Stewart Information Services Corporation

Please stand by. Your program is about to begin. Hello, and thank you for joining the Steward Information Services Q1 2020 earnings call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask a question during the question and answer session. Please note this call may be recorded. I will be standing by should you need any assistance. It is now my pleasure to turn today's conference over to Nat Otis, Head of Investor Relations. Please go ahead.

Thank you, Brie. Good morning. Thank you for joining us for Stewart's first quarter 2020 earnings conference call. We will be discussing results that were released yesterday after the close. Joining me today are CEO Fred Eppinger and CFO David Hisey. 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 risk 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 yesterday evening 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 Fred.

Thanks, Matt, and thank you, everybody, for joining the call today. We are very pleased with the progress we made in the first quarter, but given the unique situation we find ourselves, I'll let David go through the quarter details in a little bit, and I would like to take a step back and reflect on our company as we address these challenging times. First, I would like to acknowledge all those frontline people who are working tirelessly to keep us safe and healthy in communities across the country. Thank you. Our thoughts are also with those who may have lost a family member or friend or coworker or who are grappling with the challenges of COVID-19. Here at Stewart, I want to thank our employees for the tremendous effort they have undertaken over the last month in extremely uncertain times. Our team has worked tirelessly to keep our customers and coworkers safe while creatively finding ways to close transactions using a range of tools at their disposal and very uncertain and challenging conditions. In the second week of March, we transitioned to an operating approach that had roughly 70% of our employees working from home and with new social distancing and operating model approaches in place to make our customers and our employees be safer. 5,500 people working differently while meeting record demand. In my view, at the highest point of uncertainty, we came together and got the job done. Obviously, all of this requires a new operating approach where the team communicates daily to address the changes as things unfold. I am extremely proud of our team's teamwork and nimbleness as we address changing business conditions. In the end, we do not know how the situation will ultimately unfold, but our priority remains the health and safety of our employees and customers as we remain open and close transactions. From a business standpoint, we continue to close transactions on a daily basis as we work through the pipeline of business we built in the first quarter, as well as a new business that continues to come in, albeit at a reduced volume. We continue to see remote online notarization or RON levels grow, and currently 95% of our offices are now trained on and are using RON at some level. In addition, various temporary state executive orders have been issued allowing personal appearances to be replaced with video Verifications of signings known as remote ink notarizations or RINs. And in the end, only a handful of states are not currently allowing either RON or RIN transactions. Lastly, in the instance of an in-person closing, we are doing everything we can to make the transaction safe, from glass dividers to drive-through closings to tailgate closings. With respect to underwriting, given delays in the recording on closings, given county courthouse backlogs or outright courthouse and recording office closures, Stewart is providing policyholders with gap insurance for the delayed timeframe between the closing and recording and the overwhelming majority of transactions. The first quarter was a strong one for Stewart. We built on a strong market and a new sense of focus and alignment with our new strategic direction to create some real momentum to begin the year. However, the first quarter is almost irrelevant as we look at the remainder of 2020 and 2021. We need to understand that we are very much in uncharted waters, and while real estate is in a much stronger position entering this recession than it was during the last one, the stresses on our economy going forward may be far greater. While peak unemployment rates in the late 2000s were around 10%, in recent weeks we have seen multiple economists and data that indicate that we will be well in excess of that. In addition, tightening lending standards and capital constraints for lenders resulting from extended forbearance periods could compound the issue. I would also like to add that the prior recession did not include the variable of a global pandemic. with the virus in which there are no timetable yet for a vaccine. With that in mind, we expect the next two quarters to be very challenging for both our residential and commercial businesses. However, I believe we are well positioned operationally and financially to manage through this difficult time. Stewart is in a very strong financial shape with a low 14% debt-to-equity ratio and over $400 million in cash and liquid assets over regulatory requirements. and additional $50 million available on our revolving credit facility. Let me finish by noting three things. We will continue to put the safety of our employees, our customers and our communities first. We will be transparent in our assessment of the challenges we face today, tomorrow and next week. And lastly, when it is over, Stewart will be there, positioned to be a leader in this industry and support the continuity of our real estate. With that, thank you for your time. David will now go through this quarter's financials.