STEWART INFORMATION SERVICES CORP - 10-Q Quarterly Report

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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

(Mark One)

[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission file number 1-12688

STEWART INFORMATION SERVICES CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)

Delaware 74-1677330
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

1980 Post Oak Blvd., Houston TX 77056
------------------------------------------------------------
(Address of principal executive offices, including zip code)

(713) 625-8100
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(Registrant's telephone number, including area code)

- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
--- ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of October 31, 2002.

Common 16,676,882
Class B Common 1,050,012

FORM 10-Q
QUARTERLY REPORT
Quarter Ended September 30, 2002

TABLE OF CONTENTS
-----------------

Item No. Page
- -------- ----

Part I - FINANCIAL INFORMATION

1. Financial Statements 1

2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6

3. Quantitative and Qualitative Disclosures About
Market Risk 9

4. Controls and Procedures 10

Part II - OTHER INFORMATION

1. Legal Proceedings 11

5. Other Information 11

6. Exhibits and Reports on Form 8-K 12

Signature 13

Certifications Pursuant to Section 302(a) of the
Sarbanes-Oxley Act of 2002 14

As used in this report, "we", "us", "our" and "Stewart" mean Stewart Information
Services Corporation and our subsidiaries unless the context indicates
otherwise.

STEWART INFORMATION SERVICES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS
FOR THE QUARTERS AND NINE MONTHS ENDED
SEPTEMBER 30, 2002 and 2001

See notes to condensed consolidated financial statements.

-1-

STEWART INFORMATION SERVICES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2002 AND DECEMBER 31, 2001

See notes to condensed consolidated financial statements.

-2-

STEWART INFORMATION SERVICES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

2002 2001
--------- ---------
($000 Omitted)

Cash provided by operating activities (Note) 92,418 80,835

Investing activities:
Purchases of property and equipment and title plants - net (17,835) (12,906)
Proceeds from investments matured and sold 83,519 73,195
Purchases of investments (112,684) (135,283)
Increases in notes receivable (3,013) (2,138)
Collections on notes receivable 2,021 9,616
Cash paid for the acquisition of subsidiaries - net (2,185) (7,057)
--------- ---------
Cash used by investing activities (50,177) (74,573)

Financing activities:
Distribution to minority interests (5,526) (4,106)
Proceeds from issuance of stock 122 44,727
Proceeds of notes payable 4,644 8,582
Payments on notes payable (3,717) (31,431)
--------- ---------
Cash (used) provided by financing activities (4,477) 17,772
--------- ---------

Increase in cash and cash equivalents 37,764 24,034
========= =========

NOTE: Reconciliation of net earnings to the above amounts -

Net earnings 50,652 31,514
Add (deduct):
Depreciation and amortization 15,824 16,577
Provision for title losses in excess of payments 18,640 8,033
Provision for uncollectible amounts - net 1,097 (82)
(Increase) decrease in accounts receivable - net (2,164) 5,477
Increase in accounts payable and accrued
liabilities - net 5,599 13,445
Minority interest expense 6,509 5,188
Equity in net earnings of investees (2,339) (1,619)
Dividends from equity investees 1,837 1,279
Realized investment losses (gains) - net 834 (770)
Stock bonuses 634 416
(Increase) decrease in other assets (4,396) 1,079
Other - net (309) 298
--------- ---------

Cash provided by operating activities 92,418 80,835
========= =========
Supplemental information:
Assets acquired (purchase method)
Goodwill 3,435 10,133
Title plants 537 4,906
Other 61 3,021
Liabilities assumed (4,068) (2,473)
Common Stock acquired (issued) 2,220 (3,220)
Debt issued to sellers - (5,310)
--------- ---------
Cash paid for the acquisition of subsidiaries - net 2,185 7,057
========= =========

See notes to condensed consolidated financial statements.

-3-

STEWART INFORMATION SERVICES CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Interim Financial Statements

The financial information contained in this report for the three and nine month
periods ended September 30, 2002 and 2001, and as of September 30, 2002, is
unaudited. In the opinion of our management, all adjustments necessary for a
fair presentation of this information for all unaudited periods, consisting only
of normal recurring accruals, have been made. The results of operations for the
interim periods are not necessarily indicative of results for a full year. This
report should be read in conjunction with the Company's Annual Report on Form
10-K for the year ended December 31, 2001.

Certain amounts in the 2001 condensed consolidated financial statements have
been reclassified for comparative purposes. Net earnings, as previously
reported, were not affected.

