Stewart Information Services Corp. Thursday reported net earnings of $2.6 million for the first quarter and earnings per share of 14 cents, down 75.7 percent from net earnings of $10.7 million and earnings per share of 59 cents in the same time period last year.

Revenues increased 5.6 percent to $539.4 million in the first quarter of 2006 as compared with $511 million for the first quarter of 2005, but were “more than offset by increases primarily in employee and other operating costs,” the company said.

Title orders declined in the first quarter of 2006 by 8.9 percent from the same period a year ago, Stewart said, with orders 9.8 percent lower in March 2006 than in March 2005. Steady increases in mortgage interest rates were the major reason for the decline in title orders, the company said.

Revenues were positively impacted by an increase in both direct and agency business, the company said, with the increase in direct operations primarily due to acquisitions and growth in commercial transactions. Acquisitions increased revenues by $12.1 million and pretax earnings by $1.7 million for the quarter, Stewart said.

The increase in revenues for the quarter was more than offset by increases, the company said, with employee costs impacted by the competitive market for key employees in California and other states.

Employee costs were also higher compared to the same period a year ago due to significant increases in health insurance claims and premium costs, additional employees at newly opened locations and increases in staff providing technology-related services, the company said. Other operating costs increased primarily due to expenses related to new offices and increased technology development and security costs, according to Stewart.

Stewart’s book value per share decreased to $42.16 per share at March 31, 2006, as compared with $42.21 at Dec. 31, 2005, the company said. The decline in book value per share was primarily due to an increase in unrealized losses in the company’s bond portfolio triggered by interest rate increases in the first quarter of 2006, the company said.

The company noted that the quarter’s revenues represent the highest revenues for any first quarter in the company’s history. Pretax earnings (calculated before minority interests) for the first quarter of 2006 were $8.3 million as compared with $20.2 million for the same period of 2005.

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