Stewart Pays $1 million in Settlement of $46 Million Claim of the California Department of Insurance
HOUSTON (Aug. 28, 2007) – Stewart Title Guaranty Co. (Stewart) announces that it has settled a claim of $46,700,525 for $1,000,400 in an administrative proceeding filed by the California Department of Insurance (CDOI) concerning Stewart's purchase of reinsurance from alleged captive reinsurance companies.
In June 2007, the CDOI amended its pleadings to dismiss its claim that Stewart did business with a non-admitted insurer and dismiss its claim that Stewart violated the federal Real Estate Settlement Procedures Act (RESPA). Stewart maintained in the action and continues to maintain that its reinsurance transactions are legal under both state and federal law and caused no consumer harm. In fact, CDOI did not allege any consumer harm in the action.
Stewart believes it has very strong legal and factual defenses to the CDOI’s allegations and has conducted its business appropriately. However, as Stewart has not been reinsuring California transactions with alleged captive reinsurance companies for some time, it is in Stewart’s interest to terminate the lengthy and costly scheduled hearing over matters not being practiced or pursued.
Contrary to the news release issued by the CDOI, Stewart did not pay 50 percent of the title insurance premium for reinsurance. Stewart was prepared to demonstrate that its reinsurance payments were at market rates. Further Stewart did not camouflage its reinsurance agreements; rather it disclosed its agreements in its annual filings with the CDOI. By entering into the Stipulation and Waiver with the CDOI, Stewart did not admit any wrongdoing, and has entered into the Stipulation and Waiver as a compromise to avoid the cost and time of further litigation.
Stewart Title Guaranty Co. is a wholly owned subsidiary of Stewart Information Services Corp. (NYSE-STC), a customer-oriented, technology-driven, strategically competitive, real estate information and transaction management company. Stewart provides title insurance and related information services required for settlement by the real estate and mortgage industries through more than 9,500 policy-issuing offices and agencies in the United States and international markets. Stewart also provides post-closing lender services, automated county clerk land records, property ownership mapping, geographic information systems, property information reports, flood certificates, document preparation, background checks and expertise in tax-deferred exchanges. More information can be found at http://www.stewart.com/.
Statements in this news release that are not strictly historical may be deemed “forward-looking” statements which should be considered as subject to the many uncertainties that exist in the Company’s operations and environment. These uncertainties, which include economic conditions, market demand and pricing, competitive and cost factors, and the like, are incorporated by reference in the Stewart Information Services Corporation Form 10-K filed with the Securities and Exchange Commission. Such factors could cause actual results to differ materially from those in the forward-looking statements.