STEWART INFORMATION SERVICES CORP

Previous wording

Second quarter 2025 overview. We reported net income attributable to Stewart of $31.9 million ($1.13 per diluted share) for the second quarter 2025, compared to net income of $17.3 million ($0.62 per diluted share) for the second quarter 2024. Pretax income before noncontrolling interests for the second quarter 2025 was $46.8 million compared to pretax income before noncontrolling interests of $29.0 million for the prior year quarter. The second quarter 2025 results included $0.7 million of pretax net realized and unrealized gains, primarily resulting from $2.4 million of net unrealized gains on fair value changes of equity securities investments, partially offset by a $1.2 million acquisition liability adjustment loss in the title segment. Second quarter 2024 results included $0.5 million of pretax net realized and unrealized losses primarily driven by net unrealized losses on fair value changes of equity securities investments in the title segment.

Current wording

Third quarter 2025 overview. We reported net income attributable to Stewart of $44.3 million ($1.55 per diluted share) for the third quarter 2025, compared to net income of $30.1 million ($1.07 per diluted share) for the third quarter 2024. Pretax income before noncontrolling interests for the third quarter 2025 was $61.2 million compared to pretax income before noncontrolling interests of $42.8 million for the prior year quarter. Consolidated operating revenues in the third quarter 2025 were $776.5 million, which was an improvement of $126.9 million, or 20%, compared to the prior year quarter. The third quarter 2025 results included $5.6 million of pretax net realized and unrealized gains, primarily driven by $4.3 million of net unrealized gains on fair value changes of equity securities investments and a $1.2 million realized gain on a sale of real property. Third quarter 2024 results included $4.7 million of pretax net realized and unrealized gains primarily related to net unrealized gains on fair value changes of equity securities investments.

Previous wording

Total title segment employee costs and other operating expenses in the second quarter 2025 increased $31.3 million, or 13%, primarily due to increased incentive compensation and outside search and service expenses consistent with higher title revenues, and higher salaries expense related to increased employee count compared to the second quarter 2024. As a percentage of operating revenues, total title employee costs and other operating expenses improved to 46.9% in the second quarter 2025 compared to 49.7% in the second quarter 2024, primarily due to increased title operating revenues.

Current wording

Title segment operating revenues in the third quarter 2025 increased $106.6 million (19%), driven by revenue improvement of $29.0 million (11%) and $77.6 million (28%) from our direct and agency title operations, respectively, compared to the third quarter 2024. Total segment operating expenses increased $90.3 million (17%) compared to the prior year quarter, primarily due to $65.5 million (28%) increased agency retention expenses, consistent with the gross agency revenue increase, and $27.0 million (10%) higher combined employee costs and other operating expenses, primarily due to increased incentive compensation, outside search and service expenses and premium taxes consistent with higher title revenues, and higher salaries expense related to increased employee count. As a percentage of operating revenues, total employee costs and other operating expenses for the title segment improved to 44% in the third quarter 2025 compared to 47% in the third quarter 2024, primarily due to increased title operating revenues.

Previous wording

Title loss expense in the second quarter 2025 was $21.5 million, compared to $21.1 million in the prior year quarter. As a percentage of title operating revenues, second quarter 2025 title loss expense improved to 3.6%, compared to 4.2% in the second quarter 2024, primarily driven by our continued overall favorable claims experience.

Current wording

Title loss expense in the third quarter 2025 decreased by $1.7 million (8%) compared to the prior year quarter, primarily driven by our continued overall favorable claims experience. As a percentage of title operating revenues, the title loss expense improved to 3.0% in the third quarter 2025 compared to 3.8% in the third quarter 2024.

Previous wording

The real estate solutions segment's operating revenues increased $20.5 million, or 22%, in the second quarter 2025, primarily driven by increased revenues from our credit information and valuation services operations compared to the second quarter 2024. Combined segment employee costs and other operating expenses increased $18.7 million, or 23%, primarily resulting from increased costs of services related to credit information and valuation services, and higher employee costs supporting revenue growth.

Current wording

The real estate solutions segment's operating revenues improved by $20.3 million (21%) in the third quarter 2025 compared to the third quarter 2024, primarily driven by our credit information and valuation services businesses and a recently acquired real estate information services provider. Combined employee costs and other operating expenses in the third quarter 2025 increased $19.8 million (24%), primarily resulting from increased costs of services related to higher revenues and higher employee costs supporting revenue growth.

Previous wording

In regard to the corporate segment, pretax results were driven by net expenses attributable to corporate operations, which totaled $9.2 million in the second quarter 2025 compared to $9.5 million in the second quarter 2024.

Current wording

In regard to the corporate segment, pretax results were driven by net expenses attributable to corporate operations, which totaled $9.5 million for both the third quarters 2025 and 2024, while the segment recorded net realized gains of $1.4 million in the third quarter 2025, primarily resulting from a sale of real property.

