Stock and additional paid-in
capital for the years ended December 31, 1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Class B Additional
Common Common paid-in
Stock Stock capital
- ---------------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C> <C>
Balances at December 31, 1992 . . . . . . . . . . . . . . . . . 3,714 350 41,005
Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . 9 -- 166
Exercise of stock options . . . . . . . . . . . . . . . . . . 5 -- 102
Stock bonuses . . . . . . . . . . . . . . . . . . . . . . . . 25 -- 621
- -------------------------------------------------------------------------------------------------
Balances at December 31, 1993 . . . . . . . . . . . . . . . . . 3,753 350 41,894
Stock dividend . . . . . . . . . . . . . . . . . . . . . . . 1,893 175 --
Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . 3 -- 41
Exercise of stock options . . . . . . . . . . . . . . . . . . 22 -- 401
Stock bonuses . . . . . . . . . . . . . . . . . . . . . . . . 16 -- 414
- -------------------------------------------------------------------------------------------------
Balances at December 31, 1994 . . . . . . . . . . . . . . . . . 5,687 525 42,750
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . 159 -- 2,911
Stock bonuses . . . . . . . . . . . . . . . . . . . . . . . . 19 -- 284
- -------------------------------------------------------------------------------------------------
Balances at December 31, 1995 . . . . . . . . . . . . . . . . . 5,865 525 45,945
- -------------------------------------------------------------------------------------------------
</TABLE>
NOTE 13
Stock options. The Company has granted stock options to certain executive and
management personnel. Transactions under stock option plans during the last
three years were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Number of options:
January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . 128,100 141,450 135,750
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,300 18,900 20,100
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . -- (32,250) (6,996)
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- (7,404)
- ----------------------------------------------------------------------------------------------------
December 31 . . . . . . . . . . . . . . . . . . . . . . . . . 158,400 128,100 141,450
- ----------------------------------------------------------------------------------------------------
</TABLE>
Stock options were granted at prices equal to the market price at the prior
year end. Options outstanding at December 31, 1995 and 1994 were at prices of
$9.17 to $20.00 and at December 31, 1993, at $9.17 to $13.67 per share.
Options exercised during 1994 and 1993 were at $9.17 per share. Shares
available for future option grants at December 31, 1995 were 119,950.
The Financial Accounting Standards Board issued Statement 123, "Accounting
for Stock-Based Compensation", effective for fiscal years beginning after
December 15, 1995. The statement allows companies to retain the current
intrinsic value based method of accounting for its stock-based compensation
arrangements or adopt a new fair value based method. Expanded disclosure is
required in the financial statements of companies that continue to follow
current practice. The Company intends to continue its current practice of
accounting for stock-based compensation and therefore expects no effect on the
financial statements.
NOTE 14
Leases. The Company's expense for leased office space was $17,284,000 in 1995,
$16,296,000 in 1994 and $12,521,000 in 1993. These are operating, noncancelable
leases expiring over the next ten years. The future minimum lease payments are
as follows (stated in thousands of dollars):
<TABLE>
<S> <C>
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,929
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,308
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,329
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,991
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,025
2001 and after . . . . . . . . . . . . . . . . . . . . . . . . 9,274
- ---------------------------------------------------------------------------
55,856
- ---------------------------------------------------------------------------
</TABLE>
A subsidiary owned limited partnership interests in certain buildings
partially occupied by the Company, including the former Company headquarters
occupied until 1994. Annual rents paid to these partnerships by the Company
approximated $1,637,000 in 1994 and $1,728,000 in 1993, before deducting
partnership income or sub-rentals. The Company signed a ten year lease with an
unaffiliated company for its new headquarters in Houston in 1994.
30
<PAGE> 14
NOTE 15
Contingent liabilities and commitments. The Company makes separate provisions
for individual title losses over $750,000 and reviews claims in excess of this
amount asserted against Guaranty when evaluating the adequacy of recorded
reserves. See Note 1(G).
Claims had been made at December 31, 1995 against Guaranty for amounts in
excess of $750,000 for which no provision was made. Management believes, based
on the advice of counsel, the loss on these claims (1) will be resolved for
less than $750,000 each or (2) cannot be reasonably estimated. Management
believes any loss on these claims which cannot be estimated at December 31,
1995 will not be material in relation to the consolidated financial condition
of the Company.
