UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-Q
(Mark One)


þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20172023
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-02658
STEWART INFORMATION SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware74-1677330
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
19801360 Post Oak Blvd., Houston TXSuite 100
Houston,Texas77056
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code:(713) 625-8100
Securities registered pursuant to Section 12(b) of the Act:
(Former name, former address and former fiscal year, if changed since last report)Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1 par value per shareSTCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    
Yes þ☑  No  ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes þ☑    No  ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☑Large accelerated filer☐Non-accelerated filer☐Emerging growth company
Large accelerated filer  þ
☐
Accelerated filer¨
Non-accelerated filer  ¨
(Do not check if smaller reporting company)
☐
Smaller reporting company¨
Emerging growth company  ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐No þ☑
On November 2, 2017,August 1, 2023, there were 23,764,01627,346,403 outstanding shares of the issuer's Common Stock, $1 par value per share, outstanding.Stock.



FORM 10-Q QUARTERLY REPORT
QUARTER ENDED SEPTEMBERJUNE 30, 20172023
TABLE OF CONTENTS
 
Item PageItem Page
PART I – FINANCIAL INFORMATION PART I – FINANCIAL INFORMATION
 
1.
Financial Statements
3
1.
 
2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
17
2.
 
3.
Quantitative and Qualitative Disclosures About Market Risk
29
3.
 
4.
Controls and Procedures
29
4.
PART II – OTHER INFORMATION PART II – OTHER INFORMATION
1.
Legal Proceedings
30
1.
 
1A.
Risk Factors
30
1A.
 
2.
Unregistered Sales of Equity Securities and Use of Proceeds
30
2.
 
5.
Other Information
30
5.
 
6.
Exhibits
30
6.
 
Signature
30
As used in this report, “we,” “us,” “our,” "Registrant," the “Company” and “Stewart” mean Stewart Information Services Corporation and our subsidiaries, unless the context indicates otherwise.









































2

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		 Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
2017 2016 2017 2016 2023202220232022
($000 omitted, except per share) ($000 omitted, except per share)
Revenues       Revenues
Title revenues:       Title revenues:
Direct operations216,830
 241,109
 635,921
 664,128
Direct operations257,994 351,122 465,864 668,956 
Agency operations268,545
 282,269
 736,301
 732,320
Agency operations208,755 409,931 457,775 814,076 
Ancillary services12,674
 22,059
 45,096
 65,276
Real estate solutions and otherReal estate solutions and other71,387 88,186 133,978 211,415 
Operating revenues498,049
 545,437
 1,417,318
 1,461,724
Operating revenues538,136 849,239 1,057,617 1,694,447 
Investment income4,567
 4,520
 14,179
 14,445
Investment income12,123 6,739 18,722 10,361 
Investment and other (losses) gains – net(1,047) 3,253
 (1,436) 4,706
Net realized and unrealized lossesNet realized and unrealized losses(1,105)(11,905)(2,883)(7,820)
501,569
 553,210
 1,430,061
 1,480,875
549,154 844,073 1,073,456 1,696,988 
Expenses       Expenses
Amounts retained by agencies221,460
 231,586
 605,192
 598,915
Amounts retained by agencies171,776 339,847 377,514 671,039 
Employee costs140,054
 154,529
 419,184
 457,166
Employee costs182,666 210,246 353,217 415,228 
Other operating expenses88,489
 94,043
 255,593
 268,210
Other operating expenses129,333 162,008 250,073 351,756 
Title losses and related claims25,428
 26,365
 70,591
 66,612
Title losses and related claims19,802 26,398 37,476 55,619 
Depreciation and amortization6,578
 7,082
 19,397
 22,728
Depreciation and amortization15,528 14,288 30,434 28,037 
Interest963
 797
 2,492
 2,237
Interest4,875 4,507 9,724 8,918 
482,972
 514,402
 1,372,449
 1,415,868
523,980 757,294 1,058,438 1,530,597 
       
Income before taxes and noncontrolling interests18,597
 38,808
 57,612
 65,007
Income before taxes and noncontrolling interests25,174 86,779 15,018 166,391 
Income tax expense4,686
 9,041
 15,536
 16,779
Income tax expense(5,392)(19,894)(454)(37,594)
       
Net income13,911
 29,767
 42,076
 48,228
Net income19,782 66,885 14,564 128,797 
Less net income attributable to noncontrolling interests2,967
 3,392
 8,475
 9,450
Less net income attributable to noncontrolling interests3,967 5,225 6,939 9,240 
Net income attributable to Stewart10,944
 26,375
 33,601
 38,778
Net income attributable to Stewart15,815 61,660 7,625 119,557 
       
Net income13,911
 29,767
 42,076
 48,228
Net income19,782 66,885 14,564 128,797 
Other comprehensive income (loss), net of taxes:       
Other comprehensive (loss) income, net of taxes:Other comprehensive (loss) income, net of taxes:
Foreign currency translation adjustments4,141
 (1,808) 8,670
 (216)Foreign currency translation adjustments4,254 (8,181)4,852 (7,561)
Change in net unrealized gains on investments63
 (263) 2,885
 11,708
Reclassification of adjustment for gains included in net income(331) (865) (792) (1,044)
Other comprehensive income (loss), net of taxes:3,873
 (2,936) 10,763
 10,448
       
Change in net unrealized gains and losses on investmentsChange in net unrealized gains and losses on investments(5,765)(12,694)852 (32,592)
Reclassification adjustments for realized gains and losses on investmentsReclassification adjustments for realized gains and losses on investments221 (117)313 (302)
Other comprehensive (loss) income, net of taxes:Other comprehensive (loss) income, net of taxes:(1,290)(20,992)6,017 (40,455)
Comprehensive income17,784
 26,831
 52,839
 58,676
Comprehensive income18,492 45,893 20,581 88,342 
Less net income attributable to noncontrolling interests2,967
 3,392
 8,475
 9,450
Less net income attributable to noncontrolling interests3,967 5,225 6,939 9,240 
Comprehensive income attributable to Stewart14,817
 23,439
 44,364
 49,226
Comprehensive income attributable to Stewart14,525 40,668 13,642 79,102 
       
Basic average shares outstanding (000)23,448
 23,371
 23,442
 23,362
Basic average shares outstanding (000)27,255 27,018 27,228 26,989 
Basic earnings per share attributable to Stewart0.47
 1.13
 1.43
 1.15
Basic earnings per share attributable to Stewart0.58 2.28 0.28 4.43 
       
Diluted average shares outstanding (000)23,564
 23,611
 23,571
 23,596
Diluted average shares outstanding (000)27,444 27,293 27,402 27,377 
Diluted earnings per share attributable to Stewart0.46
 1.12
 1.43
 1.13
Diluted earnings per share attributable to Stewart0.58 2.26 0.28 4.37 
See notes to condensed consolidated financial statements.

3

CONDENSED CONSOLIDATED BALANCE SHEETS
As of 
 September 30, 2017 (Unaudited)		 As of 
 December 31, 2016		 
 June 30, 2023 (Unaudited)		 
 December 31, 2022
($000 omitted) ($000 omitted)
Assets   Assets
Cash and cash equivalents168,746
 185,772
Cash and cash equivalents190,039 248,367 
Short-term investments23,434
 22,239
Short-term investments26,566 24,318 
Investments in debt and equity securities available-for-sale, at fair value:   
Statutory reserve funds475,402
 485,409
Other204,280
 146,094
Investments, at fair value:Investments, at fair value:
Debt securities (amortized cost of $635,247 and $646,728)Debt securities (amortized cost of $635,247 and $646,728)601,927 611,934 
Equity securitiesEquity securities78,226 98,149 
679,682
 631,503
680,153 710,083 
Receivables:   Receivables:
Premiums from agencies33,754
 31,246
Premiums from agencies40,601 39,921 
Trade and other52,055
 41,897
Trade and other73,218 67,348 
Income taxes3,085
 4,878
Income taxes9,661 10,281 
Notes3,761
 3,402
Notes13,464 7,482 
Allowance for uncollectible amounts(8,555) (9,647)Allowance for uncollectible amounts(7,853)(7,309)
84,100
 71,776
129,091 117,723 
Property and equipment, at cost:   
Property and equipment:Property and equipment:
Land3,991
 3,991
Land2,545 2,545 
Buildings22,835
 22,529
Buildings19,094 18,761 
Furniture and equipment230,308
 217,105
Furniture and equipment226,455 213,707 
Accumulated depreciation(188,105) (173,119)Accumulated depreciation(166,331)(153,474)
69,029
 70,506
81,763 81,539 
Operating lease assetsOperating lease assets128,167 127,830 
Title plants, at cost74,237
 75,313
Title plants, at cost73,358 73,358 
Investments in investees, on an equity method basis9,302
 9,796
Investments on equity method basisInvestments on equity method basis4,073 4,575 
Goodwill231,428
 217,094
Goodwill1,074,678 1,072,982 
Intangible assets, net of amortization10,673
 10,890
Intangible assets, net of amortization204,509 199,084 
Deferred tax assets3,856
 3,860
Deferred tax assets2,582 2,590 
Other assets48,458
 42,975
Other assets82,859 75,430 
1,402,945
 1,341,724
2,677,838 2,737,879 
Liabilities   Liabilities
Notes payable138,557
 106,808
Notes payable445,027 447,006 
Accounts payable and accrued liabilities95,283
 115,640
Accounts payable and accrued liabilities167,564 196,541 
Operating lease liabilitiesOperating lease liabilities146,649 148,003 
Estimated title losses475,845
 462,572
Estimated title losses524,141 549,448 
Deferred tax liabilities20,889
 7,856
Deferred tax liabilities28,462 26,616 
730,574
 692,876
1,311,843 1,367,614 
Contingent liabilities and commitments
 
Contingent liabilities and commitments
Stockholders’ equity   Stockholders’ equity
Common Stock and additional paid-in capital182,055
 180,959
Common Stock ($1 par value) and additional paid-in capitalCommon Stock ($1 par value) and additional paid-in capital332,025 324,344 
Retained earnings483,861
 471,788
Retained earnings1,074,458 1,091,816 
Accumulated other comprehensive income (loss):   
Unrealized investment gains on investments - net9,939
 7,846
Accumulated other comprehensive loss:Accumulated other comprehensive loss:
Foreign currency translation adjustments(8,057) (16,727)Foreign currency translation adjustments(19,004)(23,856)
Net unrealized losses on debt securities investmentsNet unrealized losses on debt securities investments(26,322)(27,487)
Treasury stock – 352,161 common shares, at cost(2,666) (2,666)Treasury stock – 352,161 common shares, at cost(2,666)(2,666)
Stockholders’ equity attributable to Stewart665,132
 641,200
Stockholders’ equity attributable to Stewart1,358,491 1,362,151 
Noncontrolling interests7,239
 7,648
Noncontrolling interests7,504 8,114 
Total stockholders’ equity (23,765,807 and 23,431,279 shares outstanding)672,371
 648,848
Total stockholders’ equity (27,266,830 and 27,130,412 shares outstanding)Total stockholders’ equity (27,266,830 and 27,130,412 shares outstanding)1,365,995 1,370,265 
1,402,945
 1,341,724
2,677,838 2,737,879 
See notes to condensed consolidated financial statements.

4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Nine Months Ended 
 September 30,
 2017 2016
 ($000 omitted)
Reconciliation of net income to cash provided by operating activities:   
Net income42,076
 48,228
Add (deduct):   
Depreciation and amortization19,397
 22,728
Provision for bad debt697
 1,189
Investment and other losses (gains) – net1,436
 (4,706)
Amortization of net premium on investments available-for-sale5,114
 5,396
Payments for title losses less than (in excess of) provisions5,940
 (5,026)
Adjustment for insurance recoveries of title losses757
 290
(Increase) decrease in receivables – net(12,275) 4,966
Increase in other assets – net(5,633) (1,389)
Decrease in payables and accrued liabilities – net(20,482) (16,027)
Change in net deferred income taxes8,749
 3,159
Net income from equity investees(1,813) (1,933)
Dividends received from equity investees2,053
 1,912
Stock-based compensation expense2,078
 5,093
Other – net(46) 106
Cash provided by operating activities48,048
 63,986
    
Investing activities:   
Proceeds from investments available-for-sale sold55,533
 49,666
Proceeds from investments available-for-sale matured33,867
 25,562
Purchases of investments available-for-sale(125,415) (122,149)
Net purchases of short-term investments(1,195) (361)
Purchases of property and equipment, title plants and real estate – net(12,411) (13,615)
Cash paid for acquisition of businesses(17,784) (300)
Other – net960
 944
Cash used by investing activities(66,445) (60,253)
    
Financing activities:   
Payments on notes payable(18,848) (30,210)
Proceeds from notes payable48,043
 51,956
Distributions to noncontrolling interests(8,376) (9,430)
Cash dividends paid(21,100) (20,800)
Cash paid on Class B Common Shares conversion—
 (12,000)
Payment of contingent consideration related to an acquisition(1,298)
(2,002)
Purchase of remaining interest in consolidated subsidiary(1,014)
(301)
Cash used by financing activities(2,593) (22,787)
    
Effects of changes in foreign currency exchange rates3,964
 1,775
Decrease in cash and cash equivalents(17,026) (17,279)
    
Cash and cash equivalents at beginning of period185,772
 179,067
Cash and cash equivalents at end of period168,746
 161,788
    
See notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED)

