Stewart Information Services Corp (STC) 2016 Q1 法說會逐字稿

Good day, and welcome to the Stewart Information Services first-quarter 2016 earnings conference call and webcast. Today's call is being recorded.

(Operator Instructions)

I would now like to turn the call over to Nat Otis, Director of Investor Relations. Please go ahead.

Thank you. Good morning. Thank you for joining us for our first-quarter 2016 earnings conference call. We will be discussing results that were released earlier this morning. Joining me today, are CEO Matt Morris; and CFO Allen Berryman. To listen online, please go to the Stewart.com website to access the link for this conference call.

I will remind participants that this conference call may contain forward-looking statements that involve a number of risks and uncertainties. Because such statements are based on an expectation of future financial operating results and are not statements of fact, actual results may differ materially from those projected. The risks and uncertainties with forward-looking statements are subject to include, but are not limited to, the risks and other factors detailed in our press release published this morning and in the statement regarding forward-looking information, risk factors, and other sections of the Company's Form 10-K and other filings with the SEC.

Let me now turn the call over to Matt.

Thank you, Nat, and good morning. We appreciate everyone joining us today. This morning, we reported first-quarter 2016 earnings with our title segment delivering another quarter of solid results, with our corporate and other segment remaining challenged by the delinquent loan-servicing operations. As of the end of the first quarter, and on schedule, we have completed the exit of those operations, allowing greater focus on growth and efficiencies in our remaining business lines, specifically our title business. At the consolidated level, our first-quarter 2016 revenues fell 2%, with total title revenues increasing 2% and mortgage services-related revenue declining 46%, principally due to the delinquent loan-servicing revenue runoff.

Overall, operating revenues declined 3%. We did report a pretax loss of $15.7 million in the first quarter, while last year's first quarter reported a pretax loss of $18.9 million. Relative to last year's first quarter, we did benefit from our cost management program completed in third-quarter 2015, with total employee costs declining at a much higher rate than the decline in operating revenues. Both quarters include non-operating charges, which Allen will describe more thoroughly in a moment.

First, however, let me describe the change to our segment reporting, a change which more closely aligns our public reporting with changes in our underlying lines of business and which better provide comparability with industry participants. Effective this first-quarter 2016, we are revising the presentation of our operating segments to reflect two segments: title, and corporate and other. We previously had three segments separately reporting our various mortgage services-related operations, with that segment including the results of our centralized title services. During the first quarter, we've restructured and streamlined the Management Team over the mortgage services business lines and, as a result, we're able to adopt a more appropriate segment structure. Our centralized title services business is now included in the title segment, thereby aligning all title-related revenues into a single segment.

The remaining business lines within the former mortgage services segment -- principally valuation services, government services, and loan file review and audit -- are now included in the corporate and other segment as they are not material for separate disclosure. Also, costs of our centralized internal services departments, previously only partially allocated out of the corporate segment, are now fully charged to the respective operating businesses. Corporate operations now consists principally of the parent holding company and certain other enterprise-wide overhead costs.

Our title segment results for the quarter continued to show year-over-year improvement in pretax margin, generating positive operating earnings in what is traditionally the weakest revenue quarter of the year, in addition to us facing headwinds stemming from declining refinance volume and continued industry-wide challenges related to the new integrated disclosure requirements.

Our residential revenues, which are by far the majority of our direct revenue, were up about 1%. Domestic commercial revenues continued to show year-over-year growth, and our independent agency operations reported solid increases in both gross revenues and remittance rates. International revenues continue to face the challenge of a strong US dollar, but were up on a local currency basis. However, our centralized title operations were strongly affected by a 28% decline in revenues.

Revenues generated by our corporate and other segment declined 40% relative to last year's first quarter, due to the runoff of revenues for the delinquent loan-servicing business. The other lines of business in this segment generated modest revenue growth, and we continue to generate new sales opportunities for these businesses, while focusing on enhancing production systems to lower operational costs. Our goal here remains to be a return to profitability in the second quarter, with margin growth on track for further improvement in the back half of the year.

Looking forward, we are mindful of falling refinance volume and we are investing in operational improvements that will lower unit production costs and enhance contribution margins, specifically in our centralized title operations. We are also investing in revenue growth, including high-quality sales associates as well as the supporting infrastructure, and we are encouraged by the results so far in our targeted markets.