The Company is contingently liable for disbursements of escrow funds held by
agents in certain cases where specific insured closing guarantees have been
issued.
In December 1994 the California Board of Equalization (CBOE) ruled in favor
of the Company concerning an assessment of additional premium taxes for the
year 1987. However, an assessment of $2.5 million, excluding interest and
penalties, for retaliatory taxes for 1987 was left pending. A hearing before
the CBOE is expected in the near future.
Five other states have also assessed the Company additional premium taxes.
The assessments, excluding interest and penalties, aggregate $1.8 million. The
years of assessments cover 1984 through 1994.
The Company cannot predict whether additional taxes of this nature will be
assessed by California, the five states or any other states. State taxing
authorities are under increasing pressure to collect additional tax revenues.
The Company intends to vigorously oppose any assessments and believes its tax
payments are correct.
However, there can be no assurance the Company will prevail in these
controversies. If it does not prevail, the tax assessments may, in the
aggregate, result in a material reduction in the Company's earnings in future
years.
Various takeout commitments approximated $1,151,000 at December 31, 1995.
Management believes adequate provisions have been made for any losses from
these commitments.
NOTE 16
Reinsurance. As is the industry practice, the Company cedes risk to other
underwriters in excess of certain underwriting limits. However, the Company
remains contingently liable if the reinsurer should fail to satisfy its
obligations. The Company also assumes risk from other underwriters. A payment
on an assumed risk or a recovery on a ceded risk is rare in the experience of
the Company and the industry. The Company has not paid or recovered any
reinsured losses during the three years ended December 31, 1995. The total
amount of premiums for assumed and ceded risks was less than one percent of
title premiums, fees and other revenues in each of the last three years.
NOTE 17
Equity in investees. Certain summarized aggregate financial information for
investees follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C> <C>
For the year:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . 50,804 69,125 86,866
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . 2,245 1,471 8,993
As of December 31:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . 25,321 36,496
Stockholders' equity . . . . . . . . . . . . . . . . . . . . 16,567 19,260
- ----------------------------------------------------------------------------------------------
</TABLE>
NOTE 18
Quarterly financial information (unaudited).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Mar 31 June 30 Sept 30 Dec 31
- ----------------------------------------------------------------------------------------------------------------
($000 Omitted, except per share)
<S> <C> <C> <C> <C>
Revenues
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,048 67,327 77,165 79,965
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,411 79,849 71,785 66,110
Net earnings (loss)
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,427) 1,675 3,501 3,258
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,440 2,304 1,667 1,267 (1)
Earnings (loss) per share
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . (.23) .27 .55 .51
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72 .37 .27 .20 (1)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes an after-tax capital loss of $839,000, or $.14 per share, on the
sale of certain portfolio bonds.
31
<PAGE> 15
STEWART TITLE GUARANTY COMPANY
STEWART TITLE INSURANCE COMPANY
Subsidiaries of Stewart Information Services Corporation
UNCONSOLIDATED Statutory BALANCE SHEETS
From statutory Annual Statements as filed (unaudited)
<TABLE>
<CAPTION>
Stewart Title Stewart Title
December 31, 1995 Guaranty Company Insurance Company
- --------------------------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C>
Admitted assets
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167,120 11,793
Stocks (investments in subsidiaries) . . . . . . . . . . . . . . . . . 64,702 1,049
Cash and bank deposits . . . . . . . . . . . . . . . . . . . . . . . . 8,449 816
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . 7,305 2,203
Title plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,825 328
Title insurance premiums, fees and other receivables . . . . . . . . 6,945 237
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,896 468
- -------------------------------------------------------------------------------------------------------
268,242 16,894
- -------------------------------------------------------------------------------------------------------
Liabilities, surplus and other funds
Reserve for title losses . . . . . . . . . . . . . . . . . . . . . . . 22,350 865
Statutory premium reserve . . . . . . . . . . . . . . . . . . . . . . 106,499 3,414
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,573 880
- -------------------------------------------------------------------------------------------------------
142,422 5,159
Surplus as regards policyholders (Note) . . . . . . . . . . . . . . . . . 125,820 11,735
- -------------------------------------------------------------------------------------------------------
268,242 16,894
- -------------------------------------------------------------------------------------------------------
Consolidated stockholder's equity (unaudited), based on generally accepted
accounting principles (GAAP), for Stewart Title Guaranty Company
at December 31, 1995 was ($000 omitted) . . . . . . . . . . . . . . . . 151,615
=======
</TABLE>
Note: The amount shown above for stockholder's equity exceeds policyholder
surplus primarily because under GAAP the statutory premium reserve and reserve
for reported title losses are eliminated and estimated title loss reserves are
substituted, net of applicable income taxes.
