Stewart Information Services Corp. has reported consolidated pretax income of $19.7 million in the fourth quarter of 2018, compared to $17.5 million in the same period a year earlier.
The title business generated pretax income of $29.5 million in the fourth quarter of 2018, compared to $27.0 million in the same period a year earlier. Also, pretax margin improved 120 basis points in fourth quarter of 2018 over the prior year quarter.
Commercial fee income increased 3 percent a file and domestic residential fee income a file increased 11 percent compared to fourth quarter of 2017. Stewart reported net income of $11.4 million for the fourth quarter 2018, compared to net income of $15.1 million for the fourth-quarter of 2017.
A $3 million expense for a third-party to advise on the Fidelity National Financial merger was taken in the fourth quarter of 2018, compared to $2.9 million in the same period one year earlier. And Stewart is continuing to work on the regulatory process with Fidelity National to satisfy the regulatory requirements for closing a merger, including those of the Federal Trade Commission, the Texas Department of Insurance and the New York State Department of Financial Services.
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As previously disclosed, on Jan. 31, 2019, the NYDFS provided written notice of its disapproval of Fidelity National's application to acquire control of Stewart Title Insurance Co., Stewart’s New York domiciled title insurance underwriter.
The companies are discussing the notice with NYDFS and seek to resolve the regulators concerns, with which Stewart and Fidelity National “respectfully disagree,” according to the fourth quarter earnings report from Stewart.
Title operating revenues in the fourth quarter of 2018 decreased 10 percent compared to the prior year quarter as direct title, decreased 7 percent, and independent agency revenues decreased 12 percent.
Non-commercial domestic revenues for the fourth quarter are revenues from purchase transactions, which decreased $5 million, and centralized title operations, processing primarily refinancing and default title orders, declined $5.7 million compared to the fourth quarter of 2017. These declines were due to the lower purchase and refinancing closed orders, which decreased 16 percent in the fourth quarter 2018 compared to the prior year quarter.
Fourth quarter 2018 commercial revenues decreased $5.9 million, or 8 percent, compared to the fourth quarter 2017. Fourth quarter 2018 commercial fee for each file increased 3 percent to around $10,300 due to increased transaction sizes, while the domestic residential fee for each file increased 11 percent to around $2,300 because of the switch to a mortgage purchase market.
Commercial and domestic residential fees per file for the full year 2018 increased to $8,600 (22 percent) and $2,200 (8 percent), respectively, compared to last year. Gross revenues from independent agency operations declined 12 percent in the fourth quarter 2018, as compared to last year's quarter, due to reduced activity in high-volume states, which include New York, Texas, Florida and California.
