CHICAGO, Oct. 21 /PRNewswire/ -- Chicago Title Corporation (NYSE: CTZ), a
leading provider of title insurance and real estate-related services, today
announced record third quarter earnings. Net income from continuing
operations for the third quarter of 1998 was $29.9 million, or $1.37 per share
on both a basic and diluted basis. This represents a 71.1 percent increase
over net income from continuing operations of $17.5 million, or $0.80 per
share on both a basic and diluted basis, for the same period in 1997. For the
third quarter, total revenue was $497 million, a 33.2 percent increase over
the prior year period.
John Rau, president and chief executive officer, stated, "Favorable market
conditions prevailed throughout the prime summer home buying period and
provided us the opportunity to realize substantial revenue growth.
Residential refinance orders in the third quarter were double those of the
prior year and revenue from the commercial sector showed healthy gains as
well. New orders for residential refinancings have jumped to even higher
levels in the past few weeks as interest rates have fallen."
The recently completed period marks the first full quarter of operations
for Chicago Title following its June 1998 spin-off from Alleghany Corporation.
Exclusive of $21.6 million in after-tax non-recurring spin-off and related
management restructuring costs, net income from continuing operations amounted
to $83.4 million or $3.81 per basic and diluted share for the nine months
ended Sept. 30, 1998. This represents an increase of 107.2 percent over the
$40.2 million in net income from continuing operations and $1.84 per basic and
diluted share earned in the first nine months of 1997. Total revenue for the
first three quarters of 1998 rose 32.8 percent to $1.38 billion in 1998 from
$1.04 billion in 1997.
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.
As a result of the spin-off, Alleghany Asset Management made no contribution
to third quarter 1998 results. Net income from discontinued operations was
$3.8 million, or $0.17 per basic and diluted share, in the third quarter of
1997. For the nine months ended Sept. 30, net income from discontinued
operations amounted to $9.0 million in 1998 compared to $9.1 million in 1997.
This amounted to $0.41 per basic and diluted share in both periods.
Return on average equity amounted to 27.9 percent in the third quarter of
1998 compared to 18.4 percent in the same period last year. For the first
nine months of 1998, exclusive of discontinued operations and spin-off and
related management restructuring costs, return on average equity was
26.8 percent in 1998 compared to 14.5 percent in 1997. Chicago Title's
stockholders equity per share was $20.34 as of Sept. 30, 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 300 offices and
approximately 3,800 agents nationwide. Chicago Title's subsidiaries --
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 subsidiaries 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.
Chicago Title Corporation and Subsidiaries
Quarterly Financial Summary
(dollars in thousands, except per share data)
Unaudited
Three Months Ended Nine Months Ended
9/30/98 9/30/97 9/30/98 9/30/97
Revenue
Title, escrow, trust
and other revenue $481,326 $357,430 $1,328,887 $995,726
Investment income 15,563 13,236 46,116 37,220
Net realized investment gains 199 2,509 737 2,805
Total revenue 497,088 373,175 1,375,740 1,035,751
Expenses
Salaries and other
employee benefits (A) 157,618 116,830 452,242 324,029
Commissions paid to agents 170,450 127,188 455,683 365,293
Provision for title losses 31,904 25,866 88,650 72,152
Interest expense 1,147 1,659 3,552 3,879
Other operating and
administrative expenses (B) 89,670 75,244 276,053 210,260
Total expenses 450,789 346,787 1,276,180 975,613
Operating income from continuing operations before
income taxes 46,299 26,388 99,560 60,138
Income taxes 16,393 8,905 37,710 19,889
Net income from continuing
operations 29,906 17,483 61,850 40,249
Net income from discontinued
operations (C) 0.00 3,752 9,013 9,071
Net income $29,906 $21,235 $70,863 $49,320
Basic and diluted earnings per share
Continuing operations $1.37 $0.80 $2.83 $1.84
Discontinued operations (C) 0.00 0.17 0.41 0.41
Net income $1.37 $0.97 $3.24 $2.25
Impact of spin-off costs
Net income from continuing
operations $29,906 $17,483 $61,850 $40,249
Spin-off costs, net of tax 0.00 0.00 21,563 0.00
Net income from continuing
operations, excluding
spin-off costs $29,906 $17,483 $83,413 $40,249
Basic and diluted earnings per share
Net income from continuing
operations $1.37 $0.80 $2.83 $1.84
Spin-off costs, net of tax 0.00 0.00 0.98 0.00
Net income from continuing
operations, excluding
spin-off costs $1.37 $0.80 $3.81 $1.84
Weighted average shares
outstanding (000's) 21,895 21,907 21,903 21,907
(dollars in thousands, except per share data)
Selected Balance Sheet Information 9/30/98 6/30/98 12/31/97
Total assets $1,876,687 $1,896,206 $1,702,207
Notes payable and other
obligations (D) 41,876 42,016 32,443
Reserve for title losses 603,168 584,826 564,334
Total stockholders' equity 444,634 413,087 403,547
Net assets of Alleghany
Asset Management 0.00 0.00 18,097
Stockholder's equity per share 20.34 18.86 18.42
(A)For the nine months ended Sept. 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 pre-tax basis.
(B)For the nine months ended Sept. 30, 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.
(D)Prior to the spin-off, Chicago Title issued to Alleghany Corporation a
promissory note payable in the amount of $9.0 million on Dec. 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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Company News On-Call:
http://www.prnewswire.com/comp/117465.html or fax,
800-758-5804, ext. 117465
CONTACT:
Analysts, Michael J. Powers, Vice President -
Financial Planning, 312-223-4783, or Toshie Y. Davis, Vice
President - Investor Relations, 312-223-4788, or Media, Barbara
Harms, Vice President - Corporate Communications, 312-223-2461,
all of Chicago Title Corporation
NOTE TO EDITORS: For further information on Chicago Title's
products and services, visit our web site at http://www.ctt.com
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