UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2021~~2022

☐ 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)


Delaware		74-1677330
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1360 Post Oak Blvd.,	Suite 100
Houston,	Texas	77056
(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:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1 par value per share	STC	New 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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☑ 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

☐

Accelerated filer

☐

Smaller reporting 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 ☑

On ~~October 27, 2021,~~November 1, 2022, there were ~~26,890,755~~27,127,013 outstanding shares of the issuer's Common Stock.

FORM 10-Q QUARTERLY REPORT

QUARTER ENDED SEPTEMBER 30, ~~2021~~2022

TABLE OF CONTENTS


Item	Item		Page	Item		Page
		PART I – FINANCIAL INFORMATION			PART I – FINANCIAL INFORMATION

1.	1.	Financial Statements	3	1.	Financial Statements	3

2.	2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18	2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

3.	3.	Quantitative and Qualitative Disclosures About Market Risk	28	3.	Quantitative and Qualitative Disclosures About Market Risk	28

4.	4.	Controls and Procedures	29	4.	Controls and Procedures	29
		PART II – OTHER INFORMATION			PART II – OTHER INFORMATION
1.	1.	Legal Proceedings	30	1.	Legal Proceedings	30

1A.	1A.	Risk Factors	30	1A.	Risk Factors	30

2.	2.	Unregistered Sales of Equity Securities and Use of Proceeds	30	2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

5.	5.	Other Information	30	5.	Other Information	30

6.	6.	Exhibits	31	6.	Exhibits	31

		Signature	31		Signature	32

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.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2021	2020	2021	2020		2022	2021	2022	2021
		($000 omitted, except per share)					($000 omitted, except per share)
Revenues	Revenues					Revenues
Title revenues:	Title revenues:					Title revenues:
Direct operations	Direct operations	366,091	280,114	999,098	696,611	Direct operations	307,408	366,091	976,364	999,098
Agency operations	Agency operations	401,762	282,605	1,138,023	802,022	Agency operations	340,470	401,762	1,154,546	1,138,023
Ancillary services		61,934	27,957	176,057	44,573
Real estate solutions and other						Real estate solutions and other	69,737	61,934	281,152	176,057
Operating revenues	Operating revenues	829,787	590,676	2,313,178	1,543,206	Operating revenues	717,615	829,787	2,412,062	2,313,178
Investment income	Investment income	4,053	5,027	13,127	14,530	Investment income	5,158	4,053	15,519	13,127
Net realized and unrealized gains (losses)		2,887	(7)	17,816	(6,035)
Net realized and unrealized (losses) gains						Net realized and unrealized (losses) gains	(6,374)	2,887	(14,194)	17,816
		836,727	595,696	2,344,121	1,551,701		716,399	836,727	2,413,387	2,344,121
Expenses	Expenses					Expenses
Amounts retained by agencies	Amounts retained by agencies	329,906	231,051	935,861	659,138	Amounts retained by agencies	280,517	329,906	951,555	935,861
Employee costs	Employee costs	197,587	155,638	555,451	428,817	Employee costs	195,057	197,587	610,286	555,451
Other operating expenses	Other operating expenses	152,587	98,531	415,864	245,003	Other operating expenses	151,208	152,587	502,966	415,864
Title losses and related claims	Title losses and related claims	30,345	28,427	92,687	68,600	Title losses and related claims	25,486	30,345	81,105	92,687
Depreciation and amortization	Depreciation and amortization	9,144	5,144	22,394	13,436	Depreciation and amortization	14,067	9,144	42,103	22,394
Interest	Interest	712	562	1,960	2,075	Interest	4,553	712	13,471	1,960
		720,281	519,353	2,024,217	1,417,069		670,888	720,281	2,201,486	2,024,217
Income before taxes and noncontrolling interests	Income before taxes and noncontrolling interests	116,446	76,343	319,904	134,632	Income before taxes and noncontrolling interests	45,511	116,446	211,901	319,904
Income tax expense	Income tax expense	(23,051)	(16,058)	(70,547)	(29,293)	Income tax expense	(10,783)	(23,051)	(48,376)	(70,547)
Net income	Net income	93,395	60,285	249,357	105,339	Net income	34,728	93,395	163,525	249,357
Less net income attributable to noncontrolling interests		4,732	4,376	11,639	10,107
Less income attributable to noncontrolling interests						Less income attributable to noncontrolling interests	5,294	4,732	14,534	11,639
Net income attributable to Stewart	Net income attributable to Stewart	88,663	55,909	237,718	95,232	Net income attributable to Stewart	29,434	88,663	148,991	237,718

