10q10k10q10k.net

What changed in STEWART INFORMATION SERVICES CORP's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of STEWART INFORMATION SERVICES CORP's 2023 and 2024 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 2024 report.

+171 added−162 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-29)

Top changes in STEWART INFORMATION SERVICES CORP's 2024 10-K

171 paragraphs added · 162 removed · 148 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

68 edited+5 added−6 removed30 unchanged
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.
Biggest changeTotal 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. 23 Closed and opened orders information is as follows: Year Ended December 31 Change % Change 2024 2023 2022 2024 vs 2023 2023 vs 2022 2024 vs 2023 2023 vs 2022 Opened Orders: Commercial 15,167 14,203 20,202 964 (5,999) 7 % (30) % Purchase 191,938 202,947 241,781 (11,009) (38,834) (5) % (16) % Refinance 71,274 64,418 98,663 6,856 (34,245) 11 % (35) % Other 44,449 27,328 9,037 17,121 18,291 63 % 202 % Total 322,828 308,896 369,683 13,932 (60,787) 5 % (16) % Closed Orders: Commercial 15,452 14,971 18,448 481 (3,477) 3 % (19) % Purchase 135,471 147,528 184,652 (12,057) (37,124) (8) % (20) % Refinance 43,252 40,151 81,755 3,101 (41,604) 8 % (51) % Other 34,577 17,612 8,071 16,965 9,541 96 % 118 % Total 228,752 220,262 292,926 8,490 (72,664) 4 % (25) % Gross revenues from independent agency operations (agency revenues) improved $57.2 million, or 6%, in 2024, while they decreased $480.3 million, or 33%, in 2023, compared to corresponding prior years, which were consistent with the performance of our direct title operations and trends of the overall real estate market during 2024 and 2023.
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).
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.
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.
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; • 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; • regulatory non-compliance, fraud or defalcations by our title insurance agencies or employees; 30 • 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.
The higher effective tax rate for 2023 was primarily due to the effect of non-deductible expenses on lower pretax income and higher foreign income contribution, which is taxed at a higher rate than domestic income. Refer to Note 7 to our audited consolidated financial statements for details on the effective tax rates and income tax accounts.
The higher effective tax rate for 2023 was primarily due to the effect of non-deductible expenses on lower pretax income and higher foreign income contribution (which is taxed at a higher rate than domestic income) in 2023. Refer to Note 7 to our audited consolidated financial statements for details on the effective tax rates and income tax accounts.
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.
Guaranty may also, subject to certain limitations, provide funds to its subsidiaries (whose operations consist principally of field title offices and real estate solutions operations) for their operating and debt service needs. We maintain investments in accordance with certain statutory requirements for the funding of statutory premium reserves.
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.
Costs that are primarily fixed in nature decreased $11.8 million, or 6%, primarily driven by reduced outsourcing and rent and other occupancy expenses, while independent costs decreased $19.0 million, or 25%, primarily due to lower litigation settlement, business promotion and marketing, and office closures expenses. Title losses.
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.
Based on historical payment patterns, approximately 85% 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.
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, 2024 and 2023, 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 .
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.
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 in 2024 and 2022, while it appreciated during 2023. 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.
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.
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 $445.8 million and $1.4 billion, respectively, as of December 31, 2024.
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.
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. Other operating expenses.
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.
Provisions for title losses, as a percentage of title operating revenues, were 3.9%, 4.1% and 3.8% in 2024, 2023 and 2022, 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.
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).
As of December 31, 2024, the outstanding balance of our Senior Notes was $445.7 million, while we have an unused $197.5 million borrowing capacity on our existing line of credit facility (refer to Note 9 to our audited consolidated financial statements for details).
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.
Also in 2023, we recorded foreign currency translation gains which increased our other comprehensive income by $5.3 million, net of taxes, which was primarily driven by the appreciation in value of the Canadian dollar and British pound against the U.S. dollar. Off-balance sheet arrangements.
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.
During 2024, 2023 and 2022, payments on notes payable of $3.4 million, $5.7 million and $74.3 million, respectively, and notes payable additions of $3.4 million, $3.5 million and $39.5 million, respectively, were related to our Section 1031 business, which had an outstanding balance of $0.2 million at December 31, 2024.
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.
Guaranty paid $30.0 million in dividends to its parent during 2024, while it paid no dividends during 2023. Contractual obligations. Our material contractual obligations at December 31, 2024 are composed primarily of our unsecured senior notes (and the related semi-annual interest payments), operating leases, and reserves for estimated title losses.
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).
The Texas Department of Insurance (TDI) must be notified of any dividend declared, and any dividend in excess of the greater of the statutory net operating income or 20% of surplus (which was approximately $173.0 million as of December 31, 2024) 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).
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.
Our plans to improve margins include additional automation of manual processes, further consolidation of our various systems and production operations, and full integration of acquisitions. We continue to invest in the technology necessary to accomplish these goals. Investing activities.
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.
As of December 31, 2024, 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 24%, respectively.
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.
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 82.9%, 82.5% and 82.4% during each of the three years ended December 31, 2024.
We continue to thoughtfully manage expenses, especially in light of the current economic environment due to elevated mortgage interest rates, specifically focusing on lowering unit costs of production and improving operating margins in our direct title and real estate solutions operations.
We continue to thoughtfully manage expenses, especially in light of the current slow residential real estate market due to elevated mortgage interest rates, specifically focusing on lowering unit costs of production and improving operating margins in our direct title and real estate solutions operations.
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.
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 $535.5 million at December 31, 2024.
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.
Effect of changes in foreign currency rates. The effect of changes in foreign currency rates on the consolidated statements of cash flows was a net (decrease) increase in cash and cash equivalents of $(4.5 million), $1.0 million and $(5.5 million) in 2024, 2023 and 2022, respectively.
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.
Claims payments made on large title claims, net of insurance recoveries, during 2024, 2023 and 2022 were $14.9 million, $26.3 million and $23.1 million, respectively. 26 Our liability for estimated title losses as of December 31, 2024 and 2023 comprises both known claims and our IBNR. Known claims reserves are reserves related to actual losses reported to us.
