Q3 2019 Earnings Call

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Good day and welcome to the Stewart Information services third quarter 2019 earnings Conference call and webcast. Today's call is being recorded at this time all participants have placed on listen only mode and the Florida will be opened for your questions. Following the presentation I would like now to turn the call over to now.

Please go ahead.

Good morning, Thank you for joining us today for Stuart third quarter 29, <unk> earnings Conference call. We'll be discussing results were released yesterday. After the close joining me today, our CEO , Fred Eppinger and CFO , David Heikki looking online. Please go to the Stewart Dot Com website to access the link for this conference call I would remind participants this conference call making.

Any forward looking statements that involve a number of risks and uncertainties. The cuts that because such statements are based on an expectation of future financial operating results and are not statements affect 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.

That's really published yesterday evening and the statement regarding forward looking information risk factors. Another section of the company Form 10-K , and other filings with the FCC now, let me kind of the color but right.

Good morning, everyone and thank you for joining us today.

David will go through the financials in a minute, but before that I wanted to take a few minutes to briefly touch on my thoughts after six weeks as CEO Stewart.

First though I would like to thank our associates for helping deliver strong third quarter results during a period of significant distraction from the speculation around the pending merger and our leadership change our people every day focused and committed to deliver the great service our customers expect from Stewart.

I believe the resilient I results this quarter and over the last year [noise].

Appirio significant uncertainty confirms that the market wants in many cases need to strong independent Stuart.

This brings me to see where today and what our focus will be.

I want to revive briefly remind everyone that this is 125 year old company with a strong brand in a proud history of customer oriented service.

Then distracted over the past several years [laughter] amidst the backdrop with multiple activist campaigns call for sale, a year and a half merger process that ultimately.

No I did not ultimately consummated most of stewards customers are made loyal and our employees delivered quality service.

But this period of distraction was also period about even financial performance limited investment in our business and lack of sustained.

With these distractions behind us I believe there's a tremendous opportunity to change this and build a company position to consistently compete and win in our industry.

As a company moves beyond this period of uncertainty and uneven performance I would like to point out a few important strengths we start with.

Well I've just spoken about the strength of our people, which is a critical asset in a servicing relationship oriented business. The companys financial strength has never been on a firmer foundation.

With a solid balance sheet and strong ratings substantial statutory capital to grow premium growth and the ability to generate new significant future cash flows we are well positioned to deliver on a new focus though in a world class company that is positioned for the next 225 years.

While we're not satisfied with our performance over the last several years. The good news is that Stuart is not a judicial turnaround.

As noted we have many positive things in place to start us in the past a profitable growth again and the fact, we have many of the foundational elements in place to support our effort.

That said this is a journey and we'll take some time to get where we also want to be it transformation will not be completed overnight, but we will also not wait to get started we will compete more effectively now and we will get better every day.

Really gone what we're calling 100 day plan focused on examining all of our company's businesses functions can capabilities to understand all the opportunities to strengthen our competitive position improved improve our ability to deliver sustained winning performance.

The last six weeks I've been able to meet with over 2000 of our associates and there's a number of our markets and a number of our customers.

And these first few weeks as CEO my confidence has grown and what can be done to improve our competitive position in performance over the remainder of these first 200 days, we will lay out in greater detail, how reinvigorated Stuart will compete and win.

I'm confident in the potential we can unlock at Stewart, given the quality of our people our brand enough financial strength.

Going forward the key will be to utilize these assets in a way that spoke that spreads improved growth and it drives improve performance financial performance with the overall goals are providing value to our customers our partners people and shareholders.

They were now update you on [noise].

Thank you Frank Good morning, everyone still reported title revenues of 499 million overall revenues of 560 million and net income of 66 million or $2.78 per adjusted share on adjusted basis per diluted share on an adjusted basis that income in Peru.

The 30 million from 20 million from last year's quarter, while adjusted EPS increase to $1.28 per share from 85 cents per share from the third quarter 2018.

