STC 10-K & 10-Q changes, risk factors and insider trading
Stewart Information Services Corp. · NYSE · Title Insurance · CIK 94344 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Climate change and extreme weather events could adversely affect our operations and financial performance.”
New heading “Widespread health crises could adversely impact our business operations.”
New heading “Risks Related to Our Common Stock”
New heading “The price of our Common Stock historically has been volatile, which may affect the price at which our investors can sell their common stock.”
New heading “Anti-takeover provisions in our charter and bylaws and Delaware law may delay or prevent an acquisition of our Company.”
Removed heading “Climate change and extreme weather events could adversely affect our operations and financial performance”
Largest changes
We believe that our future success depends, in part, on our ability to anticipate changes in the industry and to offer products and services that meet evolving standards on a timely and cost-effective basis. To do so requires a flexible and secure technology architecture, such as title production systems, which can continuously comply with changing regulations, improve productivity, lower costs, reduce risk and enhance the customer experience. Further, the regulatory landscape surrounding the use of AI is rapidly evolving and remains uncertain, with potential for new laws, regulations or industry standards that could restrict the use of AI systems, impose compliance obligations, or result in enforcement actions or litigation. Our adoption of new technologies may be hindered by the development of industry-wide standards and an evolving legal and regulatory landscape. Inability to meet these requirements and any unanticipated downtime in our technology may have a material adverse effect on our earnings.see in full comparison
“Climate change and extreme weather events could adversely affect our operations and financial performance.”see in full comparison
“Climate change and extreme weather events could adversely affect our operations and financial performance”see in full comparison
“The price of our Common Stock historically has been volatile, which may affect the price at which our investors can sell their common stock.”see in full comparison
“Anti-takeover provisions in our charter and bylaws and Delaware law may delay or prevent an acquisition of our Company.”see in full comparison
“Widespread health crises could adversely impact our business operations.”see in full comparison
Full comparison: every changed paragraph (31)
Various initiatives and alternatives to traditional title insurance and settlement products and services are or may be introduced by real estate industry participants, including our competitors, lenders and investors, which may change the demand for our products and services, the manner our products and services are ordered or fulfilled, and the revenue or profitability derived from our products and services. Innovation initiatives include implementing advanced technologies, use of artificial intelligence (AI), processes and techniques to automate and streamline certain manual processes during title search, insurance policy issuance and real estate transaction settlement to improve the manner and timeliness of delivering products and services, increase efficiency, reduce costs, improve product and service quality and customer experience, and enhance risk management. The title insurance industry may experience increased competition and disruption from alternative title products and government initiatives. Title insurance waivers and alternatives to title insurance policies, such as an attorney opinion letter which may not provide the same level of protection as traditional title policies but may be a more cost-effective option, may become widely used and accepted which can affect the demand for our products and services.
We believe that our future success depends, in part, on our ability to anticipate changes in the industry and to offer products and services that meet evolving standards on a timely and cost-effective basis. To do so requires a flexible and secure technology architecture, such as title production systems, which can continuously comply with changing regulations, improve productivity, lower costs, reduce risk and enhance the customer experience. Further, the regulatory landscape surrounding the use of AI is rapidly evolving and remains uncertain, with potential for new laws, regulations or industry standards that could restrict the use of AI systems, impose compliance obligations, or result in enforcement actions or litigation. Our adoption of new technologies may be hindered by the development of industry-wide standards and an evolving legal and regulatory landscape. Inability to meet these requirements and any unanticipated downtime in our technology may have a material adverse effect on our earnings.
Our titleprincipal insuranceunderwriter, subsidiariesGuaranty, issueissues a significant portion of theirits policies through independent title agents. There is no guarantee that these title agents will fulfill their contractual obligations to us as contemplated, although such contracts include limitations that are designed to limit our risk with respect to their activities. In addition, regulators are increasingly seeking to hold title companies responsible for the actions of these title agents and, under certain circumstances, the Company may be held liable directly to third parties for actions (including defalcations) or omissions of these agents. Case law in certain states also suggests that the Company is liable for the actions or omissions of its agents in those states, regardless of contractual limitations. As a result, the Company’s use of title agents could result in increased claims on the Company’s policies issued through agents and an increase in other costs and expenses.
Competition in the title insurance industry is intense, particularly with respect to price, service and expertise. Larger commercial customers and mortgage originators also look to the size and financial strength of a title insurer. Although we are one of the leading title insurance underwriters based on market share, Fidelity National Financial, First American and Old Republic each has substantially greater gross revenues than we do and their holding companies have significantly greater capital. Further, other title insurance companies, collectively, hold a considerable share of the market. Although we are not aware of any current initiatives to reduce regulatory barriers to entering our industry, any such reduction could result in new competitors, including financial services firms or institutions, entering the title insurance business. From time-to-time, new entrants enter the marketplace with alternative products to traditional title insurance, although many of these alternative products have been disallowed by title insurance regulators. Further, advances in technologiestechnologies, including technology such as AI and machine learning, could, over time, significantly disrupt the traditional business model of financial services and real estate-related companies, including title insurance. These alternative products or disruptive technologies, if permitted by regulators, could have a material adverse effect on our revenues and earnings.
Errors and fraud relating to fund transfers may adversely affect usus.
The Company relies on its systems, employees and banks to transfer its own funds and the funds of third parties. These transfers are susceptible to user input error, fraud, system interruptions and other similar errors that, from time to time, result in lost funds or delayed transactions. Our email and computer systems, and systems used by other parties involved in a transaction have been subject to and are likely to continue to be the target of,of fraudulent attacks, including attempts to cause us or the other parties to improperly transfer funds. Funds transferred to a fraudulent recipient are often not recoverable and in certain instances, we may be liable for those unrecovered funds. Our controls and procedures in place to prevent transfer errors and fraud may prove inadequate and may result in financial losses, harm to our reputation, loss of customers or other adverse consequences which could be material to Stewart.
Climate change and extreme weather events could adversely affect our operations and financial performance
Our operations and financial performance could be adversely impacted by climate change and extreme weather events, especially if these occurrences negatively impact the overall real estate market and the broader economy. With respect to our investment portfolio, both individual corporate securities, as well as securities issued by municipalities could also see their value affected by such events. Given the unpredictable and uncertain nature of climate change and weather with respect to size, severity, frequency, geography, and duration, we are unable to quantify the true impact these events would have on our business and operations. As part of our emergency response management, we have an enterprise-wide business continuity program and disaster recovery plan to ensure continued operations of critical services in the event of a disruption to regular operations. Also, as a result of the growing importance that climate change has on both the Company’s operations as well as society in general, Stewart is committed to caring for the health of the global environment. The Company will also continue to update investors on the progress it is making to positively contribute to environmental preservation through its annual sustainability reports. These and other environmental-related documents can be found in the Investor Relations - Governance section of the Company's website.
WidespreadFailure healthto crisesattract, develop, and retain qualified personnel could adversely impactaffect our business operationsbusiness.
Our success depends, in part, on our ability to attract, develop and retain experienced and skilled personnel. The market for individuals with the requisite skills and experience is highly competitive. The loss of key employees or an inability to attract qualified new personnel in a timely manner could adversely affect our business, financial condition and results of operations.
Climate change and extreme weather events could adversely affect our operations and financial performance.
Our operations and financial performance could be adversely impacted by climate change and extreme weather events, especially if these occurrences negatively impact the overall real estate market and the broader economy. With respect to our investment portfolio, both individual corporate securities, as well as securities issued by municipalities could also see their value affected by such events. Given the unpredictable and uncertain nature of climate change and weather with respect to size, severity, frequency, geography, and duration, we are unable to quantify the true impact these events would have on our business and operations. As part of our emergency response management, we have an enterprise-wide business continuity program and disaster recovery plan to ensure continued operations of critical services in the event of a disruption to regular operations. Also, as a result of the growing importance that climate change has on both the Company’s operations as well as society in general, Stewart is committed to caring for the health of the global environment. The Company will also continue to update investors on the progress it is making to positively contribute to environmental preservation. Environmental-related documents can be found in the Investor Relations - Governance section of the Company's website.
Widespread health crises could adversely impact our business operations.
Ratings are a significant component in determining the competitiveness of insurance companies with respect to commercial title policies. OurGuaranty, domesticour underwriters,principal Guarantyunderwriter, and STIC, havehas historically been highly rated by the rating agencies that cover us. These ratings are not credit ratings. Instead, the ratings are based on quantitative, and in some cases qualitative, information and reflect the conclusions of the rating agencies with respect to our financial strength, results of operations and ability to pay policyholder claims. Our ratings are subject to continual review by the rating agencies, and we cannot be assured that our current ratings will be maintained. If our ratings are downgraded from current levels by the rating agencies, our ability to retain existing customers and develop new customer relationships may be negatively impacted, which could result in a material adverse impact on our consolidated financial condition or results of operations.
The Consumer Financial Protection Bureau (CFPB) is charged with protecting consumers by enforcing federal consumer protection laws and regulations. The CFPB is an independent agency and funded by the United States Federal Reserve System. Its jurisdiction includes banks, credit unions, securities firms, payday lenders, mortgage servicing operations, foreclosure relief services, debt collectors and other financial companies. The nature and extent of these regulations include, but are not limited to: conducting rule-making, supervision, and enforcement of federal consumer protection laws; restricting unfair, deceptive, or abusive acts or practices; marshalling consumer complaints; promoting financial education; researching consumer behavior; monitoring financial markets for new risks to consumers; and enforcing laws that outlaw discrimination and other unfair treatment in consumer finance. The current leadership of the CFPB has begun to rescind or revise many regulations, as well as to narrow its enforcement and supervision. We cannot currently predict the nature and timing of future developments that may potentially impact CFPB rules, proposals, enforcement and supervision.
We are a holding company and we receive dividends from our insurance subsidiaries and unregulated subsidiaries to pay our parent company's operating expenses, debt service obligations and dividends to our common stockholders. While we may have adequate cash available in our parent company and unregulated subsidiaries to fund these obligations, we may depend on dividends from our insurance underwriting subsidiaries to meet cash requirements for acquisitions and other strategic investments. In regard to our insurance subsidiaries, which include Guaranty and STIC, the insurance statutes and regulations of some statesjurisdictions require us to maintain a minimum amount of statutory capital and restrict the amount of dividends that our insurance subsidiaries may pay to us. Refer to Note 3 to our audited consolidated financial statements and Item 7 - MD&A - Liquidity and Capital Resources for details on statutory surplus and dividend restrictions.