 Common Stock ($1 par value) Additional paid-in capital Retained earnings Accumulated other comprehensive (loss) income Treasury stock Noncontrolling interests Total
 ($000 omitted)            
Balances at December 31, 201623,783
 157,176
 471,788
 (8,881) (2,666) 7,648
 648,848
Net income attributable to Stewart—
 —
 33,601
 —
 —
 —
 33,601
Cash dividends on Common Stock ($0.90 per share)—
 —
 (21,528) —
 —
 —
 (21,528)
Stock-based compensation and other335
 1,743
 —
 —
 —
 —
 2,078
Purchase of remaining interest in consolidated subsidiary—
 (982) —
 —
 —
 (32) (1,014)
Net change in unrealized gains and losses on investments—
 —
 —
 2,885
 —
 —
 2,885
Net realized gain reclassification—
 —
 —
 (792) —
 —
 (792)
Foreign currency translation adjustments—
 —
 —
 8,670
 —
 —
 8,670
Net income attributable to noncontrolling interests—
 —
 —
 —
 —
 8,475
 8,475
Subsidiary dividends paid to noncontrolling interests—
 —
 —
 —
 —
 (8,376) (8,376)
Net effect of other changes in ownership—
 —
 —
 —
 —
 (476) (476)
Balances at September 30, 201724,118
 157,937
 483,861
 1,882
 (2,666) 7,239
 672,371
 Six Months Ended 
 June 30,
 20232022
 ($000 omitted)
Reconciliation of net income to cash (used) provided by operating activities:
Net income14,564 128,797 
Add (deduct):
Depreciation and amortization30,434 28,037 
Adjustments for bad debt provisions1,443 (157)
Net realized and unrealized losses2,883 7,820 
Amortization of net premium on debt securities investments387 1,382 
Payments for title losses (in excess of) less than provisions(27,468)16,902 
Adjustments for insurance recoveries of title losses— 220 
(Increase) decrease in receivables – net(6,692)2,907 
Increase in other assets – net(5,859)(6,720)
Decrease in accounts payable and other liabilities – net(34,042)(68,475)
Change in net deferred income taxes585 515 
Net income from equity method investments(378)(1,860)
Dividends received from equity method investments876 2,150 
Stock-based compensation expense7,043 6,440 
Other – net269 229 
Cash (used) provided by operating activities(15,955)118,187 
Investing activities:
Proceeds from sales of investments in securities39,488 28,769 
Proceeds from matured investments in debt securities55,250 23,521 
Purchases of investments in securities(55,461)(117,913)
Net purchases of short-term investments(2,838)(189)
Purchases of property and equipment, and real estate(15,495)(26,226)
Proceeds from sale of property and equipment and other assets106 1,033 
Cash paid for acquisition of businesses(22,400)(23,310)
Increase in notes receivable(6,360)(3,667)
Other – net400 6,840 
Cash used by investing activities(7,310)(111,142)
Financing activities:
Proceeds from notes payable3,538 5,721 
Payments on notes payable(5,776)(44,553)
Distributions to noncontrolling interests(7,549)(9,483)
Repurchases of Common Stock(1,353)(2,551)
Proceeds from stock option and employee stock purchase plan exercises1,991 2,713 
Cash dividends paid(24,531)(20,258)
Payment of contingent consideration related to acquisitions(2,000)(15,997)
Other - net— 94 
Cash used by financing activities(35,680)(84,314)
Effects of changes in foreign currency exchange rates617 (3,340)
Change in cash and cash equivalents(58,328)(80,609)
Cash and cash equivalents at beginning of period248,367 485,919 
Cash and cash equivalents at end of period190,039 405,310 
See notes to condensed consolidated financial statements.

5


CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

Common StockAdditional paid-in capitalRetained earningsAccumulated other comprehensive (loss) incomeTreasury stockNoncontrolling interestsTotal
($000 omitted)
Six Months Ended June 30, 2023
Balance at December 31, 202227,483 296,861 1,091,816 (51,343)(2,666)8,114 1,370,265 
Net income attributable to Stewart— — 7,625 — — — 7,625 
Dividends on Common Stock ($0.90 per share)— — (24,983)— — — (24,983)
Stock-based compensation117 6,926 — — — — 7,043 
Stock repurchases(32)(1,321)— — — — (1,353)
Stock option and employee stock purchase plan exercises52 1,939 — — — — 1,991 
Change in net unrealized gains and losses on investments, net of taxes— — — 852 — — 852 
Reclassification adjustment for realized gains and losses on investments, net of taxes— — — 313 — — 313 
Foreign currency translation adjustments, net of taxes— — — 4,852 — — 4,852 
Net income attributable to noncontrolling interests— — — — — 6,939 6,939 
Distributions to noncontrolling interests— — — — — (7,549)(7,549)
Balance at June 30, 202327,620 304,405 1,074,458 (45,326)(2,666)7,504 1,365,995 
Six Months Ended June 30, 2022
Balance at December 31, 202127,246 282,376 974,800 253 (2,666)12,726 1,294,735 
Net income attributable to Stewart— — 119,557 — — — 119,557 
Dividends on Common Stock ($0.75 per share)— — (20,569)— — — (20,569)
Stock-based compensation126 6,314 — — — — 6,440 
Stock repurchases(37)(2,514)— — — — (2,551)
Stock option and employee stock purchase plan exercises55 2,658 — — — — 2,713 
Change in net unrealized gains and losses on investments, net of taxes— — — (32,592)— — (32,592)
Reclassification adjustment for realized gains and losses on investments, net of taxes, net of taxes— — — (302)— — (302)
Foreign currency translation adjustments, net of taxes— — — (7,561)— — (7,561)
Net income attributable to noncontrolling interests— — — — — 9,240 9,240 
Distributions to noncontrolling interests— — — — — (9,483)(9,483)
Net effect of other changes in ownership— — — — — 194 194 
Balance at June 30, 202227,390 288,834 1,073,788 (40,202)(2,666)12,677 1,359,821 
See notes to condensed consolidated financial statements.

6

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

Common StockAdditional paid-in capitalRetained earningsAccumulated other comprehensive lossTreasury stockNoncontrolling interestsTotal
($000 omitted)
Three Months Ended June 30, 2023
Balance at March 31, 202327,598 300,225 1,071,320 (44,036)(2,666)7,311 1,359,752 
Net income attributable to Stewart— — 15,815 — — — 15,815 
Dividends on Common Stock ($0.45 per share)— — (12,677)— — — (12,677)
Stock-based compensation24 4,260 — — — — 4,284 
Stock repurchases(2)(80)— — — — (82)
Change in net unrealized gains and losses on investments, net of taxes— — — (5,765)— — (5,765)
Reclassification adjustment for realized gains and losses on investments, net of taxes— — — 221 — — 221 
Foreign currency translation adjustments, net of taxes— — — 4,254 — — 4,254 
Net income attributable to noncontrolling interests— — — — — 3,967 3,967 
Distributions to noncontrolling interests— — — — — (3,774)(3,774)
Balance at June 30, 202327,620 304,405 1,074,458 (45,326)(2,666)7,504 1,365,995 
Three Months Ended June 30, 2022
Balance at March 31, 202227,367 284,524 1,022,456 (19,210)(2,666)12,317 1,324,788 
Net income attributable to Stewart— — 61,660 — — — 61,660 
Dividends on Common Stock ($0.38 per share)— — (10,328)— — — (10,328)
Stock-based compensation18 4,183 — — — — 4,201 
Stock repurchases(1)(88)— — — — (89)
Stock option exercises6 215 221 
Change in net unrealized gains and losses on investments, net of taxes— — — (12,694)— — (12,694)
Reclassification adjustment for realized gains and losses on investments, net of taxes, net of taxes— — — (117)— — (117)
Foreign currency translation adjustments, net of taxes— — — (8,181)— — (8,181)
Net income attributable to noncontrolling interests— — — — — 5,225 5,225 
Distributions to noncontrolling interests— — — — — (4,915)(4,915)
Net effect of other changes in ownership— — — — — 50 50 
Balance at June 30, 202227,390 288,834 1,073,788 (40,202)(2,666)12,677 1,359,821 
See notes to condensed consolidated financial statements.

7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1

Interim financial statements. The financial information contained in this report for the three and ninesix months ended SeptemberJune 30, 20172023 and 2016,2022, and as of SeptemberJune 30, 2017,2023, is unaudited. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2022 filed with the Securities and Exchange Commission on February 28, 2023 (2022 Form 10-K).

A. Management’s responsibility. The accompanying interim financial statements were prepared by management, who is responsible for their integrity and objectivity. These financial statements have been prepared in conformity with U.S.the United States (U.S.) generally accepted accounting principles (GAAP), including management’s best judgments and estimates. In the opinion of management, all adjustments necessary for a fair presentation of this information for all interim periods, consisting only of normal recurring accruals, have been made. The Company’s results of operations for interim periods are not necessarily indicative of results for a full year and actual results could differ.

B. Consolidation. The condensed consolidated financial statements include all subsidiaries in which the Company owns more than 50% voting rights in electing directors. All significant intercompany amounts and transactions have been eliminated and provisions have been made for noncontrolling interests. Unconsolidated investees, in which the Company typically owns from 20% throughto 50% of the equity,voting stock, are accounted for byusing the equity method.
C. Reclassifications. Certain amounts in the 2016 interim financial statements have been reclassified for comparative purposes. Net income attributable to Stewart, as previously reported, was not affected.
D.C. Restrictions on cash and investments. The Company maintains investments in accordance with certain statutory requirements for the funding of statutory premium reserves. Statutory reserve funds which approximated $475.4 million and $485.4 million at September 30, 2017 and December 31, 2016, respectively, 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 currentcurrent operating cash flow. Included in investments in debt and equity securities are statutory reserve funds of approximately $519.5 million and $544.0 million at June 30, 2023 and December 31, 2022, respectively. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $26.9$10.2 million and $13.9and $8.6 million at SeptemberJune 30, 20172023 and December 31, 2016,2022, respectively. 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. These funds are not available for any other purpose. In the event that insurance regulators adjust the determination of the statutory premium reserves of the Company’s title insurers, these restricted funds as well as statutory surplus would correspondingly increase or decrease.
E. Recent accounting pronouncements. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which eliminated the transaction-specific and industry-specific revenue recognition guidance under current GAAP and replaced it with a principles-based approach for determining revenue recognition. The new guidance sets forth the steps to be followed to recognize revenue: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 will be effective on annual and interim periods beginning after December 15, 2017. The Company expects to adopt ASU 2014-09 on January 1, 2018 using the cumulative effect method of adoption. Management is in the process of documenting and completing its analysis of the impact of the new revenue guidance, specifically its evaluation of certain fee arrangement contracts. Based on management's preliminary assessment, the Company has determined that ASU 2014-09, other than certain additional footnote disclosures, will not have a material impact on our accounting or reporting for revenue streams related to direct and agency title insurance premiums, escrow and other title-related fees, and investment income. These revenue streams account for approximately 94% of the Company's total revenues. The Company expects to complete its evaluation and documentation of the impact of the new revenue standard during the fourth quarter 2017.


In February 2016, the FASB issued ASU 2016-02, Leases, which updated the current guidance related to leases. The new guidance includes the requirement for the lessee to recognize in the balance sheet a liability equal to the present value of contractual lease payments with terms of more than twelve months and a right-of-use asset representing the right to use the underlying asset for the lease term. Disclosures will be required by lessees to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. This ASU is effective for annual and interim periods beginning after December 15, 2018 and early adoption is allowed. The Company expects to adopt ASU 2016-02 on January 1, 2019 and recognize and measure leases in the financial statements at the beginning of the earliest period presented using a modified retrospective approach. The Company expects the adoption of ASU 2016-02 will result in material increases in the assets and liabilities reported on its consolidated balance sheets. As disclosed in Note 16 of the Company's 2016 Form 10-K, the undiscounted future minimum lease payments with terms of more than twelve months were approximately $168.2 million as of December 31, 2016. The Company expects the new ASU will likely have an insignificant impact on its consolidated statements of operations and cash flows. The Company is currently evaluating certain lease management and accounting systems and plans to begin system implementation and testing on or before the first quarter 2018.

NOTE 2

Revenues. The Company's operating revenues, summarized by type, are as follows:
 Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
 2023202220232022
($000 omitted)
Title insurance premiums:
Direct170,677 231,721 301,494 437,283 
Agency208,755 409,931 457,775 814,076 
Escrow fees42,323 61,497 75,250 117,289 
Real estate solutions and abstract fees89,811 104,213 166,971 213,015 
Other revenues26,570 41,877 56,127 112,784 
538,136 849,239 1,057,617 1,694,447 



8

NOTE 3

Investments in debt and equity securities available-for-sale.securities. As of June 30, 2023 and December 31, 2022, the net unrealized investment gains relating to investments in equity securities held were $13.6 million and $19.2 million, respectively (refer to Note 5).

The amortized costs and fair values follow:of investments in debt securities are as follows:
 June 30, 2023December 31, 2022
 
Amortized
costs
Fair
values
Amortized
costs
Fair
values
 ($000 omitted)
Municipal26,273 25,949 30,104 29,835 
Corporate249,888 233,200 272,362 254,316 
Foreign326,937 311,354 315,184 299,137 
U.S. Treasury Bonds32,149 31,424 29,078 28,646 
635,247 601,927 646,728 611,934 
 September 30, 2017 December 31, 2016
 
Amortized
costs
 
Fair
values
 
Amortized
costs
 
Fair
values
 ($000 omitted)
Debt securities:       
Municipal71,849
 73,355
 72,284
 72,432
Corporate334,143
 342,760
 338,365
 343,047
Foreign215,664
 214,567
 165,735
 167,027
U.S. Treasury Bonds12,837
 12,721
 12,795
 12,613
Equity securities29,900
 36,279
 30,255
 36,384
 664,393
 679,682
 619,434
 631,503

Foreign debt securities consist of Canadian government, provincial and corporate bonds, United Kingdom treasury and corporate bonds, and Mexican government bonds. Equity securities consist of common stocks and master limited partnership interests.