That's presented in the appendix aid to our earnings release, the calculation for adjusted diluted EPS, which is a non-GAAP measure includes adjustments related to that 50 million.

That's merger termination as.

As well as equity method investment impairment merger expenses, another not operating gains or losses.

Our total revenues in the third quarter 2019 were up 3% from last year's quarter due to a strong housing market, primarily influenced by increased lending due to lower interest rates and solid direct commercial residential and international business results.

The title segment generated pretax income of 49 million or 10% pre tax margin, excluding mark to market gains or losses relating to equity securities investment impairment charge on an equity method investment.

Oh, the segment's third quarter 2019 pre tax income would have increased 55% to 52 million from last year's pretax income of 34 million.

With respect to our direct title business commercial revenues were up 7% that's the fee per file increased 22%.

$12600 as a result in increased transaction size.

Direct residential revenues improved 18% has resulted they crave crease lending.

Oh residential fee per file decreased 4% to $2200, primarily as a result of change and back in business mix.

And then in which we had a higher rate you have refinancing to purchase orders.

Total international revenues increased 3 million or 10% on increased volumes from or Canada, and UK operations.

Compared to the third quarter 2018 opened and closed orders in the third quarter 2019 grew 29 and 21% respectively.

Regarding title losses as a percent of title revenues losses improved 20 basis points to 4.2 per cent compared to 4.4% from last year's quarter, We expect our title losses to remain at approximately 4.2% of tighter revenues for the year 2019 and.

Because they can vary quarter to quarter.

At quarter end, our total balance sheet policy loss reserves were 452 million.

Okay.

This is a corporate segment.

We reported a segment pretax income of 42 million or the third quarter 2019, compared with a pretax loss of 11 million in the prior year quarter, excluding the FNF merger termination fee a merger related expenses the segment's pretax loss in the quarter would have Ben.

7 million versus 6 million in the prior year quarter.

The segment's operating revenues declined by 5 million.

That's our search and valuation business was impacted by reductions in orders from several significant customers.

The segment's results for the third quarter 2019 at 2018 included approximately seven and 13 million respectively of net expenses attributable parent company a corporate operations.

With a higher expenses in the prior year quarter, primarily caused by increased third party merger advisory expenses.

With respect to operating expenses on a consolidated basis employee costs were 4% compared to the third quarter 2018, primarily because of increased incentive compensation consistent with higher title revenues, partially offset by lower salaries expense as a result of lower.

Average employee costs.

They remained approximately 28% of operating revenues.

Other operating expenses for the third quarter 2019 declined 3% to 88 million from 91 million in the third quarter of 2018.

This decrease was primarily driven by lower professional fee expenses in the third quarter 2019, partially offset by higher outside search fees principally related to increased commercial revenues.

As a percentage of total operating expense revenues and excluding FNF merger expenses other operating expenses remained approximately 17%.

Lastly on other matters.

Corridors equity attributed to Stuart was 754 million at September Thirtyth 2019, the highest since 2007.

At quarter end, we had approximately 943 million in total cash and liquid investments or 426 million. After deducting required statutory reserves. We also have approximately 100 million available under our credit facility.

Our financial condition remains very strong with a debt to capital ratio of approximately 12% at quarter end and the book value per share of approximately $32 net cash provided by operations. During the quarter was 116 billion an increase of 79 million from the prior year quarter.

Her primarily due to higher net income, which included the merger termination fee and lower payments on accounts payable during the quarter.

The effective tax rate for the third quarter 2019 was 24.5 per cent compared to 20% for the third quarter 2018. The increase rate was due to a benefits we had in the prior year quarter due to research and development tax credits.

I'll now turn the call back over to the operator to take questions.

[noise] and at this time, if he would like to register to ask a question. Please press star and one on your Touchtone phone again that is star and one if you would like to ask a question today you can remember yourself from the question Qs anytime by pressing the pound Keith will take our first question from George boasts with KBW.