Note 2: Segment Information

Our two reportable segments are title and real estate information. Selected
financial information related to these segments follows:

Note 3: Earnings Per Share

Our basic earnings per share figures were calculated by dividing net earnings by
the weighted average number of shares of Common Stock and Class B Common Stock
outstanding during the reporting period. The only potentially dilutive effect on
earnings per share relates to our stock option plans.

In calculating the effect of the options and determining a figure for diluted
earnings per share, the average number of shares used in calculating basic
earnings per share was increased by 92,000 and 151,000 for the three month
periods ended September 30, 2002 and 2001, respectively and 96,000 and 149,000
for the nine months ended September 30, 2002 and 2001, respectively.

-4-

Note 4: Equity in Investees

The amount of earnings from equity investments was $0.9 million and $0.5 million
for the three month periods ended September 30, 2002 and 2001, respectively and
$2.3 million and $1.6 million for the nine month periods ended September 30,
2002 and 2001, respectively. These amounts are included in "title insurance
revenues - direct operations" in the condensed consolidated statements of
earnings and comprehensive earnings.

Note 5: Goodwill and Intangible Assets - Adoption of SFAS No. 142

We adopted SFAS No. 142 "Goodwill and Other Intangible Assets" on January 1,
2002 and stopped amortizing goodwill prospectively. Selected financial
information reflects the pro forma earnings assuming the provisions of SFAS No.
142 had been applied prior to January 1, 2002:

-5-

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

GENERAL

Our primary business is title insurance. We issue policies on homes and
other real property located in all 50 states, the District of Columbia and
several foreign countries through more than 6,200 issuing locations. We also
sell electronically delivered real estate services and information, as well as
mapping products and geographic information systems, to domestic and foreign
governments and private entities.

Our business has two main segments: title and real estate information
("REI"). These segments are closely related due to the nature of their
operations and common customers. The segments provide services throughout the
United States through a network of offices, including both direct operations and
agents. Although we conduct operations in several international markets, at
current levels the contributions of the international markets are generally
immaterial with respect to our consolidated financial results.

CRITICAL ACCOUNTING POLICIES

We believe the accounting policies that are the most critical to our
financial statements, and that are subject to the most judgment, are those
relating to title loss reserves, premium revenue recognition and recoverability
of long-lived assets, such as goodwill and title plants.

Title loss reserves represent the aggregate future payments, net of
recoveries, that we expect to incur on policy losses and in costs to settle
claims. Future title loss payments are difficult to estimate due to the complex
nature of title claims, the length of time over which claims are paid, the
significantly varying dollar amounts of individual claims and other factors.
Loss provision amounts are based on reported claims, historical loss experience,
title industry averages, the current legal environment and the types of policies
written. The title loss reserve is continually reviewed and adjusted, as
appropriate. Independent actuaries review the adequacy of the reserve on an
annual basis.

Premiums on title insurance written by our direct title operations are
recognized as revenue at the time of the closing of the related real estate
transaction. Premiums on title insurance policies written by agents are
recognized primarily when policies are reported to us. We also accrue for
unreported policies where reasonable estimates can be made based on historical
reporting patterns of agents, current trends and known information about agents.

We review the carrying values of title plants and other long-lived assets
if certain events occur that may indicate impairment. Impairment is indicated
when projected undiscounted cash flows over the estimated life of the assets are
less than carrying values. If impairment is determined by management, the book
amounts are written down to fair value by calculating the discounted value of
projected cash flows. In accordance with SFAS No. 142 "Goodwill and Other
Intangible Assets", goodwill is tested for impairment annually and goodwill
determined to be impaired is expensed to current operations.

RESULTS OF OPERATIONS

Generally, the principal factors that contribute to increases in our
operating revenues for our title and REI segments include:

o declining mortgage interest rates, which usually increase home sales
and refinancing transactions;
o rising home prices;
o higher premium rates;
o increased market share;
o opening of new offices and
o increased commercial transactions.

These factors may override the seasonal nature of the title business.
Generally, the third quarter is the most active in terms of real estate sales
and the first quarter is the least active.

-6-

NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 2001

GENERAL. According to published industry data, interest rates for 30-year
fixed mortgages, excluding points, for the nine months ended September 30, 2002
averaged 6.7% as compared to 7.0% for the same period a year earlier. The rates
at year-end 2001 were just over 7%. In 2001, rates remained relatively stable,
with rates reaching a high of 7.2% in May and reaching a low of 6.5% in
November. Interest rates remained relatively stable in the first quarter of 2002
and steadily declined in the second and third quarters of 2002. In 2002, rates
reached a high of 7.2% in March and a low of 6.0% in September.