We expect that cash flows from operations and cash available from our underwriters, subject to regulatory restrictions, will be sufficient to fund our operations, pay our claims and fund operational initiatives. To the extent that these funds are not sufficient, we may be required to borrow funds on less than favorable terms or seek funding from the equity market, which may be on terms that are dilutive to existing shareholders.stockholders. Increases in interest rates also increase the costs associated with borrowing on our floating rate line of credit facility. Refer to Note 9 to our audited consolidated financial statements for details on our existing line of credit facility.
We deposit substantial fiduciary funds, which are third-party funds, and operating funds in many financial institutions in excess of insured deposit limits. In relation to fiduciary funds, we perform appropriate account titling and management which leaves the majority of accounts within insured limits. Those above the limits, which typically relate to large residential or commercial settlement transactions, are generally placed in well-capitalized financial institutions. In the event that one or more of these financial institutions fail, there is no guarantee that we could recover the deposited funds in excess of federal deposit insurance, and, as such, we could be held liable for the funds owned by or owed to third parties. Under these circumstances, our liability could have a material adverse effect on our results of operations or financial condition.
Risks Related to Our Common Stock
The price of our Common Stock historically has been volatile, which may affect the price at which our investors can sell their common stock.
The market price for our Common Stock varied in the year ended December 31, 2025, between a high price of $78.61 on November 25, 2025 and a low price of $56.39 on July 16, 2025. This volatility may affect the price at which investors in our Common Stock can sell their common stock. Our stock price may continue to be volatile and subject to significant price and volume fluctuations in response to market and other factors, including those discussed herein; variations in our quarterly operating results from our expectations or those of securities analysts or investors; downward revisions in securities analysts’ estimates; and announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments.
Anti-takeover provisions in our charter and bylaws and Delaware law may delay or prevent an acquisition of our Company.
Our restated certificate of incorporation, bylaws and Delaware law contain provisions that may have the effect of delaying or preventing a change in control of us or changes in our management. Our restated certificate of incorporation and bylaws include provisions that:
•allow our board of directors to use, under certain circumstances, preferred stock as a method of discouraging, delaying or preventing a change of control of Stewart (by means of a merger, tender offer, proxy contest or otherwise);
•require a stockholder to submit written notice of any director nomination to our Corporate Secretary not less than ninety (90) days nor more than one-hundred and twenty (120) days prior to the anniversary of the immediately preceding annual meeting;
•allow our board of directors to adopt, amend or repeal our bylaws, subject to limitations under Delaware law;
•authorize additional common stock at such times, under such circumstances and with such terms and conditions as may impede a change in control of Stewart; and
•require that special meetings of stockholders be called only by the Chairman of our board of directors, Chief Executive Officer, board of directors, or at the request in writing of stockholders owning twenty-five percent (25%) or more of the entire capital stock of Stewart issued and outstanding and entitled to vote.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us in certain circumstances.
Any provision of our amended and restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Common Stock, and could also affect the price that some investors are willing to pay for our Common Stock.
Management's Discussion & Analysis (MD&A)
Largest changes
“In 2023, net unrealized investment gains of $10.9 million, net of taxes, which increased our other comprehensive income, were primarily related to net increases in the fair values of our corporate and foreign bond securities investments, primarily influenced by inflation improvements and expected government actions to lower interest rates. Also in 2023, we recorded foreign currency translation gains which increased our other comprehensive income by $5.3 million, net of taxes, which was primarily driven by the appreciation in value of the Canadian dollar and British pound against the U.S. …”see in full comparison
“Fourth quarter 2024 included $1.7 million of pretax net realized and unrealized gains, primarily related to net gains from fair value changes of equity security investments and an acquisition liability adjustment, partially offset by losses from a sale of an office and an investment impairment. Fourth quarter 2023 results included $4.8 million of pretax net realized and unrealized gains primarily driven by net gains on fair value changes of equity securities investments and an acquisition liability adjustment.”see in full comparison
“During 2023, total variable costs decreased $109.6 million, or 29%, compared to 2022, primarily due to lower appraisal and outside search expenses tied to lower overall operating revenues. Costs that are primarily fixed in nature decreased $11.8 million, or 6%, primarily driven by reduced outsourcing and rent and other occupancy expenses, while independent costs decreased $19.0 million, or 25%, primarily due to lower litigation settlement, business promotion and marketing, and office closures expenses.”see in full comparison
“Corporate segment. The segment's net expenses for the fourth quarter 2025 slightly increased to $10.1 million, compared to $9.7 million in the fourth quarter 2024, primarily due to higher interest expense on increased debt balances. The segment recorded a $1.1 million realized loss related to an investment impairment during the fourth quarter 2024.”see in full comparison
“Direct title revenues in 2023 decreased 23% compared to 2022, primarily due to reduced transaction volumes driven by the elevated interest rate market environment. Total non-commercial domestic revenues in 2023 declined 21%, primarily due to 20% and 51% lower residential purchase and refinancing transactions, respectively, compared to 2022. Domestic commercial revenues decreased 27% in 2023, primarily driven by 19% lower commercial transactions and smaller transaction sizes compared to 2022. …”see in full comparison
“Corporate segment. The segment's fourth quarter 2024 results included net expenses attributable to corporate operations of $9.7 million, which were comparable to the prior year quarter, and a $1.1 million unrealized loss related to an investment impairment.”see in full comparison
Full comparison: every changed paragraph (55)
Net income attributable to Stewart for the year 20242025 was $115.5 million, or $4.05 per diluted share, compared to $73.3 million, or $2.61 per diluted share, compared to $30.4 million, or $1.11 per diluted share, in 2023.2024. Pretax income before noncontrolling interests in 20242025 was $165.6 million (5.7% pretax margin) compared to $114.3 million (4.6% pretax margin) compared to $60.9 million (2.7% pretax margin) in 2023.2024. During 2024,2025, total operating revenues increased 10%18% to $2.86 billion compared to $2.42 billion compared to $2.21 billion in 2023,2024, while total expenses increased 8%16% to $2.38$2.76 billion, compared to $2.20$2.38 billion in 2023,2024, primarily driven by higher revenues in the title and real estate solutions services operations. Refer to "Results of Operations" for detailed year-to-year income statement discussions, and "Liquidity and Capital Resources" for an analysis of Stewart's financial condition.
For the fourth quarter 2024,2025, we reported net income attributable to Stewart of $36.3 million ($1.25 per diluted share), compared to net income attributable to Stewart of $22.7 million ($0.80 per diluted share), compared to net income attributable to Stewart of $8.8 million ($0.32 per diluted share) for the fourth quarter 2023.2024. Fourth quarter 20242025 pretax income before noncontrolling interests was $35.4$51.7 million (6.5% pretax margin) compared to pretax income before noncontrolling interests of $18.8$35.4 million (5.3% pretax margin) for the prior year quarter.
Fourth quarter 2025 results included $3.8 million of pretax net realized and unrealized losses, primarily recorded in the title segment, while the fourth quarter 2024 results included $1.7 million of pretax net realized and unrealized gains, comprised of $2.8 million net gains in the title segment and $1.1 million net losses in the corporate segment.
During the fourth quarter 2025, we completed the largest acquisition in Stewart history by acquiring Mortgage Contracting Services (MCS), an industry leader in providing property preservation and field services to mortgage servicers. This acquisition broadens Stewart's servicer customer base and expands our full suite of lender services. MCS is included in our real estate solutions segment. Refer to Note 8 to our audited consolidated financial statements for details.
Fourth quarter 2024 included $1.7 million of pretax net realized and unrealized gains, primarily related to net gains from fair value changes of equity security investments and an acquisition liability adjustment, partially offset by losses from a sale of an office and an investment impairment. Fourth quarter 2023 results included $4.8 million of pretax net realized and unrealized gains primarily driven by net gains on fair value changes of equity securities investments and an acquisition liability adjustment.
Segment operating revenues in the fourth quarter 20242025 increased $59.8$105.7 million, or 12%,19%, driven by increasedstrong revenuesperformances fromby our direct and agency title operations,operations while total segmentwith operating expensesrevenue increasedgrowth $41.0of million,18% orand 8%,20%, respectively, compared to the fourth quarter 2023.2024. AgencySegment total operating expenses increased $85.9 million, or 16%, compared to the fourth quarter 2024 driven by the $43.9 million, or 19%, higher agency retention expenses and $40.3 million, or 15%, increased combined employee costs and other operating expenses, consistent with the title revenue growth. As a percentage of operating revenues, total title segment employee costs and other operating expenses improved to 47.0% in the fourth quarter 2024 increased $13.7 million, or 6%, consistent with the $16.6 million, or 6%, increase in gross agency revenues2025 compared to 48.7% in the prior year quarter.quarter, primarily due to increased title operating revenues.
Title loss expense in the fourth quarter 2025 increased $2.3 million, or 11%, compared to the fourth quarter 2024, primarily driven by higher title revenues. As a percentage of title operating revenues, title loss expense improved to 3.4% in the fourth quarter 2025 compared to 3.7% in the prior year quarter, primarily as a result of our continued overall favorable claims experience.
Total title segment employee costs and other operating expenses in the fourth quarter 2024 increased $27.1 million, or 11%, compared to the prior year quarter, primarily due to increased incentive compensation expenses related to higher title revenues, higher outside search expenses resulting from higher commercial revenues, and increased severance expenses, primarily related to an executive retirement announced in September 2024. As a percentage of operating revenues, total segment employee costs and other operating expenses slightly improved to 48.7% in the fourth quarter 2024 compared to 49.1% in the prior year quarter. Title loss expense in the fourth quarter 2024 was $20.7 million, which was comparable to the fourth quarter 2023, primarily as a result of our overall favorable claim experience offsetting the incremental title loss expense related to increased title revenues. As a percentage of title revenues, title loss expense was 3.7% in the fourth quarter 2024 compared to 4.1% in the prior year quarter.
Total non-commercial domestic revenues in the fourth quarter 2024 improved by $8.7 million, or 6%, primarily due to increased total non-commercial domestic transactions compared to the fourth quarter 2023. Domestic commercial revenues in the fourth quarter 20242025 improved by $32.0 million, or 38%, primarily driven by increased bysizes $28.0,of commercial closed transactions, principally related to data center and energy asset classes, while domestic non-commercial revenues increased $17.7 million, or 50%,11%, primarily duedriven to aby higher averagecombined transaction sizepurchase and arefinancing 13% increase in commercialclosed transactions and increased average fee per file compared to the prior year quarter. Fourth quarter 20242025 average domestic commercial fee per file was $19,600,$27,300, or 33%39% higher compared to $14,800$19,600 in the fourth quarter 2023,2024, while average domestic residential fee per file wasimproved $2,900,13% whichto was 8% lower$3,300, compared to $3,200$2,900 from the prior year quarter, primarily due to a lower purchase transaction mix duringin the fourth quarter 2024. Total international revenues in the fourth quarter 20242025 increased by $6.5$1.5 million, or 21%,4%, primarily due to higher residential transaction volumes compared to the prior year quarter.