Net income	Net income	93,395	60,285	249,357	105,339	Net income	34,728	93,395	163,525	249,357
Other comprehensive (loss) income, net of taxes:
Other comprehensive loss, net of taxes:						Other comprehensive loss, net of taxes:
Foreign currency translation adjustments	Foreign currency translation adjustments	(4,243)	3,844	(997)	(3,404)	Foreign currency translation adjustments	(15,300)	(4,243)	(22,861)	(997)
Change in net unrealized gains and losses on investments	Change in net unrealized gains and losses on investments	(2,183)	920	(10,330)	15,055	Change in net unrealized gains and losses on investments	(8,921)	(2,183)	(41,513)	(10,330)
Reclassification adjustment for realized gains and losses on investments		(355)	(175)	(918)	(276)
Other comprehensive (loss) income, net of taxes:		(6,781)	4,589	(12,245)	11,375
Reclassification adjustments for realized gains and losses on investments						Reclassification adjustments for realized gains and losses on investments	(385)	(355)	(687)	(918)
Other comprehensive loss, net of taxes:						Other comprehensive loss, net of taxes:	(24,606)	(6,781)	(65,061)	(12,245)
Comprehensive income	Comprehensive income	86,614	64,874	237,112	116,714	Comprehensive income	10,122	86,614	98,464	237,112
Less net income attributable to noncontrolling interests		4,732	4,376	11,639	10,107
Less income attributable to noncontrolling interests						Less income attributable to noncontrolling interests	5,294	4,732	14,534	11,639
Comprehensive income attributable to Stewart	Comprehensive income attributable to Stewart	81,882	60,498	225,473	106,607	Comprehensive income attributable to Stewart	4,828	81,882	83,930	225,473

Basic average shares outstanding (000)	Basic average shares outstanding (000)	26,873	25,148	26,803	24,151	Basic average shares outstanding (000)	27,113	26,873	27,031	26,803
Basic earnings per share attributable to Stewart	Basic earnings per share attributable to Stewart	3.30	2.22	8.87	3.94	Basic earnings per share attributable to Stewart	1.09	3.30	5.51	8.87
Diluted average shares outstanding (000)	Diluted average shares outstanding (000)	27,238	25,297	27,090	24,256	Diluted average shares outstanding (000)	27,371	27,238	27,359	27,090
Diluted earnings per share attributable to Stewart	Diluted earnings per share attributable to Stewart	3.26	2.21	8.78	3.93	Diluted earnings per share attributable to Stewart	1.08	3.26	5.45	8.78

See notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS


		September 30, 2021 (Unaudited)	December 31, 2020		September 30, 2022 (Unaudited)	December 31, 2021
		($000 omitted)			($000 omitted)
Assets	Assets			Assets
Cash and cash equivalents	Cash and cash equivalents	607,605	432,683	Cash and cash equivalents	320,933	485,919
Short-term investments	Short-term investments	17,198	20,678	Short-term investments	18,077	17,650
Investments in debt and equity securities, at fair value		700,719	684,387

Investments, at fair value:				Investments, at fair value:
Debt securities (amortized cost of $624,272 and $578,165)				Debt securities (amortized cost of $624,272 and $578,165)	582,461	589,772
Equity securities				Equity securities	87,166	89,442
					669,627	679,214
Receivables:	Receivables:			Receivables:
Premiums from agencies	Premiums from agencies	47,324	34,507	Premiums from agencies	43,426	45,428
Trade and other	Trade and other	66,711	56,054	Trade and other	65,620	75,079
Income taxes	Income taxes	5,107	501	Income taxes	9,395	5,420
Notes	Notes	1,390	1,557	Notes	5,995	1,124
Allowance for uncollectible amounts	Allowance for uncollectible amounts	(6,222)	(4,807)	Allowance for uncollectible amounts	(7,577)	(7,711)
		114,310	87,812		116,859	119,340
Property and equipment:	Property and equipment:			Property and equipment:
Land	Land	2,964	2,964	Land	2,545	2,545
Buildings	Buildings	17,114	22,598	Buildings	18,553	19,303
Furniture and equipment	Furniture and equipment	191,231	168,147	Furniture and equipment	220,224	216,261
Accumulated depreciation	Accumulated depreciation	(151,311)	(142,038)	Accumulated depreciation	(160,715)	(165,653)
		59,998	51,671		80,607	72,456
Operating lease assets	Operating lease assets	117,354	106,479	Operating lease assets	130,316	134,578
Title plants, at cost	Title plants, at cost	73,127	72,863	Title plants, at cost	73,358	76,859
Investments on equity method basis	Investments on equity method basis	21,734	6,765	Investments on equity method basis	4,341	4,754
Goodwill	Goodwill	536,176	431,477	Goodwill	961,726	924,837
Intangible assets, net of amortization	Intangible assets, net of amortization	72,549	37,382	Intangible assets, net of amortization	174,430	229,804
Deferred tax assets	Deferred tax assets	4,566	4,330	Deferred tax assets	4,328	3,846
Other assets	Other assets	50,169	42,048	Other assets	150,858	64,105
		2,375,505	1,978,575		2,705,460	2,813,362
Liabilities	Liabilities			Liabilities
Notes payable	Notes payable	275,276	101,773	Notes payable	446,372	483,491
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	209,144	225,180	Accounts payable and accrued liabilities	184,065	287,326
Operating lease liabilities	Operating lease liabilities	129,064	119,089	Operating lease liabilities	146,309	149,417
Estimated title losses	Estimated title losses	534,551	496,275	Estimated title losses	547,214	549,614
Deferred tax liabilities	Deferred tax liabilities	10,770	23,852	Deferred tax liabilities	23,999	48,779
		1,158,805	966,169		1,347,959	1,518,627
Contingent liabilities and commitments	Contingent liabilities and commitments	0	0	Contingent liabilities and commitments
Stockholders’ equity	Stockholders’ equity			Stockholders’ equity
Common Stock ($1 par value) and additional paid-in capital	Common Stock ($1 par value) and additional paid-in capital	306,257	301,937	Common Stock ($1 par value) and additional paid-in capital	321,492	309,622
Retained earnings	Retained earnings	899,528	688,819	Retained earnings	1,090,938	974,800
Accumulated other comprehensive income (loss):	Accumulated other comprehensive income (loss):			Accumulated other comprehensive income (loss):
Foreign currency translation adjustments	Foreign currency translation adjustments	(9,235)	(8,238)	Foreign currency translation adjustments	(31,778)	(8,917)
Net unrealized gains on debt securities investments		14,012	25,260
Net unrealized (losses) gains on debt securities investments				Net unrealized (losses) gains on debt securities investments	(33,030)	9,170

