After posting record second quarter earnings, Stewart Information Services Corp. is bolstering its operations and market presence in the Midwest by acquiring one of the nation’s largest independent title agencies, Title First Agency Inc.
Westerville, Ohio-based Title First also has offices in Illinois, Indiana, Michigan, Texas, and West Virginia, and is licensed to operate in 34 states. Strategic partnerships allow Title First to do business in all 50 states.
Houston-based Stewart, the nation’s fourth-largest title insurer, has been expanding its digital offerings to provide customers with end-to-end mortgage services and solutions. Stewart acquired digital origination platform Cloudvirga in May, and last year snapped up e-notary service NotaryCam, appraisal management firm United States Appraisals, and valuations services provider Pro-Teck Services Ltd.
Title First President Sean Stoner said that having the backing and resources of Stewart will help the company provide the best transactional service to its growing roster of clients.
“For years we have aggressively grown our service offerings to better support our local and national clients, and becoming part of Stewart is the next strategic step for a larger national platform,” Stoner said in a statement.
Although terms of the deal were not disclosed, last week Stewart reported second quarter net income of $94.8 million, up 178 percent from a year ago. Stewart CEO Fred Eppinger attributed the results to continued strength in residential real estate sales — orders for title insurance for home purchases were up 57 percent — improving commercial business, and “solid performances” from international and ancillary services operations.
“While Stewart continues to take advantage of a historic housing market, we remain focused on our longer term goals of providing our customers with the best title and closing services and technology possible, and our shareholders with improved operational performance through the entire real estate cycle,” Eppinger said in a statement.
On a call with investment analysts, Eppinger said Stewart was able to deliver record earnings because investments the company has made in “talent, scale, services, and technologies … though not yet complete, have begun to take hold.”
Eppinger said the shift in mortgage lending from refinancing to purchase loans has benefited subsidiaries Stewart Title Guaranty Company and Stewart Title Insurance Company, which generate more revenue when homebuyers take out a loan than when they refinance. While the boom in home sales may have already peaked, “The next couple of years look pretty darn good historically … because of the strength of the purchase market,” he said.
In their most recent forecast, economists at Fannie Mae said they think the pace of home sales probably peaked during the final three months of 2020, at a seasonally-adjusted annual rate of 7.58 million. After adjusting for seasonal factors, Fannie Mae predicts the pace of sales will tick up again in the last three months of this year, and stay above 6.5 million through 2022.
Annual rate of sales, new and existing homes
“While we are bullish on the real estate over the long term, we are realistic in our assessment that the current market will not last forever,” Eppinger said. “That said, on a daily basis, we are making decisions and taking actions that will define us through the current market and the next full real estate cycle. That is what drives us and that is what you’re beginning to see in our results.”