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.
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, 2024, our total cash and investments, including amounts reserved pursuant to statutory requirements, aggregated $926.6 million.
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.
Total other operating expenses, as a percentage of total operating revenues (other operating expenses ratio), were 24.9%, 22.9% and 21.3% during 2024, 2023 and 2022, respectively, with the higher other operating expenses ratios in 2024 and 2023 primarily driven by the increased size of our real estate solutions operations which typically have higher other operating expenses.
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.
In addition, included within cash and cash equivalents are statutory reserve funds of approximately $9.5 million at December 31, 2024. 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 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.
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 and related state regulations; • 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; • acquisitions or divestitures of businesses; • volume of distressed property transactions; and • seasonality and/or weather.
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.
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 2024 2023 2022 2024 2023 2022 Title 32.8 % 33.3 % 27.1 % 16.5 % 16.4 % 14.8 % Real estate solutions 15.2 % 18.7 % 17.0 % 72.2 % 68.2 % 68.8 % Employee costs.
Our principal sources of cash from operations are premiums on title policies and revenue from title service-related transactions, real estate solutions and other operations. Our independent agencies remit cash to us net of their contractual retention. Our principal cash expenditures for operations are employee costs, operating costs and title claims payments.
Our principal sources of cash from operations are premiums on title policies and revenue from title service-related transactions, real estate solutions and other operations. Our independent agencies remit cash to us net of their contractual retention.
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 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.
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.
As of December 31, 2024, our known claims reserve totaled $66.9 million and our estimate of claims that may be reported in the future, under U.S. generally accepted accounting principles, totaled $444.6 million. In addition to this, we had cash and investments (excluding equity method investments) of $289.2 million which are available for underwriter operations, including claims payments.
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.
An analysis of expenses is shown below: Year Ended December 31 Change* % Change 2024 2023 2022 2024 vs 2023 2023 vs 2022 2024 vs 2023 2023 vs 2022 (in $ millions) (in $ millions) Amounts retained by independent agencies 864.8 813.5 1,208.3 51.3 (394.8) 6 % (33) % As a % of agency revenues 82.9 % 82.5 % 82.4 % Employee costs 745.4 712.8 802.0 32.6 (89.2) 5 % (11) % As a % of operating revenues 30.8 % 32.2 % 26.3 % Other operating expenses 604.0 507.7 648.0 96.3 (140.3) 19 % (22) % As a % of operating revenues 24.9 % 22.9 % 21.3 % Title losses and related claims 80.4 80.3 102.7 0.1 (22.4) — % (22) % As a % of title revenues 3.9 % 4.1 % 3.8 % *Amounts change may not add due to rounding.
Premiums are determined in part by the values of the transactions we handle. To the extent inflation or market conditions cause increases in the prices of homes and other real estate, premium revenues are also increased. Conversely, falling home prices cause premium revenues to decline.
Premiums are determined in part by the values of the transactions we handle. To the extent inflation or market conditions cause increases in the prices of homes and other real estate, premium revenues are also increased. Conversely, falling home prices cause premium revenues to decline. Home price changes may override the seasonal nature of the title insurance business.
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.
Refer to the Consolidated statements of cash flows in the audited consolidated financial statements. 2024 2023 2022 (in $ millions) Net cash provided by operating activities 135.6 83.0 191.9 Net cash used by investing activities (87.3) (30.0) (300.7) Net cash used by financing activities (61.0) (69.1) (123.2) Operating activities.
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 used $14.4 million, $25.1 million and $142.9 million of cash during 2024, 2023 and 2022, 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.
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.
Also in 2024, we recorded foreign currency translation losses of $14.8 million, net of taxes, which increased our other comprehensive loss, which was primarily driven by the decline in value of the Canadian dollar and British pound against the U.S. dollar.
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.
Net agency revenues (which are net of agency retention) increased $5.9 million, or 3%, in 2024 and decreased $85.5 million, or 33%, in 2023, compared to respective prior periods, primarily consistent with the gross agency revenues trend. Refer further to the "Retention by agencies" discussion under Expenses below. Title revenues by geographic location.
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.
Total claims payments in 2024 decreased $18.9 million, or 18%, compared to 2023, primarily due to decreased payments for both large and non-large claims related to prior policy years, while total claims in 2023 increased $11.2 million, or 12%, compared to 2022, primarily as a result of increase in payments for non-large claims related to prior policy years.
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.
Of our total cash and investments at December 31, 2024, $523.4 million ($259.1 million, net of statutory reserves) was held in the United States (U.S.) and the rest internationally, principally in Canada.
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.
Real estate solutions and other revenues are primarily comprised of revenues generated by our real estate solutions operations. These revenues also included $39.2 million of 2022 revenues generated by a real estate brokerage company which was sold in the second quarter 2022.
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.
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. 25 Our total employee counts at December 31, 2024, 2023 and 2022 were approximately 7,000, 6,800 and 7,100, respectively.
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.
The approximate amounts and percentages of consolidated title operating revenues for the last three years ended December 31, 2024 were as follows: Year Ended December 31 Percentages 2024 2023 2022 2024 2023 2022 (in $ millions) Texas 315 305 448 16 % 16 % 17 % New York 206 195 284 10 % 10 % 10 % International 141 131 176 7 % 7 % 6 % Ohio 123 96 105 6 % 5 % 4 % California 93 89 133 5 % 5 % 5 % Pennsylvania 87 77 77 4 % 4 % 3 % Florida 85 85 135 4 % 4 % 5 % All others 1,014 971 1,355 48 % 49 % 50 % 2,064 1,949 2,713 100 % 100 % 100 % Real estate solutions and other revenues.
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.
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.
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.
Investment income improved $10.2 million, or 23%, and $22.7 million, or 101%, in 2024 and 2023, respectively, compared to the corresponding prior periods, primarily due to higher interest income resulting from earned interest from eligible escrow balances which started mid-2023. Higher interest rates also contributed to the increased investment income in 2023 compared to 2022.
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.
