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What changed in STEWART INFORMATION SERVICES CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of STEWART INFORMATION SERVICES CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+175 added−174 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-28)

Top changes in STEWART INFORMATION SERVICES CORP's 2023 10-K

175 paragraphs added · 174 removed · 151 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

66 edited+10 added−8 removed28 unchanged
Biggest changeClosed and opened orders information is as follows: Year Ended December 31 Change % Change 2022 2021 2020 2022 vs 2021 2021 vs 2020 2022 vs 2021 2021 vs 2020 Opened Orders: Commercial 20,202 18,113 15,748 2,089 2,365 12 % 15 % Purchase 241,781 283,350 250,058 (41,569) 33,292 (15) % 13 % Refinance 98,663 256,621 304,064 (157,958) (47,443) (62) % (16) % Other 9,037 6,753 3,868 2,284 2,885 34 % 75 % Total 369,683 564,837 573,738 (195,154) (8,901) (35) % (2) % Closed Orders: Commercial 18,448 17,334 15,035 1,114 2,299 6 % 15 % Purchase 184,652 217,895 178,935 (33,243) 38,960 (15) % 22 % Refinance 81,755 211,109 203,763 (129,354) 7,346 (61) % 4 % Other 8,071 4,736 2,594 3,335 2,142 70 % 83 % Total 292,926 451,074 400,327 (158,148) 50,747 (35) % 13 % Gross revenues from independent agency operations (agency revenues) decreased $116.4 million, or 7%, in 2022 and increased $431.6 million, or 38%, in 2021, compared to corresponding prior years, which were consistent with the trends of our direct title operations and the overall real estate market during 2022 and 2021.
Biggest changeTotal international revenues decreased $24.1 million, or 13%, primarily due to lower transaction volumes in our Canadian operations and overall weaker average foreign currency exchange rates against the U.S. dollar in 2022 compared to the prior year. 23 Closed and opened orders information is as follows: Year Ended December 31 Change % Change 2023 2022 2021 2023 vs 2022 2022 vs 2021 2023 vs 2022 2022 vs 2021 Opened Orders: Commercial 14,203 20,202 18,113 (5,999) 2,089 (30) % 12 % Purchase 202,947 241,781 283,350 (38,834) (41,569) (16) % (15) % Refinance 64,418 98,663 256,621 (34,245) (157,958) (35) % (62) % Other 27,328 9,037 6,753 18,291 2,284 202 % 34 % Total 308,896 369,683 564,837 (60,787) (195,154) (16) % (35) % Closed Orders: Commercial 14,971 18,448 17,334 (3,477) 1,114 (19) % 6 % Purchase 147,528 184,652 217,895 (37,124) (33,243) (20) % (15) % Refinance 40,151 81,755 211,109 (41,604) (129,354) (51) % (61) % Other 17,612 8,071 4,736 9,541 3,335 118 % 70 % Total 220,262 292,926 451,074 (72,664) (158,148) (25) % (35) % Gross revenues from independent agency operations (agency revenues) decreased $480.3 million, or 33%, in 2023 and $116.4 million, or 7%, in 2022 compared to corresponding prior years, which were consistent with the trends of the overall real estate market and our direct title operations during 2023 and 2022.
Other operating expenses include costs that are 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, telecommunications and title plant 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, telecommunications and title plant expenses.
Cash flows. As the parent company conducts no operations apart from its wholly-owned subsidiaries, the discussion below focuses on consolidated cash flows.
As the parent company conducts no operations apart from its wholly-owned subsidiaries, the discussion below focuses on consolidated cash flows.
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 (loss) income.
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).
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 (loss) income, a component of stockholders’ equity, until realized. Refer to Note 1-H and Note 19 to our audited consolidated financial statements for details.
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.
The principal factors that contribute to changes in our operating revenues include: • mortgage interest rates; • availability of mortgage loans; • number and average value of mortgage loan originations; • ability of potential purchasers to qualify for loans; • inventory of existing homes available for sale; • ratio of purchase transactions compared with refinance transactions; • ratio of closed orders to open orders; • home prices; • consumer confidence, including employment trends; • demand by buyers; • premium rates; • foreign currency exchange rates; • market share; • ability to attract and retain highly productive sales associates; • independent agency remittance rates; • opening and integration of new offices and acquisitions; 20 • office closures; • number and value of commercial transactions, which typically yield higher premiums; • government or regulatory initiatives, including tax incentives and the implementation of the integrated disclosure requirements; • acquisitions or divestitures of businesses; • volume of distressed property transactions; • seasonality and/or weather; and • outbreaks of diseases and related quarantine orders and restrictions on travel, trade and business operations.
The principal factors that contribute to changes in our operating revenues include: • interest rates; • availability of mortgage loans; • number and average value of mortgage loan originations; • ability of potential purchasers to qualify for loans; • inventory of existing homes available for sale; • ratio of purchase transactions compared with refinance transactions; • ratio of closed orders to open orders; • home prices; • consumer confidence, including employment trends; • demand by buyers; • premium rates; • foreign currency exchange rates; • market share; • ability to attract and retain highly productive sales associates; • independent agency remittance rates; • opening and integration of new offices and acquisitions; • office closures; • number and value of commercial transactions, which typically yield higher premiums; • government or regulatory initiatives, including tax incentives and the implementation of the integrated disclosure requirements; • acquisitions or divestitures of businesses; • volume of distressed property transactions; • seasonality and/or weather; and • outbreaks of diseases and related quarantine orders and restrictions on travel, trade and business operations.
Variable costs include appraiser and service expenses related to real estate solutions operations, outside search and valuation 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.
Variable costs include appraiser and service expenses related to real estate solutions operations, 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 and travel.
Consolidated employee costs increased $25.0 million, or 3%, in 2022 compared to 2021, primarily due to higher salaries and employee benefits driven by 16% higher average employee count, as we integrate our acquisitions, partially offset by reduced incentive compensation, temporary labor and overtime costs resulting from lower operating results and volumes during 2022.
Consolidated employee costs increased $25.0 million, or 3%, in 2022 compared to 2021, primarily due to higher salaries and employee benefits driven by 16% higher average employee count, as we integrated our acquisitions, partially offset by reduced incentive compensation, temporary labor and overtime costs resulting from lower operating results and volumes during 2022.
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. 25 We maintain investments in accordance with certain statutory requirements for the funding of statutory premium reserves.
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. 27 We maintain investments in accordance with certain statutory requirements for the funding of statutory premium reserves.
A substantial majority of our consolidated cash and investments as of December 31, 2022 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.
A substantial majority of our consolidated cash and investments as of December 31, 2023 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.
As of December 31, 2022 and 2021, our reserve balance was above the actuarial midpoint of total estimated policy loss reserves. Refer to Note 10 (Estimated title losses) to our audited consolidated financial statements for details. Depreciation and amortization .
As of December 31, 2023 and 2022, our reserve balance was above the actuarial midpoint of total estimated policy loss reserves. Refer to Note 10 (Estimated title losses) to our audited consolidated financial statements for details. Depreciation and amortization .
As of December 31, 2022, 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% and 25%, respectively.
As of December 31, 2023, 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% and 25%, respectively.
These risks and uncertainties include, among other things, the following: • the volatility of economic conditions; • adverse changes in the level of real estate activity; • changes in mortgage interest rates, existing and new home sales, and availability of mortgage financing; • our ability to respond to and implement technology changes, including the completion of the implementation of our enterprise systems; • our ability to prevent and mitigate cyber risks; • the impact of unanticipated title losses or the need to strengthen our policy loss reserves; • any effect of title losses on our cash flows and financial condition; • the ability to attract and retain highly productive sales associates; • the impact of vetting our agency operations for quality and profitability; • independent agency remittance rates; • changes to the participants in the secondary mortgage market and the rate of refinancing that affects the demand for title insurance products; 28 • regulatory non-compliance, fraud or defalcations by our title insurance agencies or employees; • our ability to timely and cost-effectively respond to significant industry changes and introduce new products and services; • our ability to realize anticipated benefits of our previous acquisitions; • the outcome of pending litigation; • the impact of changes in governmental and insurance regulations, including any future reductions in the pricing of title insurance products and services; • our dependence on our operating subsidiaries as a source of cash flow; • our ability to access the equity and debt financing markets when and if needed; • effects of seasonality and weather; and • our ability to respond to the actions of our competitors.
These risks and uncertainties include, among other things, the following: • the volatility of economic conditions; • adverse changes in the level of real estate activity; • changes in mortgage interest rates, existing and new home sales, and availability of mortgage financing; • our ability to respond to and implement technology changes, including the completion of the implementation of our enterprise systems; • our ability to prevent and mitigate cyber risks; • the impact of unanticipated title losses or the need to strengthen our policy loss reserves; • any effect of title losses on our cash flows and financial condition; • the ability to attract and retain highly productive sales associates; • the impact of vetting our agency operations for quality and profitability; • independent agency remittance rates; • changes to the participants in the secondary mortgage market and the rate of refinancing that affects the demand for title insurance products; 30 • regulatory non-compliance, fraud or defalcations by our title insurance agencies or employees; • our ability to timely and cost-effectively respond to significant industry changes and introduce new products and services; • our ability to realize anticipated benefits of our previous acquisitions; • the outcome of pending litigation; • our ability to manage risks associated with potential cybersecurity or other privacy or data security breaches; • the impact of changes in governmental and insurance regulations, including any future reductions in the pricing of title insurance products and services; • our dependence on our operating subsidiaries as a source of cash flow; • our ability to access the equity and debt financing markets when and if needed; • effects of seasonality and weather; and • our ability to respond to the actions of our competitors.
Based on historical payment patterns, 87% of the outstanding loss reserves are paid out within eight years. As a result, the estimate of the ultimate amount to be paid on any claim may be modified over that time period.
Based on historical payment patterns, approximately 86% of the outstanding loss reserves are paid out within eight years. As a result, the estimate of the ultimate amount to be paid on any claim may be modified over that time period.
Refer to Note 9 (Notes payable) and Note 14 (Leases) to our audited consolidated financial statements for details on the unsecured senior notes and other notes payable, 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.
Refer to Note 9 (Notes payable) and Note 14 (Leases) to our audited consolidated financial statements for details on the unsecured senior notes 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. Cash flows.
Also in 2022, we recorded foreign currency translation losses which increased our other comprehensive loss by $14.9 million, net of taxes, which was primarily driven by the depreciation in value of the Canadian dollar and British pound against the U.S. dollar.
Also in 2022, we recorded foreign currency translation losses which increased our other comprehensive loss by $14.9 million, net of taxes, which was primarily driven by the depreciation in value of the Canadian dollar and British pound against the U.S. dollar. Off-balance sheet arrangements.
Retention by agencies. Amo unts 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 82.4%, 82.2% and 82.1% during the three years ended December 31, 2022.
Retention by agencies. Amo unts 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 82.5%, 82.4% and 82.2% during the three years ended December 31, 2023.
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 $158.1 million as of December 31, 2022) 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).
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 $168.7 million as of December 31, 2023) 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).