Previous wording

The preparation of the Company’s condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosures surrounding contingencies and commitments. Actual results can differ from our accounting estimates. While we do not anticipate significant changes in our estimates, there is a risk that such changes could have a material impact on our consolidated financial condition or results of operations for future periods. During the six months ended June 30, 2025, we made no material changes to our critical accounting estimates as previously disclosed in Management’s Discussion and Analysis in the 2024 Form 10-K.

Current wording

The preparation of the Company’s condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosures surrounding contingencies and commitments. Actual results can differ from our accounting estimates. While we do not anticipate significant changes in our estimates, there is a risk that such changes could have a material impact on our consolidated financial condition or results of operations for future periods. During the nine months ended September 30, 2025, we made no material changes to our critical accounting estimates as previously disclosed in Management’s Discussion and Analysis in the 2024 Form 10-K.

Previous wording

Comparisons of our results of operations for the three and six months ended June 30, 2025 with the corresponding periods in the prior year are set forth below. Factors contributing to fluctuations in the results of operations are presented in the order of their monetary significance, and we have quantified, when necessary, significant changes. Segment results are included in the discussions and, when relevant, are discussed separately.

Current wording

Comparisons of our results of operations for the three and nine months ended September 30, 2025 with the corresponding periods in the prior year are set forth below. Factors contributing to fluctuations in the results of operations are presented in the order of their monetary significance, and we have quantified, when necessary, significant changes. Segment results are included in the discussions and, when relevant, are discussed separately.

Previous wording

Operating environment. Existing home sales in June 2025 were 3.9 million units (seasonally-adjusted basis), which were similar to a year ago and 3% lower compared to May 2025, primarily due to the continuing elevated mortgage rates and rising home prices which have caused home sales to remain at cyclical lows. According to NAR, the June 2025 median home price of $435,000 marked the 24th consecutive month of year-over-year median price increases and was up 2% and 3% from June 2024 and May 2025, respectively, further affecting housing affordability. As a result, unsold home inventory in the U.S. in June 2025 increased 16% compared to last year. On new residential construction, U.S. housing starts(seasonally-adjusted) in June 2025 were 5% higher than May 2025 and comparable to June 2024, while newly-issued building permits in June 2025 were comparable to May 2025 and 4% lower compared to June 2024.

Current wording

Operating environment. Existing home sales in September 2025 were approximately 4.06 million units (seasonally-adjusted basis), a slight improvement of 4% and 3% compared to September 2024 and June 2025, respectively, which was primarily due to gradually falling mortgage rates and improving housing affordability. According to NAR, the September 2025 median existing home price of $415,200 marked the 27th consecutive month of year-over-year median price increases, but it was 4% lower than June 2025 as home prices declined during the third quarter 2025. As of September 2025, the unsold home inventory in the U.S. was equivalent to 1.55 million units, or 14% higher compared to last year. In regard to new residential construction, U.S. housing starts(seasonally-adjusted) as of September 2025 were 6% lower compared to last year, while newly-issued building permits as of September 2025 declined by 11% compared to last year.

Previous wording

Based on averaged estimates by Fannie Mae and MBA, total U.S. single family mortgage originations increased 24% to $532 billion during the second quarter 2025, primarily driven by higher refinancing originations compared to the second quarter 2024. The 30-year fixed mortgage interest rate slightly declined to an average of 6.8% during the second quarter 2025 compared to 7.0% from the second quarter 2024. It is expected that the interest rate will gradually decline during the rest of the year and will average around 6.6% by the end of 2025. Third quarter 2025 existing homes sales (seasonally-adjusted) are expected to increase 3%, with new homes sales staying flat, while total loan originations (primarily refinancing transactions) are forecasted to improve 2% compared to the second quarter 2025.

Current wording

Based on averaged estimates by Fannie Mae and MBA, total U.S. single family mortgage originations in the third quarter 2025 were $518 billion, or an improvement of 14% compared to the third quarter 2024, with total refinancing and purchasing transactions growing 46% and 6%, respectively, during the third quarter 2025. The 30-year fixed mortgage interest rate averaged 6.6% during the third quarter 2025 which was comparable to 6.5% from the third quarter 2024, but improved from 6.8% in the second quarter 2025. It is expected that the 30-year fixed mortgage interest rate will average around 6.4% in the fourth quarter 2025. Fourth quarter 2025 existing and new homes sales (seasonally-adjusted) are forecast to improve 3% and 5%, respectively, while fourth quarter total loan originations dollars are anticipated to increase 2% compared to the third quarter 2025, resulting from 32% higher refinancing transactions and 9% lower purchase transactions.

Previous wording

Domestic commercial revenues improved 46% and 43% in the second quarter and first six months of 2025, respectively, compared to the same periods of 2024, primarily driven by improved average transaction size and increased commercial closed transactions, primarily from the energy, mixed-use, retail, hospitality, data center and land development sectors. Average domestic commercial fee per file increased 25% to $16,900 in the second quarter 2025 and 19% to $16,300 in the first six months of 2025, compared to $13,500 and $13,700, respectively, in the same periods in 2024.