As we have previously stated, a changing regulatory environment and its impact on customer requirements may also enable highly accretive acquisitions in our core title business. Coupled with our successful cost management program, further centralization, off-shoring and technology rationalization over the next few years will help us move toward our ultimate goal of a 10% pretax margin upon a return to a more normalized origination market.

With that, I'll now turn it over to Allen for more detail on our financial results.

Thank you, Matt, and good morning, everyone. Total operating revenues decreased 3% in the first quarter of 2016 compared to the year-ago quarter, with title revenues increasing 2% and mortgage services revenue decreasing, as expected, by 46%, due to the wind down of the default servicing business. We recorded several non-operating charges during the quarter, and I want to summarize them here to provide some context to the quarter's overall results.

We incurred approximately $2.8 million of costs in the corporate and other segment relating to the exit of the delinquent loan-servicing operations, consisting principally of early lease-termination charges, severance, and accelerated amortization expense. We've recognized approximately $6.4 million of charges in total related to the exit of these operations, in line with our previously disclosed estimate of $5 million to $7 million.

We also incurred, in the corporate and other segment, $2.2 million of expense related to the pending Class B common stock conversion and the previously disclosed life insurance settlement. We realized a net $1.6 million gain, due to the changes in estimated contingent consideration associated with certain prior-year acquisitions, with a realized gain of $3.6 million recorded in the corporate and other segment, and a realized loss of $2 million recorded in the title segment.

First-quarter 2015 results included approximately $8.5 million of aggregate cost -- recorded primarily in the corporate and other segment, related to the cost management program and shareholder settlement -- and $11.8 million of reserved strengthening charges in the title segment related to large losses on prior-year title policies.

So, with that background, let me turn to our business unit results. Our title segment revenues, which now include revenues from our centralized title services, were $413.2 million for first-quarter 2016, an increase of 2%. In first-quarter 2016, the title segment generated a pretax loss of $1 million, or a negative 0.2% margin, including the previously described $2 million realized loss. First-quarter 2015 reported a pretax loss of $11.4 million, or a negative 2.8% margin. Excluding the impact of the aforementioned reserve strengthening charge, first-quarter 2015 title segment results were essentially breakeven.

With respect to our direct title operations, revenues decreased 2% from first-quarter 2015. Centralized title revenues fell 28% compared to the prior-year quarter. Revenues from purchase transactions increased approximately 1% compared to the prior-year quarter. US-only commercial revenues increased 5%, to $38.7 million, compared to first-quarter 2015. Total worldwide commercial revenues for the quarter were $42.7 million, an increase of 4%. International commercial revenues, though unfavorably impacted by a strengthening US dollar, were comparable to first quarter of 2015.

Total title orders opened in the first quarter declined 21% from the prior-year quarter, with opened refinance orders decreasing 39% and opened commercial orders decreasing 22%. Overall title orders closed declined 13% from first-quarter 2016, with the drop primarily due to declines of 24% in both refinancing and commercial orders closed. Purchase orders closed were essentially unchanged from the prior year. Residential fee per file in the quarter was $1,918, up from $1,771 in the first quarter of 2015, due principally to the shift in mix to more purchase transactions.

First quarter of 2016 total international revenues increased on a local currency basis but were unfavorably impacted by a stronger US dollar. On a US dollar basis, revenues were $18.8 million, comparable to the $18.7 million generated first-quarter 2015. Our in-tenant agency operations generated strong results, with first-quarter 2016 gross revenues increasing to $224.6 million, or 5%. The overall average remittance rate improved 18.2% in the first quarter of 2016, from 17.5% in the prior-year quarter, resulting in net independent agency revenues increasing 9%. We anticipate our ongoing remittance rates to be in the mid-18% range.

With respect to title losses, we incurred $23.1 million in the first quarter of 2016, or 5.6% of title revenues, compared to $33.1 million, or 8.2% of title revenues, in the prior-year quarter. The decrease in title loss expense was primarily the result of an $11.8 million title policy loss reserve strengthening charge relating to several large prior-year policies recorded in first-quarter 2015. We expect to maintain an accrual rate in the 5% to 5.5% range on a full-year basis going forward. Our total balance sheet policy loss reserves were $466.4 million at quarter end and remained above the actuarial midpoint of total estimated policy loss reserves.

