Earnings Up 70 Percent in Fourth Quarter and 97 Percent for the Year
CHICAGO, Feb. 9 /PRNewswire/ -- Chicago Title Corporation (NYSE: CTZ), a
leading provider of title insurance and real estate-related services, today
announced record earnings for the 1998 fourth quarter and year. Fourth
quarter net income from continuing operations rose 70.2 percent over the prior
year period to $26.3 million, or $1.20 per share on both a basic and diluted
basis. During the fourth quarter of 1997, net income from continuing
operations amounted to $15.5 million, or $0.70 per share on both a basic and
diluted basis. Total revenue in the 1998 fourth quarter increased 27.6
percent over the prior year period to $551.0 million.
John Rau, president and chief executive officer, stated, "Our fourth
quarter results reflect our ability to capitalize on strong real estate
markets. Residential refinancings produced the highest quarterly revenue of
the year and residential purchase transactions remained robust. While the
commercial sector was adversely affected by unsettled capital markets early in
the fourth quarter, it was able to post a slight improvement over record
performance in the same period last year."
In June 1998, Chicago Title was spun-off from Alleghany Corporation
(NYSE: Y) and became an independent, publicly traded company. Exclusive of
$21.6 million in after-tax spin-off and related management restructuring
costs, net income from continuing operations amounted to $109.7 million,
or $5.01 per basic and diluted share, for the year ended December 31, 1998.
This represented an increase of 97.0 percent over the $55.7 million in net
income from continuing operations, or $2.54 per basic and diluted share,
earned in 1997. The company's 1998 net income from continuing operations,
inclusive of the impact of spin-off and related management restructuring
costs, totaled $88.2 million, or $4.03 per basic and diluted share. Total
revenue rose 31.3 percent to $1.93 billion in 1998 from $1.47 billion in 1997.
Rau commented further, "The year 1998 was historic for a number of
reasons. We were able to achieve a level of earnings that was nearly double
the record set in 1997 while successfully establishing ourselves as an
independent public company. More importantly, with strategic investments in
acquisitions and technology, we continued to build on our ability to meet the
needs of our customers in the rapidly evolving real estate industry. Our
strong performance allowed us to fund these investments through internally
generated funds. We continued to maintain our high standard of financial
strength, marked by a low level of debt relative to total capitalization, as
well as the highest reserve for title losses, and the largest investment
security portfolio in the industry. While we look back on 1998 with a great
sense of accomplishment, we believe we are well-positioned to drive
long term growth in the coming years."
Prior to the spin-off, Chicago Title performed trust and asset management
services through a subsidiary, Alleghany Asset Management, Inc. This
subsidiary remained with Alleghany after the spin-off. Consequently,
Alleghany Asset Management made no contribution to fourth quarter 1998 results
and results during the periods it was owned by Chicago Title have been
classified as discontinued operations. Net income from discontinued
operations was $3.1 million, or $0.15 per basic and diluted share, in the
fourth quarter of 1997. For the year ended December 31, net income from
discontinued operations amounted to $9.0 million, or $0.41 per basic and
diluted share, in 1998, compared to $12.2 million, or $0.56 per basic and
diluted share, in 1997.
Return on average equity amounted to 23.2 percent in the fourth quarter
of 1998 compared to 15.9 percent in the same period last year. For the full
year 1998, excluding discontinued operations and spin-off and related
management restructuring costs, return on average equity was 25.9 percent in
1998 compared to 15.3 percent in 1997. Book value per share was $21.07 as of
December 31, 1998.
Chicago Title provides title insurance, escrow and closing services as
well as property valuation, credit information, default management and flood
compliance products through a network of more than 340 offices and
approximately 4,100 agents nationwide. Chicago Title's subsidiaries --
including Chicago Title Insurance Co., Ticor Title Insurance Co. and Security
Union Title Insurance Co. -- issue approximately one in every five title
insurance policies in the United States. Subsidiaries furnishing real
estate-related products include Chicago Title Flood Services Inc., Chicago
Title Credit Services Inc., Chicago Title -- Market Intelligence Inc. and
Chicago Title Field Services Inc.