Cash held at the parent company and its unregulated subsidiaries (which totaled $56.8 million at December 31, 2022) 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 Guaranty, its regulated title insurance underwriter, to meet cash requirements for acquisitions and other strategic investments.
Cash held at the parent company and its unregulated subsidiaries (which totaled $30.6 million at December 31, 2023) 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 Guaranty, its regulated title insurance underwriter, to meet cash requirements for acquisitions and other strategic investments.
Cash used and provided by investing activities is primarily driven by proceeds from matured and sold investments, purchases of investments, capital expenditures and acquisition of title offices and other businesses.
Cash used and provided by investing activities is primarily driven by proceeds from matured and sold investments, purchases of investments, capital expenditures and acquisition of businesses.
Statutory premium reserves are required to be fully funded and invested in high-quality securities and short-term investments. Statutory reserve funds are not available for current claims payments, which must be funded from current operating cash flow. Included in investments in debt and equity securities are statutory reserve funds of approximately $544.0 million at December 31, 2022.
Statutory premium reserves are required to be fully funded and invested in high-quality securities and short-term investments. Statutory reserve funds are not available for current claims payments, which must be funded from current operating cash flow. Included in investments in debt and equity securities are statutory reserve funds of approximately $527.4 million at December 31, 2023.
LIQUIDITY AND CAPITAL RESOURCES Our liquidity and capital resources reflect our ability to generate cash flow to meet our obligations to shareholders, customers (payments to satisfy claims on title policies), vendors, employees, lenders and others. As of December 31, 2022, our total cash and investments, including amounts reserved pursuant to statutory requirements, aggregated $982.8 million.
LIQUIDITY AND CAPITAL RESOURCES Our liquidity and capital resources reflect our ability to generate cash flow to meet our obligations to shareholders, customers (payments to satisfy claims on title policies), vendors, employees, lenders and others. As of December 31, 2023, our total cash and investments, including amounts reserved pursuant to statutory requirements, aggregated $952.3 million.
We used $47.9 million, $39.8 million and $15.0 million of cash for purchases of property and equipment during 2022, 2021 and 2020, respectively, while we generated cash proceeds of $10.7 million in 2021 primarily from the sale of our Colorado buildings.
We used $37.8 million, $47.9 million and $39.8 million of cash for purchases of property and equipment during 2023, 2022 and 2021, respectively, while we generated cash proceeds of $10.7 million in 2021 primarily from the sale of our Colorado buildings.
During 2022, 2021 and 2020, payments on notes payable of $74.3 million, $165.0 million and $23.8 million, respectively, and notes payable additions of $39.5 million, $201.4 million and $16.5 million, respectively, were related to our Section 1031 business, which had an outstanding balance of $2.3 million at December 31, 2022.
During 2023, 2022 and 2021, payments on notes payable of $5.7 million, $74.3 million and $165.0 million, respectively, and notes payable additions of $3.5 million, $39.5 million and $201.4 million, respectively, were related to our Section 1031 business, which had an outstanding balance of $0.2 million at December 31, 2023.
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 declined during 2022 and 2021, while both foreign currencies appreciated during 2020. *********** 27 We believe we have sufficient liquidity and capital resources to meet the cash needs of our ongoing operations, including in the current economic and real estate environment created by the increasing mortgage interest and inflation rates.
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 appreciated in 2023 and declined during 2022 and 2021. *********** 29 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 increasing mortgage interest rates.
Claims payments made on large title claims, net of insurance recoveries, during 2022, 2021 and 2020 were $18.3 million, $2.8 million and $8.7 million, respectively. Our liability for estimated title losses as of December 31, 2022 and 2021 comprises both known claims and our IBNR. Known claims reserves are reserves related to actual losses reported to us.
Claims payments made on large title claims, net of insurance recoveries, during 2023, 2022 and 2021 were $26.3 million, $23.1 million and $2.8 million, respectively. Our liability for estimated title losses as of December 31, 2023 and 2022 comprises both known claims and our IBNR. Known claims reserves are reserves related to actual losses reported to us.
In addition, included within cash and cash equivalents are statutory reserve funds of approximately $8.6 million at December 31, 2022. Although these cash statutory reserve funds are not restricted or segregated in depository accounts, they are required to be held pursuant to state statutes.
In addition, included within cash and cash equivalents are statutory reserve funds of approximately $10.0 million at December 31, 2023. Although these cash statutory reserve funds are not restricted or segregated in depository accounts, they are required to be held pursuant to state statutes.
The effect of changes in foreign currency rates on the consolidated statements of cash flows was a net (decrease) increase in cash and cash equivalents of ($5.5 million) $(2.2 million) and $3.3 million in 2022, 2021 and 2020, respectively.
The effect of changes in foreign currency rates on the consolidated statements of cash flows was a net increase (decrease) in cash and cash equivalents of $1.0 million, ($5.5 million) and $(2.2 million) in 2023, 2022 and 2021, respectively.
During 2021, we had the following debt transactions related to the parent company (refer to Note 9 to our audited consolidated financial statements for details of our debt transactions): • During the first and third quarters of 2021, we drew a total of $175.0 million on our previous line of credit facility. • In October 2021, we entered into an unsecured credit agreement which included a new $200.0 million line of credit facility and a $400.0 million short-term loan facility.
During 2021, we had the following debt transactions related to the parent company: • During the first and third quarters of 2021, we drew a total of $175.0 million on our previous line of credit facility. • In October 2021, we entered into an unsecured credit agreement which included a new $200.0 million line of credit facility and a $400.0 million short-term loan facility.
The amount of the reserve represents the aggregate, non-discounted future payments (net of recoveries) that we expect to incur on policy and escrow losses and in costs to settle claims. 24 Total title policy loss reserve balances at December 31 were as follows: 2022 2021 (in $ millions) Known claims 87.3 75.9 IBNR 462.1 473.7 Total estimated title losses 549.4 549.6 The actual timing of estimated title loss payments may vary since claims, by their nature, are complex and paid over long periods of time.
The amount of the reserve represents the aggregate, non-discounted future payments (net of recoveries) that we expect to incur on policy and escrow losses and in costs to settle claims. 26 Total title policy loss reserve balances at December 31 were as follows: 2023 2022 (in $ millions) Known claims 70.2 87.3 IBNR 458.1 462.1 Total estimated title losses 528.3 549.4 The actual timing of estimated title loss payments may vary since claims, by their nature, are complex and paid over long periods of time.
During 2022, 2021 and 2020, total proceeds from securities investments sold and matured were $103.8 million, $143.8 million and $96.0 million, respectively; while cash used for purchases of securities investments was $207.5 million, $143.9 million and $118.3 million, respectively. During 2021, we also invested $16.1 million in equity method investments in title offices.
During 2023, 2022 and 2021, total proceeds from securities investments sold and matured were $132.2 million, $103.8 million and $143.8 million, respectively; while cash used for purchases of securities investments was $78.0 million, $207.5 million and $143.9 million, respectively. During 2021, we also invested $16.1 million in equity method investments in title offices.
The following table shows employee costs and other operating expenses as a percentage of operating revenues for each of the title and real estate solutions segments for the years ended December 31: Employee Costs Other Operating Expenses 2022 2021 2020 2022 2021 2020 Title 27.1 % 24.5 % 26.8 % 14.8 % 13.0 % 13.5 % Real estate solutions 17.0 % 13.3 % 16.4 % 68.8 % 78.5 % 81.9 % Employee costs.
The following table shows employee costs and other operating expenses as a percentage of operating revenues for each of the title and real estate solutions segments for the years ended December 31: Employee Costs Other Operating Expenses 2023 2022 2021 2023 2022 2021 Title 33.3 % 27.1 % 24.5 % 16.4 % 14.8 % 13.0 % Real estate solutions 18.7 % 17.0 % 13.3 % 68.2 % 68.8 % 78.5 % Employee costs.
Refer to Note 6 to our audited consolidated financial statements for additional details. Net realized and unrealized gains. Refer to Note 6 to our audited consolidated financial statements for details. Expenses. Our employee costs and certain other operating expenses are sensitive to inflation.
Refer to Note 6 to our audited consolidated financial statements for details. Expenses. Our employee costs and certain other operating expenses are sensitive to inflation.
As of December 31, 2022, our known claims reserve totaled $87.3 million and our estimate of claims that may be reported in the future, under U.S. generally accepted accounting principles, totaled $462.1 million. In addition to this, we had cash and investments (excluding equity method investments) of $198.8 million which are available for underwriter operations, including claims payments.
As of December 31, 2023, our known claims reserve totaled $70.2 million and our estimate of claims that may be reported in the future, under U.S. generally accepted accounting principles, totaled $458.1 million. In addition to this, we had cash and investments (excluding equity method investments) of $339.2 million which are available for underwriter operations, including claims payments.
We used $142.9 million, $600.0 million and $200.0 million of cash during 2022, 2021 and 2020, respectively, for acquisitions of various title and real estate solutions businesses, consistent with our strategy of increasing scale, growth in key markets and broader technology and service offerings.
We used $25.1 million, $142.9 million and $600.0 million of cash during 2023, 2022 and 2021, respectively, for acquisitions of various title and real estate solutions businesses, related to our strategy of increasing scale, growth in key markets and broader technology and service offerings.
We maintain investment in capital expenditures at a level that enables us to implement technologies for increasing our operational and back-office efficiencies and pursuing market growth. Financing activities and capital resources. Total debt and stockholders’ equity were $447.0 million and $1.4 billion, respectively, as of December 31, 2022.
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 $445.3 million and $1.4 billion, respectively, as of December 31, 2023.
Our plans to improve margins include additional automation of manual processes, and further consolidation of our various systems and production operations. We continue to invest in the technology necessary to accomplish these goals. 26 Investing activities.
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 are investing in the technology necessary to accomplish these goals. 28 Investing activities.
Refer to the consolidated statements of cash flows in the audited consolidated financial statements. 2022 2021 2020 (in $ millions) Net cash provided by operating activities 191.9 390.3 275.8 Net cash used by investing activities (300.7) (645.3) (231.4) Net cash provided (used) by financing activities (123.2) 310.4 54.3 Operating activities.
Refer to the consolidated statements of cash flows in the audited consolidated financial statements. 2023 2022 2021 (in $ millions) Net cash provided by operating activities 83.0 191.9 390.3 Net cash used by investing activities (30.0) (300.7) (645.3) Net cash provided (used) by financing activities (69.1) (123.2) 310.4 Operating activities.
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 year. On average, refinance title premium rates are 60% of the premium rates for a similarly priced sale transaction.
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 year.
An analysis of expenses is shown below: Year Ended December 31 Change* % Change 2022 2021 2020 2022 vs 2021 2021 vs 2020 2022 vs 2021 2021 vs 2020 (in $ millions) (in $ millions) Amounts retained by independent agencies 1,208.3 1,300.4 944.5 (92.1) 355.9 (7) % 38 % As a % of agency revenues 82.4 % 82.2 % 82.1 % Employee costs 802.0 777.0 613.2 25.0 163.8 3 % 27 % As a % of operating revenues 26.3 % 23.8 % 27.0 % Other operating expenses 648.0 626.8 375.2 21.2 251.6 3 % 67 % As a % of operating revenues 21.3 % 19.2 % 16.5 % Title losses and related claims 102.7 126.2 115.2 (23.5) 11.0 (19) % 10 % As a % of title revenues 3.8 % 4.2 % 5.3 % *Amounts change may not add due to rounding.