STEWART TITLE GUARANTY COMPANY
Statutory Policyholder Surplus Growth
(In $ millions)
[BAR GRAPH]
<TABLE>
<CAPTION>
Year Amount
---- ---------------
(In $ millions)
<S> <C>
1975 . . . . . . . . . . . . . . . . . . . . . . . . 6
1976 . . . . . . . . . . . . . . . . . . . . . . . . 7
1977 . . . . . . . . . . . . . . . . . . . . . . . . 8
1978 . . . . . . . . . . . . . . . . . . . . . . . . 10
1979 . . . . . . . . . . . . . . . . . . . . . . . . 12
1980 . . . . . . . . . . . . . . . . . . . . . . . . 12
1981 . . . . . . . . . . . . . . . . . . . . . . . . 12
1982 . . . . . . . . . . . . . . . . . . . . . . . . 14
1983 . . . . . . . . . . . . . . . . . . . . . . . . 17
1984 . . . . . . . . . . . . . . . . . . . . . . . . 21
1985 . . . . . . . . . . . . . . . . . . . . . . . . 24
1986 . . . . . . . . . . . . . . . . . . . . . . . . 44
1987 . . . . . . . . . . . . . . . . . . . . . . . . 45
1988 . . . . . . . . . . . . . . . . . . . . . . . . 61
1989 . . . . . . . . . . . . . . . . . . . . . . . . 62
1990 . . . . . . . . . . . . . . . . . . . . . . . . 63
1991 . . . . . . . . . . . . . . . . . . . . . . . . 65
1992 . . . . . . . . . . . . . . . . . . . . . . . . 87
1993 . . . . . . . . . . . . . . . . . . . . . . . . 114
1994 . . . . . . . . . . . . . . . . . . . . . . . . 120
1995 . . . . . . . . . . . . . . . . . . . . . . . . 126
</TABLE>
21 consecutive years of statutory policyholder surplus growth - unmatched in
the title industry.
32
<PAGE> 1
Exhibit 21
STEWART INFORMATION SERVICES CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
STATE OF
NAME OF SUBSIDIARY INCORPORATION
------------------ -------------
<S> <C>
Stewart Title of Mobile, Inc. . . . . . . . . Alabama
Stewart Title & Trust of Phoenix, Inc. . . . . Arizona
Citizens Title & Trust . . . . . . . . . . . . Arizona
Stewart Title & Trust of Tucson . . . . . . . Arizona
Stewart Title Company of San Diego . . . . . . California
Stewart Title of California . . . . . . . . . California
Stewart Title of Modesto . . . . . . . . . . . California
Stewart Title (Los Angeles) . . . . . . . . . California
Stewart Title of Fresno . . . . . . . . . . . California
Stewart Title Company of the Inland Empire . . California
Stewart Title of Central California . . . . . California
Landata, Inc. of Los Angeles . . . . . . . . . California
Stewart Title of Monterey County . . . . . . . California
Stewart Title of Santa Barbara . . . . . . . . California
Asset Preservation, Inc. . . . . . . . . . . . California
Landata, Inc. of the West Coast - Northern
California Division . . . . . . . . . . . . . California
Stewart Title of Larimer County, Inc. . . . . Colorado
Stewart Title of Greeley, Inc. . . . . . . . . Colorado
Stewart Title of Aspen, Inc. . . . . . . . . . Colorado
Stewart Title of Eagle County, Inc. . . . . . Colorado
Stewart Title of Glenwood Springs, Inc. . . . . Colorado
Stewart Title of Denver, Inc. . . . . . . . . Colorado
Stewart Title of Summit County, Inc. . . . . . Colorado
Stewart Title of Boulder County, L.L.C. . . . . Colorado
Stewart Title Company of Colorado Springs . . Colorado
Landata, Inc. of the Rocky Mountains . . . . . Colorado
Stewart Title of Tampa . . . . . . . . . . . . Florida
Stewart Title of Palm Beach County, Inc. . . . Florida
Stewart Title Guaranty of Jacksonville, Inc. . Florida
Stewart Title of Orange County, Inc. . . . . . Florida
Stewart Title of Clearwater, Inc. . . . . . . Florida
Stewart Title of Fort Myers, Inc. . . . . . . Florida
Stewart Title of Polk County, Inc. . . . . . . Florida
Stewart Title of Martin County . . . . . . . . Florida
Stewart Title of Miami, Inc. . . . . . . . . . Florida
Stewart Title of Ft. Lauderdale . . . . . . . Florida
Stewart Title of Sarasota . . . . . . . . . . Florida
Stewart-Fidelity Title Company . . . . . . . . Florida
Landata, Inc. of Florida . . . . . . . . . . . Florida
Stewart Title of Pensacola, Inc. . . . . . . . Florida
Stewart Title of Tallahassee, Inc. . . . . . . Florida