Operating in these mortgage interest rate environments, real estate
activity in the first nine months of 2002 was strong. Refinancing transactions
remained strong in the first three quarters of 2002 compared to the same period
in 2001. Existing home sales increased 5.6% in the first nine months of 2002
over the same period in 2001. The ratio of refinancings to total loan
applications was 53.7% for the first nine months of 2002 compared to 51.8% for
the first nine months of 2001.

TITLE REVENUES. Our revenues from the title segment increased 38.6% in the
first nine months of 2002 over revenues for the same period in 2001.

Revenues from direct operations increased 27.8% to $474.6 million for the
first nine months of 2002 compared to the first nine months of 2001. The number
of direct closings we handled in 2002 increased 29.3% over those we handled in
2001. Direct closings relate only to files closed by our underwriters and
subsidiaries and do not include closings from agents. The average revenue per
closing decreased 1.6% in 2002 because of the slight increase in refinancings,
which have lower premiums than regular transactions. The largest increases were
in California, Texas and New York.

There were no major revenue rate changes in the first nine months of 2002
or in 2001. Effective November 1, 2002, policies written in Texas will be
subject to a 6% reduction in the premium rate. The decrease will be offset
somewhat by premiums that may be charged on a new policy endorsement. Although
Texas policies provided 14.7% of our gross title revenues, we do not anticipate
the change to have a significant adverse impact on gross revenues or earnings.

Premiums from our agency operations increased 47.2% to $687.9 million in
2002. This increase resulted primarily from increased refinancings and regular
transactions handled by agents nationwide. The largest increases were in
California, New York, Texas, Pennsylvania, Virginia and Florida.

REI REVENUES. Real estate information segment revenues were $51.6 million
in the first nine months of 2002 and $47.1 million in the 2001 period. The
increase in 2002 resulted primarily from providing an increased number of
post-closing services, electronic mortgage documents and flood services
resulting from the increase in real estate transactions.

INVESTMENTS. Investment income increased 2.5% in 2002 primarily because of
increases in average investment balances offset slightly by decreases in
investment yields. We realized a gain on the sale of investment real estate
during the second quarter, but it was offset by a comparable after-tax loss of
$1.2 million on the sale of WorldCom bonds. We also recorded an after-tax loss
on an equity investment in the amount of $0.5 million and an after-tax loss of
$0.5 million on the impairment of equity securities during the third quarter.
Certain investment gains in 2002 were realized as part of the on-going
management of the investment portfolio for the purpose of improving performance.

AGENT RETENTION. The amount of revenues retained by agents, as a percentage
of premiums from agents, was 82.2% and 82.0% in the years 2002 and 2001,
respectively. Amounts retained by title agents are based on contracts between
the agents and our title insurance underwriter subsidiaries. The percentage that
amounts retained by agents bear to agent revenues may vary from year to year
because of the geographical mix of agent operations and the volume of title
revenues.

EMPLOYEE COSTS. In 2002, employee costs for our combined business segments
increased 22.9% over 2001 costs. The number of persons employed at September 30,
2002 and September 30, 2001 were approximately 7,400 and 6,600, respectively.
This increase in staff in 2002 was primarily the result of additional staff in
California and acquisitions of new offices.

In our REI segment, employee costs increased in 2002 over 2001 primarily
due to a continuing shift in focus to providing more post-closing services to
lenders. These services are significantly more labor intensive than other REI
services.

-7-

OTHER OPERATING EXPENSES. Other operating expenses for our combined
business segments increased 26.4% in 2002. The overall increase in these other
operating expenses in 2002 was in new offices, search fees, premium taxes and
computer expenses. Other operating expenses for the combined business segments
also include rent, business promotion, telephone, supplies, title plant
expenses, auto and travel. Most of these expenses follow, to varying degrees,
the changes in transaction volume and revenues.

Our labor and certain other operating costs are sensitive to inflation. To
the extent inflation causes an increase in the price of homes and other real
estate, premium revenues from the sale of these properties also increase.
Premiums are determined in part by the insured values of the transactions we
handle.

TITLE LOSSES. Provisions for title losses, as a percentage of title
insurance revenues, were 4.5% in 2002 and 4.1% in 2001. The continued
improvement in industry trends in claims and a significant amount of refinancing
transactions, which result in lower loss exposure, have led to lower loss ratios
in the last five years.