Looking at our corporate and other segment, revenues decreased 40%, to $25.1 million, compared to the year-ago quarter. First-quarter 2016 revenues include net realized gains of $2.5 million, while the comparable number for first-quarter 2015 was $1 million. Relative to first-quarter 2015, the revenue decline is primarily attributable to expected declines within our delinquent loan-servicing operations.

The segment reported a pretax loss of $14.7 million in the first-quarter 2016, as compared to a pretax loss of $7.5 million in the first-quarter 2015. Included in the pretax loss for first-quarter 2016, is approximately $5.6 million of expense attributable to parent company corporate overhead as well as approximately $5 million in non-operating charges described earlier. First-quarter 2016 results also included litigation-related expense of approximately $3.6 million, as well as approximately $800,000 of operating losses associated with the delinquent loan-servicing operations.

Going forward, the revenues related to valuation services will be predominantly aligned with the mortgage origination cycle. This business, along with loan file review and auditing government services, generated modest revenue growth in the quarter and generated positive EBITDA for the quarter on a run-rate basis. As Matt mentioned earlier, the restructuring of our Management Team will focus on improving business fundamentals and new sales opportunities for these businesses, while enhancing production systems to lower operational costs. Our goal continues to be for each of these business lines to return to profitability in the second quarter, with margin growth in the back half of the year.

With respect to operating expenses as a result of our cost management program as well as reduction to net workforce due to lower revenues, employee costs for the first quarter of 2016, decreased 8% from first-quarter 2015, while average employee counts decreased approximately 7%. Excluding the impact of severance in both periods, employee costs fell 7% compared to the 3% decline in operating revenues. As a percentage of total operating revenues, employee costs were 34.7%, an improvement of 190 basis points compared to the prior-year quarter.

Other operating expenses for the first quarter of 2016 decreased 1%. During the quarter, we incurred other operating expenses of $2.2 million, consisting of professional fees associated with the pending conversion of Class B common stock, as well as the previously recorded life insurance settlement. First-quarter 2016 other operating expenses, the majority of which are fixed in nature and now include outsourcing fees incurred in lieu of employee expense, were also unfavorably influenced by litigation-related expense of $3.6 million.

Other operating expenses for first-quarter 2015 include $7.4 million of non-operating charges related to the cost management program and shareholder settlement. Excluding such charges in both periods, as well as the first-quarter litigation expense, other operating expenses as a percentage of operating revenues were 18.9% and 18.3% for first-quarters 2016 and 2015, respectively, with the first-quarter 2016 ratio being unfavorably influenced by the new outsourcing cost, as well as lower operating revenues. Depreciation and amortization expense increased $8.3 million in first-quarter 2016, from $7.1 million in first-quarter 2015, mainly due to $1.1 billion of accelerated depreciation charges related to exiting the delinquent loan-servicing operations.

Lastly, a couple of comments on other matters. Cash used by operations was $31.8 million in first-quarter 2016, compared to $26.9 million for the same period in 2015. The increase in cash used by operations was due to an increase in payment to claims and other liabilities, partially offset by increased collections on accounts receivable and the lower net loss for the first quarter. As of quarter end, cash to parent holding company is $5.1 million.

With regard to continued cost management, our focus is on those actions that will lower unit costs to production that's improving margins. And, as we have said, our goal is to achieve a 10% pretax margin at a more normalized origination market, whenever that may be. Our plans to improve margin include further outsourcing, additional automation of manual processes, and further consolidation of our various systems and production operations. We are currently investing in the technology necessary to accomplish these goals. As this multi-year effort is deployed, the Company expects to begin achieving a lower cost per file starting in 2017, with further improvement through 2019. We expect to provide additional information as to the percent savings achieved on a cost-per-file basis in the first quarter of 2017.

And, with that, I will turn it back over to the operator to take questions.

(Operator instructions)

Bose George, KBW.

Hello, good morning. This is actually Charles Tyson on for Bose.

First question is on the commercial results. It looks like the open and closed orders were down a fair amount year over year, but revenues were fairly flat. I was just wondering if you can give some color there and also what you're seeing in the commercial market?

Yes, great question.

Q1 was a tough comp hurdle to overcome. And we are seeing a little weakness in order trends to start the year. But we remain pretty comfortable with our expectations for growth in the commercial business for 2016. And I'd also point out that our commercial revenues were up even though orders were down materially.

So looking forward, beyond 2017, we remain positive on the commercial business. Certainly, refinancings play a role in this view, although we understand they'll begin to slowdown at some point. We'll also move to a more normalized mix of business then as well. We continue to see growth in commercial moving forward.