Stewart River City Title . . . . . . . . . . . Florida
Stewart Title of Northwestern Florida . . . . . Florida
</TABLE>
(continued)
<PAGE> 2
Exhibit 21
(continued)
STEWART INFORMATION SERVICES CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
STATE OF
NAME OF SUBSIDIARY INCORPORATION
------------------ -------------
<S> <C>
Charlotte County Abstract & Title Company . . Florida
Bay Title Services, Inc. . . . . . . . . . . . Florida
Stewart Approved Title, Inc. . . . . . . . . . Florida
Stewart Title of Illinois . . . . . . . . . . Illinois
Landata, Inc. of Illinois . . . . . . . . . . Illinois
Stewart Title Services of Indiana . . . . . . . Indiana
Stewart Title of Louisiana, Inc. . . . . . . . Louisiana
Stewart Title of Maryland . . . . . . . . . . Maryland
Cambridge Landata, Incorporated . . . . . . . Maryland
Landata, Inc. of the Northeast . . . . . . . . Massachusetts
Stewart Title Company of Minnesota . . . . . . Minnesota
Stewart Title Company of Mississippi . . . . . Mississippi
Stewart Title, Inc. (Kansas City) . . . . . . Missouri
Stewart Title of Douglas County . . . . . . . Nevada
Stewart Title of Northern Nevada . . . . . . . Nevada
Stewart Title of Carson City . . . . . . . . . Nevada
Stewart Title of Nevada . . . . . . . . . . . Nevada
Stewart Title of Northeastern Nevada . . . . . Nevada
Stewart Title of Central Nevada . . . . . . . Nevada
Public Data Marketing, Inc. . . . . . . . . . Nevada
Stewart Title of Central Jersey, Inc. . . . . New Jersey
Stewart-Princeton Abstract . . . . . . . . . . New Jersey
Stewart Title Services of North Jersey, L.L.C . New Jersey
Santa Fe Abstract Limited . . . . . . . . . . . New Mexico
Stewart Title Limited . . . . . . . . . . . . New Mexico
Stewart Title Insurance Company . . . . . . . New York
Barretta Landata, L.L.C. . . . . . . . . . . . New York
Stewart Title of Mecklenburg County . . . . . North Carolina
Stewart Title of North Carolina . . . . . . . North Carolina
Stewart Title Agency of Ohio, Inc. . . . . . . Ohio
Stewart Abstract & Title Co. of Oklahoma . . . Oklahoma
Stewart Title of Rhode Island, Inc. . . . . . Rhode Island
Ortem Investments, Inc. . . . . . . . . . . . Texas
East-West, Inc. . . . . . . . . . . . . . . . Texas
Stewart Title of San Patricio County, Inc. . . Texas
Stewart Title Guaranty Company . . . . . . . . Texas
Southland Information, Inc. . . . . . . . . . Texas
Stewart Title Company . . . . . . . . . . . . . Texas
Stewart Title Austin, Inc. . . . . . . . . . . Texas
Stewart Title of Lubbock, Inc. . . . . . . . . Texas
</TABLE>
(continued)
<PAGE> 3
Exhibit 21
(continued)
STEWART INFORMATION SERVICES CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
STATE OF
NAME OF SUBSIDIARY INCORPORATION
------------------ -------------
<S> <C>
Stewart Title Company of Rockport, Inc. . . . . Texas
Texarkana Title and Abstract, Inc. . . . . . . Texas
Stewart Investment Services Corporation . . . Texas
Stewart Trust Company . . . . . . . . . . . . Texas
Landata Systems, Inc. . . . . . . . . . . . . Texas
Landata, Inc. of San Antonio . . . . . . . . . Texas
Landata, Inc. of Midwest . . . . . . . . . . . Texas
Landata RE-Source, Inc. . . . . . . . . . . . Texas
Landata Field Services . . . . . . . . . . . . Texas
Fulghum, Inc. . . . . . . . . . . . . . . . . . Texas
OnLine Mortgage Documents . . . . . . . . . . . Texas
Mortgage Management Services, Inc. . . . . . . Texas
Stewart Management Information, Inc. . . . . . Texas
Stewart - U.A.M., Inc. . . . . . . . . . . . . Texas
Baca Landata, Inc. . . . . . . . . . . . . . . Texas
Primero, Inc. . . . . . . . . . . . . . . . . Texas
United Aerial Mapping, Inc. . . . . . . . . . Texas
Priority Title - Houston . . . . . . . . . . . Texas
Priority Title - Dallas . . . . . . . . . . . . Texas
Stewart Title of North Texas . . . . . . . . . Texas
Stewart Information International, Inc. . . . Texas
San Antonio Data, Inc. . . . . . . . . . . . . Texas
Stewart Title Insurance Company (U.K.)