During 2024, 2023 and 2022, total proceeds from securities investments sold and matured were $130.6 million, $132.2 million and $103.8 million, respectively; while cash used for purchases of securities investments was $121.5 million, $78.0 million and $207.5 million, respectively.
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.
Excluding the real estate brokerage company, real estate solutions revenues increased $95.0 million, or 36%, in 2024 compared to 2023, primarily due to increased revenues from our credit information and valuation management services operations, while these revenues decreased $33.1 million, or 11%, in 2023 compared to 2022, primarily due to the slow market activity influenced by higher interest rates. 24 Investment income.
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.
Depreciation and amortization expense in 2023 increased $5.3 million, or 9%, compared to 2022, primarily due to increased depreciation expenses related to internal-use systems placed into operation starting in late 2022. Acquisition intangible asset amortization expenses in 2024, 2023 and 2022 were $32.1 million, $34.6 million and $33.0 million, respectively. Income taxes.
On average, refinance title premium rates are 60% of the premium rates for a similarly priced sale transaction. 22 Title revenues.
On average, title premium rates for refinance orders are lower compared to a similarly priced purchase transaction. 22 Title revenues.
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.
Total title policy loss reserve balances at December 31 were as follows: 2024 2023 (in $ millions) Known claims 66.9 70.2 IBNR 444.6 458.1 Total estimated title losses 511.5 528.3 The actual timing of estimated title loss payments may vary since claims, by their nature, are complex and paid over long periods of time.
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 held at the parent company and its unregulated subsidiaries (which totaled $32.1 million at December 31, 2024) is available for funding the parent company's operating expenses, interest payments on debt and dividend payments to common stockholders.
The average retention percentage may vary from period to period due to the geographical mix of agency operations, the volume of title revenues and, in some states, laws or regulations. Due to the variety of such laws or regulations, as well as competitive factors, the average retention rate can differ significantly from state to state.
The average retention rate slightly increased in 2024, primarily as a result of increased revenues from states with relatively higher retention rates in 2024. The average retention percentage may vary from period to period due to the geographical mix of agency operations, the volume of title revenues and, in some states, laws or regulations.
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.
Our effective tax rates for 2024, 2023 and 2022 were 26%, 33% and 24%, respectively, based on income before taxes (after deducting noncontrolling interests) of $99.5 million, $45.7 million and $213.2 million, respectively.
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.
Direct title revenue information is presented below: Year Ended December 31 Change Percent Change 2024 2023 2022 2024 vs 2023 2023 vs 2022 2024 vs 2023 2023 vs 2022 (in $ millions) (in $ millions) Non-commercial Domestic 636.1 656.3 830.5 (20.2) (174.2) (3) % (21) % International 102.2 98.1 130.5 4.1 (32.4) 4 % (25) % 738.3 754.4 961.0 (16.1) (206.6) (2) % (21) % Commercial: Domestic 251.5 182.2 251.3 69.3 (69.1) 38 % (27) % International 30.6 26.1 34.0 4.5 (7.9) 17 % (23) % 282.1 208.3 285.3 73.8 (77.0) 35 % (27) % Total direct title revenues 1,020.4 962.7 1,246.3 57.7 (283.6) 6 % (23) % Direct title revenues in 2024 improved 6% compared to 2023, primarily driven by increased commercial revenues resulting from increased commercial transactions and higher average transaction size in 2024.
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.
Consolidated other operating expenses in 2024 increased $96.3 million, or 19%, primarily driven by increased transactions from commercial services and real estate solutions operations compared to 2023, while other operating expenses in 2023 decreased $140.3 million, or 22%, primarily due to reduced transaction volumes in 2023 compared to 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.
Our principal cash expenditures for operations are employee costs, operating costs and title claims payments. 28 Net cash provided by operations in 2024 increased by $52.6 million compared to 2023, primarily due to higher net income and lower payments on claims, while net cash provided by operations in 2023 declined by $108.8 million compared to the prior year, primarily due to the lower net income and higher payments on 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 paid were $104.3 million, $93.1 million and $71.5 million in 2022, 2021 and 2020, respectively.
Title losses in 2023 decreased $22.5 million, or 22%, compared to the previous year, primarily as a result of lower title premiums in 2023. Title losses paid were $85.4 million, $104.3 million and $93.1 million in 2024, 2023 and 2022, respectively.
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.
Average cost per employee for 2024 increased 6% compared to 2023, primarily driven by higher incentive compensation and benefits expenses, while it decreased 2% in 2023 compared to 2022, primarily due to lower incentive compensation, temporary labor and overtime costs driven by reduced 2023 transaction volumes.
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.
During 2024, we paid dividends of $1.95 per common share, compared to $1.85 and $1.65 per common share paid during 2023 and 2022, respectively. Beginning in the third quarter 2024, our annual cash dividend was increased to $2.00 per share. In aggregate, we paid total dividends of $53.9 million, $50.5 million and $44.7 million in 2024, 2023 and 2022, respectively.
Average domestic commercial fee per file in 2022 was approximately $13,600 compared to $14,000 in 2021, while average residential fee per file in 2022 was approximately $3,000 compared to $2,200 due to a higher purchase mix in 2022.
Average domestic commercial fee per file in 2024 was $16,300, which was 34% higher compared to 2023, while average residential fee per file in 2024 was $3,000, which was 7% lower compared to 2023, primarily due to lower purchase transaction mix in 2024.
In addition, a high proportion of our independent agencies are in states with retention rates greater than 80%.
Due to the variety of such laws or regulations, as well as competitive factors, the average retention rate can differ significantly from state to state. In addition, a high proportion of our independent agencies are in states with retention rates greater than 80%.
We continue to manage and resolve large claims prudently and in keeping with our commitments to our policyholders. Title losses in 2023 decreased $22.5 million, or 22%, compared to 2022, primarily as a result of lower title premiums in 2023.
We continue to manage and resolve large claims prudently and in keeping with our commitments to our policyholders. Title losses in 2024 were $80.4 million, which was comparable to 2023, primarily due to the effect of higher title premiums being offset by overall favorable claim experience in 2024.
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.