INCOME TAXES. The provision for federal and state income taxes represented
effective tax rates of 38.6% and 40.0% in 2002 and 2001, respectively.

THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 2001

GENERAL. According to published industry data, interest rates for 30-year
fixed mortgages, excluding points, for the three months ended September 30, 2002
averaged 6.3% as compared to 7.0% for the same period in 2001.

Because of a favorable mortgage interest rate environment, real estate
activity in the third quarter of 2002 was strong. Refinancing transactions
remained strong in the third quarter of 2002 compared to the same period in
2001. The ratio of refinancings to total loan applications was 68.0% for the
third quarter of 2002 compared to 51.2% for the third quarter of 2001. Existing
home sales increased 2.8% in the third quarter of 2002 over the same period in
2001.

TITLE REVENUES. Our revenues from the title segment increased 41.4% in the
third quarter of 2002 over the same period in 2001.

Revenues from direct operations increased 30.0% to $175.4 million for the
third quarter of 2002 compared to the third quarter of 2001. The number of
direct closings we handled increased 36.8% in the third quarter of 2002 compared
to the same period in 2001. Direct closings relate only to files that our
underwriters and subsidiaries close and do not include closings by agents. The
average revenue per direct closing decreased 5.0% in the third quarter of 2002
compared to the same period in 2001 because of the slight increase in
refinancings which have lower premiums than regular transactions. There were no
major revenue rate changes in the third quarter of 2002 or 2001.

Premiums from agency operations increased 49.8% to $275.4 million for the
third quarter of 2002 compared to the same period in 2001. The increase
primarily resulted from increased refinancings and regular transactions handled
by agents nationwide. The largest increases were in California, Virginia, New
York, Pennsylvania and Texas.

REI REVENUES. Real estate information revenues were $18.4 million for the
third quarter of 2002 and $16.2 million for the third quarter of 2001. The
increase resulted primarily from providing an increased number of electronic
mortgage documents, flood services and Section 1031 tax-deferred exchanges
resulting from the increase in real estate transactions.

INVESTMENTS. Investment income increased 19.3% in the third quarter of 2002
compared to the third quarter of 2001 primarily because of increases in average
investment balances. We recorded an after-tax loss on an equity investment in
the amount of $0.5 million and an after-tax loss of $0.5 million on the
impairment of equity securities during the third quarter of 2002. Certain
investment gains realized during this period were realized as part of the
ongoing management of the investment portfolio for the purpose of improving
performance.

AGENT RETENTION. The amounts retained by agents, as a percentage of
premiums from agents, were 82.9% and 82.6% in the third quarters of 2002 and
2001, respectively. Amounts retained by title agents are based on contracts
between agents and our title insurance underwriter subsidiaries. The percentage
that amounts retained by agents bears to agent revenues may vary from year to
year because of the geographical mix of agent operations and the volume of title
revenues.

-8-

EMPLOYEE COSTS. Employee costs for the combined business segments increased
21.6% in the third quarter of 2002 compared to the same period in 2001. The
number of persons we employed at September 30, 2002 and September 30, 2001 was
approximately 7,400 and 6,600, respectively. The increase in staff was primarily
the result of additional staff in California and acquisitions of new offices.

In the REI segment, employee costs increased in the third quarter of 2002
over 2001 primarily due to a continuing shift in focus to providing more
post-closing services to lenders. These services are significantly more labor
intensive.

OTHER OPERATING EXPENSES. Other operating expenses for our combined
business segments increased 31.2% in the third quarter of 2002. The increase in
other operating expenses for the combined business segments during this period
resulted from search fees, insurance, new offices and premium taxes. Other
operating expenses also include rent, business promotion, telephone, supplies,
title plant expenses, auto and travel. Most of these expenses follow, to varying
degrees, the changes in transaction volume and revenues.

Our labor and certain other operating costs are sensitive to inflation. To
the extent inflation causes increases in the prices of homes and other real
estate, premium revenues also increase. Premiums are determined in part by the
insured values of the transactions we handle.

TITLE LOSSES. For the third quarter, provisions for title losses, as a
percentage of title insurance revenues, were 4.6% in 2002 and 4.2% in 2001. The
continued improvement in industry trends in claims and increases in refinancing
transactions, which result in lower loss exposure, have led to lower loss ratios
in recent years.