Please go ahead.

Yes. Good morning. This is that those actually the first.

On the operating margin was it was definitely put strong stronger than we'd expected strong as you've seen in awhile.

It is it doesn't tell you the strength of the market is a big driver, but you know just even quarter of a corridor.

The revenues are up and the expenses up very modestly. So anything you can sort of color you can provide on it was just the strength of the margin this quarter.

Yeah, Hi, Bose its David highs of here, Yeah, I mean, I think you sort of covered it right. It was pretty much the the revenue leverage from the strong activities across the businesses.

And you know expenses didn't follow I mean, you certainly good.

You know some benefit of the of the fixed cost structure in SaaS revenues go up you know, we see that up the margin and I think that's pretty much what we saw this quarter.

And I mean is it too early to talk about sort of.

Targets for normalized margin.

Yeah just.

And when can be sort of discuss that.

Yeah, I think I think that you're just sort of going back to Freds comments on the you know the Hunter day initiatives and the like I think it's probably a little premature on on sort of the longer term margins I think we need to get through through that work and and be back to you on that.

Yeah, obviously.

For the company right, we have lagged the industry.

And for a lot of reasons and so what you will see is focused on positioning ourselves to be.

That are kind of situated to be a winner in the industry, which means we got to we got to improve both margins and frankly our growth profile.

That's very possible to do is just a couple of areas, where we need to focus and kind of think about our operating platform a little differently in how we approach the market. So.

Okay, great. Thanks, actually just one more for me on the agent side be shared.

I was a year over year, that's been declining.

You know can you just any color there in terms of how you're going to address that.

So obviously the he segment that's going to be most affected by the merger is gonna be the agency because.

Agents don't want is too much concentration with the leading company in the industry. So we obviously had and there's implications of this announced merger where people shifted part of their shelf space away from us because of they didn't want to be in the fidelity family and so that's what we have to win back and so what we've done immediately.

Is be very directive and very and very clear with those folks and trying to win back that business and I think again I think that's something we can do we just have to get on it and focus on it but it is something that is easy to anticipate given the transaction I mean to me it's stuff if the obvious thing that agents why do.

As balance their business.

So we are where after that and I think beyond that I think we've had some investments that we hadn't made for a while that will enhance the value proposition to agents.

On the technology side that we're going to sorry.

Focusing on immediately and so I think that's going to help as well so we look.

We look to that segment to grow in the future for.

Okay, great. Thank you.

Our next question comes from John Campbell with Stephens, Inc. Please go ahead.

Hey, guys. Good morning, Congrats on a great quarter and Fred welcome looking forward to working with you.

Thanks, Yeah. It's all in your prepared remarks, and I think you just mentioned this in the in the last answer to that last question, but you mentioned kind of a lack of reinvestment the business over the last few years I'm, hoping you could maybe flesh that out of bed I know, it's probably a little early to size up you know maybe that total shortfall and then it's probably way too early to lay out how much reinvestment as needed going forward.

So if you just maybe provide any additional insight there you know to what extent you can and then maybe if you could also touch on what you're looking due at the $50 million break up fee that you guys have.

Yeah. So it's you could imagine right. This this company probably for multiple years now has kind of hunker down and a lot of ways.

And managed itself relatively well I've been if you look at our service scores et cetera, I'm very impressed with what folks have done.

Over the last few years as we've kind of really a bit internally focused as we've looked at things like you know, we structuring and et cetera. So if you look at our business. You know if you can imagine or most of our businesses. There was some things that if you thought about long term value creation, you would have invested in that we did it and so in almost every day.

Business in every area, there's some places that I want to redirect our investment now what we won't do is just lay on top of bunch of additional investment. There's other things we're doing that we're going to stop doing and reallocate that so you know I would say that you know it's overwhelming but it's important for us to kind of get focused on the future here and invest in some.

Thanks, I would also say that the other thing it's going to be important for us is to fill some holes as.