Current wording

Domestic commercial revenues improved 17% and 33% in the third quarter and first nine months of 2025, respectively, compared to the same periods of 2024, primarily due to increased commercial closed transactions in 2025 across all asset sectors, including data center, energy, mixed-use and retail. The average domestic commercial fee per file in the third quarter 2025 was $17,700, which was comparable to the prior year quarter, while the average fee per file in the first nine months of 2025 improved 11% to $16,800, compared to the same period in 2024, primarily driven by large data center and energy transaction sizes.

Previous wording

Domestic non-commercial revenues increased 6% and 3% in the second quarter and first six months of 2025, respectively, primarily resulting from increased transactions related to residential refinancing and real estate investors compared to the same periods in 2024. Average residential fee per file for the second quarter and first six months of 2025 were $2,900 and $3,000, respectively, compared to $3,000 for both the same periods in 2024.

Current wording

Domestic non-commercial revenues in the third quarter 2025 increased 5%, primarily driven by improved purchase and refinancing closed transactions compared to the third quarter 2024, while these revenues improved 4% in the first nine months of 2025, compared to the same period in 2024, primarily due to increased residential refinancing and real estate investors transactions. Higher average residential fee per file also contributed to improved domestic non-commercial revenues and was $3,200 and $3,100 for the third quarter and first nine months of 2025, respectively, compared to $3,000 for both the same periods in 2024.

Previous wording

Total international revenues improved $2.0 million, or 6%, and $4.0 million, or 7%, in the second quarter and first six months of 2025, respectively, primarily driven by overall increased volumes compared to the same periods in 2024.

Current wording

Total international revenues improved $8.7 million, or 25%, and $12.7 million, or 13%, in the third quarter and first nine months of 2025, respectively, primarily driven by large commercial transactions and overall increased volumes compared to the same periods in 2024.

Previous wording

Orders information for the three and six months ended June 30 is as follows:

Current wording

Orders information for the three and nine months ended September 30 is as follows:

Previous wording

Gross revenues from independent agency operations increased $60.5 million, or 25%, and $87.3 million, or 18%, in the second quarter and first six months of 2025, respectively, primarily due to improved volumes in our key agency states compared to the same periods in 2024. Agency revenues, net of retention, increased $8.5 million, or 21%, and $13.9 million, or 17%, in the second quarter and first six months of 2025, respectively, in line with the gross agency revenue increases. Refer further to the "Retention by agencies" discussion under Expenses below.

Current wording

Gross revenues from independent agency operations increased $77.6 million, or 28%, and $164.9 million, or 22%, in the third quarter and first nine months of 2025, respectively, primarily due to improved volumes in our key agency states and increased commercial transactions compared to the same periods in 2024. Agency revenues, net of retention, increased $12.1 million, or 25%, and $26.0 million, or 20%, in the third quarter and first nine months of 2025, respectively, in line with the gross agency revenue increases. Refer further to the "Retention by agencies" discussion under Expenses below.

Previous wording

Real estate solutions revenues. Real estate solutions revenues improved $20.5 million, or 22%, in the second quarter 2025 and $34.5 million, or 20%, in the first six months of 2025, primarily driven by higher revenues from our credit information and valuation services businesses compared to the same periods in 2024.

Current wording

Real estate solutions revenues. Real estate solutions revenues improved $20.3 million, or 21%, in the third quarter 2025 and $54.8 million, or 20%, in the first nine months of 2025, primarily driven by our credit information and valuation services businesses compared to the same periods in 2024. The third quarter 2025 revenues included $3.6 million from a recently acquired real estate information services provider.

Previous wording

Investment income. Investment income in the second quarter and first six months of 2025 increased $2.0 million, or 14%, and $1.7 million, or 6%, respectively, compared to the same periods in 2024, primarily driven by higher interest and dividend income derived from our bond and cost-basis investments in 2025.

Current wording

Investment income. Investment income in the third quarter and first nine months of 2025 increased $1.2 million, or 9%, and $2.9 million, or 7%, respectively, compared to the same periods in 2024, primarily driven by higher interest income from eligible escrow balances and increased dividend income from our cost-basis investments in 2025.

Previous wording

Net realized and unrealized gains (losses). Refer to Note 5 to the condensed consolidated financial statements.

Current wording

Net realized and unrealized gains. Refer to Note 5 to the condensed consolidated financial statements.

