The Registrant leases offices at approximately 395 locations. The average term for all such leases is approximately four years. The leases expire from 2000 to 2009. The Registrant believes it will not have any difficulty obtaining renewals of leases as they expire or, alternatively, leasing comparable property. The aggregate annual rental expense under all leases was approximately $28,194,000.
(4) Restated for two-for-one stock split in May 1999 and a three-for-two stock split in April 1994, effected as stock dividends.
A comparison of the results of operations of the Company for 1999 with 1998 and 1998 with 1997 follows.
Mortgage interest rates, in the early months of 1997, rose but then began a fairly steady decline in May 1997 and fell each month that followed. In 1998 rates rose slightly above 7% during the first half of the year, but stayed just below 7% for the rest of the year. In 1999 rates rose gradually to just over 8% by the end of the year.
TITLE REVENUES. The Company's revenues from premiums, fees and other revenues increased 10.2% in 1999 over 1998 and 36.9% in 1998 over 1997. The number of title orders opened and closed by the Company and the average revenue per order closed follow (agent operations and certain other income have been excluded).
Total closings decreased 10.1% in 1999 and increased 49.0% in 1998. The average revenue per closing increased 12.7% in 1999 and decreased 1.9% in 1998. The average rate was increased by higher home prices, offset in 1998 by a large number of refinancings with their lower premiums. A 3% reduction in Texas title premium rates became effective August 1, 1998. However, the Company is experiencing new home equity business in Texas that did not exist before 1998. There were no other major revenue rate changes in 1999 or 1998.
INVESTMENTS. Investment income increased 9.6% in 1999 and 16.2% in 1998 primarily because of increases in average balances invested. Investment gains in 1999, 1998 and 1997 were realized as part of the ongoing management of the investment portfolio for the purpose of improving performance.
OTHER OPERATING EXPENSES. Other operating expenses for the combined business segments increased 18.3% in 1999 and 24.8% in 1998. Other operating expenses for the title segment as a percentage of title operating revenues were 15.4%, 14.4% and 15.4% in 1999, 1998 and 1997, respectively. Other operating expenses for the REI segment as a percentage of REI revenues were 28.4%, 26.3% and 37.6% in 1999, 1998 and 1997, respectively.
TITLE LOSSES. Provisions for title losses, as a percentage of title premiums, fees and other revenues, were 4.5%, 4.4% and 4.5% in 1999, 1998 and 1997, respectively. The continued improvement in industry trends in claims and the Company's improved experience in claims have led to lower loss ratios in recent years. An increase in refinancing transactions, which results in lower loss exposure, also reduced loss ratios. Such transactions were at record levels in 1998.
The liquidity of the Company itself, excluding Guaranty and its subsidiaries, is comprised of cash and investments aggregating $6.8 million and short-term liabilities of $1.6 million at December 31, 1999. The Company knows of no commitments or uncertainties which are likely to materially affect the ability of the Company and its subsidiaries to fund cash needs.