The statements made in this press release contain certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Act of 1934 that involve a number of
uncertainties and risks that could significantly affect current plans and
anticipated actions and Chicago Title's future financial condition and
results. In addition to the matters described in this press release, risk
factors listed from time to time in Chicago Title's reports and filings with
the Securities and Exchange Commission, including the Information Statement
included in its Registration Statement on Form 10 (File No. 1-13995) and
furnished to the stockholders of Chicago Title's former parent Alleghany
Corporation in connection with the spin-off of Chicago Title by Alleghany, may
affect the results achieved by Chicago Title.
For more information on Chicago Title Corporation via fax, free of charge,
dial 800-PRO-INFO and enter the ticker "CTZ"
Chicago Title Corporation and Subsidiaries
Financial Summary
(dollars in thousands, except per share data)
Three Months Ended Twelve Months Ended
12/31/98 12/31/97 12/31/98 12/31/97
REVENUE
Title, escrow, trust and
other revenue $532,576 $415,770 $1,861,463 $1,411,496
Investment income 17,721 15,046 63,837 52,266
Net realized investment
gains on sales to
Alleghany Corporation -- -- -- 2,214
Net realized investment
gains-other 672 879 1,409 1,470
Total revenue 550,969 431,695 1,926,709 1,467,446
EXPENSES
Salaries and other employee
benefits (A) 167,572 130,619 619,814 454,648
Commissions paid to agents 192,340 161,031 648,023 526,324
Provision for title losses 35,270 30,172 123,920 102,324
Interest expense 1,155 765 4,707 4,644
Other operating and
administrative
expenses (B) 112,487 85,643 388,540 295,903
Total expenses 508,824 408,230 1,785,004 1,383,843
Operating income from
continuing operations
before income taxes 42,145 23,465 141,705 83,603
Income taxes 15,826 8,005 53,536 27,894
Net income from continuing
operations 26,319 15,460 88,169 55,709
Net income from discontinued
operations (C) -- 3,091 9,013 12,162
Net income $26,319 $18,551 $97,182 $67,871
Basic and diluted earnings
per share
Continuing operations $1.20 $0.70 $4.03 $2.54
Discontinued operations (C) -- 0.15 0.41 0.56
Net income $1.20 $0.85 $4.44 $3.10
Impact of spin-off costs
Net income from continuing
operations $26,319 $15,460 $88,169 $55,709
Spin-off costs, net of tax -- -- 21,563 --
Net income from continuing
operations, excluding
spin-off costs $26,319 $15,460 $109,732 $55,709
Basic and diluted earnings
per share
Net income from continuing
operations $1.20 $0.70 $4.03 $2.54
Spin-off costs, net of tax -- -- 0.98 --
Net income from continuing
operations, excluding
spin-off costs $1.20 $0.70 $5.01 $2.54
Weighted average shares
outstanding (000's) 21,901 21,907 21,902 21,907
Chicago Title Corporation and Subsidiaries
Financial Summary, (Continued)
(dollars in thousands, except per share data)
Three Months Ended Twelve Months Ended
12/31/98 12/31/97 12/31/98 12/31/97
Other Data
Depreciation and amortization $12,362 $8,155 $40,907 $31,032
Claims paid, net of recoveries19,607 15,953 70,233 70,913
Selected Balance Sheet Information 12/31/98 12/31/97
Total assets $1,881,759 $1,702,207
Notes payable and other obligations 21,648 32,443
Reserve for title losses 618,831 564,334
Total stockholders' equity 461,592 403,547
Net assets of Alleghany Asset Management -- 18,097
Stockholder's equity per share 21.07 18.42
(A) For the twelve months ended December 31, 1998, salaries and other
employee benefits included $19.5 million in direct costs associated
with the spin-off for executive compensation and $3.7 million in
related managerial restructuring expenses. Both amounts are shown
on a pre-tax basis.
(B) For the twelve months ended December 31, 1998, other operating and
administrative expenses included $5.4 million on a pretax basis for
professional fees, printing costs, listing fees and other expenses
directly associated with the spin-off.
(C) Results of Alleghany Asset Management are shown as discontinued
operations for all periods presented.
SOURCE Chicago Title Corporation
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Related links:
http://www.ctt.com
CONTACT:
Analysts, Michael J. Powers, Vice President,
Financial Planning 312-223-4783, or Media, Barbara Harms, Vice
President, Corporate Communications, 312-223-2461, both of
Chicago Title Corporation
NOTE TO EDITORS: For further information on Chicago Title's
products and services, visit their web site at http://www.ctt.com
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