Previous wording

Retention by agencies. Amounts retained by title agencies are based on agreements between agencies and our title underwriters. Amounts retained by independent agencies, as a percentage of revenues generated by them, averaged 83.7% and 83.2% in the second quarter and first six months of 2025, respectively, compared to 83.2% and 83.1% in the second quarter and first six months of 2024, respectively, primarily as a result of increased revenues in 2025 from states with relatively higher retention rates. The average retention percentage may vary from period to period due to the geographical mix of agency operations, the volume of title revenues and, in some states, laws or regulations. Due to the variety of such laws or regulations, as well as competitive factors, the average retention rate can differ significantly from state to state. In addition, a high proportion of our independent agencies are in states with retention rates greater than 80%. We continue to focus on increasing profit margins in every state, increasing premium revenue in states where remittance rates are higher, and maintaining the quality of our agency network, which we believe to be the industry’s best, in order to mitigate claims risk and drive consistent future performance. While market share is important in our agency operations channel, it is not as important as margins, risk mitigation and profitability.

Current wording

Retention by agencies. Amounts retained by title agencies are based on agreements between agencies and our title underwriters. Amounts retained by independent agencies, as a percentage of revenues generated by them, averaged 83.2% in both the third quarter and first nine months of 2025, compared to 82.8% and 83.0% in the third quarter and first nine months of 2024, respectively, primarily as a result of increased 2025 revenues from states with relatively higher retention rates. The average retention percentage may vary from period to period due to the geographical mix of agency operations, the volume of title revenues and, in some states, laws or regulations. Due to the variety of such laws or regulations, as well as competitive factors, the average retention rate can differ significantly from state to state. In addition, a high proportion of our independent agencies are in states with retention rates greater than 80%. We continue to focus on increasing profit margins in every state, increasing premium revenue in states where remittance rates are higher, and maintaining the quality of our agency network, which we believe to be the industry’s best, in order to mitigate claims risk and drive consistent future performance. While market share is important in our agency operations channel, it is not as important as margins, risk mitigation and profitability.

Previous wording

Employee costs. Consolidated employee costs increased $28.5 million, or 16%, and $41.9 million, or 12%, in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024, primarily driven by higher incentive compensation consistent with overall improved revenues and increased salaries and employee benefits expenses primarily resulting from increased employee counts. Employee costs in the title segment increased $26.6 million, or 16%, and $38.3 million, or 12%, in the second quarter and first six months of 2025, respectively, while employee costs in the real estate solutions segment increased $1.9 million, or 14%, and $3.4 million, or 13%, in the second quarter 2025 and first six months of 2025, respectively, primarily driven by volume growth in both segments.

Current wording

Employee costs. Consolidated employee costs increased $17.4 million, or 9%, and $59.3 million, or 11%, in the third quarter and first nine months of 2025, respectively, compared to the same periods in 2024, primarily driven by higher salaries and employee benefits expenses primarily resulting from increased average employee counts (which increased 9% and 5%, respectively) and higher incentive compensation consistent with overall improved revenues. Employee costs in the title segment increased $15.4 million, or 9%, and $53.7 million, or 11%, in the third quarter and first nine months of 2025, respectively, while employee costs in the real estate solutions segment increased $2.0 million, or 14%, and $5.4 million, or 13%, in the third quarter 2025 and first nine months of 2025, respectively, primarily driven by volume growth in both segments.

Previous wording

Total employee costs, as a percentage of total operating revenues, improved to 29.5% and 30.3% in the second quarter and first six months of 2025, respectively, compared to 30.5% and 31.4% in the same periods in 2024, respectively, primarily driven by higher operating revenues in 2025. During the second quarter and first six months of 2025, we had an average of approximately 7,000 and 6,900 employees, respectively, compared to an average of approximately 6,700 in both the second quarter and first six months of 2024. Average cost per employee increased 10% and 8% in the second quarter and first six months of 2025, respectively, primarily due to increased incentive compensation expense compared to the same periods in 2024.

Current wording

Total employee costs, as a percentage of total operating revenues, improved to 27.2% and 29.1% in the third quarter and first nine months of 2025, respectively, compared to 29.8% and 30.8% in the respective periods in 2024, primarily driven by higher 2025 operating revenues. During the third quarter and first nine months of 2025, we had an average of approximately 7,400 and 7,100 employees, respectively, compared to 6,800 and 6,700 in the third quarter and first nine months of 2024, respectively. Average cost per employee in the third quarter 2025 was comparable to the prior year quarter, while average cost per employee increased 5% in the first nine months of 2025 primarily due to increased incentive compensation expense compared to the same period in 2024.

Previous wording

Consolidated other operating expenses increased $21.2 million, or 14%, in the second quarter 2025 and $45.2 million, or 16%, in the first six months of 2025, compared to the same periods in 2024. Total variable costs in the second quarter and first six months of 2025 increased $20.6 million, or 22%, and $40.7 million, or 23%, respectively, primarily due to higher third-party service and appraiser expenses and title outside search fees driven by increased related revenues from our real estate solutions and commercial services operations. Total costs that are primarily fixed in nature were comparable in the second quarters 2025 and 2024, and increased $2.4 million, or 3%, in the first six months of 2025, primarily due to higher technology costs compared to the same period in 2024. Independent costs increased $0.7 million, or 5%, and $2.1 million, or 8%, in the second quarter and first six months of 2025, respectively, primarily due to higher travel and business promotion expenses, partially offset by lower office closure costs compared to the same periods in 2024.