An analysis of expenses is shown below: Year Ended December 31 Change* % Change 2023 2022 2021 2023 vs 2022 2022 vs 2021 2023 vs 2022 2022 vs 2021 (in $ millions) (in $ millions) Amounts retained by independent agencies 813.5 1,208.3 1,300.4 (394.8) (92.1) (33) % (7) % As a % of agency revenues 82.5 % 82.4 % 82.2 % Employee costs 712.8 802.0 777.0 (89.2) 25.0 (11) % 3 % As a % of operating revenues 32.2 % 26.3 % 23.8 % Other operating expenses 507.7 648.0 626.8 (140.3) 21.2 (22) % 3 % As a % of operating revenues 22.9 % 21.3 % 19.2 % Title losses and related claims 80.3 102.7 126.2 (22.5) (23.5) (22) % (19) % As a % of title revenues 4.1 % 3.8 % 4.2 % *Amounts change may not add due to rounding.
Guaranty paid dividends to its parent of $150.0 million and $293.9 million (including an extraordinary dividend of $135.0 million) during 2022 and 2021, respectively. Contractual obligations. Our material contractual obligations at December 31, 2022 are composed primarily of our unsecured senior notes (and the related semi-annual interest payments), other notes payable, operating leases, and reserves for estimated title losses.
Guaranty paid no dividends to its parent during 2023, while it paid $150.0 million during 2022. Contractual obligations. Our material contractual obligations at December 31, 2023 are composed primarily of our unsecured senior notes (and the related semi-annual interest payments), operating leases, and reserves for estimated title losses.
Of our total cash and investments at December 31, 2022, $594.9 million ($310.4 million, net of statutory reserves) was held in the United States (U.S.) and the rest internationally, principally in Canada.
Of our total cash and investments at December 31, 2023, $531.0 million ($283.3 million, net of statutory reserves) was held in the United States (U.S.) and the rest internationally, principally in Canada.
Net cash provided by operations in 2022 decreased by $198.4 million from 2021, primarily due to the lower net income and higher payments related to claims and interest on debt in 2022.
Net cash provided by operations in 2023 declined by $108.8 million compared to 2022, primarily due to the lower net income and higher payments on claims, while net cash provided by operations in 2022 decreased by $198.4 million compared to the prior year, primarily due to the lower net income and higher payments related to claims and interest on debt in 2022.
As a result of changes in gross agency revenues, net agency revenues (which are net of agency retention) decreased $24.3 million, or 9%, in 2022 and increased $75.7 million, or 37%, in 2021, compared to respective prior periods. Refer further to the "Retention by agencies" discussion under Expenses below. Title revenues by geographic location.
In line with changes in gross agency revenues, our net agency revenues (which are net of agency retention) decreased $85.5 million, or 33%, and $24.3 million, or 9%, in 2023 and 2022, respectively, compared to prior periods. Refer further to the "Retention by agencies" discussion under Expenses below. Title revenues by geographic location.
Employee costs in the real estate solutions segment increased $15.9 million, or 46%, and $20.0 million, or 77%, in 2022 and 2021, respectively, compared to corresponding prior years, primarily due to higher salaries and employee benefits resulting from acquisitions. Other operating expenses.
Employee costs in 2022 for the title and real estate solutions segments increased $7.4 million, or 1%, and $15.9 million, or 46%, respectively, compared to 2021, primarily due to higher salaries and employee benefits from acquisitions. 25 Other operating expenses.
The approximate amounts and percentages of consolidated title operating revenues for the last three years ended December 31, 2021 were as follows: Year Ended December 31 Percentages 2022 2021 2020 2022 2021 2020 (in $ millions) Texas 448 469 359 17 % 16 % 16 % New York 284 263 187 10 % 9 % 9 % International 176 198 134 6 % 7 % 6 % Florida 135 150 102 5 % 5 % 5 % California 133 192 163 5 % 6 % 7 % All others 1,537 1,733 1,244 57 % 57 % 57 % 2,713 3,005 2,189 100 % 100 % 100 % Real estate solutions and other revenues.
The approximate amounts and percentages of consolidated title operating revenues for the last three years ended December 31, 2023 were as follows: Year Ended December 31 Percentages 2023 2022 2021 2023 2022 2021 (in $ millions) Texas 305 448 469 16 % 17 % 16 % New York 195 284 263 10 % 10 % 9 % International 131 176 198 7 % 7 % 7 % Ohio 96 105 92 5 % 4 % 3 % California 89 133 192 5 % 5 % 6 % Florida 85 135 150 4 % 5 % 5 % All others 1,048 1,432 1,610 53 % 52 % 54 % 1,949 2,713 2,974 100 % 100 % 100 % Real estate solutions and other revenues.
Real estate solutions and other revenues are comprised of revenues generated by our real estate solutions operations and, for the fourth quarter 2021 and first four months of 2022, by a real estate brokerage company which we sold in 2022.
Real estate solutions and other revenues are primarily comprised of revenues generated by our real estate solutions operations. These revenues also included revenues generated by a real estate brokerage company which we operated from the fourth quarter 2021 to the mid-second quarter 2022 before being sold in 2022.
Total claims payments in 2022 increased $21.6 million, or 30%, compared to 2021, primarily as a result of increased payments on large claims, while claims payments in 2021 decreased $10.5 million, or 12.8%, compared to the prior year, due to lower payments on large and non-large claims.
Total claims payments in 2023 increased $11.2 million, or 12%, compared to 2022, primarily due to increase in payments for non-large claims related to prior policy years, while total claims in 2022 increased $21.6 million, or 30%, compared to 2021, primarily as a result of increased payments on large claims.
Title losses in 2022 decreased $23.5 million, or 19%, compared to the prior year, primarily due to lower title premiums and overall favorable claims experience in 2022. Title losses in 2021 increased $11.0 million, or 10%, compared to the prior year, primarily due to increased title premiums, partially offset by favorable claims experience.
Title losses in 2022 decreased $23.5 million, or 19%, compared to the prior year, primarily due to lower title premiums and overall favorable claims experience in 2022. Title losses paid were $104.3 million, $93.1 million and $71.5 million in 2022, 2021 and 2020, respectively.
Also in 2021, we recorded foreign currency translation losses which increased our other comprehensive loss by $0.7 million, net of taxes, which was primarily driven by the depreciation in value of the British pound against the U.S. dollar in 2021. Off-balance sheet arrangements.
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.
The higher other operating expenses ratios in 2022 and 2021 were primarily influenced by the increased size of our real estate solutions operations which typically have higher other operating expenses.
Total other operating expenses, as a percentage of total operating revenues (other operating expenses ratio), were 22.9%, 21.3% and 19.2% during 2023, 2022 and 2021, respectively, with the higher other operating expenses ratios in 2023 and 2022 primarily driven by lower operating revenues and the increased size of our real estate solutions operations which typically have higher other operating expenses.
Direct title revenue information is presented below: Year Ended December 31 Change Percent Change 2022 2021 2020 2022 vs 2021 2021 vs 2020 2022 vs 2021 2021 vs 2020 (in $ millions) (in $ millions) Non-commercial Domestic 830.5 960.1 743.7 (129.6) 216.4 (13) % 29 % International 130.5 157.1 106.1 (26.6) 51.0 (17) % 48 % 961.0 1,117.2 849.8 (156.2) 267.4 (14) % 31 % Commercial: Domestic 251.3 242.3 166.7 9.0 75.6 4 % 45 % International 34.0 31.4 21.4 2.6 10.0 8 % 47 % 285.3 273.7 188.1 11.6 85.6 4 % 46 % Total direct title revenues 1,246.3 1,390.9 1,037.9 (144.6) 353.0 (10) % 34 % Direct title revenues declined 10% in 2022 compared to 2021 primarily due to lower non-commercial revenues driven by lower residential transactions, partially offset by increased commercial revenues.
Direct title revenue information is presented below: Year Ended December 31 Change Percent Change 2023 2022 2021 2023 vs 2022 2022 vs 2021 2023 vs 2022 2022 vs 2021 (in $ millions) (in $ millions) Non-commercial Domestic 656.3 830.5 960.1 (174.2) (129.6) (21) % (13) % International 98.1 130.5 157.1 (32.4) (26.6) (25) % (17) % 754.4 961.0 1,117.2 (206.6) (156.2) (21) % (14) % Commercial: Domestic 182.2 251.3 242.3 (69.1) 9.0 (27) % 4 % International 26.1 34.0 31.4 (7.9) 2.6 (23) % 8 % 208.3 285.3 273.7 (77.0) 11.6 (27) % 4 % Total direct title revenues 962.7 1,246.3 1,390.9 (283.6) (144.6) (23) % (10) % Direct title revenues in 2023 decreased 23% compared to 2022, primarily due to reduced transaction volumes driven by the elevated interest rate market environment.
Net cash provided by operations improved by $114.5 million in 2021 compared to 2020, primarily as a result of the higher net income and lower claims payments in 2021. 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.
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.
Our effective tax rates for 2022, 2021 and 2020 were 23.9%, 22.5% and 24.0%, respectively, based on income before taxes (after deducting noncontrolling interests) of $213.2 million, $417.2 million and $203.7 million, respectively. Refer to Note 7 to our audited consolidated financial statements for details on the effective tax rates and income tax accounts.
Acquisition intangible amortization expenses in 2023, 2022 and 2021 were $34.6 million, $33.0 million and $19.0 million, respectively. Income taxes. Our effective tax rates for 2023, 2022 and 2021 were 33.4%, 23.9% and 22.5%, respectively, based on income before taxes (after deducting noncontrolling interests) of $45.7 million, $213.2 million and $417.2 million, respectively.
Excluding the real estate brokerage company, real estate solutions revenues improved $37.0 million, or 14%, and $177.1 million, or 214%, during 2022 and 2021, respectively, compared to corresponding prior periods, primarily due to revenues generated by acquisitions. 22 Investment income.
Excluding the real estate brokerage company, real estate solutions revenues decreased $33.1 million, or 11%, in 2023 compared to 2022, primarily due to the slow market activity influenced by higher interest rates, while these revenues improved $37.0 million, or 14%, in 2022 compared to 2021, primarily due to revenues generated by acquisitions. Investment income.
As an overall guideline, a 5% change in median home prices results in an approximately 3.7% change in title premiums. 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.
Historically, our first quarter is the least active in terms of title insurance revenues as home buying is generally depressed during winter months.
As of December 31, 2022, the outstanding balance of our Senior Notes was $444.6 million, while we have an unused $197.5 million borrowing capacity on our existing line of credit facility. During 2022, we paid dividends of $1.65 per common share, compared to $1.365 and $1.20 per common share paid during 2021 and 2020, respectively.