Limited . . . . . . . . . . . . . . . . . . United Kingdom
Conquest Group . . . . . . . . . . . . . . . . United Kingdom
Michael Hickmott & Co. . . . . . . . . . . . . United Kingdom
Stewart Title Great Britain . . . . . . . . . . United Kingdom
Stewart Title of Virginia . . . . . . . . . . . Virginia
Stewart Title and Escrow, Inc. . . . . . . . . Virginia
Stewart Title - Shenandoah Valley, L.C. . . . Virginia
Stewart Title Services of Virginia, L.C. . . . Virginia
Signature & Stewart Settlements, L.C. . . . . Virginia
Stewart Title & Associates . . . . . . . . . . Virginia
Cedar Run Title & Abstract . . . . . . . . . . Virginia
Land Title Research . . . . . . . . . . . . . Virginia
Stewart Services of Greater Virginia . . . . . Virginia
Stewart Title of Gillette . . . . . . . . . . Wyoming
</TABLE>
<PAGE> 1
The Board of Directors
Stewart Information Services Corporation:
We consent to incorporation by reference in the registration statements (No.
33-48519, 48520, 58156 and 59747) on Form S-8 of Stewart Information Services
Corporation of our report dated February 7, 1996, relating to the consolidated
balance sheets of Stewart Information Services Corporation and subsidiaries as
of December 31, 1995 and 1994 and the related consolidated statements of
earnings and retained earnings and cash flows for each of the years in the
three-year period ended December 31, 1995, and all related schedules, which
report appears in the December 31, 1995 annual report on Form 10-K of Stewart
Information Services Corporation. Our report covering the December 31, 1995
financial statements refers to a change in accounting for long-lived assets. We
also consent to the reference to our firm under the heading "Interests of Named
Experts and Counsel" in such Registration Statements.
/s/ KPMG PEAT MARWICK LLP
Houston, Texas
March 15, 1996
<PAGE> 2
The Board of Directors
Stewart Information Services Corporation
We consent to incorporation by reference in the registration statements
(No. 33-48519, No. 33-48520, No. 33-58156, No. 33-59747 and No. 33-62535) on
Form S-8 of Stewart Information Services Corporation of our report, which
appears in the December 31, 1995 annual report on Form 10-K of Stewart
Information Services Corporation. We also consent to the reference to us under
the heading "Interests of Named Experts and Counsel" in such Registration
Statements.