Current wording

Consolidated other operating expenses increased $29.5 million, or 19%, in the third quarter 2025 and $74.7 million, or 17%, in the first nine months of 2025, compared to the same periods in 2024. Total variable costs in the third quarter and first nine months of 2025 increased $23.9 million and $64.7 million (both 24%), respectively, primarily due to higher third-party service and appraiser expenses and title outside search fees related to increased operating revenues, primarily from our real estate solutions and commercial services operations. Total costs that are primarily fixed in nature increased $2.4 million, or 5%, and $4.8 million, or 4%, third quarter and first nine months of 2025, respectively, primarily due to higher technology costs and third-party consulting expenses compared to the same period in 2024. Independent costs increased $3.2 million, or 25%, and $5.2 million, or 14%, in the third quarter and first nine months of 2025, respectively, primarily due to higher travel, business promotion and litigation defense expenses, partially offset by lower office closure costs compared to the same periods in 2024.

Previous wording

As a percentage of total operating revenues, consolidated other operating expenses in the second quarter and first six months of 2025 improved to 24.6% and 25.7%, respectively, compared to 25.9% and 25.8% in the same periods in 2024, primarily resulting from the higher operating revenues in 2025.

Current wording

As a percentage of total operating revenues, consolidated other operating expenses in the third quarter and first nine months of 2025 slightly improved to 23.8% and 25.0%, respectively, compared to 24.0% and 25.1% in the same periods in 2024.

Previous wording

Title losses. Provisions for title losses, as a percentage of title operating revenues, were 3.6% and 4.2% for the second quarters 2025 and 2024, respectively, and 3.6% and 4.1% for the first six months of 2025 and 2024, respectively. The title loss expense in the second quarter and first six months of 2025 both increased by 2%, or $0.4 million and $0.7 million, respectively, compared to the same periods in 2024, primarily as a result of increased title revenues in 2025, partially offset by our overall favorable claims experience. The title loss ratio in any given quarter can be significantly influenced by changes in large claims incurred, escrow losses and adjustments to reserves for existing large claims.

Current wording

Title losses. Provisions for title losses, as a percentage of title operating revenues, improved to 3.0% and 3.4% for the third quarter and first nine months of 2025, respectively, compared to 3.8% and 4.0% in the same periods in 2024, while total title loss expense in the third quarter and first nine months of 2025 decreased by $1.7 million (or 8%) and $1.1 million (or 2%), respectively, primarily as a result of our overall favorable claims experience, which was partially offset by increased title revenues in 2025. The title loss ratio in any given quarter can be significantly influenced by changes in large claims incurred, escrow losses and adjustments to reserves for existing large claims.

Previous wording

Total known claims provision decreased $12.4 million, or 41%, and $13.5 million, or 28%, in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024, primarily as a result of lower large claims relating to prior policy years. The current year IBNR provisions increased $1.0 million, or 6%, and $1.3 million, or 4%, primarily due to increased title premiums in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024. As a percentage of title operating revenues, provisions - IBNR for the current policy year were 3.1% for both the second quarter and first six months of 2025, compared with 3.5% and 3.4% for the second quarter and first six months of 2024, respectively.

Current wording

Total known claims provision increased $7.8 million, or 59%, in the third quarter 2025 and decreased $5.8 million, or 9%, in the first nine months of 2025 compared to the same periods in 2024, primarily as a result of activity on existing large and non-large claims relating to prior policy years. Current year IBNR provisions decreased in the third quarter and first nine months of 2025, primarily due to overall favorable claims experience, while prior policy years IBNR provisions increased in the third quarter and first nine months of 2025, primarily as a result of recoveries recorded in the same periods in 2024. As a percentage of title operating revenues, provisions - IBNR for the current policy year were 2.4% and 2.8% for the third quarter and first nine months of 2025, respectively, compared to 3.3% for both periods in 2024.

Previous wording

Cash claim payments decreased $10.7 million, or 39%, and $14.5 million, or 29%, in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024, primarily due to large recoveries received and lower payments on large and non-large claims related to prior policy years during 2025. We continue to manage and resolve large claims prudently and in keeping with our commitments to our policyholders.

Current wording

Cash claim payments increased $1.5 million, or 8%, in the third quarter 2025 compared to the prior year quarter, primarily due to timing of payments on non-large claims, while cash claim payments decreased $13.0 million, or 19%, in the first nine months of 2025 compared to the same period in 2024, primarily due to lower payments on large and non-large claims related to prior policy years during 2025. We continue to manage and resolve large claims prudently and in keeping with our commitments to our policyholders.

Previous wording

In addition to title policy claims, we incur losses in our direct operations from escrow, closing and disbursement functions. These 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. Escrow losses also arise in cases of fraud, and in those cases, the title insurer incurs the loss under its obligation to ensure that an unencumbered title is conveyed. Escrow 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. There were no material escrow losses for both the second quarters and first six months of 2025 and 2024.