The segment’s fourth quarter 20242025 operating revenues improved $25.6$24.9 million, or 42%,29%, primarily duedriven toby increased revenues fromour credit information and valuation management services operationsbusiness. compared to the fourth quarter 2023. On a combined basis, the segment'sCombined employee costs and other operating expenses in the fourth quarter 2025 increased $26.2$21.6 million, or 49%,27%, primarily drivendue byto higherincreased vendorcosts prices for credit informationof services and increased employee count in anticipation of new customers and related revenue.to revenue growth. The segment's pretax income included acquisition intangible asset amortization expenses of $5.5$5.6 million and $5.8$5.5 million in the fourth quarters 20242025 and 2023,2024, respectively.
Corporate segment. The segment's net expenses for the fourth quarter 2025 slightly increased to $10.1 million, compared to $9.7 million in the fourth quarter 2024, primarily due to higher interest expense on increased debt balances. The segment recorded a $1.1 million realized loss related to an investment impairment during the fourth quarter 2024.
Corporate segment. The segment's fourth quarter 2024 results included net expenses attributable to corporate operations of $9.7 million, which were comparable to the prior year quarter, and a $1.1 million unrealized loss related to an investment impairment.
In 2024,2025, total provisions for known claims increased $12.6 million, or 15%, compared to 2024 as a result of the timing of claims reported and changes to large and non-large claims related to both current and prior policy years. Total provisions - IBNR in 2025 decreased $13.9 million, or 21%, compared to the prior year primarily due to our overall favorable claims experience. In 2024, total known provision claims decreased $5.2 million, or 6%, compared to 2023, primarily as a result of changes to existing large and non-large claims related to prior policy years, while total provisions - IBNR increased $1.7 million, or 3%,2.7%, primarily due to increased title premiums in 2024. In 2023, total known claims provisions decreased by $17.1 million, or 16%, primarily as a result of changes to existing large and non-large claims related to prior policy years, while total provisions - IBNR decreased $19.1 million, or 23%, primarily due to lower title premiums compared to 2022. As a percentage of title operating revenues, current year provisions - IBNR were 2.7%,2.0%, 2.7% and 2.6% and 3.8% in 2024,2025, 20232024 and 2022,2023, respectively.
Industry data. Published U.S. mortgage interest rates and other selected residential housing data for the three years ended December 31, 20242025 are shown below (amounts shown for 20242025 are preliminary and subject to revision). The amounts below may not relate directly to or provide accurate data for forecasting our operating revenues or order counts. Our statements on home sales, mortgage interest rates and loan origination activity are based on averaged published industry data as of December 31, 20242025 from sources including Fannie Mae and the Mortgage Bankers Association (MBA), when available.
AfterIn reaching a 23-year high of 7.79% during the fourth quarter 2023,2025, the average 30-year mortgage interest rate dippedreached duringits 2024,lowest level in three years, influenced by several interest rate reductions by the federal government which started in late 2024. The average 30-year mortgage interest rate was 6.15% at the end of 2025, compared to 6.85% at the end of 2024,2024 comparedand toa 6.61%23-year athigh of 7.79% during the endfourth ofquarter 2023. Total loan dollar originations in 20242025 improved 10%18% compared to 2023,2024, primarily due to a 52%67% increase in refinancing transactions, with purchase lending volume improving by 1%.4%. However, 2025 existing home sales in 2024 remained subdued,flat to 2024, primarily as a result of continuedthe relatively elevated interest rates, accompaniedtight byinventory lowlevels housing inventory,and affordability challenges caused by rising home prices,prices. andHowever, weatherwe eventsare encouraged that existing home sales in 2024.December 2025 improved 5% (seasonally-adjusted) compared to November 2025, which was the strongest result in nearly three years, according to the National Association of Realtors (NAR).
For 2026, Fannie Mae and MBA expect existing homes sales to improve 7%, with the median existing home price remaining essentially unchanged. The average 30-year mortgage interest rate inis 2025forecast to average similar to 2024 and slightly improve to 6.40%6.2% in 2026.2026 compared to 6.6% in 2025, and further decline to 6.1% in 2027. Total mortgage originations are expected to increaseimprove 18%15% in 2025 compared to 2024,2026, with refinancing and purchase transactions increasing 41%31% and 10%,7%, respectively, while existing and new homes sales are expected to improve to 4.21 million (4%) and 0.77 million (10%), respectively,5% compared to 2024.2025.
Factors affecting revenues. Our primary business is title insurance and settlement-related services. We close transactions and issue title policies on homes, commercial and other real properties located in all 50 states,across the District of ColumbiaU.S. and international markets through policy-issuing offices, agencies and centralized title services centers. Our real estate solutions operations include credit and real estate information services, property preservation and field services, valuation management services, online notarization and closing services, and search services. The corporate segment includes our parent holding company and centralized support services departments, along with other businesses not related to title or real estate solutions operations.departments. Refer to Item 1. Business for details.
Premiums are determined in part by the values of the transactions we handle. To the extent inflation or market conditions cause increases in the prices of homes and other real estate, premium revenues are also increased. Conversely, falling home prices cause premium revenues to decline. Home price changes may override the seasonal nature of the title insurance business. Historically, our first quarter is the least active in terms of title insurance revenues as home buying is generally depressed during winter months. Our second and third quarters are typically the most active as the summer is the traditional home buying season, and while commercial transaction closings are skewed to the end of the year, individually large commercial transactions can occur any time of the year. On average, title premium rates for refinance orders are lower compared to a similarly priced purchase transaction.
Direct title revenues improved 13% in 2025 compared to 2024, primarily due to growth in both commercial and non-commercial domestic revenues. Domestic commercial revenues in 2025 increased 35% compared to the prior year, driven by increased sizes and volume of commercial transactions, primarily related to data center, energy, retail and mixed-use asset classes. Total non-commercial domestic revenues in 2025 increased 6% compared to 2024, primarily as a result of higher combined purchase and refinancing closed transactions and increased average fee per file. Domestic commercial transactions closed improved 13%, while combined purchase and refinancing orders increased 1% in 2025 compared to 2024. Average domestic commercial fee per file in 2025 improved 18% to $19,300, compared to $16,300 in 2024, while average residential fee per file in 2025 improved 6% to $3,200, compared to $3,000 in the prior year. Total international revenues in 2025 improved $14.2 million, 11%, primarily due to overall higher transaction volumes compared to 2024.
Direct title revenues in 2023 decreased 23% compared to 2022, primarily due to reduced transaction volumes driven by the elevated interest rate market environment. Total non-commercial domestic revenues in 2023 declined 21%, primarily due to 20% and 51% lower residential purchase and refinancing transactions, respectively, compared to 2022. Domestic commercial revenues decreased 27% in 2023, primarily driven by 19% lower commercial transactions and smaller transaction sizes compared to 2022. Average domestic commercial fee per file in 2023 was $12,200, which was 11% lower compared to 2022, while average residential fee per file in 2023 was $3,200, which was 6% higher compared to 2022, primarily due to transaction mix in 2023. Total international revenues decreased $40.3 million, or 24%, in 2023 primarily due to lower transaction volumes in our Canadian and United Kingdom operations compared to the prior year.
Gross revenues from independent agency operations (agency revenues) in 2025 improved $219.4 million, or 21%, compared to 2024, primarily driven by improved volumes in key agency states and commercial transactions. Gross agency revenues increased $57.2 million, or 6%, in 2024, while they decreased $480.3 million, or 33%, in 2023,2024 compared to corresponding prior years,2023, which werewas consistent with the performance of our direct title operations and trends of the overall real estate market during 2024 and 2023.2024. Net agency revenues (which are net of agency retention) increased $36.5 million (21%) and $5.9 million,million or 3%,(3%) in 20242025 and decreased2024, $85.5 million, or 33%, in 2023, compared to respective prior periods,respectively, primarily consistent with the gross agency revenues trend. Refer further to the "Retention by agencies" discussion under Expenses below.
Title revenues by geographic location. The approximate amounts and percentages of consolidated title operating revenues for the last three years ended December 31, 20242025 were as follows (amounts and percentages are rounded and may not foot as presented):
Real estate solutions and other revenues. Real estate solutions and other revenues are primarily comprised of revenues generated by our real estate solutions operations. These revenues alsoincreased included$79.7 $39.2million, millionor of 2022 revenues generated by a real estate brokerage company which was sold22%, in the2025 second quarter 2022. Excluding the real estate brokerage company, real estate solutions revenuesand increased $95.0 million, or 36%, in 20242024, compared to 2023,corresponding prior periods, primarily due to increased revenues from our credit information and valuation management services operations, while these revenues decreased $33.1 million, or 11%, in 2023 compared to 2022, primarily due to the slow market activity influenced by higher interest rates.businesses.
Investment income. Investment income improved $2.4 million, or 4%, in 2025 compared to 2024, primarily due to the higher interest income generated from increased cash, short-term investments and notes receivable balances in 2025. Investment income in 2024 increased $10.2 million, or 23%, and $22.7 million, or 101%, in 2024 and 2023, respectively, compared to the corresponding prior periods,2023, primarily due to higher interest income resulting from earned interest from eligible escrow balances which started mid-2023. Higher interest rates also contributed to the increased investment income in 2023 compared to 2022. Refer to Note 6 to our audited consolidated financial statements for additional details.
Retention by agencies. Amounts retained by title agencies are based on agreements between agencies and our title underwriters. Amounts retained by independent agencies, as a percentage of revenues generated by them, averaged 82.9%,83.0%, 82.5%82.9% and 82.4%82.5% during each of the three years ended December 31, 2024.2025. The average retention raterates during 2025 and 2024 were slightly increasedelevated incompared 2024,to 2023, primarily as a result of increasedrevenue revenuesgrowth from states with relatively higher retention rates in 2025 and 2024. The average retention percentage may vary from period to period due to the geographical mix of agency operations, the volume of title revenues and, in some states, laws or regulations. Due to the variety of such laws or regulations, as well as competitive factors, the average retention rate can differ significantly from state to state. In addition, a high proportion of our independent agencies are in states with retention rates greater than 80%. We continue to focus on increasing profit margins in every state, increasing premium revenue in states where remittance rates are above 20%,higher, and maintaining the quality of our agency network, which we believe to be the industry’s best, in order to mitigate claims risk and drive consistent future performance. While market share is important in our agency operations channel, it is not as important as margins, risk mitigation and profitability.
