Land Am, Stewart Post Big Losses in Q4 as Transaction Volume Dries Up
The real estate downturn is hurting some of the nation's largest title insurance conglomerates, with both Land America Financial Group, Inc. and Stewart Information Services, Inc. reporting fourth quarter losses this week. LandAmerica said Thursday that it lost $45.9 million, or $3.31/share, during the fourth quarter as the real estate slump worsened, driving down transaction volume and pushing up claims reserves among the company's title operations. The fourth quarter loss contrasts with $34.3 million in profit, or $5.61/share, in the year-ago period. The company laid off 1,700 employees in the fourth quarter as revenue plunged more than 22 percent, it said. While LandAmerica does not break out its default services seperately, the company said robust growth in its outsourced management of foreclosures and lien monitoring helped offset losses in its lender services division. In a similar fashion, Stewart reported a $40.2 million quarterly loss one day earlier, or $2.21/share, compared to a $43.3 million profit, or $2.36/share, one year earlier. The company saw revenue drop roughly 23 percent and laid off 675 employees during the quarter, it said. "Results for 2007 reflected an extremely difficult real estate market," LandAmerica CEO Theodore Chandler, Jr. said. "During the first half of the year, results were seasonally and cyclically depressed due to reductions in transactions from a weakening real estate environment. The liquidity crunch in the mortgage credit markets beginning early in the third quarter of the year brought a precipitous 34% decline in residential mortgage originations in fourth quarter 2007 compared to the same period in 2006." Both companies cited increasing claims as well as increasing losses from large claims, and said that they had bumped up their claims provisions as a result. First American, the largest title insurer in the nation, is scheduled to report earnings on February 28. Disclosure: The author held no positions in any publicly-traded firm mentioned in the story when it was originally published.