/s/ M. TIMOTHY O'ROARK
----------------------
M. TIMOTHY O'ROARK
El Paso, TX
<PAGE> 3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Forms S-8 No. 33-48519, No. 33-48520, No. 33-58156, No. 33-59747 and
No. 33-62535) pertaining to the 1992 Nonqualified Stock Option Plan for Region
Manager, the Stewart Morris, Jr. 1992 Stock Option and Malcolm Morris 1992
Stock Option, the Associates Stock Bonus Plan, 1995 Stock Option Plan, and the
Salary Deferral Plan and Trust, respectively, of Stewart Information Services
Corporation of our report dated January 20, 1995 with respect to the balance
sheet of Stewart Title as of December 31, 1994, and the related statements of
operations and retained earnings, and cash flows for each of the two years in
the period ended December 31, 1994 (no presented separately therein) included
in Stewart Information Services Corporation's Annual Report (Form 10-K) for the
year ended December 31, 1995.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Los Angeles, California
March 15, 1996
<PAGE> 4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 No. 33-48519, No. 33-48520, No. 33-58156, No. 33-59747
and No. 33-62535) of Stewart Information Services Corporation of our report
dated January 20, 1995 on the consolidated financial statements of Stewart Title
& Trust of Phoenix, Inc. appearing in this Form 10-K. We also consent to the
reference to us under the heading "Interests of Named Experts and Counsel" in
such Registration Statements.
/s/ PRICE WATERHOUSE LLP
------------------------------
PRICE WATERHOUSE LLP
Phoenix, Arizona
March 14, 1996
<PAGE> 5
The Board of Directors
Stewart Information Service Corporation
We consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, and No. 33-62535) on form
S-8 of Stewart Information Services Corporation of our reports dated February 8,
1995, relating to the consolidated balance sheets of Stewart Information
Services Corporation and subsidiaries as of December 31, 1994 and 1993 and the
related consolidated statements of earnings and retained earnings and cash
flows and related schedules for each of the years in the three-year period
ended December 31, 1994, which appear in or are incorporated by reference in
the December 31, 1994 annual report on Form 10-K of Stewart Information
Services Corporation. We also consent to the reference to our firm under the
heading "Interests of Named Experts and Counsel" in such Registration
Statements.
/s/ GRANT BENNETT ACCOUNTANTS
GRANT BENNETT ACCOUNTANTS
A PROFESSIONAL CORPORATION
Certified Public Accountants
Sacramento, California
<PAGE> 6
The Board of Directors
Stewart Information Services Corporation
We consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, 33-58156, 33-59747, and 33-62535) on Form S-8 of
Stewart Information Services Corporation of our report, which appears in the
December 31, 1995 annual report on Form 10-K of Stewart Information Services
Corporation. We also consent to the reference to us under the heading
"Interests of Named Experts and Counsel" in such Registration Statements.
/s/ WILKERSON & ARTHUR, P.C.
Wilkerson & Arthur, P.C.
Fort Worth, Texas
<PAGE> 7
The Board of Directors
Stewart Information Services Corporation
We consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, and No. 33-62535) on Form
S-8 of Stewart Information Services Corporation of our report, which appears in
the December 31, 1994 annual report on Form 10-K of Stewart Information
Services Corporation. We also consent to the reference to us under the heading
"Interests of Named Experts and Counsel" in such Registration Statements.
/s/ AARONSON, WHITE & COMPANY
AARONSON, WHITE & COMPANY
Houston, TX
<PAGE> 8
The Board of Directors
Stewart Information Services Corporation
I consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, and No. 33-62535) on Form
S-8 of Stewart Information Services Corporation of my report, which appears in
the December 31, 1995 annual report on Form 10-K of Stewart Information
Services Corporation. I also consent to the reference to me under the heading
"Interests of Named Experts and Counsel" in such Registration Statements.
/s/ GINNY SANDERS MAY, CPA
Ginny Sanders May, CPA
Lake Jackson
<PAGE> 9
The Board of Directors
Stewart Information Services Corporation
We consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, and No. 33-62535) on Form
S-8 of Stewart Information Services Corporation of our report, which appears in
the December 31, 1995 annual report on Form 10-K of Stewart Information
Services Corporation. We also consent to the reference to us under the heading
"Interests of Named Experts and Counsel" in such Registration Statements.
/s/ EDGAR, KIKER & CROSS, L.L.P.
EDGAR, KIKER & CROSS, L.L.P.
Certified Public Accountants
Beaumont, Texas
<PAGE> 10
The Board of Directors
Stewart Information Services Corporation
I consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, and No. 33-62535) on Form
S-8 of Stewart Information Services Corporation of my report, which appears in
the December 31, 1995 annual report on Form 10-K of Stewart Information
Services Corporation. I also consent to the reference to me under the heading
"Interests of Named Experts and Counsel" in such Registration Statements.