Employee costs. Consolidated employee costs increased $85.2 million, or 11%, in 20242025 compared to 2024, and increased $32.6 million, or 5%, in 2024 compared to 2023, primarily driven by increased incentive compensation on overall improved revenues and higher salaries and employee benefits expenses onrelated to a higher average employee countcount, inand increased incentive compensation consistent with overall improved results during 2025 and 2024. ConsolidatedOur total employee costscounts inat December 31, 2025, 2024 and 2023 decreasedwere $89.2approximately million,7,800, or7,000 11%,and 6,800 respectively. Average cost per employee for 2025 and 2024 increased 4% and 6%, respectively, compared to 2022,corresponding prior periods, primarily driven by lowerhigher salariesincentive compensation and benefits expenses, temporary labor and overtime costs, and incentive compensation resulting from lower average employee count and transaction volumes in 2023.expenses.
Our total employee counts at December 31, 2024, 2023 and 2022 were approximately 7,000, 6,800 and 7,100, respectively. Average cost per employee for 2024 increased 6% compared to 2023, primarily driven by higher incentive compensation and benefits expenses, while it decreased 2% in 2023 compared to 2022, primarily due to lower incentive compensation, temporary labor and overtime costs driven by reduced 2023 transaction volumes.
Employee costs in 2024 for the title segment increased $77.0 million, or 11%, in 2025 and real estate solutions segments increased $28.5 million, or 4%, andin $5.3 million, or 11%, respectively,2024, primarily driven by higher average employee counts and increased incentive compensation compared to 2023.corresponding prior periods. Employee costs in 2023 for the title and real estate solutions segments decreasedincreased $86.9$7.9 million, or 12%,14%, in 2025 and $1.1increased $5.3 million, or 2%,11%, respectively,in compared2024, primarily due to 2022, primarily driven by lowerhigher average employee counts andcompared transactionto volumescorresponding inprior 2023.periods.
Other operating expenses. Other operating expenses include costs that are primarily fixed in nature, costs that follow, to varying degrees, changes in transaction volumes and revenues (variable costs) and costs that fluctuate independently of revenues (independent costs). Costs that are primarily fixed in nature include rent and other occupancy expenses, equipment rental, insurance, repairs and maintenance, technology costs, telecommunicationscosts and title planttelecommunications expenses. Variable costs include appraiserthird-party service and serviceappraiser expenses related to real estate solutions operations, title outside search fees, attorney fee splits, credit losses (on receivables), copy supplies, delivery fees, postage, premium taxes and title plant maintenance expenses. Independent costs include general supplies, litigation defense, business promotion and marketing,marketing and travel.
Consolidated other operating expenses in 2025 and 2024 increased $110.7 million (18%) and $96.3 million,million or(19%), 19%,respectively, primarily driven by increased transactions from commercial services andhigher real estate solutions operationsservice expenses and increased title outside search and premium tax expenses resulting from revenue growth compared to 2023,corresponding whileprior other operating expenses in 2023 decreased $140.3 million, or 22%, primarily due to reduced transaction volumes in 2023 compared to 2022.periods. Total other operating expenses, as a percentage of total operating revenues (other operating expenses ratio), were 24.9%,25.0%, 24.9% and 22.9% and 21.3% during 2024,2025, 20232024 and 2022,2023, respectively, with the higher other operating expenses ratios in 20242025 and 20232024 primarily driven by the increased size of our real estate solutions operationsoperations, which typically have higher other operating expenses.
During 2025, total variable costs increased $92.8 million, or 25%, primarily driven by higher service and appraiser expenses, and title outside search expenses resulting from improved revenues from real estate solutions and commercial services, respectively, compared to 2024. Costs that are primarily fixed in nature increased $4.4 million, or 2%, in 2025, primarily as a result of increased technology costs, while independent costs increased $13.5 million, or 25%, in 2025, primarily due to increased business promotion, marketing, and travel costs and file clean-up expenses.
During 2023, total variable costs decreased $109.6 million, or 29%, compared to 2022, primarily due to lower appraisal and outside search expenses tied to lower overall operating revenues. Costs that are primarily fixed in nature decreased $11.8 million, or 6%, primarily driven by reduced outsourcing and rent and other occupancy expenses, while independent costs decreased $19.0 million, or 25%, primarily due to lower litigation settlement, business promotion and marketing, and office closures expenses.
Title losses in 2025 slightly increased (2%) compared to 2024, while title losses in 2024 were $80.4comparable to 2023, which were both primarily driven by our continued overall favorable claims experience in 2025 and 2024, which reduced the effect of increased title premiums in 2025 and 2024 compared to corresponding prior periods. Total claims payments in 2025 were $76.6 million, which was comparable10% lower compared to 2023,2024, primarily due to thelower effectpayments ofon higherlarge titleclaims premiums being offset by overall favorable claim experience in 2024. Title losses in 2023 decreased $22.5 million, or 22%, comparedrelated to theprior previousyear year, primarily as a result of lower title premiums in 2023. Title losses paid were $85.4 million, $104.3 million and $93.1 million in 2024, 2023 and 2022, respectively.policies. Total claims payments in 2024 decreasedwere $18.9$85.4 million, orwhich 18%,was 18% lower compared to 2023, primarily due to decreased payments for both large and non-large claims related to prior policy years, while total claims in 2023 increased $11.2 million, or 12%, compared to 2022, primarily as a result of increase in payments for non-large claims related to prior policy years. Claims payments made on large title claims,claims (net of insurance recoveries,recoveries) during 2024,2025, 2024 and 2023 and 2022 were $14.9$6.3 million, $26.3$14.9 million and $23.1$26.3 million, respectively.
Depreciation and amortization. Total depreciation and amortization expense in 2025 was comparable to 2024, primarily due to the amortization and depreciation expenses related to acquired intangible assets and new internal-use systems placed into operations were offset by several assets becoming fully amortized during 2025. Total depreciation and amortization expense in 2024 was also comparable to 2023, primarily due to increased depreciation expenses related to new internal-use systems placed into operation being offset by lower acquisition intangible amortization expenses resulting from several assets becoming fully amortized. Acquisition intangible asset amortization expenses in 2025, 2024 and 2023 were $31.9 million, $32.1 million and $34.6 million, respectively.
Depreciation and amortization. Depreciation and amortization expense in 2024 decreased $0.8 million, or 1%, compared to 2023, primarily due to lower acquisition intangible amortization expenses resulting from several assets becoming fully amortized, partially offset by increased depreciation expenses related to new internal-use systems placed into operation. Depreciation and amortization expense in 2023 increased $5.3 million, or 9%, compared to 2022, primarily due to increased depreciation expenses related to internal-use systems placed into operation starting in late 2022. Acquisition intangible asset amortization expenses in 2024, 2023 and 2022 were $32.1 million, $34.6 million and $33.0 million, respectively.
Our liquidity and capital resources reflect our ability to generate cash flow to meet our obligations to shareholders,stockholders, customers (payments to satisfy claims on title policies), vendors, employees, lenders and others. As of December 31, 2024,2025, our total cash and investments, including amounts reserved pursuant to statutory requirements, aggregated $926.6$975.8 million. Of our total cash and investments at December 31, 2024,2025, $523.4$540.5 million ($259.1$343.3 million, net of statutory reserves) was held in the United States (U.S.) and the rest internationally,internationally (principally in Canada.Canada).
As a holding company, the parent company is funded principally by cash from its subsidiaries' earnings in the form of dividends, operating and other administrative expense reimbursements and pursuant to intercompany tax sharing agreements. Cash held at the parent company and its unregulated subsidiaries (which totaled $32.1$150.3 million at December 31, 20242025) is available for funding the parent company'scompany and its unregulated subsidiaries' operating expenses, and the parent company's interest payments on debt and dividend payments to common stockholders. The parent company also receives distributions from Guaranty, its regulated title insurance underwriter, to meet cash requirements for acquisitions and other strategic investments.
We maintain investments in accordance with certain statutory requirements for the funding of statutory premium reserves. Statutory premiumreserve reservesfunds are required to be fully funded and invested in high-quality securities and short-term investments. Statutory reserve funds are not available for current claimsclaim payments, which must be funded from current operating cash flow. Included in investments in debt and equity securities are statutory reserve funds of approximately $535.5$492.0 million at December 31, 2024.2025. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $9.5$4.4 million at December 31, 2024.2025. Although these cash statutory reserve funds are not restricted or segregated in depository accounts, they are required to be held pursuant to state statutes. If the Company fails to maintain minimum investments or cash and cash equivalents sufficient to meet statutory requirements, the Company may be subject to fines or other penalties, including potential revocation of its business license. As of December 31, 2024,2025, our known claims reserve totaled $66.9$84.8 million and our estimate of claims that may be reported in the future, under U.S. generally accepted accounting principles, totaled $444.6$439.7 million. In addition to this, we had cash and investments (at amortized cost and excluding equity method investments) of $289.2$257.2 million which are available for underwriter operations, including claims payments.
The ability of Guaranty to pay dividends to its parent is governed by Texas insurance law. The Texas Department of Insurance (TDI) must be notified of any dividend declared, and any dividend in excess of the greater of the statutory net operating income or 20% of surplus (which was approximately $173.0$165.4 million as of December 31, 20242025) would be, by regulation, considered extraordinary and subject to pre-approval by the TDI (see Note 3 to our audited consolidated financial statements for details). Also, the Texas Insurance Commissioner may raise an objection to a planned distribution during the notification period. Guaranty’s actual ability or intent to pay dividends to its parent may be constrained by business and regulatory considerations, such as the impact of dividends on surplus and liquidity, which could affect its ratings and competitive position, the amount of insurance it can write and its ability to pay future dividends. Guaranty paid $173.0 million and $30.0 million in dividends to its parent during 2025 and 2024, while it paid no dividends during 2023.respectively.
Contractual obligations. Our material contractual obligations at December 31, 20242025 are composed primarily of our unsecured senior3.6% notesSenior Notes (Senior Notes) and line of credit facility (and the related semi-annual interest payments), operating leases, and reserves for estimated title losses. Refer to Note 9 (Notes payable and line of credit) and Note 14 (Leases) to our audited consolidated financial statements for details on the unsecuredSenior seniorNotes notesand line of credit facility, and operating leases, respectively. Refer to the Note 10 (Estimated title losses) to our audited consolidated financial statements and the Title losses section under Results of Operations for details on title losses.