Gross unrealized gains and losses were:on investments in debt securities are as follows:
 June 30, 2023December 31, 2022
 GainsLossesGainsLosses
 ($000 omitted)
Municipal1 325 3 272 
Corporate433 17,121 489 18,535 
Foreign293 15,876 165 16,212 
U.S. Treasury Bonds12 737 21 453 
739 34,059 678 35,472 
 September 30, 2017 December 31, 2016
 Gains Losses Gains Losses
 ($000 omitted)
Debt securities:       
Municipal1,697
 191
 723
 575
Corporate8,879
 262
 6,871
 2,189
Foreign2,327
 3,424
 2,912
 1,620
U.S. Treasury Bonds12
 128
 4
 186
Equity securities6,744
 365
 6,800
 671
 19,659
 4,370
 17,310
 5,241


Debt securities as of SeptemberJune 30, 20172023 mature, according to their contractual terms, as follows (actual maturities may differ due to call or prepayment rights):
Amortized
costs
Fair
values
 ($000 omitted)
In one year or less90,765 88,947 
After one year through five years357,970 337,352 
After five years through ten years171,140 162,291 
After ten years15,372 13,337 
635,247 601,927 

9
 
Amortized
costs
 
Fair
values
 ($000 omitted)
In one year or less31,735
 31,933
After one year through five years304,284
 309,497
After five years through ten years233,228
 234,022
After ten years65,246
 67,951
 634,493
 643,403


Gross unrealized losses on investments in debt securities and the fair values of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at SeptemberJune 30, 2017,2023, were:
 Less than 12 monthsMore than 12 monthsTotal
 LossesFair valuesLossesFair valuesLossesFair values
 ($000 omitted)
Municipal191 20,666 134 4,033 325 24,699 
Corporate1,990 50,979 15,131 165,730 17,121 216,709 
Foreign1,335 84,849 14,541 206,510 15,876 291,359 
U.S. Treasury Bonds656 28,748 81 1,278 737 30,026 
4,172 185,242 29,887 377,551 34,059 562,793 
 Less than 12 months More than 12 months Total
 Losses Fair values Losses Fair values Losses Fair values
 ($000 omitted)
Debt securities:       
Municipal55
 3,771
 136
 4,353
 191
 8,124
Corporate206
 39,708
 56
 1,638
 262
 41,346
Foreign3,191
 131,992
 233
 5,071
 3,424
 137,063
U.S. Treasury Bonds128
 8,293
 —
 —
 128
 8,293
Equity securities255
 6,350
 110
 568
 365
 6,918
 3,835
 190,114
 535
 11,630
 4,370
 201,744

The number of specific debt investment holdings held in an unrealized loss position as of SeptemberJune 30, 20172023 was 145, 15356. Of these securities, of which216 were in unrealized loss positions for more than 12 months. Total gross unrealized investment losses at June 30, 2023 slightly improved compared to December 31, 2022 primarily due to slower interest rate increases during 2023. Since the Company does not intend to sell and will more-likely-than-notmore likely than not maintain each investment security until its maturity or anticipated recovery in value, and no significant credit risk is deemed to exist, these investments are not considered as other-than-temporarily impaired.
Gross unrealized losses on investments and the fair values of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2016, were:
 Less than 12 months More than 12 months Total
 Losses Fair values Losses Fair values Losses Fair values
 ($000 omitted)
Debt securities:       
Municipal575
 32,038
 —
 —
 575
 32,038
Corporate2,189
 119,965
 —
 —
 2,189
 119,965
Foreign1,427
 70,012
 193
 3,160
 1,620
 73,172
U.S. Treasury Bonds186
 11,847
 —
 —
 186
 11,847
Equity securities424
 5,950
 247
 2,250
 671
 8,200
 4,801
 239,812
 440
 5,410
 5,241
 245,222
credit-impaired. The Company believes its investment portfolio is diversified and expects no material loss to result from the failure to perform by issuers of the debt securities it holds. Investments made by the Company are not collateralized.


Gross unrealized losses on investments in debt securities and the fair values of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2022, were:
 Less than 12 monthsMore than 12 monthsTotal
 LossesFair valuesLossesFair valuesLossesFair values
 ($000 omitted)
Municipal262 27,491 10 67 272 27,558 
Corporate12,935 193,239 5,600 44,342 18,535 237,581 
Foreign7,608 186,221 8,604 101,294 16,212 287,515 
U.S. Treasury Bonds413 25,102 40 445 453 25,547 
21,218 432,053 14,254 146,148 35,472 578,201 


NOTE 34

Fair value measurements. The Fair Value Measurements and Disclosures Topic (Topic 820) of the FASB Accounting Standards Codification (ASC) defines fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal, or most advantageous, market for the asset or liability in an orderly transaction between market participants at the measurement date. Topic 820 establishesUnder U.S. GAAP, there is a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs when possible.

The three levels of inputs used to measure fair value are as follows:
 
•Level 1 – quoted prices in active markets for identical assets or liabilities;
•Level 2 – observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data; and
•Level 3 – unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

10

As of SeptemberJune 30, 2017,2023, financial instruments measured at fair value on a recurring basis are summarized below:
Level 1Level 2
Fair value
measurements
 ($000 omitted)
Investments in securities:
Debt securities:
Municipal— 25,949 25,949 
Corporate— 233,200 233,200 
Foreign— 311,354 311,354 
U.S. Treasury Bonds— 31,424 31,424 
Equity securities78,226 — 78,226 
78,226 601,927 680,153 
 Level 1 Level 2 
Fair value
measurements
 ($000 omitted)
Investments available-for-sale:     
Debt securities:     
Municipal—
 73,355
 73,355
Corporate—
 342,760
 342,760
Foreign—
 214,567
 214,567
U.S. Treasury Bonds—
 12,721
 12,721
Equity securities36,279
 —
 36,279
 36,279
 643,403
 679,682

As of December 31, 2016,2022, financial instruments measured at fair value on a recurring basis are summarized below:
Level 1Level 2
Fair value
measurements
 ($000 omitted)
Investments in securities:
Debt securities:
Municipal— 29,835 29,835 
Corporate— 254,316 254,316 
Foreign— 299,137 299,137 
U.S. Treasury Bonds— 28,646 28,646 
Equity securities98,149 — 98,149 
98,149 611,934 710,083 
 Level 1 Level 2 
Fair value
measurements
 ($000 omitted)
Investments available-for-sale:     
Debt securities:     
Municipal—
 72,432
 72,432
Corporate—
 343,047
 343,047
Foreign—
 167,027
 167,027
U.S. Treasury Bonds—
 12,613
 12,613
Equity securities36,384
 —
 36,384
 36,384
 595,119
 631,503


As of SeptemberJune 30, 2017,2023 and December 31, 2022, Level 1 financial instruments consist of equity securities. Level 2 financial instruments consist of municipal, governmental, and corporate bonds, both U.S. and foreign. In accordance with the Company’s policies and guidelines which incorporate relevant statutory requirements, the Company’s third-party registered investment manager invests only in securities rated as investment grade or higher by the major rating services, where observable valuation inputs are significant. All municipal, foreign,The fair value of the Company's investments in debt and U.S. Treasury bonds are valuedequity securities is primarily determined using a third-party pricing service andprovider. The third-party pricing service provider calculates the corporate bonds are valuedfair values using theboth market approach which includes three to ten inputs from relevant market sources, including Financial Industry Regulatory Authority’s (FINRA) Trade Reporting and Compliance Engine (TRACE) and independent broker/dealer quotes, bids and offerings,model valuation methods, as well as other relevant market data, such as securitiespricing information obtained from brokers, dealers and custodians. Management ensures the reasonableness of the third-party service valuations by comparing them with similar characteristics (i.e. sector, rating, maturity, etc.). Broker/dealer quotes, bids and offerings mentioned above are gathered (typically three to ten) and a consensus risk premium spread (credit spread) over risk-free Treasury yields is developedpricing information from the inputs obtained, which is then used to calculate the resulting fair value.Company's investment manager.
There were no transfers of investments between levels during the nine months ended September 30, 2017 and 2016.


NOTE 45
Investment income
Net realized and other gainsunrealized gains. Realized and losses. Gross realized investment and otherunrealized gains and losses are detailed as follows:
 Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
 2023202220232022
 ($000 omitted)
Realized gains278 1,683 339 3,277 
Realized losses(3,430)(3,671)(4,177)(3,839)
Net unrealized investment gains (losses) recognized on equity securities still held at end of period2,047 (9,917)955 (7,258)
(1,105)(11,905)(2,883)(7,820)

11

 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
 ($000 omitted)
Realized gains548
 3,301
 1,392
 8,377
Realized losses(1,595) (48) (2,828) (3,671)
 (1,047) 3,253
 (1,436) 4,706
Expenses assignable to investment income were insignificant. There were no significant investments as of September 30, 2017 that did not produce incomeRealized losses during the year.
For the ninesecond quarter and first six months ended September 30, 2017, investment and other losses – netof 2023 included $0.8a $3.2 million of net realizedcontingent receivable loss due to an increase in the fair valueadjustment resulting from a previous disposition of a contingent consideration liability related tobusiness, while realized gains and losses during the second quarter and first six months of 2022 included a prior acquisition and $0.5loss of $3.6 million of net realized loss from the salesame disposition of subsidiaries. For the nine months ended September 30, 2016, investments and other gains - net included $1.6 million of net realized gains due to a net decrease in the fair values of contingent consideration liabilities associated with prior year acquisitions, $1.2 million of realized gain on a cost-basis investment transaction and $2.9 million of net realized gains from the sale of investments available-for-sale,business, partially offset by $1.3a $1.0 million of office closure costs.gain from an acquisition contingent liability adjustment.


Investment gains and losses recognized related to investments in equity securities are as follows:
Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
2023202220232022
($000 omitted)
Net investment gains (losses) recognized on equity securities during the period1,988 (9,366)232 (6,795)
Less: Net realized (losses) gains on equity securities sold during the period(59)551 (723)463 
Net unrealized investment gains (losses) recognized on equity securities still held at end of period2,047 (9,917)955 (7,258)

Proceeds from sales of investments available-for-salein securities are as follows:
 Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
 2023202220232022
 ($000 omitted)
Proceeds from sales of debt securities7,433 11,002 14,879 28,282 
Proceeds from sales of equity securities5,283 117 24,609 487 
Total proceeds from sales of investments in securities12,716 11,119 39,488 28,769 
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
 ($000 omitted)
Proceeds from sales of investments available-for-sale5,878
 16,839
 55,533
 49,666





NOTE 56
Goodwill and other intangibles.
Goodwill. The summary of changes in goodwill is as follows.follows:
TitleReal Estate SolutionsCorporate and OtherConsolidated Total
($000 omitted)
Balances at December 31, 2022720,478 352,504 — 1,072,982 
Acquisitions4,674 18,000 — 22,674 
Purchase accounting adjustments(20,978)— — (20,978)
Balances at June 30, 2023704,174 370,504 — 1,074,678 
 Title Ancillary Services and Corporate Consolidated Total
   ($000 omitted)
  
Balances at December 31, 2016211,365
 5,729
 217,094
Acquisitions14,419
 —
 14,419
Disposals(85) —
 (85)
Balances at September 30, 2017225,699
 5,729
 231,428

During the second quarter 2017,first six months of 2023, goodwill recorded in the Company acquired certainreal estate solutions and title businesses primarily funded by borrowings on the Company's unsecured line of credit. The Company completed its purchase price allocationssegments was related to these businesses during the third quarter 2017acquisitions of a financial and as a result, increased its goodwill related to thepersonal information online verification services provider and several title segment by a total of $14.4 million, which is deductible in full for income tax purposes over a period of 15 years. Also, in connection with the acquisitions, the Company identified and recorded $2.6 million of other intangibles,offices, respectively, while title purchase accounting adjustments were primarily related to acquired software to be amortized over 5 years from the dateprovisional recognition of acquisition.
The Company evaluates goodwill for impairment annually based on information as of June 30 of the current year or more frequently if circumstances suggest that an impairment may exist. The Company performed the annual goodwill impairment analysis during the quarter ended September 30, 2017, utilizing the qualitative assessment method for the direct operations, agency operations, international operations and ancillary services reporting units. Based on the qualitative analysis performed, the Company concluded that the goodwillintangible assets (customer relationships) related to all reporting units was not impaired.recent acquisitions.

12

NOTE 67

Estimated title losses. A summary of estimated title losses for the ninesix months ended SeptemberJune 30 is as follows:
20232022
 ($000 omitted)
Balances at January 1549,448 549,614 
Provisions:
Current year36,773 55,760 
Previous policy years703 (141)
Total provisions37,476 55,619 
Payments, net of recoveries:
Current year(6,990)(8,927)
Previous policy years(57,954)(29,790)
Total payments, net of recoveries(64,944)(38,717)
Effects of changes in foreign currency exchange rates2,161 (3,835)
Balances at June 30524,141 562,681 
Loss ratios as a percentage of title operating revenues:
Current year provisions4.0 %3.8 %
Total provisions4.1 %3.8 %
 2017 2016
 ($000 omitted)
Balances at January 1462,572
 462,622
Provisions:   
Current year69,067
 73,380
Previous policy years1,524
 (6,768)
Total provisions70,591
 66,612
Payments, net of recoveries:   
Current year(10,403) (13,938)
Previous policy years(53,491) (57,410)
Total payments, net of recoveries(63,894) (71,348)
Effects of changes in foreign currency exchange rates6,576
 2,814
Balances at September 30475,845
 460,700
Loss ratios as a percentage of title operating revenues:   
Current year provisions5.0% 5.3%
Total provisions5.1% 4.8%

There were no significant adjustments to the loss provisioning rates or large claim reserves during the nine months ended September 30, 2017. In 2016, the Company decreased its loss provisioning rates and reserves related to certain existing large claims due to continued favorable policy loss experience. As a result, a $5.4 million net policy loss reserve reduction was recorded during the nine months ended September 30, 2016.


NOTE 78

Share-based payments. During the first nine months As part of 2017 and 2016, the Company grantedits incentive compensation program for executives and senior management shares of restricted common stock, consistingemployees, the Company provides share-based awards, which usually include a combination of time-based shares, whichrestricted stock units, performance-based restricted stock units and stock options. Each restricted stock unit represents a contractual right to receive a share of the Company's common stock. The time-based units generally vest on each of the first three anniversaries of the grant date, andwhile the performance-based shares, whichunits vest upon achievement of certain financial objectives and an employee service requirement over a period of approximately three years. The stock options vest on each of the first three anniversaries of the grant date at a rate of 20%, 30% and 50%, chronologically, and expire 10 years after the grant date. Each vested stock option can be exercised to purchase a share of the Company's common stock at the strike price set by the Company at the grant date. The compensation expense associated with the share-based awards is calculated based on the fair value of the related award and recognized over the periodcorresponding vesting period.