INCOME TAXES. The provision for federal and state income taxes represented
effective tax rates of 39.1% and 41.6% in the third quarters of 2002 and 2001,
respectively.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operations was $92,418 and $80,835 for the nine month
periods ended September 30, 2002 and 2001, respectively. Cash flow from
operations has been the primary source of financing for additions to property
and equipment, expanding operations and other capital requirements. This source
of financing may be supplemented by bank borrowings. We do not have any material
source of liquidity and financing that involves off-balance sheet arrangements.

A substantial majority of our consolidated cash and investments is held by
Stewart Title Guaranty Company and its subsidiaries. Cash transfers between
Stewart Title Guaranty Company and its subsidiaries are subject to certain legal
restrictions. See notes 3 and 4 to our consolidated financial statements
included in our Annual Report on Form 10-K for the year ended December 31, 2001.

Our liquidity, excluding Stewart Title Guaranty Company and its
subsidiaries, is comprised of cash and investments aggregating $15.6 million and
short-term liabilities of $0.7 million at September 30, 2002. We know of no
commitments or uncertainties that are reasonably likely to materially affect our
ability, or the ability of our subsidiaries, to fund our short-term or long-term
cash needs.

We consider our capital resources, represented primarily by notes payable
of $18.2 million and stockholders' equity of $450.6 million at September 30,
2002, to be adequate. We are not aware of any trends, either favorable or
unfavorable that would materially affect the notes payable or the stockholders'
equity and we do not expect any material changes to the cost of such resources.
However, significant acquisitions in the future could materially affect the
notes payable balance.

FORWARD-LOOKING STATEMENTS. All statements included in this report, other
than statements of historical fact, addressing activities, events or
developments that we expect or anticipates will or may occur in the future, are
forward-looking statements. Such forward-looking statements are subject to risks
and uncertainties including, among other things, changes in mortgage interest
rates, employment levels, actions of competitors, changes in real estate
markets, general economic conditions, legislation (primarily legislation related
to title insurance) and other risks and uncertainties discussed in our filings
with the Securities and Exchange Commission.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our investment strategies, types of
financial instruments held or the risks associated with such instruments which
would materially alter the market risk disclosures made in our Annual Statement
on Form 10-K for the year ended December 31, 2001.

-9-

Item 4. Controls and Procedures

In its recent Release No. 34-46427, effective August 29, 2002, the
Securities and Exchange Commission, among other things, adopted rules requiring
reporting companies to maintain disclosure controls and procedures to provide
reasonable assurance that a registrant is able to record, process, summarize and
report the information required in the registrant's quarterly and annual reports
under the Securities Exchange Act of 1934 (the "Exchange Act"). While we believe
that our existing disclosure controls and procedures have been effective to
accomplish these objectives, we intend to continue to examine, refine and
formalize our disclosure controls and procedures and to monitor ongoing
developments in this area.

Our principal executive officers and our principal financial officer, based
upon their evaluation of our disclosure controls and procedures conducted as of
a date within 90 days before the filing date of this quarterly report (as
defined in Rule 13a-14(c) and Rule 15d-14(c) under the Exchange Act), have
concluded that those disclosure controls and procedures are effective.

There have been no changes in our internal controls or in other factors
known to us that could significantly affect these controls subsequent to their
evaluation, nor were any corrective actions necessary with regard to significant
deficiencies and material weaknesses.

-10-

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are a party to routine lawsuits incidental to our business, most of
which involve disputed policy claims. In many of these suits, the plaintiff
seeks exemplary or treble damages in excess of policy limits based on the
alleged malfeasance of an issuing agent. We do not expect that any of these
proceedings will have a material adverse effect on our consolidated financial
condition.

ITEM 5. OTHER INFORMATION

We paid regular quarterly cash dividends on our common stock from 1972
through 1999. During 1999, our Board of Directors approved a plan to repurchase
up to 5 percent (680,000 shares) of our outstanding common stock. Our Board also
decided to discontinue our regular quarterly dividend in favor of returning
those and additional funds to stockholders' equity through the stock repurchase
plan. Under this plan, we repurchased 116,900 shares of common stock during
2000. We did not repurchase any shares of our common stock in 2001 or in the
first nine months of 2002.

An additional 200,000 shares of treasury stock was acquired in the second
quarter of 2002 as a result of the consolidation of a majority owned subsidiary
which was previously held as an equity method investment. The treasury stock is
held as collateral for a note payable by our subsidiary.

An additional 8,769 shares of treasury stock were acquired in the third
quarter of 2002 as a result of a litigation settlement. This settlement related
to pre-acquisition liabilities and was paid to us by the former owners of our
subsidiary.

