PHILADELPHIA (AP) ¿ Shares of Stewart Information Services Corp., one of the nation's largest title insurers, dropped on Thursday after disclosing that it will need to take $21.5 million in title loss reserve and other charges in the third quarter.
The company will take a $12.5 million to adjust its 2006 and 2007 title loss reserves and another $3.8 million charge related to a change in its title loss accrual rate for the first eight months of 2009.
According to a Securities and Exchange Commission filing, the company also booked a $2.2 million impairment charge related to two real estate investments and a $3 million title loss reserve from developments on a claim from a title policy issued in 2006.
The company is scheduled to report third-quarter earnings Oct. 29.
Stewart took the charges after conducting a review of title loss reserves in preparation for a $60 million debt offering. The company is offering convertible senior notes due 2014 in a private placement to qualified institutional buyers.
The notes are convertible into the company's common stock. Funds raised from the debt offering, and cash on hand, will be used to pay down $60.5 million of bank debt.
The unsecured debt will be guaranteed by its Stewart Title Co. unit and other wholly owned domestic subsidiaries.
Shares of Houston-based Stewart fell $1.61, or 13 percent, to $10.48 in afternoon trading.