During the first six months of three years. The2023 and 2022, the Company granted time-based and performance-based restricted stock units with an aggregate grant-date fair values of these awards in 2017 and 2016 were $5.1$12.0 million (120,000 shares(293,000 units with an average grant price per shareunit of $42.55)$41.01) and $3.9$11.2 million (105,000 shares(174,000 units with an average grant price per shareunit of $37.33), respectively. Awards were made pursuant to the Company’s employee incentive compensation plans and the compensation expense associated with restricted stock awards is recognized over the corresponding vesting period.$64.15).
Additionally, during the second quarters 2017 and 2016, the Company granted its board of directors, as a component of annual director retainer compensation, 13,000 and 16,300 shares, respectively, of common stock, which vested immediately. The aggregate fair values of these director awards at the grant dates in 2017 and 2016 were both $0.6 million.

NOTE 89

Earnings per share. The Company’s basic Basic earnings per share (EPS) attributable to Stewart is calculated by dividing net income attributable to Stewart by the weighted-average number of shares of Common Stock outstanding during the reporting periods. Outstanding shares of Common Stock granted to employees that are not yet vested (restricted shares) are excluded from the calculation of the weighted-average number of shares outstanding for calculating basic EPS. To calculate diluted EPS, the number of shares is adjusted forto include the effects of any dilutive shares. The treasury stock method is used to calculate the dilutive number of additional shares related to the Company’s long term incentivethat would have been outstanding if restricted units and shares were vested and stock option plans.options were exercised. In periods of loss, dilutive shares are excluded from the calculation of the diluted EPS and diluted EPS is computed in the same manner as basic EPS.
13


The calculation of the basic and diluted EPS is as follows:
 Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
 2023202220232022
($000 omitted, except per share)
Numerator:
Net income attributable to Stewart15,815 61,660 7,625 119,557 
Denominator (000):
Basic average shares outstanding27,255 27,018 27,228 26,989 
Average number of dilutive shares relating to options43 154 52 226 
Average number of dilutive shares relating to grants of restricted units and shares146 121 122 162 
Diluted average shares outstanding27,444 27,293 27,402 27,377 
Basic earnings per share attributable to Stewart0.58 2.28 0.28 4.43 
Diluted earnings per share attributable to Stewart0.58 2.26 0.28 4.37 
 Three Months Ended 
 September 30,		Nine Months Ended 
 September 30,
 2017201620172016
 ($000 omitted, except per share)
Numerator:    
Net income attributable to Stewart10,944
26,375
33,601
38,778
Less: Cash paid on Class B Common Shares conversion (a)—
—
—
(12,000)
Net income available to common shareholders10,944
26,375
33,601
26,778
     
Denominator (000):    
Basic average shares outstanding23,448
23,371
23,442
23,362
Average number of dilutive shares relating to options—
1
—
1
Average number of dilutive shares relating to grants of restricted shares116
239
129
233
Diluted average shares outstanding23,564
23,611
23,571
23,596
     
Basic earnings per share attributable to Stewart0.47
1.13
1.43
1.15
     
Diluted earnings per share attributable to Stewart0.46
1.12
1.43
1.13



(a) - During 2016, the Company paid $12.0 million as part of the consideration related to the exchange agreement with the holders of the Class B Common Stock. In accordance with the ASC 260, Earnings Per Share, the $12.0 million payment was treated in a manner similar to the treatment of dividends on preferred stock for the purpose of calculating EPS. Accordingly, the $12.0 million payment was deducted from the 2016 net income to arrive at the net income for calculating basic and diluted EPS.



NOTE 910

Contingent liabilities and commitments. In the ordinary course of business, the Company guarantees the third-party indebtedness of certain of its consolidated subsidiaries. As of SeptemberJune 30, 2017,2023, the maximum potential future payments on the guarantees are not more than the related notes payable recorded in the condensed consolidated balance sheets. The Company also guarantees the indebtedness related to lease obligations of certain of its consolidated subsidiaries. The maximum future obligations arising from these lease-related guaranteesguarantees are not more than the Company’s future minimum lease payments.obligations, as presented on the condensed consolidated balance sheets, plus lease operating expenses. As of SeptemberJune 30, 2017,2023, the Company also had unused letters of credit aggregating $5.6$4.9 million relatedrelated to workers’ compensation and other insurance. The Company does not expect to make any payments on these guarantees.



NOTE 1011

Regulatory and legal developments. The Company is subject to claims and lawsuits arising in the ordinary course of its business, most of which involve disputed policy claims. In some of these lawsuits, the plaintiff seeksplaintiffs seek exemplary or treble damages in excess of policy limits. The Company does not expect that any of these ordinary course proceedings will have a material adverse effect on its consolidated financial condition or results of operations. In addition, along with the other major title insurance companies, the Company is party to class action lawsuits concerning the title insurance industry. The Company believes that it has adequate reserves for the various litigation matters and contingencies discussedreferred to in this paragraph and that the likely resolution of these matters will not materially affect its consolidated financial condition or results of operations.


The Company is subject to administrative actions and litigation relatingnon-ordinary course of business claims or lawsuits from time to time.To the basisextent the Company is currently the subject of these types of lawsuits, the Company has determined either that a loss is not reasonably possible or that the estimated loss or range of loss, if any, will not have a material adverse effect on which premium taxes are paid in certain states. the Company’s financial condition, results of operations or cash flows.

Additionally, the Company occasionally receives from time to time various other inquiries from governmental regulators concerning practices in the insurance industry. Many of these practices do not concern title insurance. To the extent the Company is in receipt of such inquiries, it believes that, where appropriate, it has adequately reserved for these matters and does not anticipate that the outcome of these inquiries will materially affect its consolidated financial condition or results of operations.


14

The Company is subject to various other administrative actions, investigations and inquiries into its business conduct in certain of the states in which it operates. While the Company cannot predict the outcome of the various regulatory and administrative matters, it believes that it has adequately reserved for these matters and does not anticipate that the outcome of any of these matters will materially affect its consolidated financial condition or results of operations.


NOTE 1112

Segment information. The Company reports twohas three reportable operating segments: the title segment, the real estate solutions segment, and ancillary servicesthe corporate and corporate.other segment. The title segment provides services needed to transfer title to property in a real estate transaction and includes services such as searching, abstracting, examining, closing and insuring the condition of the title to the property. In addition, the title segment includes centralized title services, home and personal insurance services, and Internal Revenue Code Section 1031 tax-deferred exchanges.exchanges, and digital customer engagement platform services. The ancillaryreal estate solutions segment supports the real estate industry and primarily includes credit and real estate information services, valuation management services, online notarization and closing services, and search services. The corporate and other segment historically provided appraisal and valuation services, loan file review, quality control services, government services, document management, recording and call center-related services offered to large mortgage lenders and servicers, mortgage brokers and mortgage investors. Beginning in 2017, the principal offerings of ancillary services are appraisal and valuation services. Also included in the ancillary services and corporate segment are expensesis primarily comprised of the parent holding company and certain other enterprise-wide overhead costs, net of centralized administrative services costs allocated to respective operating businesses.departments.


Selected statement of income information related to these segments is as follows:
 Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
 2023202220232022
 ($000 omitted)
Title segment:
Revenues480,825 759,035 942,468 1,488,393 
Depreciation and amortization8,883 7,489 16,986 13,631 
Income before taxes and noncontrolling interest35,459 93,595 34,794 176,375 
Real estate solutions segment:
Revenues71,411 82,864 134,035 172,255 
Depreciation and amortization6,280 6,381 12,581 13,177 
Income before taxes3,282 6,095 4,648 12,886 
Corporate and other segment:
Revenues (net realized losses)(3,082)2,174 (3,047)36,340 
Depreciation and amortization365 418 867 1,229 
Loss before taxes(13,567)(12,911)(24,424)(22,870)
Consolidated Stewart:
Revenues549,154 844,073 1,073,456 1,696,988 
Depreciation and amortization15,528 14,288 30,434 28,037 
Income before taxes and noncontrolling interest25,174 86,779 15,018 166,391 
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
 ($000 omitted)
Title segment:       
Revenues488,612
 529,816
 1,384,857
 1,410,863
Depreciation and amortization5,534
 5,120
 16,081
 15,642
Income before taxes and noncontrolling interest24,610
 50,308
 76,354
 100,984
        
Ancillary services and corporate segment:       
Revenues12,957
 23,394
 45,204
 70,012
Depreciation and amortization1,044
 1,962
 3,316
 7,086
Loss before taxes and noncontrolling interest(6,013) (11,500) (18,742) (35,977)
        
Consolidated Stewart:       
Revenues501,569
 553,210
 1,430,061
 1,480,875
Depreciation and amortization6,578
 7,082
 19,397
 22,728
Income before taxes and noncontrolling interest18,597
 38,808
 57,612
 65,007


The Company does not provide asset information by reportable operating segment as it does not routinely evaluate the asset position by segment. During 2022, the corporate and other segment included results of a real estate brokerage company that was sold during the second quarter 2022.


Revenues
15

Total revenues generated in the United States and all international operations are as follows:
 Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
 2023202220232022
 ($000 omitted)
United States514,699 791,447 1,012,228 1,600,651 
International34,455 52,626 61,228 96,337 
549,154 844,073 1,073,456 1,696,988 
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
 ($000 omitted)
United States464,111
 518,204
 1,335,129
 1,394,228
International37,458
 35,006
 94,932
 86,647
 501,569
 553,210
 1,430,061
 1,480,875


NOTE 1213
Other comprehensive income (loss). income. Changes in the balances of each component of other comprehensive (loss) income (loss) and the related tax effects are as follows:
Three Months Ended 
 June 30, 2023		Three Months Ended 
 June 30, 2022
Before-Tax AmountTax Expense (Benefit)Net-of-Tax AmountBefore-Tax AmountTax Expense (Benefit)Net-of-Tax Amount
($000 omitted)
Net unrealized gains and losses on investments:
Change in net unrealized gains and losses on investments(7,298)(1,533)(5,765)(16,068)(3,374)(12,694)
Reclassification adjustments for realized gains and losses on investments280 59 221 (148)(31)(117)
(7,018)(1,474)(5,544)(16,216)(3,405)(12,811)
Foreign currency translation adjustments5,102 848 4,254 (9,329)(1,148)(8,181)
Other comprehensive loss(1,916)(626)(1,290)(25,545)(4,553)(20,992)

Six Months Ended June 30, 2023Six Months Ended June 30, 2022
Before-Tax AmountTax Expense (Benefit)Net-of-Tax AmountBefore-Tax AmountTax Expense (Benefit)Net-of-Tax Amount
($000 omitted)
Net unrealized gains and losses on investments:
Change in net unrealized gains and losses on investments1,078 226 852 (41,256)(8,664)(32,592)
Reclassification adjustment for realized gains and losses on investments396 83 313 (382)(80)(302)
1,474 309 1,165 (41,638)(8,744)(32,894)
Foreign currency translation adjustments5,812 960 4,852 (8,353)(792)(7,561)
Other comprehensive income (loss)7,286 1,269 6,017 (49,991)(9,536)(40,455)


16
 Three Months Ended 
 September 30, 2017		 Three Months Ended 
 September 30, 2016
 Before-Tax AmountTax Expense (Benefit)Net-of-Tax Amount Before-Tax AmountTax Expense (Benefit)Net-of-Tax Amount
 ($000 omitted) ($000 omitted)
Unrealized gains on investments - net:       
Change in net unrealized gains on investments95
32
63
 (405)(142)(263)
Less: reclassification adjustment for net gains included in net income(508)(177)(331) (1,330)(465)(865)
 Net unrealized gains(413)(145)(268) (1,735)(607)(1,128)
        
Foreign currency translation adjustments5,817
1,676
4,141
 (2,363)(555)(1,808)
        
Other comprehensive income (loss)5,404
1,531
3,873
 (4,098)(1,162)(2,936)
        
 Nine Months Ended 
 September 30, 2017		 Nine Months Ended 
 September 30, 2016
 Before-Tax AmountTax Expense (Benefit)Net-of-Tax Amount Before-Tax AmountTax Expense (Benefit)Net-of-Tax Amount
 ($000 omitted) ($000 omitted)
Unrealized gains on investments - net:       
Change in net unrealized gains on investments4,438
1,553
2,885
 18,012
6,304
11,708
Less: reclassification adjustment for net gains included in net income(1,218)(426)(792) (1,606)(562)(1,044)
Net unrealized gains3,220
1,127
2,093
 16,406
5,742
10,664
        
Foreign currency translation adjustments11,831
3,161
8,670
 1,581
1,797
(216)
        
Other comprehensive income15,051
4,288
10,763
 17,987
7,539
10,448


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


MANAGEMENT’S OVERVIEW


Second quarter 2023 overview.We reported net income attributable to Stewart of $10.9$15.8 million ($0.460.58 per diluted share) for the thirdsecond quarter 20172023, compared to a net income attributable to Stewart of $26.4$61.7 million ($1.122.26 per diluted share) for the thirdsecond quarter 2016.2022. Pretax income before noncontrolling interests for the thirdsecond quarter 20172023 was $18.6$25.2 million compared to pretax income before noncontrolling interests of $38.8$86.8 million for the third quarter 2016.

Total revenues for the third quarter 2017 were $501.6 million compared to total revenues of $553.2 million for the third quarter 2016, a decline of 9%. Total operating revenues for the third quarter 2017 were $498.0 million as compared to total operating revenues of $545.4 million for the third quarter 2016, also a decline of 9%. Our third quarter title revenues were adversely affected by business disruptions caused by hurricanes Harvey and Irma, which had a combined impact of approximately $4 million, and the departure of certain retail staff as described in ourprior year quarter. The second quarter earnings release2023 results included $1.1 million of pretax net realized and quarterly report on Form 10-Q. While the revenue impactunrealized losses, primarily composed of the hurricanes was relatively minor, the impact to pretax income was more significant; there was no appreciable offsetting cost reduction as processing costs were largely incurred pre-closing, and we maintained the employeesa contingent receivable loss adjustment resulting from a previous disposition of the affected offices in order to quickly reopen them. On the positive side, our international operations delivered another strong quarter and revenues from the Title365 acquisition and recent new hiresa business, partially offset by net unrealized gains on fair value changes of equity securities investments, while the retail revenue decline. We successfully recruited strong, new revenue-generating associates, which have offset $20-$25second quarter 2022 results included $11.9 million of the $70 million in departed annual revenuespretax net realized and unrealized losses, primarily related to staff departures. The recent acquisitionnet unrealized losses on fair value changes of Title365 generated new business, which we expect to result in $40-$50 million in annual revenue. These combined actions are expected to fully replace the departed revenue by 2018’s selling season, and our ongoing recruiting efforts and targeted acquisitions should further bolster our top line.equity securities investments.