As you can imagine over the last couple of three years, we bought some critical skills and capabilities in pockets again not overwhelming.

But areas, where we need to make sure that we.

Yeah, I'll fill those holes and hire the right skill sets and make sure. We are competitive in some areas. So I'm pretty positive about where we are I'm kind of the resilience of the company. It's obvious when you look at kind of what we've done in the last two or three years, but the upside here is tremendous if I can just make sure we accelerate some focused investment and a bit.

Businesses, so we compete a little bit better.

And again I I you know is an overwhelming no but is it something that's going to take some some some time in some money shore you know and you know in the next quarter in particular.

The next quarter will be a lot clear on where it is and what we're doing.

And it's coming together pretty quickly, but I I, it's still early on exactly what we're gonna do when some of the areas, but it's.

Again, it's pretty straightforward drag you can see from our results over the last.

Few quarters.

At essentially we were kind of you know not holding share we were we were shrinking.

Relative to the market and that's going to stop so.

Got it that makes sense and then on the commercial growth that was a good result for you guys. I think you called out to over 20% growth in fee per file I'm guessing that you guys probably call a few large deals in the quarter. So if you can just maybe provide a little color on kind of the lumpiness or <unk> or the orders and then any additional color outs as far as the purchase versus refi mix and just in any kind of geographical impacts.

Yeah.

It's a here on the on the commercial I think it's just the continued.

Focus at the businesses had on on sort of the larger course of customers across the country. That's a trend we haven't seen for this over the last year. So I'm. So I don't think it was there any significant one off deals I think it was just sort of big bigger transactions across.

The franchise.

In terms of the purchase refi index I mean, I think we're sort of seeing what the markets in there.

So as against the competition when when we have that order information and so I would expect the trends you're seeing in the market to sort of impact us as well.

Well look at the at all the housing economists said that sort of look at the stuff I mean, they have and continued strong housing market you know maybe revise tapering off a bit as we go into next year.

You know that though it sort of be our expectations as well.

Okay. That's helpful. And then just to tack on to that on the commercial side.

Any any call outs as far as open orders and kind of what the pipeline looks like getting into Fourq you.

I'm, sorry, I think the guys think it's a business is still strong and yeah, but as you know on the on and those kinds of deals I mean taught timing matters, but you know decent pipeline going in the quarter.

Just need to close them.

Okay. That's helpful. Thanks, guys.

Thanks.

[noise] next question will come from Geoffrey Dunn with Dowling and partners. Please go ahead.

Thanks, Good morning.

Fred.

Acknowledging six weeks on the job, but but as you think about your vision of the opportunities for Stuart.

Is is this equally an expense and topline opportunity is it more topline that expense or vice versa.

How do you view.

The opportunity for the operations based on what you've seen over the first six weeks and obviously you experienced before that.

Yeah, I mean, obviously, if you look at our performance over the last say 10 years decade, right our margins lagged the industry, but I quoted to we've lost share over the last decade.

And so obviously it is we need to change that profile Quinn. So what you'll see is an expansion of margins as well as growth above the industry came in and I think both very possible. The question is how do you get it does margin expansions I would tell you that most of it is gonna be leverage we're gonna be leveraging it from some additional growth.

Again are there some things that we're going to stop doing yeah, I would say, there's going be a reallocation of dollars from some parts of the company to other parts of the dollar.

For the company and so I think this is kind of leveraging our portfolio. The other thing youve seen some of our ancillary businesses I think our areas, where we can manage batter and and there's some real leverage there and the overall business as we do that so again I.

So if it's probably answer is a little bit of both but more on the topline in the bought yet could then just pure expenses because they want to leverage our ability to to win at the local market level.

And again, you can imagine you know when you.

When you are reacting to things versus proactively thinking about it all your expense dollars, they're not going to the right place right. So for US we Gotta go on the front for it and make sure that we're investing in the right places that actually we to profitable growth.

And we'll do that and again it was interesting again, even in six weeks.