Net cash provided by operations in 2025 increased by $70.1 million compared to 2024, primarily due to higher net income and lower payments on claims in 2025, while net cash provided by operations in 2024 increased by $52.6 million compared to 2023,the prior year, primarily due to higher net income and lower payments on claims, while net cash provided by operationsclaims in 2023 declined by $108.8 million compared to the prior year, primarily due to the lower net income and higher payments on claims.2024. Although our business is labor intensive, we are focused on a cost-effective, scalable business model which includes utilization of technology, centralized back and middle office functions and business process outsourcing. We continueare tocontinuing thoughtfullyour manageemphasis expenses,on cost management, especially in light of the current sloweconomic residential real estate marketenvironment due to elevated mortgage interest rates, specifically focusing on lowering unit costs of production and improving operating margins in our direct title and real estate solutions operations. Our plans to improve margins include additional automation of manual processes, further consolidation of our various systems and production operations, and full integration of acquisitions. We continue to invest in the technology necessary to accomplish these goals.
We used $14.4$370.0 million, $25.1$14.4 million and $142.9$25.1 million of cash during 2024,2025, 20232024 and 2022,2023, respectively, for acquisitions of various title and real estate solutions businesses,and title businesses (which included our acquisition of MCS in 2025), consistent with our strategy of increasing scale, growth in key markets and broader technology and service offerings. We used $40.5$73.4 million, $37.8$40.5 million and $47.9$37.8 million of cash for purchases of property and equipment and other long-lived assets (including internal-use software development) during 2024,2025, 20232024 and 2022,2023, respectively, while we used cash of $8.8 million, $31.6 million and $1.0 million during 2025, 2024 and 2023, respectively, for payments for cost-basis and other investments. We maintain investment in capital expenditures at a level that enables us to implement technologies for increasing our operational and back-office efficiencies andefficiencies, to pursue growth in key markets.markets and for improving customer experience.
Financing activities and capital resources. Total debt and stockholders’ equity were $445.8$646.6 million and $1.4$1.7 billion, respectively, as of December 31, 2024.2025. As of December 31, 2024,2025, our total debt-to-equity and debt-to-capitalization ratios, excluding short-term loan agreements in connection with our Section 1031 tax-deferred property exchange (Section 1031) business, were approximately 32%39% and 24%,28%, respectively. We recently renewed and increased our line of credit facility, from which we drew $200.0 million during the fourth quarter 2025. As of December 31, 2025, the outstanding balance of our Senior Notes was $446.2 million, while our line of credit facility had an outstanding balance of $200.0 million with a remaining borrowing capacity of $97.5 million (refer to Note 9 to our audited consolidated financial statements for details). The Senior Notes are rated "BBB" by Fitch Ratings Ltd. as of December 31, 2025.
During 2024,2025, 20232024 and 2022,2023, payments on notes payable of $3.4$1.2 million, $5.7$3.4 million and $74.3$5.7 million, respectively, and notes payable additions of $3.4$1.2 million, $3.5$3.4 million and $39.5$3.5 million, respectively, were related to our Section 1031 business, which had an outstanding balance of $0.2$0.1 million at December 31, 2024. As of December 31, 2024, the outstanding balance of our Senior Notes was $445.7 million, while we have an unused $197.5 million borrowing capacity on our existing line of credit facility (refer to Note 9 to our audited consolidated financial statements for details).2025.
During the fourth quarter 2025, we issued an aggregate of 2,185,000 new shares of Common Stock, which included shares purchased by the underwriters to the offering transaction. Total proceeds from the offering, net of issuance costs, was $140.8 million.
During 2024,2025, we paid dividends of $1.95$2.05 per common share, compared to $1.85$1.95 and $1.65$1.85 per common share paid during 20232024 and 2022,2023, respectively. Beginning in the third quarter 2024,2025, we increased our annual cash dividend was increased to $2.00$2.10 per share. In aggregate, we paid total dividends of $58.5 million, $53.9 million,million and $50.5 million and $44.7 million in 2024,2025, 20232024 and 2022,2023, respectively.
Effect of changes in foreign currency rates. The effect of changes in foreign currency rates on the consolidated statements of cash flows was a net increase (decrease) increase in cash and cash equivalents of $3.2 million, $(4.5 million), and $1.0 million and $(5.5 million) in 2024,2025, 20232024 and 2022,2023, respectively. Our primary foreign currencies are the Canadian dollar and British pound, and, relative to the U.S. dollar, the value of the Canadian dollar and British pound generally declinedappreciated in 20242025 and 2022,2023, while it appreciateddeclined during 2023.2024.
We believe we have sufficient liquidity and capital resources to meet the cash needs of our ongoing operations, including consideration of the current economic and real estate environment created by the increasingelevated mortgage interest rates. However, we may determine that additional debt or equity funding is warranted to provide liquidity for achievement of strategic goals or acquisitions or for unforeseen circumstances. Other than scheduled maturities of debt, operating lease payments and anticipated claims payments, we have no material contractual commitments. We expect that cash flows from operations and cash available from our underwriters, subject to regulatory restrictions, will be sufficient to fund our operations, including title claims payments. However, to the extent that these funds are not sufficient, we may be required to borrow funds on terms less favorable than we currently have or seek funding from the equity market, which may not be successful or may be on terms that are dilutive to existing stockholders.
Other comprehensive income (loss) income.. Unrealized gains and losses on available-for-sale securities investments and changes in foreign currency exchange rates are reported net of deferred taxes in accumulated other comprehensive income (loss), a component of stockholders’ equity, until realized. Refer to Note 1-H and Note 19 to our audited consolidated financial statements for details.
In 2025, net unrealized investment gains of $10.0 million, net of taxes, which increased our other comprehensive income, were primarily related to net increases in the fair values of our corporate and foreign bond securities investments, which resulted primarily from lower interest rates. Also in 2025, we recorded foreign currency translation gains of $11.5 million, net of taxes, which increased our other comprehensive income and were primarily driven by the appreciation of the Canadian dollar and British pound against the U.S. dollar.
In 2023, net unrealized investment gains of $10.9 million, net of taxes, which increased our other comprehensive income, were primarily related to net increases in the fair values of our corporate and foreign bond securities investments, primarily influenced by inflation improvements and expected government actions to lower interest rates. Also in 2023, we recorded foreign currency translation gains which increased our other comprehensive income by $5.3 million, net of taxes, which was primarily driven by the appreciation in value of the Canadian dollar and British pound against the U.S. dollar.
Off-balance sheet arrangements. We do not have any material source of liquidity or financing that involves off-balance sheet arrangements, other than our contractual obligations under operating leases.arrangements. We also routinely hold funds in segregated escrow accounts pending the closing of real estate transactions and have qualified intermediaries in tax-deferred property exchanges for customers pursuant to Section 1031 of the Internal Revenue Code. The Company holds the proceeds from these transactions until a qualifying exchange can occur. In accordance with industry practice, these segregated accounts are not included on the balance sheet. See Note 15 to our audited consolidated financial statements included in Item 15 of Part IV of this report for details.
Cautionary statements regarding forward-lookingForward-looking statements. Certain statements in this report are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to future, not past, events and often address our expected future business and financial performance. These statements often contain words such as “may,” "expect," "anticipate," "intend," "plan," "believe," "seek," "will," "foresee" or other similar words. Forward-looking statements by their nature are subject to various risks and uncertainties that could cause our actual results to be materially different than those expressed in the forward-looking statements. These risks and uncertainties include, among other things, the following:
•the volatility of economic conditions, including economic changes that may result from new or increased tariffs, trade restrictions, prolonged federal government shutdowns or geopolitical tensions;
•the volatility of economic conditions;
What changed in the latest 10-Q
Risk Factors
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A. “Risk Factors” in our 2025 Form 10-K. There have been no material changes to our risk factors since our 2025 Form 10-K.
No wording changes found in this section.
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Management's Discussion & Analysis (MD&A)
Largest changes
Based on averaged estimates by Fannie Mae andsee in full comparisonMBA,MBA as of June 2026, total U.S.single familysingle-family mortgage originations increased42%14% to$536$581 billionduringin thefirstsecond quarter 2026 compared to thefirstsecond quarter2025. This increase was2025, primarily driven bya45%128% rise inhigher refinancingoriginations,activity.whileWhilepurchase lending improved by 10%. Thethe 30-year fixed mortgage interestrate,ratewhile stillremained relatively elevated,averagedit6.1%declined to an average of 6.4% during thefirstsecond quarter 2026 compared to 6.8% in thepriorsecondyearquarterquarter.2025,The 30-year fixed mortgage interest rateand is expected to remain relatively stableforthrough the remainder of the year.ForLooking ahead, Fannie Mae and MBA expect total originations in thesecondthird and fourth quarter of 2026 to be comparable to the same periods in 2025. Existing homes sales are expected to improve modestly by approximately 3% for the full year 2026,existingwhileandtotal new homes sales(seasonally-adjusted)areexpectedprojected toincreaseremain5%consistentand 7%, respectively, compared to last year, while total purchase and refinancing originations are forecast to improve 1% and 63%, respectively, compared to the second quarterwith 2025.
see in full comparisonNet realized and unrealized gains in the first quarters 2026 and 2025 were primarily related to net gains on fair value changes of equity securities investments.Investment incomeincreaseddecreased$1.2$1.4 million (10%9%) in thefirstsecond quarter 2026, primarily driven byincreasedlower earned interestincomefrom eligible escrow balances resulting fromincreasedlowercashinterest rates and escrow balances compared to thefirstsecond quarter 2025. Included in the title segment's pretax income in thefirstsecond quarters 2026 and 2025 were acquisition intangible asset amortization expenses of $2.7 million and $2.8 million, respectively.
Consolidated other operating expenses increasedsee in full comparison$56.6$67.5 million, or35%,39%, and $124.1 million, or 37%, in the second quarter and firstquartersix months of 2026 compared to thefirstsamequarterperiods in 2025. Total variable costs in the second quarter and firstquartersix months of 2026 increased$50.8$54.1 million, or50%,47%, and $105.0 million, or 49%, respectively, primarily due to higher real estate solutions third-party service and appraiserexpenses,expensesas well asand increased title outside search and service fees and premium taxes related tohigheroperatingrevenues.revenue growth. Total costs that are primarily fixed in nature increasedslightlyby$1.1$5.1 million, or2%,12%,whileandindependent costs increased $4.7$6.2 million, or36%,7%, in the second quarter and first six months of 2026, respectively, primarily driven by higher external technology costs. Independent costs increased $8.2 million, or 55%, and $12.9 million, or 46%, in the second quarter and first six months of 2026, respectively, primarily resulting from acquisition integration expenses and higher business promotion and marketing costs, travel expenses and bank fees.As a percentage of total operating revenues, consolidated other operating expenses in the first quarter 2026 increased to 28.4%, compared to 27.0% in the prior year quarter, primarily due to the increased size of our real estate solutions operations, which typically have higher other operating expenses.