As of December 31, 2023, the outstanding balance of our Senior Notes was $445.1 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).
The title loss ratio in any given year can be significantly influenced by changes in new large claims incurred, escrow losses and adjustments to reserves for existing large claims. We continue to manage and resolve large claims prudently and in keeping with our commitments to our policyholders.
Title losses. Provisions for title losses, as a percentage of title operating revenues, were 4.1%, 3.8% and 4.2% in 2023, 2022 and 2021, respectively. The title loss ratio in any given year can be significantly influenced by changes in new large claims incurred, escrow losses and adjustments to reserves for existing large claims.
Investment income improved $5.6 million, or 33%, due to higher interest income driven by increased interest rates and higher dividend income from investments in 2022 compared to 2021. Investment income in 2021 decreased $1.8 million, or 9%, primarily due to reduced interest income on investments resulting from the lower interest rates environment compared to 2020.
Investment income in 2022 improved $5.6 million, or 33%, due to higher interest income driven by increased interest rates and higher dividend income from investments in 2022 compared to 2021. Refer to Note 6 to our audited consolidated financial statements for additional details. 24 Net realized and unrealized gains.
Consolidated employee costs increased $163.8 million, or 27%, in 2021 compared to 2020, primarily due to increased salaries and employee benefits on a 20% higher average employee count driven by acquisitions, higher incentive compensation on improved overall operating results, and increased temporary labor and overtime costs on increased transaction volumes.
Consolidated employee costs in 2023 decreased $89.2 million, or 11%, compared to 2022, primarily driven by lower salaries and benefits expenses, temporary labor and overtime costs, and incentive compensation resulting from lower average employee count and transaction volumes in 2023.
Total international revenues decreased $24.1 million, or 13%, primarily due to lower transaction volumes in our Canadian operations and overall weaker average foreign currency exchange rates against the U.S. dollar in 2022 compared to the prior year. 21 Direct title revenues in 2021 grew 34% compared to the prior year, as a result of overall revenue improvements in both non-commercial and commercial operations.
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. Direct title revenues declined 10% in 2022 compared to 2021 primarily due to lower non-commercial revenues driven by lower residential transactions, partially offset by increased commercial revenues.
In 2021, net unrealized investment losses of $16.1 million, net of taxes, which increased our other comprehensive loss, were primarily related to decreases in the fair values of our corporate and foreign bond securities, primarily resulting from higher interest rates. The five-year U.S. treasury yield applicable on our investments increased approximately 90 basis points in 2021 versus 2020.
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.
Depreciation and amortization expense increased $20.8 million, or 57%, and $17.2 million, or 89%, in 2022 and 2021, respectively, compared to corresponding prior years, primarily due to acquisitions' intangible asset amortization, which totaled $33.0 million and $19.0 million, respectively. Income taxes.
Depreciation and amortization expense increased $5.3 million, or 9%, in 2023 compared to 2022, primarily due to increased depreciation expenses related to internal-use technology systems placed into operation starting in late 2022. Depreciation and amortization expense in 2022 increased $20.8 million, or 57%, compared to 2021, primarily due to acquisitions' intangible asset amortization.
In aggregate, we paid total dividends of $44.7 million, $36.6 million and $30.2 million in 2022, 2021 and 2020, respectively. During 2020, we generated net proceeds of approximately $109.0 million from an issuance of new shares of Common Stock, which we used primarily for the acquisition of several title offices. Effect of changes in foreign currency rates.
During 2023, we paid dividends of $1.85 per common share, compared to $1.65 and $1.365 per common share paid during 2022 and 2021, respectively. In aggregate, we paid total dividends of $50.5 million, $44.7 million and $36.6 million in 2023, 2022 and 2021, respectively. Effect of changes in foreign currency rates.
Non-commercial revenues increased in 2021, primarily driven by increased residential transactions and scale compared to 2020. Domestic commercial revenues increased 45% in 2021 compared to 2020, primarily due to improved commercial transaction size and volume. Total purchase and refinancing closed orders improved 12%, while commercial closed orders increased 15% in 2021 compared to the prior year.
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.
Our total employee counts at December 31, 2022, 2021 and 2020 were approximately 7,100, 7,400 and 5,800, respectively.
Our total employee counts at December 31, 2023, 2022 and 2021 were approximately 6,800, 7,100 and 7,400, respectively. Average cost per employee for 2023 and 2022 decreased 2% and 10%, respectively, compared to corresponding prior years, primarily due to lower incentive compensation, temporary labor and overtime costs driven by reduced 2023 and 2022 transaction volumes.
Removed
Domestic commercial and residential fees per file in 2021 were approximately $14,000 and $2,200, respectively, which respectively were 26% and 18% higher compared to 2020. Total international revenues grew $61.0 million, or 48%, in 2021 compared to 2020, primarily due to increased residential and commercial transaction volumes in our Canadian operations.
Added
On average, refinance title premium rates are 60% of the premium rates for a similarly priced sale transaction. 22 Title revenues.
Removed
Average cost per employee for 2022 decreased 10% compared to 2021, while average cost per employee in 2021 increased 5% compared to 2020. 23 Employee costs for the title segment increased $7.4 million, or 1%, and $143.7 million, or 24%, in 2022 and 2021, respectively, compared to corresponding prior years, primarily due to acquisitions, while higher incentive compensation on increased title revenues also contributed to the increase in employee costs in 2021.
Added
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.
Removed
Consolidated other operating expenses increased $21.3 million, or 3%, and $251.6 million, or 67%, in 2022 and 2021, respectively, compared to corresponding prior years, while total other operating expenses, as a percentage of total operating revenues (other operating expenses ratio), were 21.3%, 19.2% and 16.5% during 2022, 2021 and 2020, respectively.
Added
Investment income increased $22.7 million, or 101%, in 2023 compared to the prior year, primarily due to higher interest income resulting from earned interest from eligible escrow balances and increased interest rates in 2023.
Removed
During 2021, costs fixed in nature increased $29.0 million, or 21%, compared to 2020, primarily due to acquisitions, (which added technology costs, professional fees, and rent and other occupancy expenses), higher third-party outsourcing provider fees and increased consulting fees related to business acquisition and integration.
Added
Employee costs in 2023 for the title and real estate solutions segments decreased $86.9 million, or 12%, and $1.1 million, or 2%, respectively, compared to 2022, primarily driven by lower average employee counts and transaction volumes in 2023.
Removed
Variable costs increased $206.5 million, or 101%, primarily due to increased appraiser and service expenses on higher real estate solutions revenues, increased outside title search, attorney fee splits and premium taxes on improved title revenues, and state sales tax assessments.
Added
Consolidated other operating expenses in 2023 decreased $140.3 million, or 22%, compared to 2022, primarily due to reduced transaction volumes in 2023, while other operating expenses in 2022 increased $21.3 million, or 3%, compared to 2021.
Removed
Independent costs increased $16.1 million, or 46%, primarily due to office consolidation costs, higher marketing and travel expenses, and increased bank service fees. Title losses. Provisions for title losses, as a percentage of title operating revenues, were 3.8%, 4.2% and 5.3% in 2022, 2021 and 2020, respectively.
Added
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.
Removed
Title losses paid were $93.1 million, $71.5 million and $82.0 million in 2022, 2021 and 2020, respectively.
Added
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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeInnovations introduced by real estate industry participants, including Stewart and our competitors, may be potentially disruptive and could adversely affect Stewart Various initiatives are introduced by real estate industry participants, including Stewart and our competitors, utilizing innovative technologies, processes and techniques in order to improve the manner and timeliness of delivering products and services, increase efficiency, improve the quality of products and services and customer experience, and enhance risk management.
Biggest changeInnovations and title insurance alternatives introduced by real estate industry participants, including Stewart and our competitors, lenders and investors may be potentially disruptive and could adversely affect Stewart Various initiatives and alternatives to traditional title insurance and settlement products and services are or may be introduced by real estate industry participants, including Stewart and 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.
Under these circumstances, our liability could have a material adverse effect on our results of operations or financial condition. General Risk Factor Our business could be disrupted as a result of a threatened proxy contest and other actions of activist stockholders. We have previously been the subject of actions taken by activist stockholders.
Under these circumstances, our liability could have a material adverse effect on our results of operations or financial condition. 12 General Risk Factor Our business could be disrupted as a result of a threatened proxy contest and other actions of activist stockholders. We have previously been the subject of actions taken by activist stockholders.
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. Financial Risk Factors Availability of credit may reduce our liquidity and negatively impact our ability to fund operations.
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. Financial Risk Factors Availability and cost of credit may reduce our liquidity and negatively impact our ability to fund operations.
Finally, changes in regulations or new regulations in our industry may be introduced that would have a material adverse effect on our business or result in increased costs of compliance. Dividends from our insurance underwriting subsidiaries are an important source for capital planning.
Finally, changes in regulations or new regulations in our industry may be introduced that could have a material adverse effect on our business or result in increased costs of compliance. Dividends from our insurance underwriting subsidiaries are an important source for capital planning.
Depending on factors relating to our operations, the real estate industry and the macroeconomic environment, these innovative investments may not be successful, may result in increased claims, reputational damage or other material impact on Stewart, or could disrupt our business operations by significantly diverting management's attention. Rapid changes in our industry require secure, timely and cost-effective technological responses.
Depending on factors relating to our operations, the real estate industry and the macroeconomic environment, these innovative investments may not be successful, may result in increased claims, damage to our reputation or other material impacts on Stewart, or could disrupt our business operations by significantly diverting management's attention. 7 Rapid changes in our industry require secure, timely and cost-effective technological responses.
Although we maintain cyber liability insurance to help protect us financially, there is no assurance that the instances noted above would not have a negative impact on cash flows, litigation status and/or our reputation, which could have a material adverse effect on our business, financial condition and results of operations.
Although we maintain cyber liability insurance to help protect us financially, there is no assurance that the instances noted above would not have a negative impact on cash flows, litigation status and/or our reputation, which could have a material adverse effect on our business, financial condition and results of operations. Refer to Part I, Item 1C.
The nature and extent of these regulations vary from jurisdiction to jurisdiction, but typically involve: • approving or setting of insurance premium rates; • standards of solvency and minimum amounts of statutory capital and surplus that must be maintained; • limitations on types and amounts of investments; • establishing reserves, including statutory premium reserves, for losses and loss adjustment expenses; • regulating underwriting and marketing practices; • regulating dividend payments and other transactions among affiliates; 10 • prior approval for the acquisition and control of an insurance company or of any company controlling an insurance company; • licensing of insurers, agencies and, in certain states, escrow officers; • regulation of reinsurance; • restrictions on the size of risks that may be insured by a single company; • deposits of securities for the benefit of policyholders; • approval of policy forms; • methods of accounting; and • filing of annual and other reports with respect to financial condition and other matters.