A couple of things it strikes me the energy as a place and that kind of that people are focused on why could get back on the front for it and when I said I think what you saw on commercial is a little bit of that I mean, I think the energy level around some of our arc.

Standing commercial team has got to be they're going to the future.

So you have a bunch of folks that kinda know how to win and want to focus on the right thing, but the other thing that I've seen as just a bunch of thing that we were going to do that did it like there was a number of areas, where we know what we need to do.

But we held off and I got to make sure we do that.

And I got to make sure that we find funding for that so.

This might be a little bit of a step back before step forward in some cases.

But but we know the objective function hike you can't you know it it three years, we're not going to be at the bottom quintile of your distributors at losing share I can tell you that so I'm pretty confident that we can turn this around we just got to make sure we invest in some areas and focus on winning and the local markets.

Okay and then in your comments you did have a bit of a a cautionary a couple of sensors about this is not an overnight process.

Just to frame that I mean is it reasonable to think about next three five quarters really 2020 being a transition period could be a bit lumpy depending on what are your initiatives, our plus and minus and and really the payout as more of a 20 122 type of thing.

I think that's fair.

You know again do I do I think about it that way not necessarily because they're going to move forward and compete better every day and this is a so much of an execution base business that this is kind of if you're going out hostile you can do things, but there is gonna be some some investment some refocus the refocusing the company.

And some decision that essentially are gonna be about the long term not the short terms I think it's a fair characterization alright, and then last question for David what occurred sequentially with head count in Q3, and what are the a preliminary actions into Q4.

Okay.

Headcounts been coming down a little bit I think the you know with.

With with the merger, we've been pretty pretty firm on hiring I think we'll see that trend continuing you know into the fourth quarter I think where we go from there. It's really a function of what you just talked about with with Fred you know in terms of the initiatives and investments in that kind of thing.

Okay. Thanks.

[noise] as a reminder, that is star and one if you would like to register to ask a question today. Our next question comes from Mackenzie Aron with Zelman and Associates. Please go ahead.

Thank you. Good morning, just wanted to follow up on on that question around needing to rebuild the team in certain areas, but can you give us any color around what you've seen so far there are certain areas of the business. It seem to have had more attrition or is it pretty broad base anything by geography. It does anything that you all.

The out from.

And to the head count our personnel perspective.

Yeah, I don't think it's I don't think it's specific to any area I do think that.

What you see when you go through something like this is that you lose some bench and.

And again, we have some holes in some areas that we're going to we're going to my two and two.

Before but it before but it's you know we've been remarkably resilient. So it's not again, it's not overwhelming but it's fair I mean, it again you can you can imagine some functions, particularly overhead functions that you know when you go through something like this there is some people are just [laughter].

You know hang around so there are some areas that we will be beefing up and we will rebuild.

You know, making sure that we hire and again I would tell you that I've already you know we've already had a lot of calls in conversations with people that we want back at already coming back on an interesting enough. We've also had.

People from competitors that are talking to us about wanting to come to so again my view is that this isn't.

Overwhelming but its important it's important part of what we have to do we have to make sure that we have a resilient organization, we have the skills, we need and all the different areas, but again, it's just part of what we need.

Great and then it just going back to the agency conversation as well.

How what's the sense about how sticky some of the ships have been from agents that as high ties with Stewart are those relationships that can be turned on relatively quickly or what's been the initial kind of reaction and impression that you've heard.

Great question I think for the most part those those are those are things that we can win back I'm meeting actually today tomorrow.

With over 100 or agents to discuss kind of off and what we're doing I'm pretty if that's a business that we're going to grow a lot.

I feel pretty confident in that we can be a good partner for particularly winning agents agents that are investing in their business and growing their business.

But they did shift right and again I think it's completely logical I think if I was at age and I would have probably done the same thing so.

We got to focus on adding and make sure that we provide the value proposition we need to to win a back some probably we can get it back. The question is how long does it take yeah, hopefully it yes, it's not too long, but we got to work we gotta focus on it and make sure we are talking tool and making sure we understand what their.