Title segment operating revenues increasedsee in full comparison$104.0$91.1 million (21%15%) in thefirstsecond quarter 2026 compared to thefirstsecond quarter 2025,drivenprimarilybyresulting from strongresultsperformanceacross bothby our direct and agency titleoperations despite the current market environment.operations. Direct title revenues improved$38.5$15.3 million (17%5%), primarilyreflectingdueconsistenttostrong performance in ourincreased domestic commercialbusinesstransactionandvolume,improvedwhiledomestic residential results. Grossgross agency title revenues increased$65.5$75.8 million (25%),.while revenues, netNet of agency retention, agency title revenues increased$10.7$13.0 million (23%26%)compared to the first quarter 2025. The title segment's combined employee costs and other operating expenses increased $36.9 million (14%); however, as a percentage of operating revenues, these costs improved to 48.4%in thefirstsecond quarter 2026fromcompared51.1% into the prior year quarter,primarilyconsistentdue to higher title operating revenues. Title loss expense, as a percentage of title operating revenues, improved to 3.1% inwith thefirstgrossquarteragency2026,revenuecompared to 3.5% in the prior year quarter, primarily due to our continued overall favorable claims experience.growth.
Operating environment. According to NAR,see in full comparisonMarch 2026existing home sales (seasonally-adjusted basis) were approximately3.984.09 millionunits,units in June 2026, representingdeclinesaof3%1%increaseandfrom4%thecompared to lastprior year andFebruarya2026,2%respectively.declineThefromdecreasesMaywere2026.primarilyNARattributedindicated that monthly sales activity continued tolowerfluctuateconsumerasconfidenceaffordabilityandremainedelevatedsensitive to changes in mortgage interest rates.AsAdditionally, home prices continue to rise, primarily as a result ofcontinuedlimited housinginventory,inventory.theThe median existing home pricerosein June 2026 increased to$408,800$440,600,inanMarch 2026, a new recordall-time highfor the monthand the33rd36th consecutive month of year-over-yearmedianpriceappreciation.increase. Inregardaddition,toU.S. residential construction activityinremainedMarchmixed during June 2026,U.S.as total housing starts(seasonally-adjusted)increasedwere4%11%andhigher,19% compared to June 2025 and May 2026, respectively, whilenewly-issuednewly issued building permitsdeclineddecreased7%2%comparedandto3%lastoveryear.the same periods.
Domestic commercial revenues improvedsee in full comparison$24.6$15.2 million, or35%,20%, and $39.8 million, or 28%, in thefirstsecond quarter2026and first six months of 2026, respectively, compared to thefirstsamequarterperiods in 2025, primarily driven by higher commercial transactionsize and volume, primarilyvolume across energy,industrial,multi-family,siteindustrialdevelopment,and other asset classes, as well as larger data centerandtransactionretail asset classes.sizes. The average domestic commercial fee per fileinfor thefirstsecond quarter 2026 was$21,100,$16,900,whichconsistentiswithathe33%priorimprovementyear quarter due to transaction mix across asset classes, while the average fee per file for the six months of 2026 increased 15% to $18,800 primarily driven by higher data center transaction size and volume compared to$15,800 inthe same period in2025, while domestic commercial closed orders increased 2%.2025.
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FirstSecond quarter 2026 overview. We reported net income attributable to Stewart of $17.0$37.2 million ($0.55$1.21 per diluted share) for the firstsecond quarter 2026, compared to net income attributable to Stewart of $3.1$31.9 million ($0.11$1.13 per diluted share) for the firstsecond quarter 2025. Pretax income before noncontrolling interests for the firstsecond quarter 2026 was $23.6$55.1 million compared to pretax income before noncontrolling interests of $5.9$46.8 million for the prior year quarter. FirstSecond quarter 2026 and 2025 results included $2.9$3.4 million and $3.1 million, respectively, of pretax net realized and unrealized gains, bothwhich were primarily drivenrelated byto net gains from fair value changes of equity securities investments recorded in the title segment. Second quarter 2025 results included $0.7 million of pretax net realized and unrealized gains, which primarily resulted from $2.4 million of net unrealized gains on fair value changes of equity securities investments, partially offset by a $1.2 million acquisition liability adjustment loss in the title segment.
Title segment operating revenues increased $104.0$91.1 million (21%15%) in the firstsecond quarter 2026 compared to the firstsecond quarter 2025, drivenprimarily byresulting from strong resultsperformance across bothby our direct and agency title operations despite the current market environment.operations. Direct title revenues improved $38.5$15.3 million (17%5%), primarily reflectingdue consistentto strong performance in ourincreased domestic commercial businesstransaction andvolume, improvedwhile domestic residential results. Grossgross agency title revenues increased $65.5$75.8 million (25%),. while revenues, netNet of agency retention, agency title revenues increased $10.7$13.0 million (23%26%) compared to the first quarter 2025. The title segment's combined employee costs and other operating expenses increased $36.9 million (14%); however, as a percentage of operating revenues, these costs improved to 48.4% in the firstsecond quarter 2026 fromcompared 51.1% into the prior year quarter, primarilyconsistent due to higher title operating revenues. Title loss expense, as a percentage of title operating revenues, improved to 3.1% inwith the firstgross quarteragency 2026,revenue compared to 3.5% in the prior year quarter, primarily due to our continued overall favorable claims experience.growth.
The title segment's combined employee costs and other operating expenses increased $29.6 million (11%) in the second quarter 2026 compared to the prior year quarter, primarily driven by higher salaries and employee benefits, incentive compensation, and outside search and service fees. As a percentage of operating revenues, these costs improved to 45% in the second quarter 2026 from 47% in the second quarter 2025, primarily due to higher title operating revenues. Title loss expense, as a percentage of title operating revenues, improved to 3.2% in the second quarter 2026 from 3.6% in the prior year quarter, primarily due to continued overall favorable claims experience.
Net realized and unrealized gains in the first quarters 2026 and 2025 were primarily related to net gains on fair value changes of equity securities investments. Investment income increaseddecreased $1.2$1.4 million (10%9%) in the firstsecond quarter 2026, primarily driven by increasedlower earned interest incomefrom eligible escrow balances resulting from increasedlower cashinterest rates and escrow balances compared to the firstsecond quarter 2025. Included in the title segment's pretax income in the firstsecond quarters 2026 and 2025 were acquisition intangible asset amortization expenses of $2.7 million and $2.8 million, respectively.
The realReal estate solutions segment's operatingsegment revenues improvedincreased by $64.3$84.7 million (66%75%) in the firstsecond quarter 2026 compared to the priorsecond yearquarter quarter,2025, primarily driven by our recently acquired MCS business and higher revenues from credit information services revenues and ourvaluation recently-acquired Mortgage Contracting Services (MCS) business.services. Combined segment employee costs and other operating expenses increased $55.3$70.4 million (64%71%) in the firstsecond quarter 2026, primarily due to increasedhigher costs of services associated with revenue growth and increased revenueemployee levels.count. The segment's firstpretax quarterincome in the second quarters 2026 pretaxand income2025 included acquisition intangible asset amortization expenseexpenses of $6.7$7.2 million and integration costs related to MCS of $2.5$5.5 million, while first quarter 2025 pretax income included acquisition intangible asset amortization expense of $5.5 million.respectively.
In regard to the corporate segment, pretax results were driven by net expenses attributable to corporate operations, which increased to $12.2$12.0 million forin the firstsecond quarter 2026, compared to $9.9$9.2 million in the firstsecond quarter 2025, primarily drivendue byto higher interest expense on increased debt balances.
The preparation of the Company’s condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosures surrounding contingencies and commitments. Actual results can differ from our accounting estimates. While we do not anticipate significant changes in our estimates, there is a risk that such changes could have a material impact on our consolidated financial condition or results of operations for future periods. During the threesix months ended MarchJune 31,30, 2026, we made no material changes to our critical accounting estimates as previously disclosed in Management’s Discussion and Analysis in the 2025 Form 10-K.
Operations. Our primary business is title insurance and settlement-related services. We close transactions and issue title policies on homes, commercial and other real properties located in all 50 states, the District of Columbia and international markets through policy-issuing offices, agencies and centralized title services centers. Our real estate solutions operations include credit and real estate information services, property preservation and field services, valuation services, and online notarization and closing services, and capital markets search services.solutions. The corporate segment includes our parent holding company and centralized support services departments.
Comparisons of our results of operations for the three and six months ended MarchJune 31,30, 2026 with the corresponding periods in the prior year are set forth below. Factors contributing to fluctuations in the results of operations are presented in the order of their monetary significance, and we have quantified, when necessary, significant changes. Segment results are included in the discussions and, when relevant, are discussed separately.
Our statements on home sales, interest rates and loan activity are based on published U.S. industry data from sources including Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR) and the U.S. Census Bureau as of MarchJune 31,30, 2026. We also use information from our direct operations.
Operating environment. According to NAR, March 2026 existing home sales (seasonally-adjusted basis) were approximately 3.984.09 million units,units in June 2026, representing declinesa of3% 1%increase andfrom 4%the compared to lastprior year and Februarya 2026,2% respectively.decline Thefrom decreasesMay were2026. primarilyNAR attributedindicated that monthly sales activity continued to lowerfluctuate consumeras confidenceaffordability andremained elevatedsensitive to changes in mortgage interest rates. AsAdditionally, home prices continue to rise, primarily as a result of continued limited housing inventory,inventory. theThe median existing home price rosein June 2026 increased to $408,800$440,600, inan March 2026, a new recordall-time high for the month and the 33rd36th consecutive month of year-over-year median price appreciation.increase. In regardaddition, toU.S. residential construction activity inremained Marchmixed during June 2026, U.S.as total housing starts (seasonally-adjusted)increased were4% 11%and higher,19% compared to June 2025 and May 2026, respectively, while newly-issuednewly issued building permits declineddecreased 7%2% comparedand to3% lastover year.the same periods.