/s/ JIM S. WALKER
Jim S. Walker
Certified Public Accountant
Beaumont, Texas
January 19, 1996
<PAGE> 11
The Board of Directors
Stewart Information Services Corporation
We consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, and No. 33-62535) on Form
S-8 of Stewart Information Services Corporation of our report, which appears in
the December 31, 1995 annual report on Form 10-K of Stewart Information
Services Corporation. We also consent to the reference to us under the heading
"Interests of Named Experts and Counsel" in such Registration Statements.
/s/ DOSHIER, PICKENS, & FRANCIS, P.C.
----------------------------------------
DOSHIER, PICKENS, & FRANCIS, P.C.
Amarillo, TX
March 5, 1996
<PAGE> 12
The Board of Directors
Stewart Information Services Corporation
We consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, and No. 33-62535) on Form
S-8 of Stewart Information Services Corporation of our report, which appears in
the December 31, 1995 annual report on Form 10-K of Stewart Information
Services Corporation. We also consent to the reference to us under the heading
"Interests of Named Experts and Counsel" in such Registration Statements.
/s/ FANCHER AND COMPANY
FANCHER AND COMPANY
Corpus Christi, Texas
<PAGE> 13
The Board of Directors
Stewart Information Services Corporation
We consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, and No. 33-62535) on Form
S-8 of Stewart Information Services Corporation of our report, which appears in
the December 31, 1994 annual report on Form 10-K of Stewart Information
Services Corporation. We also consent to the reference to us under the heading
"Interests of Named Experts and Counsel" in such Registration Statements.
/s/ JESUS YEPEZ
Jesus Yepez
Certified Public Accountant
Lubbock, Texas
<PAGE> 14
The Board of Directors
Stewart Information Services Corporation
We consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, and No. 33-62535) on Form
S-8 of Stewart Information Services Corporation of our report, which appears in
the December 31, 1995 annual report on Form 10-K of Stewart Information
Services Corporation. We also consent to the reference to us under the heading
"Interests of Named Experts and Counsel" in such Registration Statements.
/s/ WILLIAMS & PEARCY, P.C.
Williams & Pearcy, P.C.
Texarkana, USA
<PAGE> 15
The Board of Directors
Stewart Information Services Corporation
Houston, Texas
We consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, and No. 33-62535) on Form
S-8 of Stewart Information Services Corporation of our report for the audit of
escrow fund of Stewart Title Rockport and San Patricio. We also consent to the
reference to us under the heading "Interests of Named Experts and Counsel" in
such Registration Statements, only to the extent it relates to the audit of the
escrow funds.
/s/ FLUSCHE, VAN BEVEREN, KILGORE, P.C.
Flusche, Van Beveren, Kilgore, P.C.
February 29, 1996
Corpus Christi, Texas
<PAGE> 16
The Board of Directors
Stewart Information Services Corporation
We consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, 33-58156, 33-59747 and 33-62535) on Form S-8 of
Stewart Information Services Corporation of our report, which appears in the
December 31, 1994 annual report on Form 10-K of Stewart Information Services
Corporation. We also consent to the reference to us under the heading
"Interests of Named Experts and Counsel" in such Registration Statements.
/s/ MCGEE, HAZA & CO.
----------------------------------------
McGee, Haza & Co.
Dallas, Texas
February 29, 1996
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
consolidatd balance sheet as of December 31, 1995 and the related consolidated
statement of earnings for the year ended December 31, 1995 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<DEBT-HELD-FOR-SALE> 185,756
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 3,133
<REAL-ESTATE> 2,882
<TOTAL-INVEST> 213,994<F1>
<CASH> 16,698
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 351,359
<POLICY-LOSSES> 138,312
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 12,589
<COMMON> 6,390
0
0
<OTHER-SE> 168,462
<TOTAL-LIABILITY-AND-EQUITY> 351,359
266,728
<INVESTMENT-INCOME> 13,564
<INVESTMENT-GAINS> 956
<OTHER-INCOME> 1,257
<BENEFITS> 29,591
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 10,729
<INCOME-TAX> 3,722
<INCOME-CONTINUING> 7,007
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,007
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.11
<RESERVE-OPEN> 134,316
<PROVISION-CURRENT> 27,554
<PROVISION-PRIOR> 2,037
<PAYMENTS-CURRENT> 5,678
<PAYMENTS-PRIOR> 19,917
<RESERVE-CLOSE> 138,312
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>Includes short-term investments.
</FN>
</TABLE>