The reasoning wise and why we should get it back but again, it's not illogical. This is not one of those things you know in my view that.

That is it's not unknowable, we know exactly what they were thinking that business people. So we need to go through and get it back and if you look at some of the growth over the last few years structurally an industry to regional companies you know regional companies have done a good job taking some share for that for the larger companies in the agency channel and that's something we can.

Get back easily were a little bit more nimble than a bigger guys. That's bad that's something that we should focus on particularly since a lot of as regional companies were built to sell and you've seen some transactions from their perspective, and so they have some disruption as well so I think both short term and structurally.

Agency channel as a channel that we can and really a piece of good damage there and grow some share.

Okay, well, thanks for all the tolerant best of luck.

Thanks.

Yes.

Next question comes from Deforest Hinman with Walthausen <unk> Company. Please go ahead.

Morning.

Hello, Thanks for taking.

Questions from shareholders.

Great discussion thanks for your review.

Your first.

Two weeks on the job you spent some time in terms of areas it we need to improve but.

Maybe so people can better understand.

Opportunity Fred can you talk about.

Things that we do well and you talk about you know.

Culture of winning you know were areas. We can we're already performing well, we can do even better.

Yeah, I think again, one of the things I've watched this company for a lot of years actually end up one of the fasting thinks about it is we have an underutilized brand and what struck the.

And is it continues to strike the if you look at.

Our local markets service metrics and how their relationships are in some of these local markets with our people would expect extraordinary I'm, giving all the distraction and all the things has gone through and its company. The fact that we've lost some people if you look at that.

Quality of the relationships locally and some of his service stuff in the business like this which if you have that that's quite sticky and the question is how do you leverage that but it is a tremendous strength. The other thing I would tell you is almost every customer I've talked to they like our relative position versus the big guys right I think we're a little bit.

More responsive a little bit more we hostile it had better our insight about some of the segments like in commercial is a little bit better. It the way we will work with them. So I again, it's a meal interesting strikes in this company that I think as people partner with us that are more global sense versus just at a micro personal.

Person sense.

It it creates a real opportunity, but there is real strength here I mean, I'd again like if you will get across all industries. If you took a company a generic industry. If you said you're for sale for 18 months.

[laughter] better falls apart you wouldn't see the strength of our results over this year I mean, the stability of this company says something the resilience that we are experienced a bounce back we had in the last six weeks as people we focused on what we needed to do that that tells us that we have an underlying strength here that.

Well, there's something.

We leveraged now again that said we work to do you know together, we have law work to do to make US one of the better companies in the industry, so but to your point.

This company has.

Tremendous strengths to build.

Okay, and then as shareholders as we're looking for that plan I know you talked about opportunities and you talked about.

Revenue and a the margin profile.

How are you going to be setting up those benchmarks are both internally and how to help us think about how to make people hit those expectations and how are we going to communicate how were.

Moving towards those expectations are benchmarks shareholders isn't going to D.. We're gonna have some you know one of your targets that were talking about two or three year targets I just any color that you could provide be very helpful for shareholders.

So soon so my view of this industry as in Manny insurance type financial services companies is that.

This is an execution based business. This is not so much of this is about winning day to day, it's kind of a game of inches. If you will add so when you're in a game, we hear a business like that execution delivery, because everything and so what we're going to be doing is obviously be a very clear about where.

We'll go in and it's going to Cascade through this organization. So people have a clarity of what we need to achieve.

Together and from the outside World again, what I will try to do is been clear over kind of the next two three years, where we think we're going to what's going to look like.

Yeah, and you know my view is some of those people overestimate, what you can can track quarter to quarter.

And what a quarter really means but if you look at the right metrics over a period of time right and if it's obvious what we have to improve.

And it for doing this business. So you will see us lay out a kind of what I would call a long term plan for the company you will see more importantly internally a clarity to all our colleagues to say what do we need to achieve together and again I know.