We have announced that John Killea, chief legal officer & chief compliance officer, has been appointed to the additional role of president of Stewart. His deep experience and intimate knowledge of our company uniquely positions him to expand his responsibilities as we execute on our strategic priorities. In addition, we are very pleased to announce that John Magness has joined Stewart as chief corporate development officer. John brings nearly 35 years of leadership experience in the title and real estate industry and will play a key role in ensuring Stewart continues to provide the high quality services our customers have come to expect. Most recently, John served as president of Old Republic Title Companies, Inc.

We also announced that the Board of Directors has previously formed a strategic committee which has been pursuing the full range of strategic alternatives available to Stewart. These alternatives include, among other things, business combinations, the sale of the Company, and continuing to execute on Stewart’s standalone business plan. The Company has retained and will be assisted in the strategic review process by Citi as financial advisor and Davis Polk & Wardwell LLP as legal advisor. The Board plans to complete this process in an expeditious manner. There can be no assurance that this process will result in a particular outcome. We do not intend to provide updates on its review until it deems further disclosure is appropriate or required.


Summary results of the title segment are as follows ($ in millions, except pretax margin):
For the Three Months
Ended June 30
 20232022% Change
Operating revenues466.7 761.1 (39)%
Investment income12.1 6.7 80 %
Net realized and unrealized (losses) gains2.0 (8.8)123 %
Pretax income35.5 93.6 (62)%
Pretax margin7.4 %12.3 %
 
For the Three Months
Ended September 30,
 2017 2016 % Change
      
Total revenues488.6
 529.8
 (8)%
Pretax income24.6
 50.3
 (51)%
Pretax margin5.0% 9.5% 



Pretax income duringTitle segment operating revenues for the thirdsecond quarter 2017 declined $25.72023 decreased $294.3 million, or 39%, compared to thirdthe second quarter 2016,2022, as a result of transaction volume declines in our direct and agency title businesses, while total title revenues declined $41.2 million. In addition to the factors mentioned above, title revenues declined due tosegment operating expenses decreased $220.1 million, or 33%, primarily driven by lower commercial revenues, fewer purchase orders closed, and a significant decline in refinancing orders industry-wide. Includedrevenues. Agency retention expenses in the segment’s results forsecond quarter 2023 decreased $168.1 million, or 49%, in line with $201.2 million, or 49%, lower gross agency revenues, while the third quarter 2017 are approximately $1.4 million of Title365 integration costs. Also includedaverage independent agency remittance rate in the thirdsecond quarter 2017 results were $1.3 million of realized losses,2023 slightly improved to 17.7% compared to $2.1 million of realized gains17.1% in the thirdprior year quarter, 2016.primarily as a result of geographic mix.



Non-commercial domestic revenue, as shown under the Results of Operations - Title revenues section, includes revenues from purchase transactionsTotal employee costs and centralized title operations (processing primarily refinancing and default title orders), which decreased 11% and 32%, respectively,other operating expenses in the thirdsecond quarter 20172023 decreased $47.2 million, or 16%, compared to the prior year quarter. As a percentage of operating revenues, these expenses were 52.4% in the second quarter as a result of declines2023 compared to 38.3% in purchase and refinancing orders closed. Commercial revenues declined 10% fromthe second quarter 2022, primarily due to lower second quarter 2023 revenues. Title loss expense decreased $6.6 million, or 25%, in the second quarter 2023 compared to the prior year quarter primarily as a result of lower commercial orders closed, fewer large transactions thantitle revenues. As a percentage of title revenues, title loss expense was 4.2% in the second quarter 2023 compared to 3.5% in the second quarter 2022, which benefited from last year’s favorable claims experience.

The title segment’s net realized and unrealized gains in the second quarter 2023 were primarily driven by $2.0 million of unrealized gains from fair value changes of equity securities investments, while the segment’s net realized and unrealized losses in the prior year quarter and reduced average fee per file. Total international title revenues increased 7%were primarily due to $9.9 million of net unrealized losses on fair value changes of equity securities investments, partially offset by a $1.0 million gain related to an acquisition contingent liability adjustment. Investment income in the thirdsecond quarter 20172023 increased $5.4 million compared to the prior yearsecond quarter mainly2022, primarily due to transaction volume growthhigher interest income resulting from our United Kingdom operationsearned interest from eligible escrow balances and a stronger Canadian dollar relative to the U.S. dollar. Revenues from independent agency operationsincreased interest rates and higher short-term investment balances in the thirdsecond quarter 2017 declined 5% compared to the third quarter 2016.2023. The independent agency remittance rate decreased to 17.5%segment's pretax income included $3.3 million and $2.5 million of acquisition intangible asset amortization and other expenses in the third quarter 2017 from 18.0% in the third quarter 2016 mainly due to geographic mix of our agency business (reduced revenues in higher-remitting statessecond quarters 2023 and increases in lower-remitting states); third quarter 2017 revenues from independent agencies, net of retention, decreased 7% from the prior year quarter. Given our current independent agent geographic footprint, we expect the remittance rate to remain in the mid-to-high 17% range over the near term.2022, respectively.





17

Summary results of the ancillary services and corporatereal estate solutions segment are as follows ($ in millions):
For the Three Months
Ended June 30
 20232022% Change
Operating revenues71.4 82.9 (14)%
Pretax income3.3 6.1 (46)%
Pretax margin4.6 %7.4 %
 For the Three Months
Ended September 30,
 2017 2016 % Change
      
Total revenues13.0
 23.4
 (45)%
Pretax loss(6.0) (11.5) 48 %


The decline in the segment’s operating revenues in the thirdsecond quarter 20172023 decreased $11.5 million, or 14%, compared to the prior yearsecond quarter was2022, primarily due to lower transaction volumes resulting from the divestiturescontinuing elevated interest rate environment. Consistent with the revenue decline, combined employee costs and other operating expenses in the second quarter 2023 decreased $8.5 million, or 12%. The segment's pretax income included acquisition intangible asset amortization expenses of $5.8 million and $6.1 million in the loan file review, quality control servicessecond quarters 2023 and government services lines of business at2022, respectively, and a $1.2 million state sales tax assessment expense in the end of 2016. The segment’ssecond quarter 2023 related to an acquisition.

In regard to the corporate and other segment, pretax results improvedfor the second quarter 2023 included net realized losses of $3.1 million, primarily driven by a contingent receivable loss adjustment resulting from a previous disposition of a business, while second quarter 2022 results included net realized losses of $3.2 million primarily resulting from the same disposition of a business. Net expenses attributable to a $6.0corporate operations during the second quarter 2023 were $10.5 million pretax loss, compared to a pretax loss of $11.5$10.2 million in the prior year quarter. The segment’s results for the third quarter 2017 and 2016 included approximately $6 million and $8 million, respectively, of expenses attributable to parent company and corporate operations.




CRITICAL ACCOUNTING ESTIMATES

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 ninesix months ended SeptemberJune 30, 2017,2023, we made no material changes to our critical accounting estimates as previously disclosed in Management’s Discussion and Analysis in the Company’s Annual Report on2022 Form 10-K for the year ended December 31, 2016.10-K.

Operations. Our primary business is title insurance and settlement-related services. We close transactions and issue title policies on homes, commercial and other real properties located in all 50 states, the District of Columbia and international markets through policy-issuing offices, agencies and centralized title services centers. Our ancillaryreal estate solutions operations include credit and real estate information services, valuation management services, online notarization and closing services, and search services. The corporate and other segment includes our parent holding company expenses and certain enterprise-wide overhead costs, along with our remaining ancillary services operations, principally appraisal and valuation services.other businesses not related to title or real estate solutions operations.

Factors affecting revenues. The principal factors that contribute to changes in our operating revenues for our title and ancillary services and corporate segments include:
mortgage •interest rates;
•availability of mortgage loans;
•number and average value of mortgage loan originations;
•ability of potential purchasers to qualify for loans;
•inventory of existing homes available for sale;
•ratio of purchase transactions compared with refinance transactions;
•ratio of closed orders to open orders;
•home prices;
•consumer confidence, including employment trends;
•demand by buyers;
number of households;
•premium rates;
•foreign currency exchange rates;
•market share;
18

•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 new integrated disclosure requirements;
•acquisitions or divestitures of businesses;
•volume of distressed property transactions; and
•seasonality and/or weather.weather; and

•outbreaks of diseases and related quarantine orders and restrictions on travel, trade and business operations.

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. As an overall guideline, a 5% change in median home prices results in an approximate 3.6% change in title premiums. Home price changes may override the seasonal nature of the title insurance business. Historically, our first quarter is the least active in terms of title insurance revenues as home buying is generally depressed during winter months. Our second and third quarters are typically the most active as the summer is the traditional home buying season, and while commercial transaction closings are skewed to the end of the year, individually large commercial transactions can occur any time of the year. On average, refinance title premium rates are 60% of the premium rates for a similarly priced sale transaction.




RESULTS OF OPERATIONS

Comparisons of our results of operations for the three and ninesix months ended SeptemberJune 30, 20172023 with the three and nine months ended September 30, 2016corresponding periods in the prior year are set forth below. Factors contributing to fluctuations in the results of operations are presented in the order of their monetary significance, and we have quantified, when necessary, significant changes. Segment results are included in the discussions and, when relevant, are discussed separately.

Our statements on home sales and loan activity are based on published U.S. industry data from sources including Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors® (NAR), and the Mortgage Bankers Association and Freddie Mac.U.S. Census Bureau as of June 30, 2023. We also use information from our direct operations.

Operating environment. Actualenvironment. According to NAR, existing home sales (seasonally-adjusted basis) in the third quarter 2017 declined approximately 2% from the third quarter 2016. September 2017 existing home sales totaled 465,000, which was down 4%June 2023 were 4.2 million units, a decrease of 19% from a year ago and also down 13%3% from August 2017. AccordingMay 2023, primarily due to NAR,the current elevated mortgage interest rate environment. Housing inventory continued to be low and was 14% lower home listings, fast-risingin June 2023 compared to June 2022, while home prices and the temporary effect of hurricanes Harvey and Irma were the likely causes of lowerhave steadily increased. The existing home salesmedian price in June 2023 was $410,200, which was the third quarter 2017. September 2017second highest since 1999, when NAR began tracking the data. The June 2023 median and average home prices both rose approximately 4%price was 3% higher than May 2023, but 1% lower compared to September 2016 prices. September 2017$413,800 observed in June 2022 which was the all-time high. With new residential construction, U.S. housing starts improved 6% from(seasonally-adjusted) in June 2023 were 8% lower compared to both June 2022 and May 2023, while newly-issued building permits in June 2023 were 15% and 4% lower compared to a year ago but were down 5% sequentiallyand May 2023, respectively.

With regard to lending activity, single family mortgage originations during the second quarter 2023 decreased 34% to $450 billion compared to the second quarter 2022, resulting from August 2017. Newly issued building permits in September 2017 declined 5% sequentially from August 201758% and 4% from a year ago. According25% lower refinancing and purchase transactions, respectively, according to Fannie Mae one-to-four family residential lending declinedand MBA (averaged). During the second quarter 2023, the average 30-year fixed interest rate was 6.5% compared to $465 billion in5.3% during the thirdsecond quarter 2017 from $589 billion in2022. For the third quarter 2016, driven by a decrease of approximately $137 billion, or 47%year 2023, Fannie Mae and MBA expect the interest rate to average 6.3%, in refinance originations, partially offset by a $13 billion, or 4%, increase in purchase lending. Onhigher than the 5.4% average refinance title premium rates are 60% of the premium rates for a similarly priced sale transaction. Per Fannie Mae's forecast,observed during 2022, while total originations asfor the year 2023 are expected to decline 27% compared to the third quarter 2017, will decrease 8% to $427 billion in the fourth quarter 2017.2022.

19

Title revenues.Direct title revenue information is presented below:
 Three Months Ended June 30,Six Months Ended June 30,
 20232022 Change% Chg20232022 Change% Chg
 ($ in millions)($ in millions)
Non-commercial
Domestic184.5 234.4 (49.9)(21)%334.9 454.8 (119.9)(26)%
International25.9 41.2 (15.3)(37)%45.0 72.6 (27.6)(38)%
210.4 275.6 (65.2)(24)%379.9 527.4 (147.5)(28)%
Commercial:
Domestic41.5 67.1 (25.6)(38)%74.2 123.5 (49.3)(40)%
International6.1 8.4 (2.3)(27)%11.8 18.1 (6.3)(35)%
47.6 75.5 (27.9)(37)%86.0 141.6 (55.6)(39)%
Total direct title revenues258.0 351.1 (93.1)(27)%465.9 669.0 (203.1)(30)%
 
Three Months Ended
September 30,
 
Nine Months Ended
 September 30,
 2017 2016 % Change 2017 2016 % Change
 ($ in millions)   ($ in millions)  
Non-commercial           
Domestic141.7
 162.2
 (13)% 417.8
 458.1
 (9)%
International30.4
 29.3
 4 % 75.9
 68.6
 11 %
 172.1
 191.5
 (10)% 493.7
 526.7
 (6)%
Commercial:           
Domestic39.2
 45.2
 (13)% 127.4
 123.8
 3 %
International5.5
 4.4
 25 % 14.8
 13.6
 9 %
 44.7
 49.6
 (10)% 142.2
 137.4
 3 %
Total direct title revenues216.8
 241.1
 (10)% 635.9
 664.1
 (4)%

Revenues from direct title operations, which include residential, commercial, international and centralized title services transactions,Non-commercial revenues decreased $24.3 million, or 10%, and $28.2 million, or 4%, in the thirdsecond quarter and first ninesix months of 2017,2023, compared to the same periods in 2022, primarily resulting from lower residential purchase and refinancing transactions influenced by the rising mortgage interest rates during 2023. Combined purchase and refinancing orders closed declined 31% and 41% in the second quarter and first six months of 2023, respectively, compared to the same periods in 2016, due to a decline2022, while average residential fee per file in revenues from our residential, commercial and centralized title operations transactions, partially offset by revenue increases from our international operations. Our residential revenues, which make up about 60% of our total direct revenues, decreased $15.6 million, or 11%, and $28.7 million, or 7%, inboth the thirdsecond quarter and first ninesix months of 2017,2023 increased to $3,300 (or 11% and 19%, respectively), primarily due to the higher mix of purchase transactions.