Employee costs in 2024 for the title and real estate solutions segments increased $28.5 million, or 4%, and $5.3 million, or 11%, respectively, primarily driven by higher average employee counts and increased incentive compensation compared to 2023.
Total international revenues decreased $40.3 million, or 24%, in 2023 primarily due to lower transaction volumes in our Canadian and United Kingdom operations compared to the prior year. 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.
Total international revenues in 2024 improved $8.6 million, 7%, primarily due to higher transaction volumes in our Canadian and Australian operations compared to 2023. Direct title revenues in 2023 decreased 23% compared to 2022, primarily due to reduced transaction volumes driven by the elevated interest rate market environment.
In 2022, net unrealized investment losses of $36.7 million, net of taxes, which increased our other comprehensive loss, were primarily related to overall decreases in the fair values of our bond securities, primarily driven by the effect of higher interest rates. The five-year U.S. treasury yield applicable on our investments increased approximately 270 basis points in 2022 compared to 2021.
In 2024, net unrealized investment gains of $6.6 million, net of taxes, which decreased our other comprehensive loss, were primarily related to net increases in the fair values of our corporate and foreign bond securities investments, primarily influenced by the federal government's reduction of interest rates.
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.
We used $40.5 million, $37.8 million and $47.9 million of cash for purchases of property and equipment and other long-lived assets during 2024, 2023 and 2022, respectively, while we used cash of $31.6 million and $1.0 million during 2024 and 2023, respectively, for cost-basis and other investments.
Non-commercial revenues declined as a result of 15% and 61% lower purchase and refinancing closed orders, respectively, which were primarily influenced by the high interest rate market environment in 2022 compared to 2021. Domestic commercial revenues improved 4% primarily due to a 6% increase in commercial transactions in 2022 compared to the prior year.
Total non-commercial domestic revenues in 2024 declined 3% compared to 2023, primarily as a result of lower total residential transactions influenced by the continued elevated interest rates and weaker existing home sales in 2024. Purchase closed orders during 2024 declined 8%, partially offset by an 8% improvement in refinancing closed orders compared to 2023.
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.
Consolidated employee costs in 2024 increased $32.6 million, or 5%, compared to 2023, primarily driven by increased incentive compensation on overall improved revenues and higher salaries and benefits expenses on higher average employee count in 2024.
Removed
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.
Added
During 2024, total variable costs increased $99.5 million, or 37%. compared to 2023, primarily driven by higher appraiser and service expenses and outside search expenses resulting from improved revenues from real estate solutions and commercial services, respectively.
Removed
During 2022, costs that are primarily fixed in nature increased $29.0 million, or 18%, compared to 2021, primarily due to additional rent and other occupancy and other expenses related to acquisitions, and increased insurance and technology expenses from existing businesses.
Added
Costs that are primarily fixed in nature in 2024 were comparable with 2023, while independent costs decreased $3.1 million, or 5%, primarily due to lower office closure and litigation settlement expenses, partially offset by higher business promotion and marketing, and travel costs.
Removed
Variable costs decreased $25.4 million, or 6%, primarily due to lower title and appraisal management transactions, partially offset by service costs related to increased revenues from our credit and real estate data services businesses. Independent costs increased $24.2 million, or 47%, primarily due to regulatory settlement and litigation expenses, increased office closure costs, and higher marketing and travel expenses.
Added
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.
Removed
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.
Added
Depreciation and amortization expense in 2024 decreased $0.8 million, or 1%, compared to 2023, primarily due to lower acquisition intangible amortization expenses resulting from several assets becoming fully amortized, partially offset by increased depreciation expenses related to new internal-use systems placed into operation.
Removed
We drew $370.0 million from the short-term loan facility and used a portion of the proceeds to payoff the $273.9 million balance on the previous line of credit facility. • In November 2021, we completed an offering of $450.0 million unsecured ten-year senior notes (Senior Notes) and generated proceeds, net of underwriting discounts and issuance costs, of $444.0 million.
Added
The parent company also receives distributions from Guaranty, its regulated title insurance underwriter, to meet cash requirements for acquisitions and other strategic investments. 27 A substantial majority of our consolidated cash and investments as of December 31, 2024 was held by Guaranty and its subsidiaries.
Removed
We used a portion of the proceeds to payoff the $370.0 million balance of our short-term loan.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

25 edited+11 added−1 removed58 unchanged
Biggest changeInstability 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.
Biggest changeOur 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.
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.
The nature and extent of these regulations vary from jurisdiction to jurisdiction, but typically involve: • approving or setting insurance premium rates; • 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.
These disruptions, which may include, among others, decreased volume of orders and other business activity, delayed closing of real estate transactions, office closures, and decreased value of investments and other assets, may significantly impact our future results of operations and financial position. Regulatory and Compliance Risk Factors A downgrade of our underwriters by rating agencies may reduce our revenues.
These disruptions, which may include, among others, decreased volume of orders and other business activity, delayed closing of real estate transactions, office closures, and decreased value of investments and other assets, may significantly impact our future results of operations and financial position. 10 Regulatory and Compliance Risk Factors A downgrade of our underwriters by rating agencies may reduce our revenues.
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.
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.
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.
Title insurance waivers and alternatives to title insurance policies, such as an attorney opinion letter which may not provide the same level of protection as traditional title policies but may be a more cost-effective option, may become widely used and accepted which can affect the demand for our products and services.
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.
Cybersecurity for our policies and procedures in place to address cybersecurity risks. 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.
Innovations 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.
Various initiatives and alternatives to traditional title insurance and settlement products and services are or may be introduced by real estate industry participants, including our competitors, lenders and investors, which may change the demand for our products and services, the manner our products and services are ordered or fulfilled, and the revenue or profitability derived from our products and services.
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.
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.
We are a holding company and we receive dividends from our insurance subsidiaries and unregulated subsidiaries to pay our parent company's operating expenses, debt service obligations and dividends to our common stockholders.
Dividends from our insurance underwriting subsidiaries are an important source for capital planning. We are a holding company and we receive dividends from our insurance subsidiaries and unregulated subsidiaries to pay our parent company's operating expenses, debt service obligations and dividends to our common stockholders.
