CHICAGO, July 21 /PRNewswire/ -- Chicago Title Corporation (NYSE: CTZ), a
leading provider of title insurance and real estate related services, today
reported operating results for the first time since its recent spin-off from
Alleghany Corporation (NYSE: Y). The Company announced that earnings for the
three months and six months ended June 30, 1998 were the highest in its 151
year history, after excluding costs associated with the spin-off and related
management restructuring.
John Rau, Chicago Title's President and Chief Executive Officer, stated,
"Our operating results reflect our ability to service all segments of the U.S.
real estate market. High levels of residential refinancing activity, home
sales and commercial transactions each played an important role in driving our
second quarter and first half performance."
Following are highlights of the Company's financial results:
(dollars in thousands, except per share data)
Basic and Diluted
Amount Earnings Per Share
6/30/98 6/30/97 6/30/98 6/30/97
Three months ended
Net income from
continuing operations $10,703 $16,838 $0.49 $0.77
Net income from
discontinued operations 4,034 3,123 0.18 0.14
Net income $14,737 $19,961 $0.67 $0.91
After-tax costs of
spin-off and related
management
restructuring $21,196 $-- $0.97 $--
Net income from
continuing operations,
exclusive of after-tax
costs of spin-off and
related management
restructuring $31,899 $16,838 $1.46 $0.77
Six months ended
Net income from
continuing operations $31,944 $22,766 $1.46 $1.04
Net income from
discontinued operations 9,013 5,319 0.41 0.24
Net income $40,957 $28,085 $1.87 $1.28
After-tax costs of
spin-off and related
management
restructuring $21,563 $-- $0.98 $--
Net income from
continuing operations,
exclusive of after-tax
costs of spin-off and
related management
restructuring $53,507 $22,766 $2.44 $1.04
For the second quarter of 1998, net income from continuing operations
(exclusive of the spin-off and related management restructuring costs)
increased 89% over the same period in 1997 to $31.9 million on a 35.6% rise in
total revenue. For the first half of 1998, net income from continuing
operations (exclusive of the spin-off and related management restructuring
charges) rose 135% over the prior year to $53.5 million on an increase in
total revenue of 32.6%. Net income from continuing operations in the second
quarter and first half of 1998 were impacted by after-tax spin-off and related
management restructuring costs in excess of $21 million.
Adjusted for the impact of the spin-off and related management
restructuring costs, second quarter earnings per share from continuing
operations (basic and diluted) amounted to $1.46 compared to $0.77 for the
prior year period. For the first half of 1998, basic and diluted earnings per
share, exclusive of spin-off and related management restructuring costs, were
$2.44 compared to $1.04 for the same period last year.
The spin-off was effected on June 17, 1998 through the distribution of
21,523,863 shares of Chicago Title Corporation stock to holders of Alleghany
stock (three shares of Chicago Title to each holder of a share of Alleghany).
In addition, 382,788 shares (of which 380,184 are subject to vesting and
transfer restrictions) were issued to directors and employees, resulting in a
total of 21,906,651 shares outstanding. Immediately following the spin-off,
options to purchase 855,940 shares at a price equal to the stock's fair market
value on the date of grant were issued to certain employees and directors.
Prior to the spin-off, Chicago Title performed trust and asset management
services through a subsidiary, Alleghany Asset Management, Inc. Ownership of
this subsidiary was transferred to Alleghany Corporation shortly preceding the
spin-off. Accordingly, the results of operation of this subsidiary are
reported in Chicago Title's statements of income as discontinued operations.
The transfer of Alleghany Asset Management served to reduce Chicago Title's
consolidated stockholders' equity by $22.7 million. As of June 30, 1998,
Chicago Title's stockholders' equity was $18.86 per share.
Chicago Title is pursuing a strategy to increase its market share, and
thereby its earnings, by capitalizing on its size, national network, and full
range of products. In the last quarter, the Company announced a joint
marketing arrangement with Trans Union and has continued to make selective
acquisitions. Rau commented, "So far this year we have closed six
acquisitions which we see as evidence that we can grow faster than the market
by acquiring firms that need our scale and scope to service national real
estate markets."