Okay. Was the higher revenue per order in this quarter, was that just due to larger transactions closing?

You're talking about the higher fee per file?

Yes

I didn't think it was higher.

I was just wondering if orders are down year over year but revenue is fairly flat.

Our commercial team did note that pricing held up pretty well in the first quarter. Going out of the fourth quarter, it held up really well in first quarter.

Yes. Closings were still strong, so it was more the order count. Different quarter matching up your closings to your order count.

Okay. And then, do you have an estimate on the margins of the commercial revenue versus just margins overall in the title segment?

We've said before they are about double what we would expect on a residential transaction. Obviously, we can have a given deal being much, much higher or given deal being in that sort of twice the margin range. So a lot of it is a function of what level of liability you're taking on because the incremental pricing on the higher liability deals just drives higher incremental margins.

Okay. And then last one. I think, by my calculations at least, the static liquidity ratio looks like at the end of the year it was over your 100% target.

It was.

Can you talk about how that affects your go-to-market offering on the commercial side, as well as how that makes you think about your capital priorities going forward?

It was barely over, right? It was 103%, so it wasn't a big leap over 100%. It does help on the marketing front in the sense of that's just one less thing that can be used against us.

Going forward, I don't see us thinking that it has to be materially higher than that 103%, although we have to be mindful of what our competitors are doing so that we don't end up in a disadvantaged position again.

Okay. Thank you.

Geoffrey Dunn, Dowling & Partners.

Thank you. Good morning.

I wanted to revisit the commercial. The fee for file has been climbing pretty steadily on a year-over-year basis for the last few quarters. Is it just that you are taking on higher liability deals, or is it a deal size, or is it a combination of both? Because that seems to be the real driver here of the revenue gains that you have been posting in that segment.

Yes, I would say it's a combination of both. There's probably some geography in there as well. I think you are accurate.

I don't think one has driven it more than the other. Let's just put it that way. I think, as you said, it's probably the higher liability amounts that we are able to take on, which drives the higher pricing.

And I will say, Geoff, just on that, these are not one-time transactions. So we're not seeing that this is being driven by huge commercial transactions. But overall, transactions are up. It's not one-timers that are driving that as much as the overall commercial market.

Okay. And then when you look at the open and closed on the commercial, there's been a trend over the last year of a decline, although it bounces around. So I know every title company has been talking about that we're approaching maybe a slowdown to more reasonable growth levels. But as we think through, not this year and next year, but into 2018-2019, when you start getting the 10-year bullet resets off the 2008 and 2009 books, how do we think about the impact of a drop in the refi market impacting the overall growth profile commercial? What percent of commercial right now is refi? And how do you think about how that impacts your growth in 2018 and 2019?

We think it is about 25% refi at the moment. I haven't seen anything that's more specific than that; but obviously, you're right. We have all seen, as an industry, sort of a deceleration of growth in the commercial business. But at the same time, we think it's pretty strong relative to historical standards and will be for the next couple of years.

And in terms of 2018-2019 though, how do we think about the refi volume dropping there?

You know, I don't know that I have a view on that at the moment. I think we kind of expect an ongoing certain level of refis in the commercial world, not as high as we are seeing today. But there is always some level of refinancing activity in the commercial world.

Okay.

Remember that you should get better pricing on resale transactions in the commercial world, just as you do in the residential world. So even if the refinancing transactions fall, your fee for file should be going up.

Okay. Great.

Obviously, you've reshuffled around corporate and mortgage services. Could you revisit how we think about run rate revenue from here? You have the potential deceleration if it is linked to volume. But the prior kind of margin expectations, I'm not sure if they still hold because you have other corporate expense in mix.

So can you just give us a little bit of update on how to think about the revenue and margin normalized run rate looking forward?

Let me address it backwards. Let me start from the back. In the Corporate and Other segment, the corporate costs that are included in that are really now just sort of the public company costs. And those probably are in the $20 million to $25 million a year range. So on an ongoing basis on the revenue side, it's really just our loan file review and audit, government services, and the valuation services business.

So I think the valuation services kind of ebbs and flows essentially as the origination cycle does. So on that basis, I think what you'll see in Q2 is probably a much more normalized run rate on a revenue perspective. From a margin perspective, as we've said, we think that that business needs to improve with margins.