The nature and extent of these regulations vary from jurisdiction to jurisdiction, but typically involve: • approving or setting of insurance premium rates; 10 • setting standards of solvency and minimum amounts of statutory capital and surplus that must be maintained; • placing limits on types and amounts of investments; • establishing reserves, including statutory premium reserves, for losses and loss adjustment expenses; • regulating underwriting and marketing practices; • regulating dividend payments and other transactions among affiliates; • approving the acquisition and control of an insurance company or of any company controlling an insurance company; • licensing of insurers, agencies and, in certain states, escrow officers; • regulating reinsurance; • restricting the size of risks that may be insured by a single company; • requiring deposits of securities for the benefit of policyholders; • approving policy forms; • approving and prescribing methods of accounting; and • filing of annual and other reports with respect to financial condition and other matters.
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.
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.
Widespread health crises could adversely impact our business operations Widespread health crises and responses to such events could adversely affect the Company. Although the title insurance industry has been deemed essential in the United States, health crises and measures to address them may cause disruptions in the real estate market and on our business operations.
Although the title insurance industry has been deemed essential in the United States, health crises and measures to address them may cause disruptions in the real estate market and on our business operations.
From time-to-time, we experience large losses, including losses from independent agency defalcations, wire fraud, title policies that have been issued or worsening loss payment experience, any of which may require us to increase our title loss reserves. These events are unpredictable and may have a material adverse effect on our earnings.
From time-to-time, we experience large losses, including losses from independent agency defalcations, wire fraud, title policies that have been issued or worsening loss payment experience, any of which may require us to increase our title loss reserves.
The issuance of our title insurance policies and related activities by title agents, which operate with substantial independence from us, could adversely affect our operations. Our title insurance subsidiaries issue a significant portion of their policies through independent title agents.
These events are unpredictable and may have a material adverse effect on our earnings. 8 The issuance of our title insurance policies and related activities by title agents, which operate with substantial independence from us, could adversely affect our operations. Our title insurance subsidiaries issue a significant portion of their policies through independent title agents.
Our revenues and results of operations have been and may in the future be adversely affected by a decline in home prices, real estate activity and the availability of financing alternatives.
As a result, the title insurance industry tends to experience decreased revenues and earnings, and potentially increased claims experience. Our revenues and results of operations have been and may in the future be adversely affected by a decline in home prices, real estate activity and the availability of financing alternatives.
We are involved in litigation arising in the ordinary course of business. In addition, we may be, and have been in the past, subject to claims and litigation from large classes of claimants seeking substantial damages not arising in the ordinary course of business.
In addition, we may be, and have been in the past, subject to claims and litigation from large classes of claimants seeking substantial damages not arising in the ordinary course of business. Material pending legal proceedings not in the ordinary course of business, if any, would be disclosed in Part I, Item 3—Legal Proceedings .
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, FNF, First American and Old Republic each has substantially greater gross revenues than we do and their holding companies have significantly greater capital.
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.
We may also perform an evaluation whenever events may indicate an impairment has occurred. In assessing whether an impairment has occurred, we consider whether the performance of our reporting units may be below projections, unexpected declines in our market capitalization, negative macroeconomic trends or negative industry and company-specific trends.
In assessing whether an impairment has occurred, we consider whether the performance of our reporting units may be below projections, unexpected declines in our market capitalization, negative macroeconomic trends or negative industry and company-specific trends. We also perform reviews, at the asset group level, if carrying values of our long-lived assets are not recoverable.
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.
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. Increases in interest rates also increase the costs associated with borrowing on our floating rate line of credit facility.
However, an unfavorable outcome in any litigation, claim or investigation against us could have a material adverse effect on our consolidated financial condition or results of operations. Failures at financial institutions at which we deposit funds could adversely affect us.
To date, the impact of the outcome of these proceedings has not been material to our consolidated financial condition or results of operations. However, an unfavorable outcome in any litigation, claim or investigation against us could have a material adverse effect on our consolidated financial condition or results of operations.
To do so requires a flexible and secure technology architecture which can continuously comply with changing regulations, improve productivity, lower costs, reduce risk and enhance the customer experience.
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. Inability to meet these requirements and any unanticipated downtime in our technology may have a material adverse effect on our earnings.
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.
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.
The demand for our title insurance-related and real estate solutions offerings is dependent primarily on the volume of residential and commercial real estate transactions. The volume of these transactions historically has been influenced by such factors as mortgage interest rates, inventory, affordability, availability of financing and the overall state of the economy.
The volume of these transactions historically has been influenced by such factors as mortgage interest rates, inventory, affordability, availability of financing and the overall state of the economy. Typically, when interest rates are increasing or when the economy is experiencing a downturn, real estate activity declines.
These and other environmental-related documents can be found in the Investor Relations - Governance section of the Company's website. 9 Errors and fraud relating to fund transfers may adversely affect us The Company relies on its systems, employees and banks to transfer its own funds and the funds of third parties.
Cybersecurity for our policies and procedures in place to address cybersecurity risks. Errors and fraud relating to fund transfers may adversely affect us The Company relies on its systems, employees and banks to transfer its own funds and the funds of third parties.
We also perform reviews, at the asset group level, if carrying values of our long-lived assets are not recoverable. If we conclude that the carrying values of these assets exceed the fair value or are not recoverable, we may be required to record a noncash impairment of these assets.
If we conclude that the carrying values of these assets exceed the fair value or are not recoverable, we may be required to record a noncash impairment of these assets. Any substantial impairment that may be required in the future could have a material adverse effect on our results of operations or financial condition.
Our IT systems and our vendors' IT systems are used to store and process sensitive information regarding our operations and financial position as well as any information pertaining to our customers and vendors. While we take the utmost precautions, we cannot guarantee safety from all cyber threats, IT system or software vulnerabilities, wire fraud and attacks to our systems.
Our IT systems and our vendors' IT systems are used to store and process sensitive information regarding our operations and financial position as well as any information pertaining to our customers and vendors.
Unfavorable economic or other business conditions could cause us to record an impairment of all or a portion of our goodwill, other intangible assets and other long-lived assets. We perform annual impairment tests of the carrying values of our goodwill, other intangible assets and other long-lived assets.
As of December 31, 2023, we have an available $197.5 million borrowing capacity on our existing line of credit facility. 11 Unfavorable economic or other business conditions could cause us to record an impairment of all or a portion of our goodwill, other intangible assets and other long-lived assets.
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.
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. 9 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.
We deposit substantial fiduciary funds, which are third-party funds, and operating funds in many financial institutions in excess of insured deposit limits.
Failures at financial institutions at which we deposit funds could adversely affect us. 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.
Innovations by our competitors 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. Further, in developing and implementing our own innovation initiatives, we have made and will likely continue to make significant investments.
Further, in developing and implementing our own innovation initiatives, we have made and will likely continue to make significant investments.
Our financial condition and results of operations are affected by changes in economic conditions, particularly mortgage interest rates, credit availability, real estate prices and consumer confidence. Our revenues and earnings have fluctuated in the past due to the cyclical nature of the housing industry and we expect them to continue to fluctuate in the future.
Operational Risk Factors Adverse changes in economic conditions, especially those affecting the levels of real estate and mortgage activity, may reduce our revenues. Our financial condition and results of operations are affected by changes in economic conditions, particularly mortgage interest rates, credit availability, real estate prices and consumer confidence.
As a result of the growing importance that climate change has on both the Company’s operations as well as society in general, Stewart has made a formal statement on its commitment to the health of the global environment.
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.
Any substantial impairment that may be required in the future could have a material adverse effect on our results of operations or financial condition. 11 Our investment portfolio is subject to interest rate and other risks and could experience losses. We maintain a substantial investment portfolio, primarily consisting of fixed income debt securities and, to a lesser extent, equity securities.
Our investment portfolio is subject to interest rate and other risks and could experience losses. We maintain a substantial investment portfolio, primarily consisting of fixed income debt securities and, to a lesser extent, equity securities. Our portfolio holdings are subject to certain economic and financial market risks, including credit risk, interest rate risk, foreign exchange rate risk and liquidity risk.
Our portfolio holdings are subject to certain economic and financial market risks, including credit risk, interest rate risk, foreign exchange rate risk and liquidity risk. Instability in credit markets and economic conditions can increase the risk of loss in our portfolio. Periodically, we assess the recoverability of the amortized cost of our debt securities investments.
Instability in credit markets and economic conditions can increase the risk of loss in our portfolio. Periodically, we assess the recoverability of the amortized cost of our debt securities investments. If the amortized cost of such investments exceeds the fair value, and we conclude the decline is other-than-temporary, we are required to record an impairment.
If the amortized cost of such investments exceeds the fair value, and we conclude the decline is other-than-temporary, we are required to record an impairment. The impairment could have a material adverse effect on our results of operations or financial condition. Claims by large classes of claimants may impact our financial condition or results of operations.
The impairment could have a material adverse effect on our results of operations or financial condition. Claims by large classes of claimants may impact our financial condition or results of operations. We are involved in litigation arising in the ordinary course of business.
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, reputational harm, loss of customers or other adverse consequences which could be material to Stewart.
Funds transferred to a fraudulent recipient are often not recoverable and in certain instances, we may be liable for those unrecovered funds.
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. 8 Competition in the title insurance industry may affect our revenues. Competition in the title insurance industry is intense, particularly with respect to price, service and expertise.
Competition in the title insurance industry may affect our revenues. 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.
These efforts include implementing advanced technologies to automate and streamline certain manual processes during, but not limited to, search and examination, title insurance policy issuance, and real estate transaction settlement.
Innovation initiatives include implementing advanced technologies, 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.
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Inability to meet these requirements and any unanticipated downtime in our technology may have a material adverse effect on our earnings. 7 Operational Risk Factors Adverse changes in economic conditions, especially those affecting the levels of real estate and mortgage activity, may reduce our revenues.
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Additionally, certain of the investments that we frequently make are in regulated entities that are required to comply with various governmental regulatory requirements, which may impose significant costs on such entities or otherwise impact the value of our investments therein.
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Typically, when interest rates are increasing or when the economy is experiencing a downturn, real estate activity declines. As a result, the title insurance industry tends to experience decreased revenues and earnings, and potentially increased claims experience.
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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.
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In the event of a material cybersecurity breach, we have an incident response team in place to take immediate actions, work with local and national law enforcement, notify impacted parties as well as appropriate state regulators and the NYSE.
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Our revenues and earnings have fluctuated in the past due to the cyclical nature of the housing industry, and we expect them to continue to fluctuate in the future. The demand for our title insurance-related and real estate solutions offerings is dependent primarily on the volume of residential and commercial real estate transactions.
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The Company will also continue to update investors on the progress it is making to positively contribute to environmental preservation through its annual ESG reports.
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While we take strong precautions, we cannot guarantee safety from all cyber threats, IT system or software vulnerabilities, wire fraud and attacks to our systems, or our ability to timely detect cyber incidents.
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Material pending legal proceedings not in the ordinary course of business, if any, would be disclosed in Part I, Item 3—Legal Proceedings . To date, the impact of the outcome of these proceedings has not been material to our consolidated financial condition or results of operations.
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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.
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These and other 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 Widespread health crises and responses to such events could adversely affect the Company.
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We perform annual impairment tests of the carrying values of our goodwill, other intangible assets and other long-lived assets. We may also perform an evaluation whenever events may indicate an impairment has occurred.