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.
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.
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.
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.
Also, we may not be able to accurately predict the effects of periods or expectations of high or rapidly rising inflation rates, and governmental responses thereto, and may not respond in a timely or adequate manner to mitigate the negative effects of such inflation, such as decreases in the demand for our products and services and higher labor and other expenses.
Also, we may not be able to accurately predict the effects of periods or expectations of high or rapidly rising inflation rates, and governmental responses thereto, and may not respond in a timely or adequate manner to mitigate the negative effects of such inflation, such as decreases in the demand for our products and services and higher labor and other expenses. 8 Our claims experience may require us to increase our provision for title losses or to record additional reserves, either of which would adversely affect our earnings.
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 investment portfolio is subject to interest rate and other risks and could experience losses. We maintain a substantial domestic and foreign investment portfolio, primarily consisting of fixed income debt securities and, to a lesser extent, equity securities.
Claims are often complex and involve uncertainties as to the dollar amount and timing of individual payments. Claims are often paid many years after a policy is issued.
Changes in the total estimated future loss for prior policy years are recorded in the period in which the estimate changes. Claims are often complex and involve uncertainties as to the dollar amount and timing of individual payments. Claims are often paid many years after a policy is issued.
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 .
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.
Additionally, we have in the past and may in the future be subject to investigations or inquiries from regulators, including state attorneys general. We incur costs as a result of such investigations or inquiries, including increased compliance costs, which may impact our operating results.
Additionally, we have in the past and may in the future be subject to investigations or inquiries from regulators, including state attorneys general.
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.
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.
Any failure by us to effectively limit such risks or implement our acquisitions or strategic investment strategies could have a material adverse effect on our business, financial condition or results of operations.
Any failure by us to effectively limit such risks or implement our acquisitions or strategic investment strategies could have a material adverse effect on our business, financial condition or results of operations. Innovations and title insurance waivers and alternatives introduced by real estate industry participants, including our competitors, lenders and investors may be potentially disruptive and could adversely affect Stewart.
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.
Refer to Note 9 to our audited consolidated financial statements for details on our existing line of credit facility. 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.
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.
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.
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.
We incur costs as a result of such investigations or inquiries, including increased compliance costs, which may impact our operating results. 11 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.
Provisions for policy losses on policies written within a given year are charged to income in the same year the related premium revenues are recognized. The amounts provided are based on reported claims, historical loss payment experience and the current legal and economic environment.
We estimate our future loss payments (net of recoveries), and our assumptions about future losses may prove inaccurate. Provisions for policy losses on policies written within a given year are charged to income in the same year the related premium revenues are recognized.
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.
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. 12 Claims by large classes of claimants may impact our financial condition or results of operations.
Losses that are higher than anticipated are an indication that total losses for a given policy year may be higher than originally calculated. Changes in the total estimated future loss for prior policy years are recorded in the period in which the estimate changes.
The amounts provided are based on reported claims, historical loss payment experience and the current legal and economic environment. Losses that are higher than anticipated are an indication that total losses for a given policy year may be higher than originally calculated.
Funds transferred to a fraudulent recipient are often not recoverable and in certain instances, we may be liable for those unrecovered funds.
Funds transferred to a fraudulent recipient are often not recoverable and in certain instances, we may be liable for those unrecovered funds. Our controls and procedures in place to prevent transfer errors and fraud may prove inadequate and may result in financial losses, harm to our reputation, loss of customers or other adverse consequences which could be material to Stewart.
Removed
Our claims experience may require us to increase our provision for title losses or to record additional reserves, either of which would adversely affect our earnings. We estimate our future loss payments, and our assumptions about future losses may prove inaccurate.
Added
The title insurance industry may experience increased competition and disruption from alternative title products and government initiatives.
Added
Stewart’s risk management program may not effectively assess, identify, and manage risks, which could negatively impact our business, financial condition and results of operations. Stewart has an enterprise risk management (ERM) program to assess, identify, and manage risks. Our ERM program involves risk management policies and procedures that operate in various functions across our organization.
Added
The risk management function is overseen broadly by our cross-functional ERM committee, but the nature of our business requires us to also rely, to some degree, on localized risk mitigation efforts.
Added
This is particularly true with respect to certain risks inherent in the process of underwriting title insurance policies and providing certain related services, which may involve a significant degree of individual judgment.
Added
Although we have policies, procedures and tools in place to mitigate these and other identified risks, these aspects of our ERM may not be sufficient to address the risks inherent in our business.
Added
Additionally, while we regularly update and evaluate our risk management policies and procedures, our existing ERM program may not successfully identify and mitigate emerging risks to our business. If our ERM program does not adequately address the risks related to our business, our financial condition and results of operations may be adversely impacted.
Added
It may become difficult to acquire necessary data used in our business, or we may experience increased costs related to acquiring and utilizing such data. The nature of our business requires us to obtain and utilize certain data.
Added
Such data is often subject to laws and regulations that govern its use, which impose significant compliance burdens on us and the suppliers of such data.
Added
To the extent additional laws and regulations impacting the data we use are implemented, we may experience increased costs of compliance, and it could become more difficult for us to obtain such data in the future.
Added
Additionally, if we fail to adequately secure and store the data that we use, we may suffer reputational harm or become subject to litigation or regulatory action, which could have a material adverse effect on our business, financial condition and results of operations.
Added
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.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+0 added−1 removed11 unchanged
Biggest changeVendor risk management is an essential part of Stewart’s Enterprise Governance Risk and Compliance (GRC) program. Critical vendors, which includes vendors that have access to personal information, are assessed and measured against standard security frameworks. Critical vendors are monitored for performance and compliance, and vendor security requirements are well defined and included with all master service agreements and contracts.
Biggest changeCritical vendors, which includes vendors that have access to personal information, are assessed and measured against standard security frameworks. Critical vendors are monitored for performance and compliance, and vendor security requirements are well defined and included with all master service agreements and contracts.