Commercial revenues in the second quarter and first six months of 2023 were lower compared to the same periods in 2022, as a result of lower transaction volume and average transaction size. Domestic commercial orders closed decreased 30% and 22% in the second quarter and first six months of 2023, respectively, while average domestic commercial fee per file decreased 12% to $11,600 and 23% to $9,900 in the second quarter and first six months of 2023, respectively, compared to the same periods in 2016,2022. Total international revenues in the second quarter and first six months of 2023 declined by $17.6 million, or 35%, and $33.9 million, or 37%, respectively, primarily due to managementlower transaction volumes in our Canadian operations compared to the same periods in 2022.

Orders information for the three and staff departures within certain officessix months ended June 30 is as follows:
Three Months Ended June 30,Six Months Ended June 30,
20232022Change% Chg20232022Change% Chg
Opened Orders:
Commercial3,294 5,530 (2,236)(40)%7,136 11,572 (4,436)(38)%
Purchase58,637 72,084 (13,447)(19)%108,106 140,582 (32,476)(23)%
Refinance18,642 24,953 (6,311)(25)%34,771 65,527 (30,756)(47)%
Other4,611 1,079 3,532 327 %9,032 2,721 6,311 232 %
Total85,184 103,646 (18,462)(18)%159,045 220,402 (61,357)(28)%
Closed Orders:
Commercial3,585 5,132 (1,547)(30)%7,509 9,563 (2,054)(21)%
Purchase43,082 55,354 (12,272)(22)%74,710 102,680 (27,970)(27)%
Refinance10,674 22,677 (12,003)(53)%20,287 57,164 (36,877)(65)%
Other2,905 1,719 1,186 69 %5,639 3,359 2,280 68 %
Total60,246 84,882 (24,636)(29)%108,145 172,766 (64,621)(37)%


Gross revenues from independent agency operations in the second quarter and first six months of 2023 decreased $201.2 million, or 49%, and $356.3 million, or 44%, respectively, compared to the same periods in 2022, primarily influenced by lower commercial and residential market activity. Agency revenues, net of retention, declined $33.1 million, or 47%, and $62.8 million, or 44%, in the second quarter and first six months of 2023 compared to the same periods in 2022, generally in line with the change in gross agency revenues. Refer further to the "Retention by agencies" discussion under Expenses below.
20


Real estate solutions and other revenues. Real estate solutions and other revenues are comprised of revenues generated by our real estate solutions segment and, for 2022, by a real estate brokerage company which we sold during the second quarter 2017, as well as the impact of hurricanes Harvey and Irma on Texas and Florida, respectively. We estimate the revenue impact of these items to be approximately $25 million, with the majority attributed to the staff attrition. Revenues from our centralized title operations, which primarily process refinancing and default title orders,2022. Real estate solutions revenues decreased $4.9$11.5 million, or 32%14%, and $11.6$38.3 million, or 24%22%, in the thirdsecond quarter and first ninesix months of 2017 compared to the third quarter and first nine months of 2016, respectively,2023, primarily due to the decreased refinancing ordersmarket activity resulting from the continued elevated interest rate environment. The disposed real estate brokerage company generated revenues of $5.3 million and lower demand for default services, which are in line with industry trends.

Our direct operations include local offices and international operations, and we generate commercial revenues both domestically and internationally. U.S. commercial revenues during the third quarter 2017 decreased $6.0$39.2 million or 13%, compared to the third quarter 2016, primarily due to a decline in commercial orders and the average revenue fee per file; while revenues increased $3.6 million, or 3%, in the first nine months of 2017 compared with the same period in 2016, mainly due to certain large transactions during the second quarter 2017, which resulted in an improvement in our commercial revenue fee per file, partially offsetand first six months of 2022, respectively.

Investment income. Investment income increased by a decline in commercial orders. Total international revenues increased $2.2$5.4 million, or 7%80%, and $8.5$8.4 million, or 10%81%, in the thirdsecond quarter and first ninesix months of 20172023, respectively, compared to the third quarter and first nine months of 2016, respectively,same periods in 2022, primarily as a result of higher interest income resulting from earned interest from eligible escrow balances and increased transaction volume frominterest rates and higher short-term investments balances in 2023.

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

Expenses. An analysis of expenses is shown below:
 Three Months Ended June 30,Six Months Ended June 30,
 20232022Change*% Chg20232022Change*% Chg
 ($ in millions)($ in millions)
Amounts retained by agencies171.8 339.8 (168.0)(49 %)377.5 671.0 (293.5)(44 %)
As a % of agency revenues82.3 %82.9 %82.5 %82.4 %
Employee costs182.7 210.2 (27.6)(13 %)353.2 415.2 (62.0)(15 %)
As a % of operating revenues33.9 %24.8 %33.4 %24.5 %
Other operating expenses129.3 162.0 (32.7)(20 %)250.1 351.8 (101.7)(29 %)
As a % of operating revenues24.0 %19.1 %23.6 %20.8 %
Title losses and related claims19.8 26.4 (6.6)(25 %)37.5 55.6 (18.1)(33 %)
As a % of title revenues4.2 %3.5 %4.1 %3.8 %
*Amounts change may not foot due to rounding.

Retention by agencies. Amounts retained by title agencies are based on agreements between agencies and our Canadatitle underwriters. Amounts retained by independent agencies, as a percentage of revenues generated by them, averaged 82.3% and United Kingdom operations. Direct revenues constituted 45% and 46% of our total title revenues82.5% in the third quarters 2017 and 2016, respectively, and 46% and 48% during the first nine months of 2017 and 2016, respectively.

Orders information for the thirdsecond quarter and first ninesix months ended September 30 is as follows:
 Three Months Ended Nine Months Ended
 20172016Change% Change 20172016Change% Change
Opened Orders:         
Commercial10,685
11,866
(1,181)(10)% 32,923
35,334
(2,411)(7)%
Purchase59,679
63,115
(3,436)(5)% 188,744
193,625
(4,881)(3)%
Refinance27,155
42,851
(15,696)(37)% 74,794
113,819
(39,025)(34)%
Other4,565
3,423
1,142
33 % 13,584
10,032
3,552
35 %
Total102,084
121,255
(19,171)(16)% 310,045
352,810
(42,765)(12)%
          
Closed Orders:         
Commercial7,643
8,149
(506)(6)% 23,136
24,344
(1,208)(5)%
Purchase48,432
52,937
(4,505)(9)% 140,996
145,829
(4,833)(3)%
Refinance17,965
28,361
(10,396)(37)% 53,471
78,304
(24,833)(32)%
Other2,872
4,086
(1,214)(30)% 10,205
12,536
(2,331)(19)%
Total76,912
93,533
(16,621)(18)% 227,808
261,013
(33,205)(13)%

Gross revenuesof 2023, respectively, compared to 82.9% and 82.4% in the same periods in 2022. The average retention percentage may vary from independentperiod to period due to the geographical mix of agency operations, decreased $13.7 million,the volume of title revenues and, in some states, laws or 5%, in the third quarter 2017, comparedregulations. Due to the third quarter 2016, primarilyvariety of such laws or regulations, as well as competitive factors, the average retention rate can differ significantly from state to state. In addition, a resulthigh proportion of revenue decreasesour independent agencies are in the states of Massachusetts, New York, Texas, Florida (there likely was some independent agency revenue impact from the hurricanes in Texas and Florida) and New Jersey, partially offset by increases in the states of California, Illinois and Ohio. As a result of decreased agency revenues, the third quarter 2017 net agency revenues (net of agency retention) decreased $3.6 million, or 7%, compared to the prior year quarter. Gross agency revenues for the first nine months of 2017 increased $4.0 million, or approximately 1%, compared to the first nine months of 2016, primarily due to revenue increases in the states of California, Minnesota, Michigan and Ohio, partially offset by revenue decreases in the states of New York, Massachusetts and Florida. Net of agencywith retention agency revenues in the first nine months of 2017, compared to the same period in 2016, decreased $2.3 million, or 2%, primarily due to revenue increases from generally lower remitting states, while revenues from higher remitting states declined. rates greater than 80%. We continue to focus on increasing profit margins in every state, increasing premium revenue in states where remittance rates are above 20%, 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.
Ancillary services revenues. Ancillary services operating revenues decreased $9.4 million, or 43%, and $20.2 million, or 31%,
21

Employee costs. Consolidated employee costs in the thirdsecond quarter and first ninesix months of 20172023 decreased $27.6 million, or 13%, and $62.0 million, or 15%, respectively, compared to the same periods in 2016, respectively, primarily due to our divestitures of the loan file review, quality control services and government services lines of business at the end of 2016. Our exit of the delinquent loan servicing operations, completed in the first quarter 2016, also contributed to the revenue decline during the first nine months of 2017 compared to the first nine months of 2016. These divestitures primarily resulted in the pretax results improvement of $4.7 million, or 101%, and $12.4 million, or 90%, in the thirdsecond quarter and first ninesix months of 2017 compared2022, primarily resulting from lower salaries expenses, incentive compensation and temporary labor costs related to lower volumes and 11% and 10% lower average employee counts in the same periods in 2016 for ancillary services.

Investment income. Investment income during the thirdsecond quarter and first ninesix months of 2017 was comparable2023, respectively. Compared to the investment income during the samecorresponding periods in 2016.

Investment and other (losses) gains - net. Investment and other losses - netthe prior year, employee costs for the third quarter 2017 included net realized losses of $0.6 million from the sale of investments available-for-sale and $0.3 million from the sale of subsidiaries; while investment and other gains - net for the third quarter 2016 included net realized gains of $2.0 million from the sale of investments available-for-sale and $1.2 million on a cost-basis investment transaction.

For the nine months ended September 30, 2017, investment and other losses – net included $0.8 million of net realized loss due to an increase in the fair value of a contingent consideration liability related to a prior acquisition and $0.5 million of net realized loss from the sale of subsidiaries. For the nine months ended September 30, 2016, investments and other gains - net included $1.6 million of net realized gains due to a net decrease in the fair values of contingent consideration liabilities associated with prior year acquisitions, $1.2 million of realized gain on a cost-basis investment transaction and $2.9 million of net realized gains from the sale of investments available-for-sale, partially offset by $1.3 million of office closure costs.

Expenses. An analysis of expenses is shown below:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 2017
 2016
 % Change 2017 2016 % Change
 ($ in millions)    ($ in millions)  
            
Amounts retained by agencies221.5
 231.6
 (4)% 605.2
 598.9
 1 %
As a % of agency revenues82.5% 82.0%   82.2% 81.8%  
Employee costs140.1
 154.5
 (9)% 419.2
 457.2
 (8)%
As a % of operating revenues28.1% 28.3%   29.6% 31.3%  
Other operating expenses88.5
 94.0
 (6)% 255.6
 268.2
 (5)%
As a % of operating revenues17.8% 17.2%   18.0% 18.3%  
Title losses and related claims25.4
 26.4
 (4)% 70.6
 66.6
 6 %
As a % of title revenues5.2% 5.0% 

 5.1% 4.8% 


Retention by agencies. Amounts retained by title agencies are based on agreements between agencies and our title underwriters. Average independent agency remittance rates (i.e., inverse of retention rates, representing the amount paid to us relative to the amount collected by agents at the closing of the transaction) in the thirdsecond quarter and first ninesix months of 2017 were 17.5%2023 in the title segment decreased $27.9 million, or 14%, and 17.8%$58.6 million, or 15%, respectively, as compared to 18.0% and 18.2%while employee costs in the same periods in 2016. The decrease in the agency remittance rates during the third quarterreal estate solutions segment decreased $0.3 million, or 2%, and first nine months of 2017 was primarily due to revenue declines from higher remitting states (with average remittance rates of 19.8% and 19.4%$1.3 million, or 5%, respectively) accompanied by revenue increases from lower remitting states (with average remittance rates of 15.0% and 16.0%, respectively). We continue to evaluate independent agency relationships with a focus on states that provide higher remittance rates. The average retention percentage may vary from quarter-to-quarter due to the geographic 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%. Consequently, we expect our average annual remittance rate to remain in the mid-to-high 17% range over the near term.respectively.


Employee costs.Total employee costs, decreased $14.5 million, or 9%, and $38.0 million, or 8%, in the third quarter and first nine months of 2017 compared to the same periods in 2016, as a result of a reduction in employee counts tied to volume declines, primarily in our ancillary services and centralized title operations, management and staff departures in direct operations during the second quarter 2017, and ongoing cost management efforts. Average employee counts for both the third quarter and first nine months of 2017 decreased approximately 7% and 8% from the third quarter and first nine months of 2016, respectively; as a percentage of total operating revenues, employee costs forwere higher at 33.9% and 33.4% in the thirdsecond quarter and first ninesix months of 2017 were 28.1% and 29.6%2023, respectively, compared to 28.3%24.8% and 31.3%, respectively, for24.5% in the same periods in 2016.