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Those above the limits, which typically relate to large residential or commercial settlement transactions, are generally placed in well-capitalized financial institutions.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We currently lease under a non-cancelable operating leas e that expires in year 2025 approximately 150,000 square feet of space in an office building in Houston, Texas, which is used for our corporate offices and for offices of several of our subsidiaries. Additionally, we lease space at approximately 560 locations for business operations, administrative and technology centers.
Biggest changeItem 2. Properties We currently sub-lease under a non-cancelable operating leas e that expires in year 2025, approximately 110,000 square feet of space in an office building in Houston, T exas, which is used for our corporate offices and for offices of several of our subsidiaries.
These additional locations include significant leased facilities in Arizona (Phoenix, Scottsdale and Tucson), New York (New York), Colorado (Denver), California (Irvine, San Diego, Anaheim an d Glendale), Texas (Houston), Canada (Toronto), and Massachusetts (Boston). Our leases expire through 2033 and we believe we will not have any difficulty obtaining renewals of leases as they expire or, alternatively, leasing comparable properties.
These additional locations include significant leased facilities in Arizona (Phoenix and Scottsdale), New York (New York), Colorado (Denver), Texas (Houston), California (Irvine and San Diego) and Canada (Toronto). Our current leases expire through 2036 and we believe we will not have any difficulty obtaining renewals of leases as they expire or, alternatively, leasing comparable properties.
The aggregate annual rent expense under all office leases was approximately $51.2 million in 2022. We also own office buildings i n Arizona, Texas, New Mexico, California, New York, Florida and the United Kingdom. These owned properties are not material to our consolidated financial condition.
The aggregate rent expense under all office leases was approximately $47.7 million in 2023. We also own office buildings in Arizona, Texas, New Mexico, California, New York, Florida and the United Kingdom. These owned properties are not material to our consolidated financial condition.
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Additionally, we executed during 2023 a lease agreement with the owner of the building that extends our occupancy of such office space through the year 2036. We also lease space at approximately 510 locations for business operations, administrative and technology centers.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe presented information assumes that the value of the investment in our Common Stock and each index was $100 at December 31, 2017 and that all dividends were reinvested. 2017 2018 2019 2020 2021 2022 Stewart 100.00 100.61 102.09 125.15 210.92 117.00 Russell 2000 Index 100.00 89.03 111.72 133.92 153.72 122.27 Russell 2000 Financial Services Sector Index 100.00 89.13 110.60 108.36 140.61 118.69 The performance graph above and the related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, as amended, except to the extent that the Company specifically incorporates it by reference into such filing. 14 Dividends policy.
Biggest changeThe presented information assumes that the value of the investment in our Common Stock and each index was $100 at December 31, 2018 and that all dividends were reinvested. 2018 2019 2020 2021 2022 2023 Stewart 100.00 101.47 124.38 209.63 116.28 166.54 Russell 2000 Index 100.00 125.49 150.42 172.66 137.33 160.51 Russell 2000 Financial Services Sector Index 100.00 124.09 121.57 157.76 133.17 149.56 The performance graph above and the related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, as amended, except to the extent that the Company specifically incorporates it by reference into such filing. 16 Dividend Policy.
Stock Performance Graph. The following table and graph compares the yearly percentage change in our cumulative total stockholder retur n on Common Stock with the cumulative total return of the Russell 2000 Index and the Russell 2000 Financial Services Sector Index for the five years ended December 31, 2022.
Stock Performance Graph. The following table and graph compares the yearly percentage change in our cumulative total stockholder retur n on Common Stock with the cumulative total return of the Russell 2000 Index and the Russell 2000 Financial Services Sector Index for the five years ended December 31, 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market and Holders Information. Our Common Stock is listed on the NYSE under the symbol “STC”. As of February 17, 2023, the number of stockholders of record was approximately 4,800 and the closing price of one share of our Common Stock was $45.68.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market and Holders Information. Our Common Stock is listed on the NYSE under the symbol “STC”. As of February 16, 2024, the number of stockholders of record was approximately 4,700 and the closing price of one share of our Common Stock was $62.15.
There were no stock repurchases during 2022, except for repurchases of approximately 51,000 shares (aggregate purchase price of approximately $3.3 million) related to statutory income tax withholding on the annual vesting of employee restricted share grants.
There were no stock repurchases during 2023, except for repurchases of approximately 41,700 shares (aggregate purchase price of approximately $1.8 million) related to statutory income tax withholding on the annual vesting of employee restricted share grants.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur statements on home sales, mortgage interest rates and loan activity are based on averaged published industry data as of December 31, 2022 from sources including Fannie Mae, Freddie Mac, and the Mortgage Bankers Association (MBA), when available. 19 2022 2021 2020 Mortgage interest rates (30-year, fixed-rate) – % Averages for the year 5.33 2.96 3.11 First quarter 3.79 2.88 3.51 Second quarter 5.24 3.00 3.23 Third quarter 5.58 2.87 2.95 Fourth quarter 6.69 3.08 2.76 Mortgage originations – $ billions 2,296 4,504 4,241 Refinancings – % of originations 29 58 64 New home sales – in millions 0.65 0.77 0.83 New home median sales price – in $ thousands 453 396 335 Existing home sales – in millions 5.11 5.90 5.66 Existing home median sales price – in $ thousands 385 348 295 Interest rates significantly increased during 2022 compared to the prior year, primarily driven by government actions to curb the elevated inflation rate.
Biggest changeOur statements on home sales, mortgage interest rates and loan activity are based on averaged published industry data as of December 31, 2023 from sources including Fannie Mae and the Mortgage Bankers Association (MBA), when available. 2023 2022 2021 Mortgage interest rates (30-year, fixed-rate) – % Averages for the year 6.80 5.33 2.96 First quarter 6.36 3.79 2.88 Second quarter 6.49 5.24 3.00 Third quarter 7.04 5.58 2.87 Fourth quarter 7.29 6.69 3.08 Mortgage originations – $ billions 1,583 2,347 4,504 Refinancings – % of originations 18 31 58 Existing home sales – in millions 4.12 5.07 5.90 Existing home median sales price – in $ thousands 389 384 348 New home sales – in millions 0.68 0.64 0.77 New home median sales price – in $ thousands 424 456 396 Interest rates increased further in 2023 as a result of government actions to address the high inflation rate, which started in the late 2022.
In addition, we are typically not the only underwriter for which an independent agency issues policies, and independent agencies may not always provide complete financial records for our review. Goodwill impairment Goodwill is not amortized, but is reviewed for impairment annually and whenever occurrences of events indicate a potential impairment at the reporting unit level.
In addition, we are typically not the only underwriter for which an independent agency issues policies, and independent agencies may not always provide complete financial records for our review. 20 Goodwill impairment Goodwill is not amortized, but is reviewed for impairment annually and whenever occurrences of events indicate a potential impairment at the reporting unit level.
As a consequence, our ultimate liability may be materially greater or lower than current reserves and/or our third-party actuary’s calculated estimates. 17 Provisions for known claims arise primarily from prior policy years as claims are not typically reported until years after policies are issued.
As a consequence, our ultimate liability may be materially greater or lower than current reserves and/or our third-party actuary’s calculated estimates. Provisions for known claims arise primarily from prior policy years as claims are not typically reported until years after policies are issued.
Fourth quarter 2022 results included $12.7 million of pretax net realized and unrealized gains, primarily composed of net unrealized gains on fair value changes of equity securities investments and gains related to settlements of company-owned insurance policies, offset by $16.7 million of combined office closure, severance and regulatory settlement and litigation expenses.
Fourth quarter 2022 results included $12.7 million of pretax net realized and unrealized gains, primarily composed of net unrealized gains on fair value changes of equity securities investments and gains related to settlements of company-owned insurance policies, offset by $16.7 million of combined office closure, severance and regulatory settlement and litigation expenses. Title segment .
Segment results are included in the discussions and are discussed separately, when relevant. Industry data. Published U.S. mortgage interest rates and other selected residential housing data for the three years ended December 31, 2022 are shown below (amounts shown for 2022 are preliminary and subject to revision).
Segment results are included in the discussions and are discussed separately, when relevant. Industry data. Published U.S. mortgage interest rates and other selected residential housing data for the three years ended December 31, 2023 are shown below (amounts shown for 2023 are preliminary and subject to revision).
RESULTS OF OPERATIONS We discuss in this section the consolidated results of operations for the years 2022 and 2021, as compared to each corresponding prior year. Factors contributing to fluctuations in our results of operations are presented in the order of their monetary significance, and significant changes are quantified, when necessary.
RESULTS OF OPERATIONS We discuss in this section the consolidated results of operations for the years 2023 and 2022, as compared to each corresponding prior year. Factors contributing to fluctuations in our results of operations are presented in the order of their monetary significance, and significant changes are quantified, when necessary.
Title loss reserves Provisions for title losses, as a percentage of title operating revenues, were 3.8%, 4.2% and 5.3% for the years ended December 31, 2022, 2021 and 2020, respectively. Actual loss payment experience, including the impact of large losses, is the primary reason for increases or decreases in our loss provision.
Title loss reserves Provisions for title losses, as a percentage of title operating revenues, were 4.1%, 3.8% and 4.2% for the years ended December 31, 2023, 2022 and 2021, respectively. Actual loss payment experience, including the impact of large losses, is the primary reason for increases or decreases in our loss provision.
A 100 basis point change in the loss provisioning percentage, a reasonable scenario based on our historical loss experience, would have increased or decreased our provision for title losses, and affected pretax operating results by approximately $27.1 million for the year ended December 31, 2022.
A 100 basis point change in the loss provisioning percentage, a reasonable scenario based on our historical loss experience, would have increased or decreased our provision for title losses, and affected pretax operating results by approximately $19.5 million for the year ended December 31, 2023.
For the fourth quarter 2022, we reported net income attributable to Stewart of $13.3 million ($0.49 per diluted share), compared to net income attributable to Stewart of $85.5 million ($3.12 per diluted share) for the fourth quarter 2021.
For the fourth quarter 2023, we reported net income attributable to Stewart of $8.8 million ($0.32 per diluted share), compared to net income attributable to Stewart of $13.3 million ($0.49 per diluted share) for the fourth quarter 2022.
The corporate and other segment includes our parent holding company expenses and certain enterprise-wide overhead costs, along with other businesses not related to title or real estate solutions operations. Refer to
Our real estate solutions operations include appraisal management services, online notarization and closing services, credit and real estate information services, and search and valuation services. The corporate and other segment includes our parent holding company expenses and certain enterprise-wide overhead costs, along with other businesses not related to title or real estate solutions operations. Refer to
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MANAGEMENT'S OVERVIEW On a full year basis, 2022 net income attributable to Stewart was $162.3 million, or $5.94 per diluted share, compared to $323.2 million, or $11.90 per diluted share, in 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MANAGEMENT'S OVERVIEW Net income attributable to Stewart for the year 2023 was $30.4 million, or $1.11 per diluted share, compared to $162.3 million, or $5.94 per diluted share, in 2022.