Current wording

In addition to title policy claims, we incur losses in our direct operations from escrow, closing and disbursement functions. These 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. Escrow losses also arise in cases of fraud, and in those cases, the title insurer incurs the loss under its obligation to ensure that an unencumbered title is conveyed. Escrow 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. There were no material escrow losses for both the three and nine-month periods ended September 30, 2025 and 2024.

Previous wording

Depreciation and amortization. Total depreciation and amortization expenses in the second quarter and first six months of 2025 were comparable to the same periods in 2024, with total acquisition intangible amortization expenses in the second quarter and first six months of 2025 declining due to several assets becoming fully amortized in 2025, offset by increased depreciation expenses related to new internal systems recently placed into operations.

Current wording

Depreciation and amortization. Total depreciation and amortization expenses in the third quarter and first nine months of 2025 were comparable to the same periods in 2024. This was primarily due to the higher fixed asset depreciation expense related to new internal systems placed into operations in 2025 and increased acquisition intangible amortization expense driven by a business acquisition in the third quarter 2025. These were both offset by the lower depreciation and amortization expenses resulting from several assets becoming fully depreciated or amortized in 2025.

Previous wording

Income taxes. Our effective tax rates (based on income before taxes and after deducting income attributable to noncontrolling interests) of 26% and 25% in the second quarter and first six months of 2025, respectively, were lower compared to 31% and 30% in the same periods in 2024, primarily due to the higher pretax income in the second quarter and first six months of 2025.

Current wording

Income taxes. Our effective tax rates (based on income before taxes and after deducting income attributable to noncontrolling interests) of 22.7% and 23.7% in the third quarter and first nine months of 2025, respectively, were lower compared to 23.3% and 26.2% in the same periods in 2024, primarily due to discrete income tax benefits recognized in the third quarter 2025 related to higher utilization of foreign income tax and research and development credits.

Previous wording

Our liquidity and capital resources reflect our ability to generate cash flow to meet our obligations to stockholders, customers (payments to satisfy claims on title policies), vendors, employees, lenders and others. As of June 30, 2025, our total cash and investments, including amounts reserved pursuant to statutory requirements, aggregated $913.6 million, of which $486.3 million ($261.4 million, net of statutory reserves) was held in the United States and the rest internationally (principally in Canada).

Current wording

Our liquidity and capital resources reflect our ability to generate cash flow to meet our obligations to stockholders, customers (payments to satisfy claims on title policies), vendors, employees, lenders and others. As of September 30, 2025, our total cash and investments, including amounts reserved pursuant to statutory requirements, aggregated $928.0 million, of which $491.4 million ($254.4 million, net of statutory reserves) was held in the United States and the rest internationally (principally in Canada).

Previous wording

As a holding company, the parent company is funded principally by cash from its subsidiaries' earnings in the form of dividends, operating and other administrative expense reimbursements and pursuant to intercompany tax sharing agreements. Cash held at the parent company and its unregulated subsidiaries (which totaled $61.2 million at June 30, 2025) is available for funding the parent company's operating expenses, interest payments on debt and dividend payments to common stockholders. The parent company also receives distributions from Stewart Title Guaranty Company (Guaranty), its regulated title insurance underwriter, to meet cash requirements for acquisitions and other strategic investments.

Current wording

As a holding company, the parent company is funded principally by cash from its subsidiaries' earnings in the form of dividends, operating and other administrative expense reimbursements and pursuant to intercompany tax sharing agreements. Cash held at the parent company and its unregulated subsidiaries (which totaled $37.3 million at September 30, 2025) is available for funding the parent company's operating expenses, interest payments on debt and dividend payments to common stockholders. The parent company also receives distributions from Stewart Title Guaranty Company (Guaranty), its regulated title insurance underwriter, to meet cash requirements for acquisitions and other strategic investments.

Previous wording

We maintain investments in accordance with certain statutory requirements for the funding of statutory premium reserves. Statutory reserve funds are required to be fully funded and invested in high-quality securities and short-term investments. Statutory reserve funds are not available for current claim payments, which must be funded from current operating cash flow. Included in investments in debt and equity securities are statutory reserve funds of approximately $516.3 million and $535.5 million at June 30, 2025 and December 31, 2024, respectively. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $7.4 million and $9.5 million at June 30, 2025 and December 31, 2024, respectively. As of June 30, 2025, our known claims reserve totaled $65.8 million and our estimate of claims that may be reported in the future, under generally accepted accounting principles, totaled $457.3 million. In addition to this, we had cash and investments (at amortized cost and excluding equity method investments) of $269.8 million, which are available for underwriter operations, including claims payments, and acquisitions.