Employee costs in the title segment decreased $5.2 million, or 4%, and $14.6 million, or 4%, in the third quarter and first nine months of 2017, respectively, compared to the same periods last year, largely due to decreased salaries and incentives as a result of reduced employee counts, primarily in direct title operations. These decreases in employee costs were partially offset as we have hired replacement management and employees in offices impacted by the previously discussed departures. In the ancillary services and corporate segment, employee costs decreased $9.3 million, or 55%, and $23.3 million, or 45%, in the third quarter and first nine months of 2017, respectively, compared to the same periods last year,2022, primarily as a result of the reductionlower revenues in average employee count resulting from the disposed lines2023. As of ancillary services businesses mentioned above.June 30, 2023, we had approximately 6,900 employees compared to approximately 7,700 and 7,100 employees as of June 30, 2022 and December 31, 2022, respectively.

Other operating expenses. Other operating expenses include costs that are primarily fixed in nature, costs that follow, to varying degrees, changes in transaction volumes and revenues (variable costs) and costs that fluctuate independently of revenues.revenues (independent costs). Costs that are primarily fixed in nature include attorney and professional fees, third-party-outsourcing provider fees, equipment rental, insurance, rent and other occupancy expenses, equipment rental, insurance, repairs and maintenance, technology costs, telephonetelecommunications and title plant expenses. Costs that follow,Variable costs include appraiser and service expenses related to varying degrees, changes in transaction volumes and revenues includereal estate solutions operations, outside search fees, attorney fee attorney splits, bad debt expenses, ancillary services cost of sales expenses,credit losses (on receivables), copy supplies, delivery fees, outside search fees, postage, premium taxes and title plant maintenance expenses. Costs that fluctuate independently of revenuesIndependent costs include general supplies, litigation defense, business promotion and marketing and travel.


Consolidated other operating expenses decreased $5.6in the second quarter and first six months of 2023 declined $32.7 million, or 6%20%, in the third quarter 2017and $101.7 million, or 29%, respectively, compared to the thirdsecond quarter 2016,and first six months of 2022, primarily due to a decrease in outside search fees resulting from reduced revenues from our ancillary search services, centralizeddecreased costs tied to lower title and commercial operations which are principal usersreal estate solutions revenues. Total variable costs in the second quarter and first six months of outside search services in generating revenues. Additionally, consolidated other operating expenses2023 decreased $12.6$25.7 million, or 5%26%, in the first nine months of 2017 compared to the same period last yearand $90.3 million, or 40%, respectively, primarily due to lower professionalappraisal and outside search expenses and premium taxes. Total costs that are primarily fixed in nature in the second quarter and first six months of 2023 decreased $5.0 million, or 10%, and $7.3 million, or 7%, respectively, primarily due to reduced outsourcing and insurance expenses, while independent costs decreased $2.0 million, or 13%, and $4.1 million, or 14%, respectively, primarily due to lower business promotion and marketing costs and bank fees insurance and litigation-related expenses. expense.

As a percentage of total operating revenues, consolidated other operating expenses were 17.8% and 18.0% forin the thirdsecond quarter and first ninesix months of 2017,2023 increased to 24.0% and 23.6%, respectively, as compared to 17.2%19.1% and 18.3%, respectively, for20.8% in the same periods in 2016. During the third quarter 2017, we incurred $1.4 million of integration expenses related to a recent acquisition, while during the third quarter 2016, we incurred $1.2 million of consulting costs related to shareholder activism. Additionally, during the first quarter 2016, we incurred other operating expenses of $3.6 million for a litigation-related accrual and $2.2 million of expenses associated2022, primarily with a life insurance settlement with a former Class B shareholder. Excluding these non-operating charges, other operating expenses as a percentage of operating revenues were 17.5% and 17.0% in the third quarters 2017 and 2016, respectively, and 17.9% for both the first nine months of 2017 and 2016.

Costs that follow, to varying degrees, changes in transaction volumes and revenues decreased $4.2 million, or 9%, and $2.0 million, or 2%, in the third quarter and first nine months of 2017, respectively, compared to the same periods in 2016, primarily as a result of reduced outside search fees driven mainly by decreased search revenues within the ancillary services and centralized title operations. Costs that fluctuate independently of revenues during the third quarter 2017 were comparable to those of the prior year quarter; while excluding the litigation-related accrual mentioned above, these costs decreased $0.8 million, or 3%, during first nine months of 2017 compared to the same period last year due to lower general supplies expenses. Excluding the charges mentioned above, costs that are fixedoperating revenues in nature decreased $1.3 million, or 4%, and $3.2 million, or 3%, in the third quarter and first nine months of 2017 compared to the same periods in 2016, mainly due to lower attorney and professional fees.2023.

Title losses. Provisions for title losses, as a percentagepercentage of title operating revenues, were 4.2% and including changes in estimates for certain large claims and escrow losses, were 5.2% and 5.0%4.1% for the third quarters 2017second quarter and 2016,first six months of 2023, respectively, compared to 3.5% and 5.1% and 4.8%3.8% for the second quarter and first ninesix months of 2017 and 2016,2022, respectively. The slightly higher title loss ratios in 2023 were primarily due to the favorable claims experience during 2022. Title loss expense in the thirdsecond quarter 2017, compared to the third quarter 2016,and first six months of 2023 decreased $0.9$6.6 million, or 4%25%, and $18.1 million, or 33%, respectively, primarily as a result of lower title revenues partially offset by an increase of our Canadian business' provisioning rate; while the title loss expense for the first nine months of 2017, compared to the same period in 2016, increased $4.0 million, or 6%, primarily as a result of a $5.4 million net policy loss reserve reduction recorded during the second quarter 2016 due to favorable policy loss experience. Excluding this net reserve reduction, title losses as a percentage of title revenues were 5.2% in the first nine months of 2016.2023. The title loss ratio in any given quarter can be significantly influenced by changes in new large claims incurred, escrow losses and adjustments to reserves for existing large claims.


Cash claim payments in the third quarter and first nine months of 2017 compared to the same periods in the prior year decreased 35% and 10%, respectively, primarily due to a decrease in payments for existing non-large claims.
22


We continue to manage and resolve large claims prudently and in keeping with our commitments to our policyholders.

The composition of title policy loss expense is as follows:
 Three Months Ended June 30,Six Months Ended June 30,
 20232022Change% Chg20232022Change% Chg
 ($ in millions)($ in millions)
Provisions – known claims:
Current year3.3 3.7 (0.4)(11)%5.8 8.4 (2.6)(31)%
Prior policy years24.5 16.7 7.8 47 %42.5 31.6 10.9 34 %
27.8 20.4 7.4 36 %48.3 40.0 8.3 21 %
Provisions – IBNR
Current year16.3 23.2 (6.9)(30)%31.0 47.3 (16.3)(34)%
Prior policy years0.2 (0.5)0.7 (140)%0.7 (0.1)0.8 (800)%
16.5 22.7 (6.2)(27)%31.7 47.2 (15.5)(33)%
Transferred from IBNR to known claims(24.5)(16.7)(7.8)47 %(42.5)(31.6)(10.9)34 %
Total provisions19.8 26.4 (6.6)(25)%37.5 55.6 (18.1)(33)%
 Three Months Ended September 30, 
Nine Months Ended
September 30,
 2017 2016 2017 2016
 ($ in millions) ($ in millions)
Provisions – known claims:       
Current year3.9
 5.3
 8.1
 13.1
Prior policy years13.6
 18.7
 48.3
 49.9
 17.5
 24.0
 56.4
 63.0
Provisions – IBNR       
Current year21.3
 21.0
 61.0
 60.3
Prior policy years0.2
 0.1
 1.5
 (6.8)
 21.5
 21.1
 62.5
 53.5
Transferred to known claims(13.6) (18.7) (48.3) (49.9)
Total provisions25.4
 26.4
 70.6
 66.6


Provisions for known claims arise primarily from prior policy years as claims are not typically reported until several years after policies are issued. Provisions - Incurred But Not Reported (IBNR) are estimates of claims expected to be incurred over the next 20 years; therefore, it is not unusual or unexpected to experience changes to those estimated provisions in both current and prior policy years as additional loss experience on policy years is obtained. This loss experience may result in changes to our estimate of total ultimate losses expected (i.e., the IBNR policy loss reserve). Current year provisions - IBNR are recorded on policies issued in the current year as a percentage of premiums earned (provisioning rate). As claims become known, provisions are reclassified from IBNR to known claims. Adjustments relating to large losses (those individually in excess of $1.0 million) may impact provisions either for known claims or for IBNR.


Current yearTotal known claims provisions decreased $1.4 million, or 26%, and $5.0 million, or 38%,provision increased in the thirdsecond quarter and first ninesix months of 2017,2023, compared to the same periods in 2022, as a result of increases to existing large and non-large claims related to prior policy years, while current year IBNR provisions in the second quarter and first six months of 2023 decreased, primarily due to lower title premiums. As a percentage of title operating revenues, provisions - IBNR for the current policy year were 3.5% and 3.4% in the second quarter and first six months of 2023, respectively, compared to 3.0% and 3.2% in the second quarter and first six months of 2022, respectively. Cash claim payments in the second quarter and first six months of 2023 increased $13.0 million, or 71%, and $26.2 million, or 68%, respectively, compared to the same periods in 2016, primarily as a result of lower claim amounts reported. Compared to the same periods in 2016, total provisions - IBNR was comparable in the third quarter 2017 and increased $9.0 million, or 17%, in the first nine months of 2017,2022, primarily due to a $5.4 million net policy loss reserve reduction recorded during the second quarter 2016 as a result of favorable loss experience. As a percentage of title operating revenues, provisions - IBNR for the current policy year increased to 4.4% in both the third quarter and first nine months of 2017 compared with 4.0% and 4.3%, respectively, in the same periods in 2016, primarily driven by lower knownpayments on existing large claims related to the currentprior policy year.years resulting from resolution of those claims in 2023. We continue to manage and resolve large claims prudently and in keeping with our commitments to our policyholders.


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 mortgage 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 expenseexpenses 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. During the third quarter and first nine months of 2017, we recorded approximately $1.5 million and $3.6 million, respectively, of policy loss reserves relating to escrow losses arising from mortgage fraud, as compared to $2.1 million and $4.0 million, respectively, during the same periods in 2016.



Total title policy loss reserve balances:balances are as follows:
June 30, 2023December 31, 2022
 ($ in millions)
Known claims70.5 87.3 
IBNR453.6 462.1 
Total estimated title losses524.1 549.4 

23
 September 30, 2017 
December 31,
2016
 ($ in millions)
Known claims69.0
 76.5
IBNR406.8
 386.1
Total estimated title losses475.8
 462.6


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. Title claims are generally incurred three to five years after policy issuance and theactual timing of estimated title loss payments may vary since claims, by their nature, are complex and paid over long periods of time. Based on these claims can significantly impacthistorical payment patterns, the balance of known claims. In many cases, claims may be open for several years before the resolution and payment of the claims occur; asoutstanding loss reserves are substantially 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.

Due to the inherent uncertainty in predicting future title policy losses, significant judgment is required by both our management and our third party actuaries in estimating reserves. As a consequence, our ultimate liability may be materially greater or less than current reserves and/or our third party actuary’s calculated estimates.


Depreciation and amortization. Depreciation and amortization expenses decreased to $6.6increased $1.2 million and $19.4$2.4 million (both 9%) in the thirdsecond quarter and first ninesix months of 2017,2023, respectively, compared to $7.1 million and $22.7 million in the same periods in 2016,2022, primarily due to increased depreciation expenses related to internal-use systems placed into operation starting in the lowersecond quarter 2022. Acquisition intangible amortization expenseexpenses for the second quarter and first six months of 2023 were $8.7 million and $17.0 million, respectively, compared to $8.5 million and $16.9 million, respectively, for the same periods in 2017 as a result of the fourth quarter 2016 disposal of certain intangible assets in connection with the divestitures of several lines of the ancillary services business, and the higher depreciation expense recorded in 2016 resulting from accelerated depreciation charges relating to our exit from the delinquent loan servicing operations, which was completed at the end of the first quarter 2016.2022.


Income taxes. Our effective tax rates, based on income before taxes and after deducting income attributable to noncontrolling interests, were 30.0%25% and 31.6%6% in the thirdsecond quarter and first ninesix months of 2017,2023, respectively, and 25.5% and 30.2% incompared to 24% for both the thirdsecond quarter and first ninesix months of 2016, respectively. Included in2022. Excluding discrete tax adjustments, primarily recorded during the first quarter 2023 and related to increased utilization of net operating loss carryforwards of prior years' acquisitions, the effective tax provision calculation are discrete net income tax benefits of $0.7 million and $2.1 million inrate for the third quarter and first ninesix months of 2017, respectively, principally relating to previously unrecognized research and development tax credits, compared with discrete net income tax benefits of $4.6 million and $4.5 million, respectively, in the same periods in 2016, principally relating to previously unrecognized research and development tax credits and a goodwill impairment true-up adjustment. Excluding the effect of the discrete tax items, our effective tax rates were 34.3% and 36.0% in the third quarter and first nine months of 2017, respectively, and 38.6% and 38.3% in the third quarter and first nine months of 2016, respectively.2023 would have been 26%.



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 SeptemberJune 30, 2017,2023, our total cash and investments, including amounts reserved pursuant to statutory requirements aggregated $871.9 million ($369.5 million, net of statutory reserves on cash and investments).$896.8 million. Of our total cash and investments at SeptemberJune 30, 2017, $605.32023, $497.5 million ($300.2244.2 million, net of statutory reserves) was held in the United States and the rest internationally principally Canada.(principally in Canada).


Cash held at the parent company totaled $0.2 million at September 30, 2017. As a holding company, the parent company is funded principally by cash from its subsidiariessubsidiaries' earnings in the form of dividends, operating and other administrative expense reimbursements and pursuant to intercompany tax sharing agreements. The expense reimbursements are paid in accordance with management agreements, approved by the Texas Department of Insurance (TDI), among us and our subsidiaries. In addition to funding operating expenses, cashCash held at the parent company and its unregulated subsidiaries (which totaled $42.3 million at June 30, 2023) is usedavailable for funding the parent company's operating expenses, interest payments on debt and dividend payments to common stockholders and for stock repurchases, if any. To the extent such uses exceed cash available, thestockholders. The parent company is dependent onalso receives distributions from Stewart Title Guaranty Company (Guaranty), its regulated title insurance underwriter, Stewart Title Guaranty Company (Guaranty).to meet cash requirements for acquisitions and other strategic investments.