Fourth quarter 2022 pretax income before noncontrolling interests was $20.8 million compared to pretax income before noncontrolling interests of $114.1 million for the fourth quarter 2021.
Fourth quarter 2023 pretax income before noncontrolling interests was $18.8 million compared to pretax income before noncontrolling interests of $20.8 million for the prior year quarter.
Such losses are usually discovered when the independent agency fails to pay off an outstanding mortgage loan at closing (or immediately thereafter) from the proceeds of the new loan.
Large title losses due to independent agency defalcations typically occur when the independent agency misappropriates funds from escrow accounts under its control. Such losses are usually discovered when the independent agency fails to pay off an outstanding mortgage loan at closing (or immediately thereafter) from the proceeds of the new loan.
Total 2022 provisions - IBNR decreased $20.9 million, or 20%, compared to the prior year, primarily due to lower title premiums and lower provisioning rates from an overall favorable claims experience in 2022.
Total 2022 provisions - IBNR decreased $20.9 million, or 20%, compared to the prior year, primarily due to lower title premiums and lower provisioning rates from an overall favorable claims experience in 2022. As a percentage of title operating revenues, current year provisions - IBNR were 2.6%, 2.8% and 3.3% in 2023, 2022 and 2021, respectively.
Summary results of the title segment are as follows (in $ millions, except pretax margin and % change): For the Three Months Ended December 31, 2022 2021 % Change Operating revenues 581.6 836.4 (30) % Investment income 6.9 3.7 85 % Net realized and unrealized gains 10.3 4.9 110 % Pretax income 26.9 118.6 (77) % Pretax margin 4.5 % 14.0 % Operating revenues for the title segment decreased $254.8 million, or 30%, in the fourth quarter 2022 compared to the fourth quarter 2021, primarily due to volume declines in our direct title and agency operations, while total segment operating expenses decreased $154.6 million, or 21%, primarily as a result of lower revenues.
Summary results of the title segment are as follows (in $ millions, except pretax margin and % change): For the Three Months Ended December 31, 2023 2022 % Change Operating revenues 503.0 581.6 (14) % Investment income 13.0 6.9 89 % Net realized and unrealized gains 5.1 10.3 (50) % Pretax income 27.3 26.9 2 % Pretax margin 5.2 % 4.5 % Segment operating revenues decreased $78.6 million, or 14%, compared to the prior year quarter, as a result of transaction volume declines in our direct and agency title operations.
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 appraisal management services, online notarization and closing services, credit and real estate information services, and search and valuation services.
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.
The high interest rate environment negatively impacted transactions in the real estate market. Mortgage originations during 2022 fell 49% from the prior year, with total refinancing transactions decreasing by 74%. Refinancing share from total mortgage originations declined to 29% in 2022 compared to 58% in 2021.
The elevated interest rate environment negatively impacted transactions in the real estate market, where 2023 mortgage originations declined 33% from the prior year, with total refinancing transactions decreasing by 61%. Refinancing share from total mortgage originations declined to 18% in 2023 compared to 31% in 2022.
Pretax income before noncontrolling interests in 2022 was $232.7 million (7.6% pretax margin) compared to $434.0 million (13.1% pretax margin) in 2021.
Pretax income before noncontrolling interests in 2023 was $60.9 million (2.7% pretax margin) compared to $232.7 million (7.6% pretax margin) in 2022.
Adjustments relating to large claims may impact provisions either for known claims or for IBNR. 2022 2021 2020 (in $ millions) Provisions – Known Claims: Current year 20.2 22.8 14.3 Prior policy years 84.2 55.7 68.8 104.4 78.5 83.1 Provisions – IBNR Current year 75.2 98.3 84.5 Prior policy years 7.3 5.1 16.4 82.5 103.4 100.9 Transferred IBNR to Known Claims (84.2) (55.7) (68.8) Total provisions 102.7 126.2 115.2 In 2022, total known claims provisions increased by $25.9 million, or 33%, primarily due to an increase in reported new and existing large claims relating to prior policy years compared to 2021.
Adjustments relating to large claims may impact provisions either for known claims or for IBNR. 19 2023 2022 2021 (in $ millions) Provisions – Known Claims: Current year 16.9 20.2 22.8 Prior policy years 70.4 84.2 55.7 87.3 104.4 78.5 Provisions – IBNR Current year 49.9 75.2 98.3 Prior policy years 13.5 7.3 5.1 63.4 82.5 103.4 Transferred IBNR to Known Claims (70.4) (84.2) (55.7) Total provisions 80.3 102.7 126.2 In 2023, total provisions for known claims decreased by $17.1 million, or 16%, compared to 2022, 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.
Agency retention expenses in the fourth quarter 2022 decreased $107.8 million, or 30%, consistent with the 30% decline in gross agency revenues, while the average independent agency remittance rate in the fourth quarter 2022 was 17.6% compared to 18.0% in the fourth quarter 2021. 15 Total employee costs and other operating expenses in the fourth quarter 2022 decreased $36.2 million, or 11%, compared to the prior year quarter, and as a percentage of operating revenues, these expenses were 48.9% in the fourth quarter 2022 compared to 38.3% in the fourth quarter 2021, primarily due to lower revenues in the fourth quarter 2022.
The average independent agency remittance rate in the fourth quarter 2023 was 17.3%, compared to 17.6% during the fourth quarter 2022. 17 Total employee costs and other operating expenses in the fourth quarter 2023 were lower by $37.6 million, or 13%, compared to the prior year quarter, while as a percentage of operating revenues, these expenses were 49.1% in the fourth quarter 2023 compared to 48.9% in the prior year quarter.
Direct title revenue information is presented below (in $ millions, except % change) : For the Three Months Ended December 31, 2022 2021 % Change Non-commercial Domestic 171.3 251.0 (32) % International 24.0 38.3 (37) % 195.3 289.3 (32) % Commercial: Domestic 66.9 93.1 (28) % International 7.7 9.4 (18) % 74.6 102.5 (27) % Total direct title revenues 269.9 391.8 (31) % Total non-commercial revenues decreased $94.0 million, or 32%, primarily resulting from a 55% decline in residential purchase and refinancing transactions during the fourth quarter 2022 compared to the prior year quarter.
Direct title revenue information is presented below (in $ millions, except % change) : For the Three Months Ended December 31, 2023 2022 % Change Non-commercial Domestic 153.8 171.3 (10) % International 24.0 24.0 — % 177.8 195.3 (9) % Commercial: Domestic 56.1 66.9 (16) % International 6.5 7.7 (16) % 62.6 74.6 (16) % Total direct title revenues 240.4 269.9 (11) % Total non-commercial domestic revenues in the fourth quarter 2023 declined $17.5 million, or 9%, primarily due to a 5% decline in total residential purchase and refinancing transactions and a lower average fee per file compared to the fourth quarter 2022.
Title loss expense in the fourth quarter 2022 decreased $11.9 million, or 36%, compared to the prior year quarter, primarily due to lower title revenues. As a percentage of title revenues, title loss expense was 3.7% in the fourth quarter 2022 compared to 4.0% in the fourth quarter 2021.
Fourth quarter title loss expense decreased $1.1 million, or 5%, primarily as a result of lower title revenues compared to the prior year quarter. As a percentage of title revenues, title loss expense was 4.1% in the fourth quarter 2023 compared to 3.7% in the fourth quarter 2022, which benefited from last year’s favorable claims experience.
Average domestic commercial fee per file in the fourth quarter 2022 was $15,100, which was 23% lower compared to $19,700 in the fourth quarter 2021, while average residential fee per file in the fourth quarter 2022 increased 45% to $3,500, compared to $2,400 in the prior year quarter due to a higher purchase mix in the fourth quarter 2022.
Average domestic commercial fee per file in the fourth quarter 2023 was $14,800 compared to $15,100 in the fourth quarter 2022, while average residential fee per file in the fourth quarter 2023 was $3,200, which was 9% lower compared to $3,500 in the prior year quarter primarily due to transaction mix in the fourth quarter 2023.
These losses are recognized as expenses when discovered or when contingencies associated with them (such as litigation) are resolved and are typically paid less than 12 months after the loss is recognized. Large title losses due to independent agency defalcations typically occur when the independent agency misappropriates funds from escrow accounts under its control.
In those cases, the title insurer incurs the loss under its obligation to ensure that an unencumbered title is conveyed. These losses are recognized as expenses when discovered or when contingencies associated with them (such as litigation) are resolved and are typically paid less than 12 months after the loss is recognized.
In addition, the overall decline in an independent agency’s revenues, profits and cash flows increases the agency’s incentive to improperly utilize the escrow funds from real estate transactions.
In addition, the overall decline in an independent agency’s revenues, profits and cash flows increases the agency’s incentive to improperly utilize the escrow funds from real estate transactions. For each of the three years ended December 31, 2023, our net title losses due to independent agency defalcations were not material.
Escrow losses typically relate to errors or other miscalculations of amounts to be paid at closing, including timing or amount of a mortgage payoff, payment of property or other taxes and payment of homeowners’ association fees, and wire fraud. In those cases, the title insurer incurs the loss under its obligation to ensure that an unencumbered title is conveyed.
In addition to title policy claims, we incur losses in our direct operations from escrow, closing and disbursement functions. Escrow losses typically relate to errors or other miscalculations of amounts to be paid at closing, including timing or amount of a mortgage payoff, payment of property or other taxes and payment of homeowners’ association fees, and wire fraud.
For our annual goodwill impairment test for all our reporting units, we utilized the quantitative approach during 2022, while we used the qualitative approach during 2021.
For our annual goodwill impairment test for all our reporting units, we utilized the quantitative approach during 2023 and 2022 and concluded that there is no impairment of goodwill for any of our reporting units.
Fourth quarter 2021 results included $6.5 million of pretax net realized and unrealized gains, primarily composed of net unrealized gains on fair value changes of equity securities investments and net gains related to acquisition contingent liability adjustments, partially offset by net realized losses primarily related to sale of securities investments and other assets and $4.1 million of office closure costs.
Fourth quarter 2023 included $4.8 million of pretax net realized and unrealized gains primarily driven by net unrealized gains on fair value changes of equity securities investments and net gains from acquisition liability adjustments, offset by $6.4 million of combined office closures and severance expenses.
The corporate and other segment recorded $2.5 million of net realized and unrealized gains in the fourth quarter 2022, primarily related to settlement of a company-owned life insurance policy, compared to $1.6 million of net realized losses in the fourth quarter 2021, primarily driven by losses on asset disposals.
The corporate and other segment's results for the fourth quarter 2023 and 2022 were primarily driven by net expenses attributable to corporate operations which were $9.7 million and $9.0 million, respectively. During the fourth quarter 2022, the segment recorded $2.5 million of net realized gains primarily related to a settlement of a company-owned life insurance policy.
