STEWART INFORMATION SERVICES CORP

LIQUIDITY AND CAPITAL RESOURCES

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 December 31, 2025, our total cash and investments, including amounts reserved pursuant to statutory requirements, aggregated $975.8 million. Of our total cash and investments at December 31, 2025, $540.5 million ($343.3 million, net of statutory reserves) was held in the United States (U.S.) and the rest internationally (principally in Canada).

As a holding company, the parent company is funded principally by cash from its subsidiaries' earnings in the form of dividends, operating and other administrative expense reimbursements and pursuant to intercompany tax sharing agreements. Cash held at the parent company and its unregulated subsidiaries (which totaled $150.3 million at December 31, 2025) is available for funding the parent company and its unregulated subsidiaries' operating expenses, and the parent company's interest payments on debt and dividend payments to common stockholders. The parent company also receives distributions from Guaranty, its regulated title insurance underwriter, to meet cash requirements for acquisitions and other strategic investments.

A substantial majority of our consolidated cash and investments as of December 31, 2025 was held by Guaranty and its subsidiaries. The use and investment of these funds, dividends to the parent company, and cash transfers between Guaranty and its subsidiaries and the parent company are subject to certain legal and regulatory restrictions. In general, Guaranty uses its cash and investments in excess of its legally-mandated statutory premium reserve (established in accordance with requirements under Texas law) to fund its insurance operations, including claims payments. Guaranty may also, subject to certain limitations, provide funds to its subsidiaries (whose operations consist principally of field title offices and real estate solutions operations) for their operating and debt service needs.

We maintain investments in accordance with certain statutory requirements for the funding of statutory premium reserves. Statutory reserve funds are required to be fully funded and invested in high-quality securities and short-term investments. Statutory reserve funds are not available for current claim payments, which must be funded from current operating cash flow. Included in investments in debt and equity securities are statutory reserve funds of approximately $492.0 million at December 31, 2025. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $4.4 million at December 31, 2025. Although these cash statutory reserve funds are not restricted or segregated in depository accounts, they are required to be held pursuant to state statutes. If the Company fails to maintain minimum investments or cash and cash equivalents sufficient to meet statutory requirements, the Company may be subject to fines or other penalties, including potential revocation of its business license. As of December 31, 2025, our known claims reserve totaled $84.8 million and our estimate of claims that may be reported in the future, under U.S. generally accepted accounting principles, totaled $439.7 million. In addition to this, we had cash and investments (at amortized cost and excluding equity method investments) of $257.2 million which are available for underwriter operations, including claims payments.

The ability of Guaranty to pay dividends to its parent is governed by Texas insurance law. The Texas Department of Insurance (TDI) must be notified of any dividend declared, and any dividend in excess of the greater of the statutory net operating income or 20% of surplus (which was approximately $165.4 million as of December 31, 2025) would be, by regulation, considered extraordinary and subject to pre-approval by the TDI (see Note 3 to our audited consolidated financial statements for details). Also, the Texas Insurance Commissioner may raise an objection to a planned distribution during the notification period. Guaranty’s actual ability or intent to pay dividends to its parent may be constrained by business and regulatory considerations, such as the impact of dividends on surplus and liquidity, which could affect its ratings and competitive position, the amount of insurance it can write and its ability to pay future dividends. Guaranty paid $173.0 million and $30.0 million in dividends to its parent during 2025 and 2024, respectively.

Contractual obligations. Our material contractual obligations at December 31, 2025 are composed primarily of our unsecured 3.6% Senior Notes (Senior Notes) and line of credit facility (and the related interest payments), operating leases, and reserves for estimated title losses. Refer to Note 9 (Notes payable and line of credit) and Note 14 (Leases) to our audited consolidated financial statements for details on the Senior Notes and line of credit facility, and operating leases, respectively. Refer to the Note 10 (Estimated title losses) to our audited consolidated financial statements and the Title losses section under Results of Operations for details on title losses.

Cash flows. As the parent company conducts no operations apart from its wholly-owned subsidiaries, the discussion below focuses on consolidated cash flows. Refer to the Consolidated statements of cash flows in the audited consolidated financial statements.

Operating activities. 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.

Net cash provided by operations in 2025 increased by $70.1 million compared to 2024, primarily due to higher net income and lower payments on claims in 2025, while net cash provided by operations in 2024 increased by $52.6 million compared to the prior year, primarily due to higher net income and lower payments on claims in 2024. Although our business is labor intensive, we are focused on a cost-effective, scalable business model which includes utilization of technology, centralized back and middle office functions and business process outsourcing. We are continuing our emphasis on cost management, especially in light of the current economic environment due to elevated mortgage interest rates, specifically focusing on lowering unit costs of production and improving operating margins in our direct title and real estate solutions operations. Our plans to improve margins include additional automation of manual processes, further consolidation of our various systems and production operations, and full integration of acquisitions. We continue to invest in the technology necessary to accomplish these goals.

Investing activities. Cash used and provided by investing activities is primarily driven by proceeds from matured and sold investments, purchases of investments, capital expenditures and acquisition of businesses. During 2025, 2024 and 2023, total proceeds from securities investments sold and matured were $214.7 million, $130.6 million and $132.2 million, respectively; while cash used for purchases of securities investments was $112.1 million, $121.5 million and $78.0 million, respectively.

