* Title orders closed down 18 pct at First American Financial
* Title orders closed down 13.7 pct at Stewart Information
* FAF Q2 EPS $0.30 vs est $0.23
* Stewart Information Q2 EPS $0.28 vs est $0.14
By Aditi Sharma
BANGALORE, July 28 (Reuters) - Title insurers First American Financial Corp and Stewart Information Services Corp posted second-quarter earnings above market estimates, mainly on reduced costs.
Title insurance guarantees that property owners possess titles to their properties and can legally transfer them. Many lenders require that buyers have this coverage.
But as fewer Americans take out mortgage, title insurers are increasingly being forced to cut costs to boost earnings.
Stewart Information, which reduced employee costs by 2.5 percent and laid-off 190 employees since June 2010, said industry forecasts are for declining market activity and it anticipates a continued reduction in employee costs.
“We have reduced employee expense through outsourcing and will continue that trend as we shift more of our workflow process to Costa Rica, resulting in significant savings,” said Stewart Morris, the company’s co-chief executive.
For a graphic on falling U.S. mortgages: r.reuters.com/wah82s
“We executed an expense reduction program that is expected to yield $40 million in annualized cost savings, beginning the third quarter,” First American Financial Chief Executive Dennis Gilmore said.
The Santa Ana, California-based company earned 30 cents a share, above 23 cents a share as estimated by analysts.
Including charges related to a loan guarantee obligation and changes in the estimated reserves of several existing large title losses, Stewart earned 28 cents a share, compared with analysts expectations of 14 cents a share.
Title revenues at Stewart Information declined 5.5 percent and total orders closed fell 13.7 percent. At First American Financial, orders closed down 18 percent, primarily hurt by declining home sales in a weak U.S. economic climate.
Shares of First American closed at $15.32 on Wednesday on the New York Stock Exchange, while those Stewart Information closed at $10.21 on the same exchange. (Reporting by Aditi Sharma in Bangalore; Editing by Joyjeet Das)