Current wording

We maintain investments in accordance with certain statutory requirements for the funding of statutory premium reserves. Statutory reserve funds are required to be fully funded and invested in high-quality securities and short-term investments. Statutory reserve funds are not available for current claim payments, which must be funded from current operating cash flow. Included in investments in debt and equity securities are statutory reserve funds of approximately $526.4 million and $535.5 million at September 30, 2025 and December 31, 2024, respectively. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $7.8 million and $9.5 million at September 30, 2025 and December 31, 2024, respectively. As of September 30, 2025, our known claims reserve totaled $66.5 million and our estimate of claims that may be reported in the future, under generally accepted accounting principles, totaled $453.9 million. In addition to this, we had cash and investments (at amortized cost and excluding equity method investments) of $288.0 million, which are available for underwriter operations, including claims payments, and acquisitions.

Previous wording

The ability of Guaranty to pay dividends to its parent is governed by Texas insurance law. The Texas Department of Insurance (TDI) must be notified of any dividend declared, and any dividend in excess of the greater of the statutory net operating income or 20% of surplus (which was approximately $173.0 million as of December 31, 2024) would be, by regulation, considered extraordinary and subject to pre-approval by the TDI. Also, the Texas Insurance Commissioner may raise an objection to a planned distribution during the notification period. Guaranty’s actual ability or intent to pay dividends to its parent may be constrained by business and regulatory considerations, such as the impact of dividends on surplus and liquidity, which could affect its ratings and competitive position, the amount of insurance it can write and its ability to pay future dividends. During the six months ended June 30, 2025 and 2024, Guaranty paid dividends of $50.0 million and $20.0 million, respectively, to the parent company.

Current wording

The ability of Guaranty to pay dividends to its parent is governed by Texas insurance law. The Texas Department of Insurance (TDI) must be notified of any dividend declared, and any dividend in excess of the greater of the statutory net operating income or 20% of surplus (which was approximately $173.0 million as of December 31, 2024) would be, by regulation, considered extraordinary and subject to pre-approval by the TDI. Also, the Texas Insurance Commissioner may raise an objection to a planned distribution during the notification period. Guaranty’s actual ability or intent to pay dividends to its parent may be constrained by business and regulatory considerations, such as the impact of dividends on surplus and liquidity, which could affect its ratings and competitive position, the amount of insurance it can write and its ability to pay future dividends. During the nine months ended September 30, 2025 and 2024, Guaranty paid dividends of $50.0 million and $30.0 million, respectively, to the parent company.

Previous wording

Effective March 31, 2025, Stewart Title Insurance Company (STIC) was merged into Guaranty, primarily to streamline our underwriting operations. Prior to the merger, STIC, our second largest underwriter, was a wholly-owned subsidiary of Guaranty and was domiciled in the state of New York. Our total statutory reserve funds at June 30, 2025 decreased compared to December 31, 2024, primarily as a result of the merger.

Current wording

Effective March 31, 2025, Stewart Title Insurance Company (STIC) was merged into Guaranty, primarily to streamline our underwriting operations. Prior to the merger, STIC, our second largest underwriter, was a wholly-owned subsidiary of Guaranty and was domiciled in the state of New York. This merger contributed to the decrease of our total statutory reserve funds at September 30, 2025 compared to December 31, 2024.

Previous wording

Net cash provided by operations improved to $23.5 million during the first six months of 2025, compared to net cash used by operations of $8.5 million during the same period in 2024, primarily driven by the higher net income and lower claims payments in 2025. Although our business is labor intensive, we are focused on a cost-effective, scalable business model which includes utilization of technology, centralized back and middle office functions and business process outsourcing. We are continuing our emphasis on cost management, especially in light of the current economic environment due to elevated mortgage interest rates, specifically focusing on lowering unit costs of production and improving operating margins in our direct title and real estate solutions operations. Our plans to improve margins include additional automation of manual processes, further consolidation of our various systems and production operations, and full integration of acquisitions. We continue to invest in the technology necessary to accomplish these goals.

Current wording

Net cash provided by operations improved to $116.1 million during the first nine months of 2025, compared to net cash provided by operations of $67.7 million during the same period in 2024, primarily driven by the higher net income and lower claims payments in 2025. Although our business is labor intensive, we are focused on a cost-effective, scalable business model which includes utilization of technology, centralized back and middle office functions and business process outsourcing. We are continuing our emphasis on cost management, especially in light of the current economic environment due to elevated mortgage interest rates, specifically focusing on lowering unit costs of production and improving operating margins in our direct title and real estate solutions operations. Our plans to improve margins include additional automation of manual processes, further consolidation of our various systems and production operations, and full integration of acquisitions. We continue to invest in the technology necessary to accomplish these goals.

Previous wording

Investing activities. Cash used and provided by investing activities is primarily related to proceeds from matured and sold investments, purchases of investments, capital expenditures and acquisition of businesses. During the first six months of 2025 and 2024, total proceeds from securities investments sold and matured were $84.8 million and $72.7 million, respectively, while cash used for purchases of securities investments was $72.2 million and $58.4 million, respectively. Additionally, cash paid for cost-basis and other investments was $1.4 million and $31.6 million during the first six months of 2025 and 2024, respectively.