A substantial majority of our consolidated cash and investments as of SeptemberJune 30, 20172023 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 may useuses 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 ancillary servicesreal estate solutions operations) for their operating and debt service needs.


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We maintain investments in accordance with certain statutory requirements in the states of domicile of our underwriters for the funding of statutory premium reserves. Statutory premium reserves, which approximated $475.4 million and $485.4 million at September 30, 2017 and December 31, 2016, respectively,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 $519.5 million and $544.0 million at June 30, 2023 and December 31, 2022, respectively. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $26.9$10.2 million and $13.9$8.6 million at SeptemberJune 30, 20172023 and December 31, 2016,2022, respectively. 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 SeptemberJune 30, 2017,2023, our known claims reserve totaled $69.0$70.5 million and our estimate of claims that may be reported in the future, under generally accepted accounting principles, totaled $406.8$453.6 million. In addition to this, we had cash and investments (excluding equity method investments) of $281.1$289.6 million, which are available for underwriter operations, including claims payments.payments, and acquisitions.


The ability of Guaranty to pay dividends to its parent is governed by Texas insurance law. The TDITexas Department of Insurance (TDI) must be notified of any dividend declared, and any dividend in excess of the greater of the statutory maximum ofnet operating income or 20% of surplus (approximately $102.0(which was approximately $158.1 million as of December 31, 2016)2022) 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 the liquidity, ratio, which could affect its ratings and competitive position, the amount of insurance it can write and its ability to pay future dividends. As of SeptemberDuring the six months ended June 30, 2017, our statutory liquidity ratio for our principal underwriter was 110%. Our internal objective is to maintain a ratio of at least 100%, as we believe that ratio is crucial to our competitiveness in the market2023 and our insurer financial strength ratings. On an ongoing basis, this ratio will largely guide our decisions as to frequency and magnitude of2022, no dividends fromhave been paid by Guaranty to the parent company. Further, depending on business and regulatory conditions, we may in the future need to retain cash in Guaranty or even raise cash in the capital markets to contribute to it in order to maintain its ratings or statutory capital position. Such a requirement could be the result of investment losses, reserve charges, adverse economic environment operating conditions or changes in interpretation of statutory accounting requirements by regulators. No dividend was paid by Guaranty to its parent during the nine months ended September 30, 2017 and 2016.


As the parent company conducts no operations apart from its wholly-owned subsidiaries, the discussion below focuses on consolidated cash flows.
 Six Months Ended June 30,
 20232022
 ($ in millions)
Net cash (used) provided by operating activities(16.0)118.2 
Net cash used by investing activities(7.3)(111.1)
Net cash used by financing activities(35.7)(84.3)
 For the Nine Months
Ended September 30,
 2017 2016
 (dollars in millions)
Net cash provided by operating activities48.0
 64.0
Net cash used by investing activities(66.4) (60.3)
Net cash used by financing activities(2.6) (22.8)

Operating activities. Our principal sources of cash from operations are premiums on title policies and revenue from title service-related transactions, ancillary servicesreal 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.



CashNet cash used by operations in the first six months of 2023 was $16.0 million compared to net cash provided by operations was $48.0of $118.2 million in the first nine months of 2017 compared to $64.0 million for the same period in 2016. The decrease in the cash flows from operations was2022, primarily due to thedriven by lower net income generatedand higher claims payments during the third quarter 2017, higher payments on accounts payable and an increase in accounts receivable related to certain business units, partially offset by lower claim payments.

2023. Although our business is labor intensive, we are focused on a cost-effective, scalable business model which includes utilization of technology, centralized back and middle office functions and business process outsourcing. Our approach allows us to adjust more easily to seasonal and cyclical fluctuations in transaction volumes. 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 which will resultand improving operating margins in improved margins.our direct title and real estate solutions operations. Our plans to improve margins also include further outsourcing, additional automation of manual processes, and further consolidation of our various systems and production operations.operations, and full integration of acquisitions. We are currently investingcontinue to invest in the technology necessary to accomplish these goals.


Investing activities. CashNet cash used by investing activities wasis primarily driven by proceeds from matured and sold investments, purchases of investments, capital expenditures and acquisition of subsidiaries, offset bybusinesses. During the first six months of 2023, total proceeds from matured and sold investments. Total proceeds from available-for-salesecurities investments sold and matured were $89.4$94.7 million, and $75.2compared to $52.3 million while cashduring the first six months of 2022. Cash used for purchases of available-for-salesecurities investments approximated $125.4was $55.5 million during the first six months of 2023 compared to $117.9 million during the same period in 2022.

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We used $22.4 million and $122.1$23.3 million of net cash for acquisitions in the title and real estate solutions segments during the first ninesix months of 20172023 and 2016, respectively. Our purchases2022, respectively, while we received $6.6 million during the first six months of short-term investments, net2022 from the sale of sales, aggregated $1.2a subsidiary. We used $15.5 million and $0.4 million for the first nine months of 2017 and 2016, respectively.

During 2017, we used $17.8$26.2 million of cash for acquisitions of new subsidiaries, while purchases of property and equipment were $12.4 million and $13.6 million forduring the first ninesix months of 20172023 and 2016,2022, respectively. 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 $138.6$445.0 million and $672.4 million,$1.37 billion, respectively, as of SeptemberJune 30, 2017. Of2023. During the totalfirst six months of 2023 and 2022, payments on notes payable activity during the first nine months of 2017 and 2016, proceeds of $32.0$5.7 million and $32.0$42.9 million, respectively, and paymentsnotes payable additions of $16.0$3.5 million and $27.6$5.7 million, respectively, were related to short-term loan agreements in connection with our Section 1031 tax-deferred property exchange (Section 1031) business. Also during the first nine months of 2017 and 2016, we drew $16.0 million and $20.0 million, respectively, from

At June 30, 2023, our $125.0 million line of credit facility. At September 30, 2017, the outstanding balance of the line of creditfacility was $108.9 million,fully available, while the remaining balance of the line of credit available for use was $13.6 million, net of an unused $2.5 million letter of credit. Ourour debt-to-equity ratio at September 30, 2017,and debt-to-capitalization ratios, excluding our Section 1031 notes, waswere approximately 17.4%33% and 25%, below the 20% we have set as our unofficial internal limit on leverage.

respectively. During the first ninesix months of 2017 and 2016,2023, we declared and paid total dividends of $0.90$24.5 million ($0.90 per common share, which aggregated $21.1 million and $20.8 million, respectively. As previously disclosed in our 2016 Form 10-K, we paid $12.0 million in cash as part of the consideration in exchange for the retirement of the outstanding Class B Common Stock shares in relationshare), compared to the Class B Exchange Agreement approved by our stockholders during the second quarter 2016.

Effect of changes in foreign currency exchange rates. The effect of changes in foreign currency exchange rates on our cash and cash equivalents on the consolidated statements of cash flows was a net increase of $4.0 million and $1.8 milliontotal dividends paid in the first nine monthssame period in 2022 of 2017 and 2016, respectively. Our principal foreign operating unit is in Canada, and, on average, the value of the Canadian dollar relative to the U.S. dollar appreciated during the nine months ended September 30, 2017 and 2016.$20.3 million ($0.75 per common share).

***********


We believe we have sufficient liquidity and capital resources to meet the cash needs of our ongoing operations.operations, including consideration of the current economic and real estate environment created by the higher 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 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.


Contingent liabilities and commitments. See discussion of contingent liabilities and commitments in Note 910 to the condensed consolidated financial statements included in Item 1 of Part I of this Report.statements.


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. ForDuring the ninefirst six months ended September 30, 2017,of 2023, net unrealized investment gains of $2.1$1.2 million, net of taxes, and reclassification adjustment, which increased our other comprehensive income, were primarily related to temporarynet increases in the fair values over costs of our corporate and municipal bond securities available-for-sale investments, partially offset by temporary decreases in fair values over costsinvestments. During the first six months of our foreign securities available-for-sale investments. For the nine months ended September 30, 2016,2022, net unrealized investment gainslosses of $10.7$32.9 million, net of taxes, and reclassification adjustment, which increased our other comprehensive income,loss, were primarily related to temporary increasesnet decreases in the fair values over costs of all classes of our corporate and foreign bond securities available-for-sale investments.investments, primarily driven by the effect of higher interest rates and credit spreads.


Changes in foreign currency exchange rates, primarily related to our Canadian and United Kingdom operations, increased our other comprehensive income, net of taxes, by $8.7$4.9 million forin the ninefirst six months ended September 30, 2017, compared to a decrease inof 2023, while they increased our other comprehensive income,loss, net of taxes, by $0.2$7.6 million forin the ninefirst six months ended September 30, 2016.of 2022.


Off-balance sheet arrangements. We do not have any material source of liquidity or financing that involves off-balance sheet arrangements, other than our contractual obligations under operating leases. 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 1715 in our Annual Report on2022 Form 10-K for the year ended December 31, 2016.10-K.


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Forward-looking statements.Certain statements in this report are “forward-looking statements”"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 challengingfollowing:
•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;
•regulatory non-compliance, fraud or defalcations by our title insurance agencies or employees;
•our ability to timely and cost-effectively respond to significant industry changes and introduce new products and services;
•our ability to realize anticipated benefits of our previous acquisitions;
•the outcome of pending litigation;
•the impact of changes in governmental and insurance regulations, including any future reductions in the pricing of title insurance products and services;
•our dependence on our operating subsidiaries as a source of cash flow; the continued realization of expense savings from our cost management program; our ability to successfully integrate acquired businesses;
•our ability to access the equity and debt financing markets when and if needed; our ability to grow our international operations;
•effects of seasonality and weather; and
•our ability to respond to the actions of our competitors. These

The above risks and uncertainties, as well as others, are discussed in more detail in our documents filed with the Securities and Exchange Commission, including in Part I, Item 1A "Risk Factors" in our Annual Report on2022 Form 10-K, for the year ended December 31, 2016, and if applicable,as may be further updated and supplemented from time to time in our future Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K.8-K filed subsequently. 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.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes during the quarter ended SeptemberJune 30, 20172023 in our investment strategies, types of financial instruments held or the risks associated with such instruments that would materially alter the market risk disclosures made in our Annual Report on2022 Form 10-K for the year ended December 31, 2016.10-K.


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Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. Our principal executive officer and principal financial officer are responsible for establishing and maintaining disclosure controls and procedures. They evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of SeptemberJune 30, 2017,2023, and have concluded that, as of such date, our disclosure controls and procedures are adequate and effective to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. There was no change in our internal control over financial reporting during the quarter ended SeptemberJune 30, 2017,2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.




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PART II – OTHER INFORMATION
 
Item 1. Legal Proceedings

See discussion of legal proceedings in Note 1011 to the condensed consolidated financial statements included in Item 1 of Part I of this Report, which is incorporated by reference into this Part II, Item 1, as well as Item 3. Legal Proceedings, in our Annual Report on2022 Form 10-K for the year ended December 31, 2016.10-K.



Item 1A. Risk Factors


Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A. “Risk Factors” in our 2022 Form 10-K. There have been no material changes during the first nine months ended September 30, 2017 to our risk factors as listed insince our Annual Report on2022 Form 10-K for the year ended December 31, 2016.10-K.




Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


There were no repurchases of our Common Stock during the quartersix months ended SeptemberJune 30, 2017.2023, except for repurchases of approximately 32,200 shares (aggregate purchase price of approximately $1.4 million) related to the statutory income tax withholding on the vesting of restricted unit grants to executives and senior management employees.



Item 5. Other Information

Book value per share. Our book value per share was $28.29$49.82 and $27.69$50.21 as of SeptemberJune 30, 20172023 and December 31, 2016,2022, respectively. As of SeptemberJune 30, 2017,2023, our book value per share was based on approximately $672.4 million in$1.36 billion of stockholders’ equity attributable to Stewart and 23,765,80727,266,830 shares of Common Stock outstanding. As of December 31, 2016,2022, our book value per share was based on approximately $648.8 million in$1.36 billion of stockholders’ equity attributable to Stewart and 23,431,27927,130,412 shares of Common Stock outstanding.


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Item 6. Exhibits
Those exhibits required to be filed by Item 601 of Regulation S-K are listed in the Index to Exhibits immediately preceding the exhibits filed herewith and such listing is incorporated herein by reference.
Exhibit
3.1—
3.2—
31.1*—
31.2*—
32.1*—
32.2*—
101.INS*—XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*—XBRL Taxonomy Extension Schema Document
101.CAL*—XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*—XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*—XBRL Taxonomy Extension Label Linkbase Document
101.PRE*—XBRL Taxonomy Extension Presentation Linkbase Document
104*—Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith




SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
November 7, 2017
Date
Stewart Information Services CorporationAugust 8, 2023
Registrant
By:/s/ David C. Hisey
David C. Hisey, Chief Financial Officer, Secretary and TreasurerDate

Index to Exhibits
Exhibit
3.1-
Restated Certificate of Incorporation of the Registrant, dated April 28, 2016 (incorporated by reference in this report from Exhibit 3.1 of the Current Report on Form 8-K filed April 29, 2016)
3.2-
Third Amended and Restated By-Laws of the Registrant, as of April 27, 2016 (incorporated by reference in this report from Exhibit 3.2 of the Current Report on Form 8-K filed April 28, 2016)
10.1*†-
Employment Agreement entered into and effective as of September 1, 2017, by and between Stewart Information Services Corporation and David C. Hisey
Registrant
By:/s/ David C. Hisey
31.1*-
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*-
Certification ofDavid C. Hisey, Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*-
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*-
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
and Treasurer
101.INS*-XBRL Instance Document
101.SCH*-XBRL Taxonomy Extension Schema Document
101.CAL*-XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*-XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*-XBRL Taxonomy Extension Label Linkbase Document
101.PRE*-XBRL Taxonomy Extension Presentation Linkbase Document
30
* Filed herewith
† Management contract or compensatory plan




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