Our program focuses on a broad area of security domains, including, but not limited to: risk management, data protection, incident response, identity and access management, threat and vulnerability management, disaster recovery, business resiliency, and continuity. Risk assessment and management Stewart has an enterprise risk management (ERM) program to assess, identify, and manage risks.
Our program focuses on a broad area of security domains, including, but not limited to: risk management, data protection, incident response, identity and access management, threat and vulnerability management, disaster recovery, business resiliency, and continuity. 13 Risk assessment and management Stewart has an enterprise risk management (ERM) program to assess, identify, and manage risks.
Risk from cybersecurity threats While Stewart regularly defends against, responds to and mitigates risks from IT systems and software vulnerabilities, broader cybersecurity threats and data security incidents, as of the date of this report, Stewart has not identified any cybersecurity threats that have materially affected or are reasonably anticipated to have a material effect on the organization, h owever, there can be no guarantee that we will not experience such an incident in the future.
Our cybersecurity team routinely challenges our employees and the effectiveness of existing controls. 14 Risk from cybersecurity threats While Stewart regularly defends against, responds to and mitigates risks from IT systems and software vulnerabilities, broader cybersecurity threats and data security incidents, as of the date of this report, Stewart has not identified any cybersecurity threats that have materially affected or are reasonably anticipated to have a material effect on the organization, h owever, there can be no guarantee that we will not experience such an incident in the future.
Stewart experienced no known material cyber breaches during the three-year period ended December 31, 2023. For additional information concerning Stewart’s risks related to cybersecurity, see Item 1A. Risk Factors. 14
Stewart experienced no known material cyber breaches during the three-year period ending December 31, 2024. For additional information concerning Stewart’s risks related to cybersecurity, see Item 1A. Risk Factors.
Management uses third party consultants, as necessary, to assist in assessing, identifying and managing risks from cybersecurity threats. Annually, senior management participates in tabletop exercises to assess its readiness responding to cybersecurity incidents. Our cybersecurity team routinely challenges our employees and the effectiveness of existing controls.
Management uses third party consultants, as necessary, to assist in assessing, identifying and managing risks from cybersecurity threats. Annually, senior management participates in tabletop exercises to assess its readiness responding to cybersecurity incidents.
Stewart is regularly assessed against the cybersecurity frameworks of the National Institute of Standards and Technology (NIST CSF) and also evaluated for compliance with the SSAE-18 Systems and Organization Controls (SOC) standards of the American Institute of Certified Public Accountants (AICPA). 13 Stewart receives certain confidential or personal information related to its customers and employees.
Stewart is regularly assessed against the cybersecurity frameworks of the National Institute of Standards and Technology (NIST CSF) and also evaluated for compliance with the SSAE-18 Systems and Organization Controls (SOC) standards of the American Institute of Certified Public Accountants (AICPA). Vendor risk management is an essential part of Stewart’s Enterprise Governance Risk and Compliance (GRC) program.
Removed
Stewart’s operations depend upon the secure collection, processing, retention and transmission of such information by and through Stewart and its vendors. Therefore, the performance, reliability, and security of Stewart’s technology infrastructure and information systems, and those of its vendors, are critical to Stewart’s operations and initiatives.

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−0 removed1 unchanged
Biggest changeThese 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.
Biggest changeThese additional locations include significant leased facilities in Arizona (Phoenix, Scottsdale and Tucson), New York (New York City), Colorado (Denver), Nevada (Las Vegas), Canada (Toronto), California (Roseville), and Georgia (Atlanta). 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 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.
The aggregate rent expense under all office leases was approximately $44.4 million in 2024. 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.
Item 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.
Item 2. Properties We currently sub-lease under a non-cancelable operating lease that expires at the end of the first quarter 2025, approximately 110,000 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 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.
Additionally, we previously executed a new lease agreement directly with the owner of the building that extends our occupancy of such office space from the second quarter 2025 through the year 2036. We also lease space at approximately 460 locations for business operations, administrative and technology centers.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed0 unchanged
Biggest changeOur current dividend policy anticipates the payment of quarterly dividends in the future. The declaration and payment of dividends will be at the discretion of our Board of Directors and will be dependent upon our future earnings, financial condition and capital requirements. Refer to Liquidity and Capital Resources . Stock Repurcha ses.
Biggest changeThe declaration and payment of dividends will be at the discretion of our Board of Directors and will be dependent upon our future earnings, financial condition and capital requirements, and will also be subject to certain regulatory restrictions on the ability of Guaranty to distribute dividends to is parent company. Refer to Liquidity and Capital Resources . Stock Repurcha ses.
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.
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, 2024.
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.
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, 2025, the number of stockholders of record was approximately 4,500 and the closing price of one share of our Common Stock was $68.54.
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.
There were no stock repurchases during 2024, except for repurchases of approximately 61,900 shares (aggregate purchase price of approximately $3.8 million) related to statutory income tax withholding on the annual vesting of employee restricted share grants.
The 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.
The presented information assumes that the value of the investment in our Common Stock and each index was $100 at December 31, 2019 and that all dividends were reinvested. 2019 2020 2021 2022 2023 2024 Stewart 100.00 122.58 206.60 114.60 164.13 194.08 Russell 2000 Index 100.00 119.87 137.59 109.44 127.91 142.66 Russell 2000 Financial Services Sector Index 100.00 97.97 127.14 107.32 120.53 140.47 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.
Added
Our current dividend policy anticipates the payment of quarterly dividends in the future.

Item 7. Management's Discussion & Analysis

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

36 edited+6 added−6 removed20 unchanged
Biggest changeTotal 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.
Biggest changeAgency retention expenses in the fourth quarter 2024 increased $13.7 million, or 6%, consistent with the $16.6 million, or 6%, increase in gross agency revenues compared to the prior year quarter. 17 Total title segment employee costs and other operating expenses in the fourth quarter 2024 increased $27.1 million, or 11%, compared to the prior year quarter, primarily due to increased incentive compensation expenses related to higher title revenues, higher outside search expenses resulting from higher commercial revenues, and increased severance expenses, primarily related to an executive retirement announced in September 2024.
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.
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, 2024, our net title losses due to independent agency defalcations were not material.