Summary results of the real estate solutions segment are as follows (in $ millions, except % change): For the Three Months Ended December 31, 2022 2021 % Change Operating revenues 54.7 83.7 (35) % Net realized and unrealized gains — 3.3 (100) % Pretax income 0.4 5.3 (93) % Pretax margin 0.7 % 6.1 % 16 Operating revenues for the real estate solutions segment decreased in the fourth quarter 2022 compared to last year’s fourth quarter primarily due to lower transaction volumes influenced by the current high interest rate environment.
Summary results of the real estate solutions segment are as follows (in $ millions, except pretax margin and % change): For the Three Months Ended December 31, 2023 2022 % Change Operating revenues 61.4 54.7 12 % Pretax income 1.4 0.4 276 % Pretax margin 2.3 % 0.7 % The segment’s fourth quarter operating revenues improved $6.7 million, or 12%, compared to the prior year quarter, primarily due to increased credit information services revenues, partially offset by lower valuation services revenues from lower transaction volumes.
To aid in the selection of independent agencies to review, we have developed an agency risk model that aggregates data from different areas to identify possible issues. This is not a guarantee that all independent agencies with deficiencies will be identified.
However, even with adequate internal controls in place, their effectiveness can be circumvented by collusion or improper override of the controls by management at the independent agencies. To aid in the selection of independent agencies to review, we have developed an agency risk model that aggregates data from different areas to identify possible issues.
Included in the segment's pretax income were total acquired intangible asset amortization expenses of $5.8 million and $5.6 million in the fourth quarters 2022 and 2021, respectively. Corporate and other segment .
Combined segment employee costs and other operating expenses in the fourth quarter 2023 increased $5.4 million, or 11%, consistent with the higher operating revenues. The segment's pretax income included acquisition intangible asset amortization expenses of $6.0 million and $6.6 million in the fourth quarters 2023 and 2022, respectively. 18 Corporate and other segment .
The audits and site visits cover examination of the escrow account bank reconciliations and an examination of a sample of closed transactions. In some instances, the scope of our review is limited by attorney agencies that cite client confidentiality. Certain states have mandated annual reviews of agencies by their underwriter.
In some instances, the scope of our review is limited by attorney agencies that cite client confidentiality. Certain states have mandated annual reviews of agencies by their underwriter. We also determine whether our independent agencies have appropriate internal controls as defined by ALTA's best practices and us.
Total 2022 operating revenues decreased 7% to $3.0 billion, compared to $3.3 billion in 2021, while total 2022 operating expenses decreased 1% to $2.8 billion, compared to $2.9 billion in 2021, primarily due to lower title transaction volumes which were partially offset by full year results of acquisitions from 2021.
During 2023, total operating revenues decreased 27% to $2.2 billion compared to $3.0 billion in 2022, while total expenses decreased 23% to $2.2 billion compared to $2.8 billion in 2022, primarily due to lower transaction volumes driven by the elevated interest rate environment during 2023.
The title segment’s net realized and unrealized gains in the fourth quarters 2022 and 2021 included net unrealized gains of $11.2 million and $8.1 million, respectively, related to fair value changes of equity securities investments and net realized losses of $0.6 million and $0.8 million, respectively, on sale of investment securities.
Net realized and unrealized gains of $5.1 million and $10.3 million for the fourth quarters 2023 and 2022, respectively, were primarily driven by net unrealized gains on fair value changes on equity securities investments.
Total international revenues in the fourth quarter 2022 declined by $16.0 million, or 34%, primarily as a result of lower transaction volumes in our Canadian operations. Real estate solutions segment .
Total international revenues in the fourth quarter 2023 decreased by $1.2 million, or 4%, primarily due to lower transaction volumes compared to the prior year quarter. Real estate solutions segment .
For each of the three years ended December 31, 2022, our net title losses due to independent agency defalcations were not material. 18 Internal controls relating to independent agencies include, but are not limited to, periodic audits, site visits and reconciliations of policy inventories and premiums.
Internal controls relating to independent agencies include, but are not limited to, periodic audits, site visits and reconciliations of policy inventories and premiums. The audits and site visits cover examination of the escrow account bank reconciliations and an examination of a sample of closed transactions.
In 2021, total known claims provisions decreased by $4.6 million, or 6%, to $78.5 million primarily due to lower reported claims relating to prior year policies compared to 2020.
In 2022, total known claims provisions increased by $25.9 million, or 33%, primarily due to an increase in reported new and existing large claims relating to prior policy years compared to 2021.
Domestic commercial revenues in the fourth quarter 2022 decreased $26.2 million, or 28%, primarily due to lower transaction volume and size compared to the fourth quarter 2021.
Fourth quarter domestic commercial revenues decreased $10.8 million, or 16%, primarily driven by 14% lower commercial transactions compared to the prior year quarter.
Removed
Additionally, the segment recorded $2.0 million of net losses related to acquisition contingent liability adjustments during the fourth quarter 2021. Investment income in the fourth quarter 2022 increased compared to the prior year quarter, primarily as a result of higher interest income resulting from increased interest rates and higher short-term investments in the fourth quarter 2022.
Added
Total segment operating expenses in the fourth quarter 2023 decreased $78.1 million, or 14%, consistent with lower operating revenues. Agency retention expenses decreased $39.7 million, or 15%, in the fourth quarter 2023 primarily due to $49.2 million, or 16%, lower gross agency revenues.
Removed
Combined employee costs and other operating expenses decreased 36% in the fourth quarter 2022, consistent with the reduced operating revenue. Net realized and unrealized gains during the fourth quarter 2021 were primarily driven by net gains related to acquisition contingent liability adjustments.
Added
Investment income in the fourth quarter 2023 increased $6.1 million, compared to the prior year quarter, primarily due to higher interest income resulting from earned interest from eligible escrow balances in the fourth quarter 2023.
Removed
Segment results for the fourth quarter 2021 included a real estate brokerage company that was acquired in late 2021 and sold in early 2022. Net expenses attributable to corporate operations increased to $9.0 million in the fourth quarter 2022 compared to $7.9 million in the prior year quarter, primarily as a result of higher interest expense resulting from debt.
Added
This is not a guarantee that all independent agencies with deficiencies will be identified.
Removed
Total 2021 provisions - IBNR increased by $2.5 million, or 3%, to $103.4 million compared to the prior year, primarily due to increased title premiums in 2021, partially offset by the effect of lower provisioning rates due to favorable claims experience.
Added
Existing home sales activity declined 19% in 2023, primarily due to the high interest rate environment, while new homeowner demand and materials supply improvement contributed to new home sales improving by 7% in 2023 compared to the prior year. 21 With the government pausing interest rate hikes during the second half of 2023 and encouraging economic data, Fannie Mae and the MBA expect the housing market to slowly recover beginning in 2024.
Removed
As a percentage of title operating revenues, current year provisions - IBNR were 2.8%, 3.3% and 3.9% in 2022, 2021 and 2020, respectively. In addition to title policy claims, we incur losses in our direct operations from escrow, closing and disbursement functions.
Added
As interest rates are expected to gradually decline, total loan originations are forecast to improve 23% in 2024 with purchase and refinancing originations expected to increase 13% and 67%, respectively, compared to 2023. Additionally, existing and new home sales are estimated to increase 3% and 4%, respectively, in 2024 compared to 2023. Factors affecting revenues.
Removed
We also determine whether our independent agencies have appropriate internal controls as defined by ALTA's best practices and us. However, even with adequate internal controls in place, their effectiveness can be circumvented by collusion or improper override of the controls by management at the independent agencies.
Removed
Additionally, due to the deterioration of the macroeconomic environment during the second half of 2022 and its impact on the real estate market, we performed an updated quantitative analysis using a valuation date of December 31, 2022 and concluded there is no impairment of goodwill for any of our reporting units.
Removed
Existing and new home sales activity declined 13% and 16%, respectively, while elevated existing and new median home prices continued, increasing 11% and 15%, respectively, in 2022 compared to 2021. Fannie Mae and the MBA expect the housing market softening to continue into 2023, with total mortgage originations in 2023 expected to decline 22% from 2022.
Removed
Existing and new homes sales in 2023 are anticipated to be lower by 17% and 9%, respectively, from the prior year. While the average 30-year mortgage interest rate is expected to be 5.8% for the full year 2023, it is expected to begin decreasing starting in the third quarter 2023 and anticipated to average lower at 5.0% in 2024.
Removed
As a result, a market recovery is forecasted for 2024, with total mortgage lending expected to improve 22% and both total existing and new homes sales anticipated to increase by 15% compared to 2023. Factors affecting revenues. Our primary business is title insurance and settlement-related services.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed9 unchanged
Biggest changeInvestments in debt securities at December 31, 2022 mature, according to their contractual terms, as follows (actual maturities may differ because of call or prepayment rights): Amortized costs Fair values (in $ thousands) In one year or less 79,070 78,241 After one year through two years 105,800 102,569 After two years through three years 68,276 65,604 After three years through four years 109,389 101,981 After four years through five years 75,688 70,544 After five years 208,505 192,995 646,728 611,934 We believe our investment portfolios are diversified and do not expect any material loss to result from the failure to perform by issuers of the debt securities we hold.
Biggest changeInvestments in debt securities at December 31, 2023 mature, according to their contractual terms, as follows (actual maturities may differ because of call or prepayment rights): Amortized costs Fair values (in $ thousands) In one year or less 101,050 99,855 After one year through two years 78,470 76,630 After two years through three years 114,040 108,900 After three years through four years 81,290 77,490 After four years through five years 70,570 67,057 After five years 185,874 180,304 631,294 610,236 We believe our investment portfolios are diversified and do not expect any material loss to result from the failure to perform by issuers of the debt securities we hold.
The material market risk in our investments in financial instruments is related to our debt securities investments, which represent approximately 86% of our total securities investment portfolio at December 31, 2022, with the remainder invested in equity securities. We invest primarily in corporate, foreign, municipal and U.S. government debt securities.
The material market risk in our investments in financial instruments is related to our debt securities investments, which represent approximately 90% of our total securities investment portfolio at December 31, 2023, with the remainder invested in equity securities. We invest primarily in corporate, foreign, municipal and U.S. government debt securities.
Refer to Note 4 to our audited consolidated financial statements for details. 29 Based on our foreign debt securities portfolio and foreign currency exchange rates at December 31, 2022, a 100 basis-point increase (decrease) in foreign currency exchange rates would result in an increase (decrease) of approximately $2.9 million in the fair value of our foreign debt securities portfolio.
Refer to Note 4 to our audited consolidated financial statements for details. 31 Based on our foreign debt securities portfolio and foreign currency exchange rates at December 31, 2023, a 100 basis-point increase (decrease) in foreign currency exchange rates would result in an increase (decrease) of approximately $3.1 million in the fair value of our foreign debt securities portfolio.
Based on our debt securities portfolio and interest rates at December 31, 2022, a 100 basis-point increase (decrease) in interest rates would result in a decrease (increase) of approximately $20.6 million, or 3.4%, in the fair value of our portfolio.
Based on our debt securities portfolio and interest rates at December 31, 2023, a 100 basis-point increase (decrease) in interest rates would result in a decrease (increase) of approximately $19.8 million, or 3.2%, in the fair value of our debt securities portfolio.

Other STC 10-K year-over-year comparisons