We saw an improvement in Q1 in kind of the ongoing businesses that we're operating going forward. And we're just going to drive to a higher margin in those businesses from second quarter onward.

All right. So maybe think about it upper-single-digit margin on the revenue line, plus $20 million to $25 million expense drag for corporate?

I would say that is sort of our near-term goal.

Okay. All right. Thank you.

Ryan Byrnes, Janney

Thanks. Good morning, everybody.

Again, just sticking with the resegmenting piece. So the title segment under the previous accounting had, I guess, a 12.5% margin. Now under the new resegmenting it has a 4% margin. And I think the only thing that really changed in the title segment was adding the centralized refi. So is it fair to say that the centralized refi is running at a materially lower margin than the --?

There were two changes. The first change to the title segment was adding the centralized refi. But the second change was the allocation of the centralized internal services departments to that title segment.

Got you.

So both changes, obviously, had an impact on the margin of the title segment.

Okay. And then secondly, again in terms of where we think we can get this to in a normal market -- or, I guess, where should we expect these margins to go?

I think the answer to that question is what we've said repeatedly -- is that we're driving towards a consolidated margin of 10% in a normalized market. That's our objective.

So 10% for the title segment or actually consolidated? I just want to make sure I had that (multiple speakers). Consolidated.

Right.

Okay. Great. Sorry. That's all I had. Thanks.

John Campbell, Stephens.

Hello. Good morning. Congrats on the successful wind down of the default related business. I know that's been a kind of long and arduous path. But just looking for two things related to that shift.

Allen, I think somebody just asked this question. But can you help us out a little bit on the margin of the remaining origination-related businesses under that former Mortgage Services segment? I think was maybe high-single-digits, maybe low-double-digits-type pretax (audio break) margins. Does that still hold?

Yes.

Okay, and I don't know if you have this --

That includes their share of the corporate allocation.

Okay. That makes sense.

I don't know if you have this on hand, but what would have the total Mortgage Services margin been under the former reporting structure in the quarter?

You know, I don't have that.

That's fine.

And then just one more back on the commercial growth. I mean 4% growth off that 20% plus type comp last year, that was a pretty good result in our view. Could you provide a little bit of sense for the strength or weakness by geography? Just mainly looking or just curious about Texas or New York or maybe just Manhattan?

I don't know that we have that right now. There are some anecdotal, but we don't have great evidence on the geographic mix of orders coming in any differently than it has in the past.

Okay. I guess there's just some concern that Manhattan, in particular, might be slowing down. And then you've got some potential oil energy pressure in Texas. So maybe just anecdotally, if you can just maybe start with Texas. What are you seeing in commercial and residential side as well?

As to the residential side, there has been a slowing of transactions in the Houston area. But the other metro areas of Texas being Austin, San Antonio, Dallas, have held up pretty well on the residential side. And even within Houston, you have a different outcome depending on where you are.

The northern side of the city seems to have had the more pronounced slowdown, whereas the southern half of the city, down along the coastline where there's a lot of expansion of petrochemical complexes, are seeing pretty good residential activity. On the commercial front, clearly, there is a slowdown in the Houston area. But I don't have any specific numbers on that.

And, John, not to be too rosy with the picture, but for awhile we really haven't had disparity impression of where commercial prices are heading; and now you have that. Again, anecdotally, you are starting to see some conversations take place because you do have people with different impressions about how commercial is going to grow. And I think that's starting to drive at least some conversations on commercial transactions, just giving differing opinions out there, which really we haven't seen in the market for a few years.

Got it. Just last one here on TRID. I saw in the press release you think that is going to dissipate. I guess some of the TRID-related costs will roll off a little bit for the back half of the year. But can you just talk conceptually about what type of costs are coming off? If you guys can isolate what was maybe TRID-related in the quarter and then any kind of commentary on the normalization of the closing cycle?

Yes, it's hard to calculate because a lot of the costs remaining are labor. The industry is still experiencing some challenges on the technology and the integrations overall. But what that is yielding for us, most of our technology changes are all complete, continue to update those. The training is out there. Our hard costs are done. It's basically the extension of the closing time.

We do see it continuing to fall. I don't expect to have that be a remaining impact. I think it would be nominal in Q2 and beyond. But it has been a factor in slowing down closing times and also expanding your labor costs and getting those closings compete.

Okay. Great. Thanks.

Patrick Kealey, FBR.