These incurred losses are typically more severe in terms of dollar value compared with traditional title policy claims since the independent agency is often able, over time, to conceal misappropriation of escrow funds relating to more than one transaction through the constant volume of funds moving through its escrow accounts.
These incurred losses are typically more severe in terms of dollar value compared with traditional title policy claims since the independent agency is often able, over time, to conceal misappropriations of escrow funds relating to more than one transaction through the constant volume of funds moving through its escrow accounts.
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).
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, 2024 are shown below (amounts shown for 2024 are preliminary and subject to revision).
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.
RESULTS OF OPERATIONS We discuss in this section the consolidated results of operations for the years 2024 and 2023, 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.
In declining real estate markets, lower transaction volumes result in a lower incoming volume of funds, making it more difficult to cover up the misappropriation with incoming funds. Thus, when the defalcation is discovered, it often relates to several transactions.
In declining real estate markets, lower transaction volumes result in a lower incoming volume of funds, making it more difficult to cover up the misappropriations with incoming funds. Thus, when the defalcation is discovered, it often relates to several transactions.
We consider our actual claims payments and incurred loss experience, including the frequency and severity of claims, compared to our actuarial estimates of claims payments and incurred losses in determining whether our overall loss experience has improved or worsened relative to prior periods.
We consider our actual claims payments (net of recoveries) and incurred loss experience, including the frequency and severity of claims, compared to our actuarial estimates of claims payments and incurred losses in determining whether our overall loss experience has improved or worsened relative to prior periods.
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.
For our annual goodwill impairment test for all our reporting units, we utilized the quantitative approach during 2024 and 2023 and concluded that there is no impairment of goodwill for any of our reporting units.
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.
Title loss reserves Provisions for title losses, as a percentage of title operating revenues, were 3.9%, 4.1% and 3.8% for the years ended December 31, 2024, 2023 and 2022, respectively. Actual loss payment experience, including the impact of large losses, is the primary reason for increases or decreases in our title loss provision.
CRITICAL ACCOUNTING ESTIMATES Actual results can differ from our accounting estimates. While we do not anticipate significant changes in our estimates, there is a risk that such changes could have a material impact on our consolidated financial condition or results of operations for future periods.
While we do not anticipate significant changes in our estimates, there is a risk that such changes could have a material impact on our consolidated financial condition or results of operations for future periods.
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.
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 2024 was $73.3 million, or $2.61 per diluted share, compared to $30.4 million, or $1.11 per diluted share, in 2023.
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.
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 income by approximately $20.6 million for the year ended December 31, 2024.
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.
Fourth quarter 2024 pretax income before noncontrolling interests was $35.4 million compared to pretax income before noncontrolling interests of $18.8 million for the prior year quarter.
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.
Adjustments relating to large claims may impact provisions either for known claims or for IBNR. 19 2024 2023 2022 (in $ millions) Provisions – Known Claims: Current year 15.3 16.9 20.2 Prior policy years 66.8 70.4 84.2 82.1 87.3 104.4 Provisions – IBNR Current year 56.1 49.9 75.2 Prior policy years 9.0 13.5 7.3 65.1 63.4 82.5 Transferred IBNR to Known Claims (66.8) (70.4) (84.2) Total provisions 80.4 80.3 102.7 In 2024, total provisions for known claims decreased $5.2 million, or 6%, compared to 2023, primarily as a result of changes to existing large and non-large claims related to prior policy years, while total provisions - IBNR increased $1.7 million, or 3%, primarily due to increased title premiums in 2024.
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.
Pretax income before noncontrolling interests in 2024 was $114.3 million (4.6% pretax margin) compared to $60.9 million (2.7% pretax margin) in 2023.
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.
For the fourth quarter 2024, we reported net income attributable to Stewart of $22.7 million ($0.80 per diluted share), compared to net income attributable to Stewart of $8.8 million ($0.32 per diluted share) for the fourth quarter 2023.
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.
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, 2024 2023 % Change Operating revenues 87.0 61.4 42 % Pretax income 0.9 1.4 (34) % Pretax margin 1.1 % 2.3 % The segment’s fourth quarter 2024 operating revenues improved $25.6 million, or 42%, primarily due to increased revenues from credit information and valuation management services operations compared to the fourth quarter 2023.
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.
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.
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.
Fourth quarter 2023 results included $4.8 million of pretax net realized and unrealized gains primarily driven by net gains on fair value changes of equity securities investments and an acquisition liability adjustment. Title 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 .
Total international revenues in the fourth quarter 2024 increased by $6.5 million, or 21%, primarily due to higher transaction volumes compared to the prior year quarter. Real estate solutions segment .
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.
We close transactions and issue title policies on homes, commercial and other real properties located in all 50 states, the District of Columbia and international markets through policy-issuing offices, agencies and centralized title services centers. Our real estate solutions operations include credit and real estate information services, valuation management services, online notarization and closing services, and search services.
Our 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.
Our statements on home sales, mortgage interest rates and loan activity are based on averaged published industry data as of December 31, 2024 from sources including Fannie Mae and the Mortgage Bankers Association (MBA), when available. 2024 2023 2022 Mortgage interest rates (30-year, fixed-rate) – % Averages for the year 6.72 6.80 5.33 First quarter 6.75 6.36 3.79 Second quarter 6.99 6.49 5.24 Third quarter 6.51 7.04 5.58 Fourth quarter 6.65 7.29 6.69 Mortgage originations – $ billions 1,714 1,554 2,347 Refinancings – % of originations 25 18 31 Existing home sales – in millions 4.05 4.10 5.07 Existing home median sales price – in $ thousands 406 388 384 New home sales – in millions 0.70 0.67 0.64 New home median sales price – in $ thousands 423 427 456 After reaching a 23-year high of 7.79% during the fourth quarter 2023, the average 30-year mortgage interest rate dipped during 2024, influenced by several interest rate reductions by the federal government in late 2024.
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.
Fourth quarter 2024 average domestic commercial fee per file was $19,600, or 33% higher compared to $14,800 in the fourth quarter 2023, while average domestic residential fee per file was $2,900, which was 8% lower compared to $3,200 from the prior year quarter, primarily due to a lower purchase transaction mix during the fourth quarter 2024.