None of this stuff is easy.

But my view is that we have a strong enough foundation and we have a clarity of what we think the opportunities are so we can execute a plan it's relatively transparent so.

Okay. That's helpful. Again, it's going to unfold you know as I said over the next 100 days as we kind of look at things because what I. What I wanted to do is taken time to take a step back right here and look at all our businesses and look at all our positions. So that I know, how we need to reallocate our investment in our resources to the greatest opportunities.

Because that's what we've got to make sure we jump on some of this and kind of make some progress quickly. So.

No. That's that's very helpful color shifting gears to capital allocation Hell believes this is touched on but you have an interesting situation.

I know, there's some appropriate levels capitalization or in terms of cash and investment portfolio, but.

You know at a very high level. It seems like you have.

Lot of excess capital currently he was also received a.

Break fees from the deal not being completed.

You just.

Half an hour talked about the opportunity in front of us.

Is it appropriate to be buying stock.

Inside of rewarding shareholders.

For waiting for this transaction to close it didn't and potentially a lowering the share count will soon we hope.

Better earnings profile in the future.

Yeah. My primary use right now I'm going to hold the capital I'm going to focus their capital on building the business and that doesn't say you know overtime I'm going to get some clarity on yeah, we are with our capital base and if anybody.

Followed what I've done in the past I tend to get back excess capital with I don't feel I can use it to grow the business. That's just what I do.

But right now what I'm going to do is focus on trying to build this business and right now my primary concern about capitals using it to build the business.

And I want to get more clarity over the next 12 months and after that I can have a little bit better answer, but right now that's what the answer.

Okay. So just a little color on that would that include a M&A type transactions.

Good it could again I think for US one of the things that is clear in this business is that winning at the local market and having a strong position that local markets is very very helpful.

Could I feel could or could there be some appropriate transactions that system that help us your we don't need them necessarily.

But that could be but I want to look at all the alternatives and to really understand.

How we go this business and that's really my priority right now.

Okay. Thank you.

Thank you.

Once again that is started one if he would like to register to ask a question today. The next question comes from Jaffe, Geoffrey Dunn with Dowling and partners. Please go ahead.

Thanks, I just had a few number follow ups, David first could you share your open order per day experience to the first few weeks of October .

On a seasonal basis, we've continued to strong right I mean, obviously, we're going into the slower comment a year, but but relative to history, where we're seeing good activity.

Can you put any specific number around the first two weeks or not.

I prefer not to but it's it's strong relative to prior years.

Okay, and then investment income dip this quarter as of the yields obviously had a more cashed in there but.

What are your thoughts around yield and any investment income level relative to this quarter going forward, particularly if we're looking at a two more rate cuts usher.

Yeah, I mean, we bet. It's a good it's a good question and you know there's a lot of people that would debate. We would had been building cash going into the transaction I think the ultimate used to that is for the cost of the the comment that Fred just had I think there's you know depending on what happens with rates.

As it stands right now you know you may not really be getting paid for duration, but I think that's something you know investment community looks at and we'll be taking up with the board and whether we want to how we want to reinvest some of that money in it it might not only be in the investment portfolio might be as Fred said in the business.

Okay, and then is 6 million still the right underlying run rate for corporate expenses.

Uh huh.

Thank all the all the all the noise out from you know we've had the.

You have the M&A stuff and all that and that's that's probably probably fair.

Okay and then last question, how do we think about the agency premiums going into the fourth quarter.

And you've seen a reminder, do you have a lag reporting there. So we should see a sequential uptick given threeq you direct activity or what is the trend there.

And there is there is a lag so some of the activity then seen on on the you know increased order side will carry over into that business going into the fourth quarter Yep.

Alright, great. Thank you.

<unk>.

It does appear that we have no further questions at this time I would like to turn the call back to our speakers for any additional remarks.

That concludes this quarter conference call. Thank you for joining today and your interest in Stewart.

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