-11-

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

3.1 - Certificate of Incorporation of the Registrant, as amended
March 19, 2001 (incorporated by reference in this report from
Exhibit 3.1 of Annual Report on Form 10-K for the fiscal year
ended December 31, 2000)

3.2 - By-Laws of the Registrant, as amended March 13, 2000
(incorporated by reference in this report from Exhibit 3.2 of
Annual Report on Form 10-K for the fiscal year ended December
31, 2000)

4. - Rights of Common and Class B Common Stockholders

* 10.1 - Summary of agreements as to payment of bonuses to certain
executive officers (incorporated by reference in this report
from Exhibit 10.1 of Annual Report on Form 10-K for the fiscal
year ended December 31, 2001)

* 10.2 - Deferred Compensation Agreements dated March 10, 1986, amended
July 24, 1990 and October 30, 1992, between the Registrant and
certain executive officers (incorporated by reference in this
report from Exhibit 10.2 of Annual Report on Form 10-K for the
fiscal year ended December 31, 1997)

* 10.3 - Stewart Information Services Corporation 1999 Stock Option
Plan (incorporated by reference in this report from Exhibit
10.3 of Annual Report on Form 10-K for the fiscal year ended
December 31, 1999)

* 10.4 - Stewart Information Services Corporation 2002 Stock Option
Plan for Region Managers (incorporated by reference in this
report from Exhibit 10.4 of Quarterly Report on Form 10-Q for
the quarter ended March 31, 2002)

99.1 - Details of Investments at September 30, 2002 and December 31,
2001

99.2 - Certificate of Co-Chief Executive Officer pursuant to Section
906(a) of the Sarbanes-Oxley Act of 2002

99.3 - Certificate of Co-Chief Executive Officer pursuant to Section
906(a) of the Sarbanes-Oxley Act of 2002

99.4 - Certificate of Chief Financial Officer pursuant to Section
906(a) of the Sarbanes-Oxley Act of 2002

* A management compensation plan, contract or arrangement.

During the quarterly period covered by this report, we filed a report
on Form 8-K dated August 7, 2002, reporting sworn statements by our Co-Chief
Executive Officers and our Chief Financial Officer.

-12-

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, we have
duly caused this report to be signed on our behalf by the undersigned thereunto
duly authorized.

Stewart Information Services Corporation
----------------------------------------
(Registrant)

November 4, 2002
- ----------------
Date

/s/ MAX CRISP
-----------------------------------------------
Max Crisp
(Executive Vice President and Chief Financial
Officer, Secretary-Treasurer, Director and
Principal Financial and Accounting Officer)

-13-

CERTIFICATIONS

Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

I, Malcolm S. Morris, certify that:

1. I have reviewed the quarterly report on Form 10-Q of Stewart Information
Services Corporation (registrant);

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statement made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a and 15d-14) for the registrant and we have (a) designed
such controls and procedures to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this
quarterly report is being prepared; (b) evaluated the effectiveness of the
registrant's disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions); (a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and (b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: November 4, 2002

/s/ MALCOLM S. MORRIS
------------------------------------------
[Signature]
Title: Chairman of the Board and Co-Chief
Executive Officer

-14-

CERTIFICATIONS

Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

I, Stewart Morris, Jr., certify that:

1. I have reviewed the quarterly report on Form 10-Q of Stewart Information
Services Corporation (registrant);

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statement made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a and 15d-14) for the registrant and we have (a) designed
such controls and procedures to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this
quarterly report is being prepared; (b) evaluated the effectiveness of the
registrant's disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions); (a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and (b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: November 4, 2002

/s/ STEWART MORRIS, JR.
-----------------------------------------
[Signature]
Title: President and Co-Chief Executive
Officer

-15-

CERTIFICATIONS

Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

I, Max Crisp, certify that:

1. I have reviewed the quarterly report on Form 10-Q of Stewart Information
Services Corporation (registrant);

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statement made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a and 15d-14) for the registrant and we have (a) designed
such controls and procedures to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this
quarterly report is being prepared; (b) evaluated the effectiveness of the
registrant's disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions); (a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and (b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: November 4, 2002

/s/ MAX CRISP
-----------------------------------------
[Signature]
Title: Executive Vice President and
Chief Financial Officer, Secretary-
Treasurer, Director and Principal
Financial and Accounting Officer

-16-

INDEX TO EXHIBITS

* A management compensation plan, contract or arrangement.