Good morning. Thanks for taking my questions.

So first off, I think, Matt, you talked about in your prepared remarks that the regulatory backdrop may actually create some opportunities for consolidation within the industry. So maybe if you could give us your thoughts on you, as an acquirer, what you would be looking for in a potential deal. And then also, when you think of timeline, how long should we think of that before we could start to see deals coming to market?

Obviously, we've done pretty significant transformation of our title operations. And there are certain segments of geographies that could have some market share gains that would be highly accretive overall. We haven't published our target externally for obvious reasons. But we do think these could be highly accretive, and we think these could start taking place in the next 12 months to 18 months going forward.

So we think we're in a solid position, with a solid platform, against some of your title business we talked about with increased regulation, increased cost. Some smaller players make that more challenging. And so leveraging our platform allows us to be much more accretive in any potential acquisition. We hope to start seeing some of that in the next 12 months.

Okay, great.

And also, just focusing on agency here. You talked about, again, your improvement in remittance rates. I know in the past you had talked about a push for better remitting states in your mix. When I think about that improvement this quarter, was that the primary driver? Or was there anything else we should be thinking about that helped drive that improvement for Q1?

Yes, I think that's the primary driver. You really have to think -- when I think if the remittance rate, I really don't look at a specific quarter as an indicator of what the trend may be over the longer term. I kind of always look at it on a trailing 12-month basis. So if I look at the remittance rate based on revenues and agent retention on a trailing 12 basis, and then compare that to the prior trailing 12, you get a better picture of the trends.

So in this case, when you do that comparison, you do see nice growth in certain states -- Pennsylvania, Florida -- that have historically had the higher remittance rates. So that just blends the average upward. And as we've said, our agency team has been focused on growing revenues in those states that have the higher remittance rate. And in Q1, I think they had some nice traction on that.

Okay, great. Think for the time.

(Operator instructions)

Kevin Kaczmarek, Zelman & Associates.

Hello. I was just wondering, I guess you maybe answered this indirectly. But on the commercial side, do you have a sense of the dollar amount of open orders and how that's trended year over year versus -- I've seen your accounting, obviously. But do you have a sense of the dollar backlog?

If I just say that based on the trends in average revenue per transaction, I'd say that the dollars are probably higher than they would be. I don't have specific data on that.

Okay. In terms of attempting to gain share within commercial, are there any particular customer types you've been targeting? And can you give us a sense of who you've been gaining traction with -- any type of buyer -- whether it's private equity or some other type of buyer? Any particular drivers there?

Yes, we have different teams targeting different segments, obviously. We had some success on the renewable side. Again, with the stronger ratings, with the stronger liquidity ratio, I think we'll start to see more improvement in some of the life insurance companies that's been more a constraint for.

But overall, if I'm looking right now, I can't say one segment is necessarily putting us over the top going forward. But if I look at the two areas, which I've seen some growth just anecdotally, that would be them.

Okay. And in terms of M&A, when you talk about the accretive acquisitions, are we talking mostly local title agents? Or could you consider smaller title insurers or maybe other businesses, such as appraisal?

We'd be focusing more on the title business. That's where we see we can be most accretive in potential acquisitions. Obviously, the title agents probably are the most apt to have had better future on the platforms. So that's probably the most feasible model. But I think we'd be open to looking at various options.

Okay. And I guess one last one.

On the purchase order trend, it seems like, especially on the open side, they've been flattish to negative from year end, and it seems the title industry overall. But application surveys indicate that they're growing at high-single, double-digit percent growth year over year. And I know the difference is there is a cash sale component within your purchase orders. But it seems like a little too large of a split to be explained by that.

Do you know why you would be trending lower in terms of open purchase orders versus some of the other metrics that people are looking at in the market?

No, not really.

Do you know the percent of cash sales versus mortgage purchases roughly or how that's trending?

I think the last data I saw was that cash sales were still probably in that 20% to 25% range.

Okay. All right.

But a little higher than you would expect by historical standards.

Okay. Thanks a lot. That's all I had.

And it appears we have no further questions at this time. I'll return the floor to Nat Otis for closing remarks.

Thank you, Keith.

That concludes this quarter's conference call. Thank you for joining us today and your interest in Stewart. Our next earnings call will be on July 21, 2016. Goodbye.

Ladies and gentlemen, this does conclude today's program. Thanks for your participation. You may now disconnect and have a great day.