Current wording

Investing activities. Cash used and provided by investing activities is primarily related to proceeds from matured and sold investments, purchases of investments, capital expenditures and acquisition of businesses. During the first nine months of 2025 and 2024, total proceeds from securities investments sold and matured were $112.3 million and $113.1 million, respectively, while cash used for purchases of securities investments was $100.6 million and $99.2 million, respectively. Additionally, cash paid for cost-basis and other investments was $1.8 million and $31.1 million during the first nine months of 2025 and 2024, respectively.

Previous wording

During the first six months of 2025 and 2024, we used $27.1 million and $19.4 million, respectively, of cash for expenditures related to property and equipment and other long-lived assets, while we used net cash of $8.5 million for acquisitions of title offices and an intangible asset during the first six months of 2025, compared to net cash used of $8.2 million for a title office acquisition during the same period in 2024. 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.

Current wording

During the first nine months of 2025 and 2024, we used $46.2 million and $28.1 million, respectively, of cash for expenditures related to property and equipment and other long-lived assets, while we used net cash of $38.6 million and $14.4 million, respectively, for acquisitions of businesses and intangible assets. 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.

Previous wording

Financing activities and capital resources. Total debt and stockholders’ equity were $446.0 million and $1.45 billion, respectively, as of June 30, 2025. At June 30, 2025, our line of credit facility was fully available, while our debt-to-equity and debt-to-capitalization ratios, excluding our Section 1031 tax-deferred property exchange notes, were approximately 31% and 24%, respectively.

Current wording

Financing activities and capital resources. Total debt and stockholders’ equity were $446.1 million and $1.48 billion, respectively, as of September 30, 2025. As disclosed in Note 1-D to our condensed consolidated financial statements, we recently renewed and increased our line of credit facility, which was unused at the date of this report. At September 30, 2025, our debt-to-equity and debt-to-capitalization ratios, excluding our Section 1031 tax-deferred property exchange notes, were approximately 30% and 23%, respectively, which were better than 32% and 24%, respectively, at December 31, 2024.

Previous wording

During the first six months of 2025, we paid total dividends of $27.9 million ($1.00 per common share), compared to total dividends paid of $26.2 million ($0.95 per common share) during the same period in 2024.

Current wording

During the first nine months of 2025, we paid total dividends of $42.6 million ($1.53 per common share), compared to total dividends paid of $40.0 million ($1.45 per common share) during the same period in 2024.

Previous wording

Other comprehensive income (loss). Unrealized gains and losses on available-for-sale debt securities investments and changes in foreign currency exchange rates are reported net of deferred taxes in accumulated other comprehensive income (loss), a component of stockholders’ equity, until they are realized. During the first six months of 2025, net unrealized investment gains of $6.4 million, net of taxes, which increased our other comprehensive income, were primarily related to net increases in the fair values of our foreign and corporate bond securities investments. These increases primarily resulted from lower interest rates during the first six months of 2025. During the first six months of 2024, net unrealized investment losses of $1.6 million, net of taxes, which increased our other comprehensive loss, were primarily related to net decreases in the fair values of our foreign and corporate bond securities investments, primarily influenced by the continued elevated interest rate environment.

Current wording

Other comprehensive income (loss). Unrealized gains and losses on available-for-sale debt securities investments and changes in foreign currency exchange rates are reported net of deferred taxes in accumulated other comprehensive income (loss), a component of stockholders’ equity, until they are realized. During the first nine months of 2025, net unrealized investment gains of $9.7 million, net of taxes, which increased our other comprehensive income, were primarily related to net increases in the fair values of our foreign and corporate bond securities investments. These increases were primarily due to lower interest rates during the first nine months of 2025. During the first nine months of 2024, net unrealized investment gains of $11.8 million, net of taxes, which increased our other comprehensive income, were primarily related to net increases in the fair values of our foreign and corporate bond securities investments, primarily influenced by the Federal Reserve's reduction of interest rates during the third quarter 2024.

Previous wording

Changes in foreign currency spot exchange rates (primarily related to our Canadian and United Kingdom operations) resulted in other comprehensive income, net of taxes, of $14.4 million in the first six months of 2025 and other comprehensive loss, net of taxes, of $5.7 million during the first six months of 2024. During the first six months of 2025, the Canadian dollar and British pound both appreciated relative to the U.S. dollar, while they both depreciated during the same period in 2024.

Current wording

Changes in foreign currency spot exchange rates (primarily related to our Canadian and United Kingdom operations) resulted in other comprehensive income, net of taxes, of $9.2 million in the first nine months of 2025 and other comprehensive loss, net of taxes, of $0.9 million during the first nine months of 2024. During the first nine months of 2025, the Canadian dollar and British pound both appreciated relative to the U.S. dollar, while during the same period in 2024, the effect of the British pound's appreciation were more than offset by the depreciation of the Canadian dollar relative to the U.S. dollar.