We used $370.0 million, $14.4 million and $25.1 million of cash during 2025, 2024 and 2023, respectively, for acquisitions of various real estate solutions and title businesses (which included our acquisition of MCS in 2025), consistent with our strategy of increasing scale, growth in key markets and broader technology and service offerings. We used $73.4 million, $40.5 million and $37.8 million of cash for purchases of property and equipment and other long-lived assets (including internal-use software development) during 2025, 2024 and 2023, respectively, while we used cash of $8.8 million, $31.6 million and $1.0 million during 2025, 2024 and 2023, respectively, for payments for cost-basis and other investments. We maintain investment in capital expenditures at a level that enables us to implement technologies for increasing our operational and back-office efficiencies, to pursue growth in key markets and for improving customer experience.

Financing activities and capital resources. Total debt and stockholders’ equity were $646.6 million and $1.7 billion, respectively, as of December 31, 2025. As of December 31, 2025, our total debt-to-equity and debt-to-capitalization ratios, excluding short-term loan agreements in connection with our Section 1031 tax-deferred property exchange (Section 1031) business, were approximately 39% and 28%, respectively. We recently renewed and increased our line of credit facility, from which we drew $200.0 million during the fourth quarter 2025. As of December 31, 2025, the outstanding balance of our Senior Notes was $446.2 million, while our line of credit facility had an outstanding balance of $200.0 million with a remaining borrowing capacity of $97.5 million (refer to Note 9 to our audited consolidated financial statements for details). The Senior Notes are rated "BBB" by Fitch Ratings Ltd. as of December 31, 2025.

During 2025, 2024 and 2023, payments on notes payable of $1.2 million, $3.4 million and $5.7 million, respectively, and notes payable additions of $1.2 million, $3.4 million and $3.5 million, respectively, were related to our Section 1031 business, which had an outstanding balance of $0.1 million at December 31, 2025.

During the fourth quarter 2025, we issued an aggregate of 2,185,000 new shares of Common Stock, which included shares purchased by the underwriters to the offering transaction. Total proceeds from the offering, net of issuance costs, was $140.8 million.

During 2025, we paid dividends of $2.05 per common share, compared to $1.95 and $1.85 per common share paid during 2024 and 2023, respectively. Beginning in the third quarter 2025, we increased our annual cash dividend to $2.10 per share. In aggregate, we paid total dividends of $58.5 million, $53.9 million and $50.5 million in 2025, 2024 and 2023, respectively.

Effect of changes in foreign currency rates. The effect of changes in foreign currency rates on the consolidated statements of cash flows was a net increase (decrease) in cash and cash equivalents of $3.2 million, $(4.5 million) and $1.0 million in 2025, 2024 and 2023, respectively. Our primary foreign currencies are the Canadian dollar and British pound, and, relative to the U.S. dollar, the value of the Canadian dollar and British pound generally appreciated in 2025 and 2023, while it declined during 2024.

We believe we have sufficient liquidity and capital resources to meet the cash needs of our ongoing operations, including consideration of the current economic and real estate environment created by elevated mortgage interest rates. However, we may determine that additional debt or equity funding is warranted to provide liquidity for achievement of strategic goals or acquisitions or for unforeseen circumstances. Other than scheduled maturities of debt, operating lease payments and anticipated claims payments, we have no material contractual commitments. We expect that cash flows from operations and cash available from our underwriters, subject to regulatory restrictions, will be sufficient to fund our operations, including title claims payments. However, to the extent that these funds are not sufficient, we may be required to borrow funds on terms less favorable than we currently have or seek funding from the equity market, which may not be successful or may be on terms that are dilutive to existing stockholders.

Other comprehensive income (loss). Unrealized gains and losses on available-for-sale securities investments and changes in foreign currency exchange rates are reported net of deferred taxes in accumulated other comprehensive income (loss), a component of stockholders’ equity, until realized. Refer to Note 1-H and Note 19 to our audited consolidated financial statements for details.

In 2025, net unrealized investment gains of $10.0 million, net of taxes, which increased our other comprehensive income, were primarily related to net increases in the fair values of our corporate and foreign bond securities investments, which resulted primarily from lower interest rates. Also in 2025, we recorded foreign currency translation gains of $11.5 million, net of taxes, which increased our other comprehensive income and were primarily driven by the appreciation of the Canadian dollar and British pound against the U.S. dollar.

In 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. 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.

Off-balance sheet arrangements. We do not have any material source of liquidity or financing that involves off-balance sheet arrangements. We also routinely hold funds in segregated escrow accounts pending the closing of real estate transactions and have qualified intermediaries in tax-deferred property exchanges for customers pursuant to Section 1031 of the Internal Revenue Code. The Company holds the proceeds from these transactions until a qualifying exchange can occur. In accordance with industry practice, these segregated accounts are not included on the balance sheet. See Note 15 to our audited consolidated financial statements included in Item 15 of Part IV of this report for details.

Forward-looking statements. Certain statements in this report are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to future, not past, events and often address our expected future business and financial performance. These statements often contain words such as “may,” "expect," "anticipate," "intend," "plan," "believe," "seek," "will," "foresee" or other similar words. Forward-looking statements by their nature are subject to various risks and uncertainties that could cause our actual results to be materially different than those expressed in the forward-looking statements. These risks and uncertainties include, among other things, the following:

•the volatility of economic conditions, including economic changes that may result from new or increased tariffs, trade restrictions, prolonged federal government shutdowns or geopolitical tensions;

•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;

•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.

All forward-looking statements included in this report are expressly qualified in their entirety by such cautionary statements. We expressly disclaim any obligation to update, amend or clarify any forward-looking statements contained in this report to reflect events or circumstances that may arise after the date hereof, except as may be required by applicable law.