Based on averaged estimates by Fannie Mae and MBA,MBA as of June 2026, total U.S. single familysingle-family mortgage originations increased 42%14% to $536$581 billion duringin the firstsecond quarter 2026 compared to the firstsecond quarter 2025. This increase was2025, primarily driven by a45% 128% rise inhigher refinancing originations,activity. whileWhile purchase lending improved by 10%. Thethe 30-year fixed mortgage interest rate,rate while stillremained relatively elevated, averagedit 6.1%declined to an average of 6.4% during the firstsecond quarter 2026 compared to 6.8% in the priorsecond yearquarter quarter.2025, The 30-year fixed mortgage interest rateand is expected to remain relatively stable forthrough the remainder of the year. ForLooking ahead, Fannie Mae and MBA expect total originations in the secondthird and fourth quarter of 2026 to be comparable to the same periods in 2025. Existing homes sales are expected to improve modestly by approximately 3% for the full year 2026, existingwhile andtotal new homes sales (seasonally-adjusted) are expectedprojected to increaseremain 5%consistent and 7%, respectively, compared to last year, while total purchase and refinancing originations are forecast to improve 1% and 63%, respectively, compared to the second quarterwith 2025.
Domestic commercial revenues improved $24.6$15.2 million, or 35%,20%, and $39.8 million, or 28%, in the firstsecond quarter 2026and first six months of 2026, respectively, compared to the firstsame quarterperiods in 2025, primarily driven by higher commercial transaction size and volume, primarilyvolume across energy, industrial,multi-family, siteindustrial development,and other asset classes, as well as larger data center andtransaction retail asset classes.sizes. The average domestic commercial fee per file infor the firstsecond quarter 2026 was $21,100,$16,900, whichconsistent iswith athe 33%prior improvementyear quarter due to transaction mix across asset classes, while the average fee per file for the six months of 2026 increased 15% to $18,800 primarily driven by higher data center transaction size and volume compared to $15,800 in the same period in 2025, while domestic commercial closed orders increased 2%.2025.
Domestic non-commercial revenues in the second quarter 2026 remained relatively consistent with the prior year quarter. For the first six months of 2026, domestic non-commercial revenues increased $9.6 million, or 3%, compared to the same period in 2025, primarily driven by higher refinancing activity and increased average fee per file. The average domestic residential fee per file improved to $3,200 for both the second quarter and first six months of 2026, compared to $2,900 and $3,000, respectively, for the same periods in 2025, primarily due to higher purchase transaction mix.
Total international revenues improved $1.8 million, or 5%, and $4.5 million, or 7%, in the second quarter and first six months of 2026, respectively, primarily driven by higher transaction volumes compared to the same periods in 2025.
Domestic non-commercial revenues increased $11.2 million, or 8%, in the first quarter 2026, primarily due to higher closed transaction volumes, driven by increased refinancing activity, compared to the first quarter 2025. The average residential fee per file was $3,300 in the first quarter 2026, consistent with the prior year quarter. Total international revenues improved $2.7 million, or 10%, in the first quarter 2026, primarily driven by improved residential volumes compared to the same period in 2025.
Gross revenues from independent agency operations increased $65.5$75.8 million, or 25%, and $141.2 million, or 25%, in the firstsecond quarter and first six months of 2026, respectively, primarily due to improved residential and commercial volumes in our key agency states and increased commercial transactions compared to the same period in 2025.states. Agency revenues, net of retention, increased $10.7$13.0 million, or 23%,26%, and $23.7 million, or 25%, in the firstsecond quarter and first six months of 2026, inrespectively, lineconsistent with the gross agency revenue increase.growth. Refer further to the "Retention by agencies" discussion under Expenses below.
Real estate solutions revenues. Real estate solutions revenues improved $64.3$84.7 million, or 66%,75%, in the second quarter 2026 and $149.0 million, or 71%, in the first quartersix months of 2026 compared to the priorsame yearperiods quarter,in 2025, primarily duedriven toby our recently acquired MCS business and higher revenues from our credit information and valuation services business and contribution from our recently-acquired MCS business.businesses.
Investment income. Investment income increasedin $1.2the second quarter and first six months of 2026 decreased $1.4 million, or 9%, inand the$0.2 firstmillion, quarteror 20261%, respectively, compared to the priorsame yearperiods quarter,in 2025, primarily driven by higherlower earned interest incomefrom eligible escrow balances resulting from increasedlower cashinterest balancesrates inand 2026.escrow balances.
Retention by agencies. Amounts retained by title agencies are based on agreements between agencies and our title underwriters. Amounts retained by independent agencies, as a percentage of revenues generated by them, averaged 82.9%83.5% and 83.2% in the firstsecond quarter and first six months of 2026, respectively, which was comparable to 82.8%83.7% and 83.2% in the firstsame quarterperiods of 2025. The average retention percentage may vary from period to period due to the geographical mix of agency operations, the volume of title revenues and, in some states, laws or regulations. Due to the variety of such laws or regulations, as well as competitive factors, the average retention rate can differ significantly from state to state. In addition, a high proportion of our independent agencies are in states with retention rates greater than 80%. We continue to focus on increasing profit margins in every state, increasing premium revenue in states where remittance rates are higher, and maintaining the quality of our agency network, which we believe to be the industry’s best, in order to mitigate claims risk and drive consistent future performance. While market share is important in our agency operations channel, it is not as important as margins, risk mitigation and profitability.
Employee costs. Consolidated employee costs increased $35.3$32.9 million, or 19%,16%, and $68.1 million, or 17%, in the firstsecond quarter 2026and first six months of 2026, respectively, compared to the same periodperiods in 2025, primarily driven by higher salaries and employee benefitsbenefit expenses related to an increased average employee count, as well asand higher incentive compensation consistent with improved operating results. Employee costs in the title segment increased $26.9$22.8 million, or 16%,12%, and $49.6 million, or 14%, while employee costs in the real estate solutions segment increased $8.6$10.0 million, or 63%,65%, and $18.6 million, or 64%, in the firstsecond quarter and first six months of 2026, respectively, both primarily driven by volume growth and recent acquisitions.
Total employee costs, as a percentage of total operating revenues, improved to 28.9%27.4% and 28.1% in the firstsecond quarter and first six months of 2026, comparedrespectively, tofrom 31.2%29.5% and 30.3% in the firstsame quarterperiods of 2025, primarily drivendue byto higher 2026 operating revenues.revenues in 2026. During the second quarter and first quartersix months of 2026, we had an average of approximately 8,0008,200 employeesand 8,100 employees, respectively, compared to 6,800approximately 7,000 and 6,900 in the firstsame quarterperiods of 2025, primarily driven by volume growth and acquisitions,acquisitions. while averageAverage cost per employee increased slightly by 2% compared tofor the priorsecond yearquarter quarter.and first six months of 2026 remained comparable with the second quarter and first six months of 2025.
Other operating expenses. Other operating expenses include costs that are primarily fixed in nature, costs that follow, to varying degrees, changes in transaction volumes and revenues (variable costs) and costs that fluctuate independently of revenues (independent costs). Costs that are primarily fixed in nature include rent and other occupancy expenses, equipment rental, insurance, repairs and maintenance, technology costs and telecommunications expenses. Variable costs include third-party service and appraiser expenses related to real estate solutions operations, title outside search and service fees, attorney fee splits, credit losses (on receivables), copy supplies, delivery fees, postage, premium taxes and title plant maintenance expenses. Independent costs include general supplies, litigation defense, business promotion and marketing, and travel.
Consolidated other operating expenses increased $56.6$67.5 million, or 35%,39%, and $124.1 million, or 37%, in the second quarter and first quartersix months of 2026 compared to the firstsame quarterperiods in 2025. Total variable costs in the second quarter and first quartersix months of 2026 increased $50.8$54.1 million, or 50%,47%, and $105.0 million, or 49%, respectively, primarily due to higher real estate solutions third-party service and appraiser expenses,expenses as well asand increased title outside search and service fees and premium taxes related to higher operating revenues.revenue growth. Total costs that are primarily fixed in nature increased slightly by $1.1$5.1 million, or 2%,12%, whileand independent costs increased $4.7$6.2 million, or 36%,7%, in the second quarter and first six months of 2026, respectively, primarily driven by higher external technology costs. Independent costs increased $8.2 million, or 55%, and $12.9 million, or 46%, in the second quarter and first six months of 2026, respectively, primarily resulting from acquisition integration expenses and higher business promotion and marketing costs, travel expenses and bank fees. As a percentage of total operating revenues, consolidated other operating expenses in the first quarter 2026 increased to 28.4%, compared to 27.0% in the prior year quarter, primarily due to the increased size of our real estate solutions operations, which typically have higher other operating expenses.
As a percentage of total operating revenues, consolidated other operating expenses in the second quarter and first six months of 2026 increased to 27.4% and 27.9%, respectively, compared to 24.6% and 25.7% in the same periods of 2025, primarily due to the increased size of our real estate solutions operations, which typically have higher other operating expenses.
Title losses. Provisions for title losses, as a percentage of title operating revenues, were 3.1%3.2% and 3.5%3.1% for the second quarter and first six months of 2026, compared to 3.6% for both the second quarter and first six months of 2025. Title loss expense increased $0.6 million, or 3%, in the second quarter 2026 and 2025,$1.4 respectively.million, Titleor loss expense3%, in the first quartersix months of 2026 increased by $0.7 million, or 4%, compared to the priorsame yearperiods quarter,in 2025, primarily duedriven to the effect ofby increased title revenuesrevenues, beingwhich were partially offset by lower title loss resulting from our continued overall favorable claims experience. The title loss ratio in any given quarter can be significantly influenced by changes in large claims incurred, escrow losses and adjustments to reserves for existing large claims.
Total known claims provision in the second quarter 2026 was comparable to the second quarter 2025, while total known claims provision for the first six months of 2026 decreased $11.3$10.6 million, or 70%, in the first quarter 202631%, compared to the same period in 2025, primarily as a result of lower reported claims primarily relating to prior policy years. Current year IBNR provisions increasedfor $1.0the million,second orquarter 7%,and first six months of 2026 were comparable to the same periods in 2025, primarily due to increasedour favorable claims experience offsetting the effect of higher title premiums.premiums in 2026. As a percentage of title operating revenues, provisions - IBNR for the current policy year were 2.7% for both the second quarter and 3.0% for the first quarterssix months of 2026 compared to 3.1% for both the second quarter and 2025,first respectively.six months of 2025.
Total claim payments increased $5.4$2.2 million, or 28%,13%, in the second quarter 2026 primarily due to higher payments on non-large claims relating to prior year policies and increased $7.6 million, or 21%, in the first quartersix 2026months comparedof to the prior year quarter,2026, primarily due to higher payments on large claims relating to prior policy years.years compared to the same periods in 2025. We continue to manage and resolve large claims prudently and in keeping with our commitments to our policyholders.