The Chicago Title Family of Companies is the source of real estate
services, providing 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 300 offices and
approximately 3,800 agents nationwide. The Chicago Title Family -- including
Chicago Title Insurance Co., Ticor Title Insurance Co. and Security Union
Title Insurance Co. -- issues approximately one in every five title insurance
policies in the United States. Other members of the family include Chicago
Title Flood Services Inc., Chicago Title Credit Services Inc., Chicago
Title-Market Intelligence Inc., Chicago Title Field Services Inc. and
Consolidated Reconveyance Co.
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.
Chicago Title Corporation and Subsidiaries
Quarterly Financial Summary
(Dollars in thousands, except per share data)
Unaudited
Three Months Ended Six Months Ended
6/30/98 6/30/97 6/30/98 6/30/97
REVENUES
Title, escrow, trust
and other revenue $461,757 $339,888 $847,561 $638,296
Investment income 15,748 12,222 30,553 23,984
Net realized
investment gains 167 141 538 296
Total revenues 477,672 352,251 878,652 662,576
EXPENSES
Salaries and other
employee benefits (A) 167,021 106,722 294,624 207,199
Commissions paid to agents 153,743 123,705 285,233 238,105
Provision for title losses 30,467 24,514 56,746 46,286
Interest expense 1,110 1,064 2,405 2,220
Other operating and
administrative expenses (B) 104,110 70,898 186,383 135,016
Total expenses 456,451 326,903 825,391 628,826
Operating income from
continuing operations
before income taxes 21,221 25,348 53,261 33,750
Income taxes 10,518 8,510 21,317 10,984
Net income from
continuing operations 10,703 16,838 31,944 22,766
Net income from
discontinued operations 4,034 3,123 9,013 5,319
Net income $14,737 $19,961 $40,957 $28,085
Basic and diluted earnings
per share
Continuing operations $0.49 $0.77 $1.46 $1.04
Discontinued operations 0.18 0.14 0.41 0.24
Net earnings per share $0.67 $0.91 $1.87 $1.28
Impact of spin-off costs
and related management
restructuring costs
Net income from
continuing operations $10,703 $16,838 $31,944 $22,766
Spin-off costs, net of tax 21,196 -- 21,563 --
Net income from continuing
operations, excluding
spin-off costs $31,899 $16,838 $53,507 $22,766
Basic and diluted earnings
per share
Net income from
continuing operations $0.49 $0.77 $1.46 $1.04
Spin-off costs, net of tax 0.97 -- 0.98 --
Net income from continuing
operations, excluding
spin-off costs $1.46 $0.77 $2.44 $1.04
Shares outstanding 21,906,651 21,906,651 21,906,651 21,906,651
Unaudited
Selected Balance Sheet Information 6/30/98 3/31/98 12/31/97
Total assets $1,896,206 $1,812,464 $1,702,207
Notes payable and other
obligations (C) 42,016 32,851 32,443
Reserve for title losses 584,826 569,829 564,334
Total stockholders' equity 413,088 429,807 403,547
Net assets of Alleghany
Asset Management, Inc. -- 19,825 18,097
Total stockholders' equity
per share 18.86 19.62 18.42
(A) For the three months and six months ended June 30, 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 pretax basis.
(B) For the three months and six months ended June 30, 1998, other
operating and administrative expenses included $4.8 million and
$5.4 million on a pretax basis, respectively, for professional fees,
printing costs, listing fees and other expenses directly associated
with the spin-off.
(C) Prior to the spin-off, Chicago Title issued to Alleghany Corporation
a promissory note payable in the amount of $9.0 million on December
31, 1998. This dividend represents a distribution by Chicago Title
of a portion of its earnings for the period during 1998 that it was
held as a subsidiary of Alleghany.
SOURCE Chicago Title Corporation
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CONTACT:
Peter G. Leemputte, EVP and Chief
Administrative and Financial Officer, 312-223-4447; or Michael J.
Powers, VP of Financial Planning, 312-223-4783, both of Chicago
Title Corporation
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