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.
Summary results of the title segment are as follows (in $ millions, except pretax margin and % change): For the Three Months Ended December 31, 2024 2023 % Change Operating revenues 562.7 503.0 12 % Investment income 14.5 13.0 12 % Net realized and unrealized gains 2.8 5.1 (46) % Pretax income 45.2 27.3 65 % Pretax margin 7.8 % 5.2 % Segment operating revenues in the fourth quarter 2024 increased $59.8 million, or 12%, driven by increased revenues from our direct and agency title operations, while total segment operating expenses increased $41.0 million, or 8%, compared to the fourth quarter 2023.
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.
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.
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.
Direct title revenue information is presented below (in $ millions, except % change) : For the Three Months Ended December 31, 2024 2023 % Change Non-commercial Domestic 162.5 153.8 6 % International 25.9 24.0 8 % 188.4 177.8 6 % Commercial: Domestic 84.1 56.1 50 % International 11.1 6.5 71 % 95.2 62.6 52 % Total direct title revenues 283.6 240.4 18 % Total non-commercial domestic revenues in the fourth quarter 2024 improved by $8.7 million, or 6%, primarily due to increased total non-commercial domestic transactions compared to the fourth quarter 2023.
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
The corporate segment includes our parent holding company and centralized support services departments, along with other businesses not related to title or real estate solutions operations. Refer to
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.
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.
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.
As a percentage of title revenues, title loss expense was 3.7% in the fourth quarter 2024 compared to 4.1% in the prior year quarter.
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 segment's pretax income included acquisition intangible asset amortization expenses of $5.5 million and $5.8 million in the fourth quarters 2024 and 2023, respectively. 18 Corporate segment .
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.
As a percentage of operating revenues, total segment employee costs and other operating expenses slightly improved to 48.7% in the fourth quarter 2024 compared to 49.1% in the prior year quarter.
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.
As a percentage of title operating revenues, current year provisions - IBNR were 2.7%, 2.6% and 3.8% in 2024, 2023 and 2022, respectively. In addition to title policy claims, we incur losses in our direct operations from escrow, closing and disbursement functions.
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 .
Fourth quarter 2024 included $1.7 million of pretax net realized and unrealized gains, primarily related to net gains from fair value changes of equity security investments and an acquisition liability adjustment, partially offset by losses from a sale of an office and an investment impairment.
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.
In 2023, total known claims provisions decreased by $17.1 million, or 16%, primarily as a result of changes to existing large and non-large claims related to prior policy years, while total provisions - IBNR decreased $19.1 million, or 23%, primarily due to lower title premiums compared to 2022.
Fourth quarter domestic commercial revenues decreased $10.8 million, or 16%, primarily driven by 14% lower commercial transactions compared to the prior year quarter.
Domestic commercial revenues in the fourth quarter 2024 increased by $28.0, or 50%, primarily due to a higher average transaction size and a 13% increase in commercial transactions compared to the prior year quarter.
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.
Total mortgage originations are expected to increase 18% in 2025 compared to 2024, with refinancing and purchase transactions increasing 41% and 10%, respectively, while existing and new homes sales are expected to improve to 4.21 million (4%) and 0.77 million (10%), respectively, compared to 2024. Factors affecting revenues. Our primary business is title insurance and settlement-related services.
Removed
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.
Added
During 2024, total operating revenues increased 10% to $2.42 billion compared to $2.21 billion in 2023, while total expenses increased 8% to $2.38 billion, compared to $2.20 billion in 2023, primarily driven by higher revenues in title and real estate solutions services operations.
Removed
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.
Added
Title loss expense in the fourth quarter 2024 was $20.7 million, which was comparable to the fourth quarter 2023, primarily as a result of our overall favorable claim experience offsetting the incremental title loss expense related to increased title revenues.
Removed
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.
Added
On a combined basis, the segment's employee costs and other operating expenses increased $26.2 million, or 49%, primarily driven by higher vendor prices for credit information services and increased employee count in anticipation of new customers and related revenue.
Removed
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.
Added
The segment's fourth quarter 2024 results included net expenses attributable to corporate operations of $9.7 million, which were comparable to the prior year quarter, and a $1.1 million unrealized loss related to an investment impairment. CRITICAL ACCOUNTING ESTIMATES Actual results can differ from our accounting estimates.
Removed
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.
Added
The average 30-year mortgage interest rate was 6.85% at the end of 2024, compared to 6.61% at the end of 2023. Total loan originations in 2024 improved 10% compared to 2023, primarily due to a 52% increase in refinancing transactions, with purchase lending volume improving by 1%.
Removed
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.
Added
However, existing home sales in 2024 remained subdued, primarily as a result of continued relatively elevated interest rates, accompanied by low housing inventory, affordability challenges caused by rising home prices, and weather events in 2024. 21 Fannie Mae and MBA expect the 30-year mortgage interest rate in 2025 to average similar to 2024 and slightly improve to 6.40% in 2026.

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, 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.
Biggest changeInvestments in debt securities at December 31, 2024 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 68,529 68,198 After one year through two years 122,551 120,545 After two years through three years 78,785 76,727 After three years through four years 80,281 77,945 After four years through five years 53,690 53,483 After five years 195,451 189,717 599,287 586,615 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.
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.
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, 2024, a 100 basis-point increase (decrease) in foreign currency exchange rates would result in an increase (decrease) of approximately $3.0 million in the fair value of our foreign debt securities portfolio.
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.
The material market risk in our investments in financial instruments is related to our debt securities investments, which represent approximately 88% of our total securities investment portfolio at December 31, 2024, with the remainder invested in equity securities. We invest primarily in corporate, foreign, municipal and U.S. government debt securities.
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.
Based on our debt securities portfolio and interest rates at December 31, 2024, a 100 basis-point increase (decrease) in interest rates would result in a decrease (increase) of approximately $20.1 million, or 3.4%, in the fair value of our debt securities portfolio.

Other STC 10-K year-over-year comparisons