Depreciation and amortization. Total depreciation and amortization expenses in the second quarter and first quartersix months of 2026 increased $1.5$2.5 million, or 10%,16%, fromand $4.0 million, or 13%, respectively, compared to the priorsame yearperiods quarter,in 2025, primarily due to increased intangible amortization and depreciation expenses related to our recent MCS acquisition, partially offset by lower amortization expenses resulting from several assets becoming fully amortized in 2026.
Income taxes. Our effective tax raterates (basedcalculated on income before taxes and after deducting income attributable to noncontrolling interests) ofwere 21.2%26% and 25% in the firstsecond quarter and first six months of 20262026, wasrespectively, higherwhich comparedwere toconsistent 13.6%with those reported in the firstcorresponding quarter 2025, primarily due to the effect of discrete income tax benefits on a lower pretax incomeperiods in the first quarter 2025.
Our liquidity and capital resources reflect our ability to generate cash flow to meet our obligations to stockholders, customers (payments to satisfy claims on title policies), vendors, employees, lenders and others. As of MarchJune 31,30, 2026, our total cash and investments, including amounts reserved pursuant to statutory requirements, aggregated $920.0$914.9 million, of which $496.4$492.7 million ($292.1$277.8 million, net of statutory reserves) was held in the United States and the rest internationally (principally in Canada).
As a holding company, the parent company is funded principally by cash from its subsidiaries' earnings in the form of dividends, operating and other administrative expense reimbursements and pursuant to intercompany tax sharing agreements. Cash held at the parent company and its unregulated subsidiaries (which totaled $146.2$123.4 million at MarchJune 31,30, 2026) is available for funding the parent company's operating expenses, interest payments on debt and dividend payments to common stockholders. The parent company also receives distributions from Stewart Title Guaranty Company (Guaranty), its regulated title insurance underwriter, to meet cash requirements for acquisitions and other strategic investments.
A substantial majority of our consolidated cash and investments as of MarchJune 31,30, 2026 was held by Guaranty and its subsidiaries. The use and investment of these funds, dividends to the parent company, and cash transfers between Guaranty and its subsidiaries and the parent company are subject to certain legal and regulatory restrictions. In general, Guaranty uses its cash and investments in excess of its legally-mandated statutory premium reserve (established in accordance with requirements under Texas law) to fund its insurance operations, including claims payments. Guaranty may also, subject to certain limitations, provide funds to its subsidiaries (whose operations consist principally of field title offices and real estate solutions operations) for their operating and debt service needs.
We maintain investments in accordance with certain statutory requirements for the funding of statutory premium reserves. Statutory reserve funds are required to be fully funded and invested in high-quality securities and short-term investments. Statutory reserve funds are not available for current claim payments, which must be funded from current operating cash flow. Included in investments in debt and equity securities are statutory reserve funds of approximately $494.4$504.7 million and $492.0 million at MarchJune 31,30, 2026 and December 31, 2025, respectively. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $3.8 million and $4.4 million at MarchJune 31,30, 2026 and December 31, 2025, respectively. As of MarchJune 31,30, 2026, our known claims reserve totaled $65.3$65.4 million and our estimate of claims that may be reported in the future, under generally accepted accounting principles, totaled $451.5$453.8 million. In addition to this, we had cash and investments (at amortized cost and excluding equity method investments) of $203.1$221.1 million, which are available for underwriter operations, including claims payments, and acquisitions.
The ability of Guaranty to pay dividends to its parent is governed by Texas insurance law. The Texas Department of Insurance (TDI) must be notified of any dividend declared, and any dividend in excess of the greater of the statutory net operating income or 20% of surplus (which was approximately $165.4 million as of December 31, 2025) would be, by regulation, considered extraordinary and subject to pre-approval by the TDI. Also, the Texas Insurance Commissioner may raise an objection to a planned distribution during the notification period. Guaranty’s actual ability or intent to pay dividends to its parent may be constrained by business and regulatory considerations, such as the impact of dividends on surplus and liquidity, which could affect its ratings and competitive position, the amount of insurance it can write and its ability to pay future dividends. Guaranty did not pay any dividends to the parent company during either of the first quartersix months of 2026 and 2025.
Net cash usedprovided by operations improved $25.4by $32.5 million to $4.5$56.0 million during the first quartersix months of 2026, comparedfrom to $29.9$23.5 million of net cash used by operations during the same period in 2025, primarily driven by the higher net income and lowertiming on payments of liabilitiesaccounts in the first quarter 2026.payable. Although our business is labor intensive, we are focused on a cost-effective, scalable business model which includes utilization of technology, centralized back and middle office functions and business process outsourcing. We are continuing our emphasis on cost management, especially in light of the current economic environment due to elevated mortgage interest rates, specifically focusing on lowering unit costs of production and improving operating margins in our direct title and real estate solutions operations. Our plans to improve margins include additional automation of manual processes, further consolidation of our various systems and production operations, and full integration of acquisitions. We continue to invest in the technology necessary to accomplish these goals.
Investing activities. Cash used and provided by investing activities is primarily related to proceeds from matured and sold investments, purchases of investments, capital expenditures and acquisition of businesses. During the first quarterssix months of 2026 and 2025, total proceeds from securities investments sold and matured were $14.9$63.4 million and $27.9$84.8 million, respectively, while cash used for purchases of securities investments was $18.8$71.7 million and $22.4$72.2 million, respectively. Additionally, during the first quarterssix months of 2026 and 2025, we used $16.4cash of $41.9 million and $12.3$27.1 million, respectively, of cash for expenditures related to property and equipment and other long-lived assets, while we used net cash of $1.9$27.8 million and $7.4$8.5 million, respectively, for acquisitions of real estate solutions and title businesses. We maintain investment in capital expenditures at a level that enables us to implement technologies for increasing our operational and back-office efficiencies and to pursue growth in key markets.
Financing activities and capital resources. Total debt and stockholders’ equity were $646.7 million and $1.65$1.67 billion, respectively, as of MarchJune 31,30, 2026. At MarchJune 31,30, 2026, our debt-to-equity and debt-to-capitalization ratios, excluding our Section 1031 tax-deferred property exchange notes, were approximately 39% and 28%, respectively, which were consistent with December 31, 2025.
As of MarchJune 31,30, 2026, the outstanding balance of our Senior Notes was $446.4 million, while our line of credit facility had an outstanding balance of $200.0 million, with a remaining borrowing capacity of $97.5 million and an option to increase the line of credit facility by up to $125.0 million. Total interest expense during the first six months of 2026 increased by $5.2 million, or 52%, compared to the same period in 2025, primarily due to the higher outstanding balance on the line of credit facility. During the first quarterssix months of 2026 and 2025, payments on notes payable of $2.5$2.8 million and $1.1 million, respectively, and notes payable additions of $2.6$2.7 million and $1.0 million, respectively, were related to our Section 1031 business, which had an outstanding balance of $0.2$0.1 million as of MarchJune 31,30, 2026.
During the first quartersix months of 2026, we paid total dividends of $16.3$32.7 million ($0.53$1.05 per common share), compared to total dividends paid of $13.9$27.9 million ($0.50$1.00 per common share) during the same period in 2025.
Other comprehensive (loss) income. Unrealized gains and losses on available-for-sale debt securities investments and changes in foreign currency exchange rates are reported net of deferred taxes in accumulated other comprehensive income (loss), a component of stockholders’ equity, until they are realized. During the first quartersix months of 2026, net unrealized investment losses of $2.8$1.8 million, net of taxes, which increased our other comprehensive loss, were primarily related to net decreases in the fair values of our foreigncorporate and corporategovernment bond securities investments which were influenced by higher interest rates. During the first quartersix months of 2025, net unrealized investment gains of $5.4$6.4 million, net of taxes, which increased our other comprehensive income, were primarily related to net increases in the fair values of our foreign and corporate bond securities investments,investments primarilyresulting due tofrom lower interest rates.
Changes in foreign currency spot exchange rates (primarily related to our Canadian and United Kingdom operations) resulted in other comprehensive loss, net of taxes, of $2.6$4.9 million in the first quartersix months of 2026, primarily due to the depreciation of both the Canadian dollar and British pound relative to the U.S. dollar. In the first quartersix months of 2025, both the Canadian dollar and the British pound appreciated relative to the U.S. dollar, primarily resulting in other comprehensive income, net of taxes, of $1.0$14.4 million.
STC insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 1,000 shares, about $63.9K) and open-market sales in 2 filings (2 insiders, 2 trade dates, 12,492 shares, about $887.2K). Net open-market shares: -11,492 (purchases minus sales); net value about -$823.3K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-21 | Glaze Brian |
Open-market sale | 1,500 | $69.16 | $103.7K |
| 2026-07-01 | Bryant Iain Martyn |
Shares withheld for tax | 261 | $67.58 | $17.6K |
| 2026-07-01 | Bryant Iain Martyn |
Option exercise | 1,071 | — | — |
| 2026-06-01 | Bradley C Allen Jr |
Open-market purchase | 12 | $63.80 | $766 |
| 2026-06-01 | Bradley C Allen Jr |
Open-market purchase | 230 | $63.87 | $14.7K |
| 2026-06-01 | Bradley C Allen Jr |
Open-market purchase | 758 | $63.87 | $48.4K |
| 2026-05-07 | Morris Matthew |
Grant/award | 1,791 | — | — |
| 2026-05-07 | Pallotta Karen R |
Grant/award | 1,791 | — | — |
| 2026-05-07 | Sanchez Rodriquez Manuel |
Grant/award | 1,791 | — | — |
| 2026-05-07 | Vaid Helen |
Grant/award | 1,791 | — | — |
| 2026-05-07 | Matz Deborah Jane |
Grant/award | 1,791 | — | — |
| 2026-05-07 | Corey William S. Jr. |
Grant/award | 1,791 | — | — |
| 2026-05-07 | Clarke Robert |
Grant/award | 3,151 | — | — |
| 2026-05-07 | Bradley C Allen Jr |
Grant/award | 1,791 | — | — |
| 2026-05-07 | Apel Thomas G |
Grant/award | 1,791 | — | — |
| 2026-05-01 | Swed Ryan M. |
Option exercise | 802 | — | — |
| 2026-05-01 | Swed Ryan M. |
Shares withheld for tax | 241 | $69.10 | $16.7K |
| 2026-04-28 | Rable Brad |
Gift | 300 | — | — |
| 2026-04-24 | Hisey David C |
Open-market sale | 5,639 | $71.09 | $400.9K |
| 2026-04-24 | Hisey David C |
Open-market sale | 5,353 | $71.47 | $382.6K |
Well-known investors holding STC (13F)
None of the 59 investors we track reported a position in their latest 13F.