Treasury stock – 352,161 common shares, at cost	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 Stewart	Stockholders’ equity attributable to Stewart	1,207,896	1,005,112	Stockholders’ equity attributable to Stewart	1,344,956	1,282,009
Noncontrolling interests	Noncontrolling interests	8,804	7,294	Noncontrolling interests	12,545	12,726
Total stockholders’ equity (26,890,064 and 26,728,242 shares outstanding)		1,216,700	1,012,406
Total stockholders’ equity (27,123,388 and 26,893,430 shares outstanding)				Total stockholders’ equity (27,123,388 and 26,893,430 shares outstanding)	1,357,501	1,294,735
		2,375,505	1,978,575		2,705,460	2,813,362

See notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


		Nine Months Ended September 30,			Nine Months Ended September 30,
		2021	2020		2022	2021
		($000 omitted)			($000 omitted)
Reconciliation of net income to cash provided by operating activities:	Reconciliation of net income to cash provided by operating activities:			Reconciliation of net income to cash provided by operating activities:
Net income	Net income	249,357	105,339	Net income	163,525	249,357
Add (deduct):	Add (deduct):			Add (deduct):
Depreciation and amortization	Depreciation and amortization	22,394	13,436	Depreciation and amortization	42,103	22,394
Provision for bad debt		1,871	363
Net realized and unrealized (gains) losses		(17,816)	6,035
Adjustments for bad debt provisions				Adjustments for bad debt provisions	812	1,871
Net realized and unrealized losses (gains)				Net realized and unrealized losses (gains)	14,194	(17,816)
Amortization of net premium on debt securities investments	Amortization of net premium on debt securities investments	2,794	3,280	Amortization of net premium on debt securities investments	1,870	2,794
Payments for title losses less than provisions	Payments for title losses less than provisions	39,761	9,615	Payments for title losses less than provisions	10,950	39,761
Adjustments for insurance recoveries of title losses	Adjustments for insurance recoveries of title losses	—	(73)	Adjustments for insurance recoveries of title losses	220	—
Increase in receivables – net		(20,771)	(4,290)
Decrease (increase) in receivables – net				Decrease (increase) in receivables – net	9,521	(20,771)
Increase in other assets – net	Increase in other assets – net	(3,725)	(1,702)	Increase in other assets – net	(4,343)	(3,725)
Decrease (increase) in accounts payable and other liabilities – net		(30,385)	1,301
Decrease in accounts payable and other liabilities – net				Decrease in accounts payable and other liabilities – net	(81,987)	(30,385)
Change in net deferred income taxes	Change in net deferred income taxes	7,024	3,576	Change in net deferred income taxes	25	7,024
Net income from equity method investments	Net income from equity method investments	(6,852)	(2,385)	Net income from equity method investments	(2,536)	(6,852)
Dividends received from equity method investments	Dividends received from equity method investments	5,496	2,499	Dividends received from equity method investments	3,135	5,496
Stock-based compensation expense	Stock-based compensation expense	8,494	4,234	Stock-based compensation expense	9,239	8,494
Other – net	Other – net	(325)	(367)	Other – net	312	(325)
Cash provided by operating activities	Cash provided by operating activities	257,317	140,861	Cash provided by operating activities	167,040	257,317
Investing activities:	Investing activities:			Investing activities:
Proceeds from sales of investments in securities	Proceeds from sales of investments in securities	19,726	25,772	Proceeds from sales of investments in securities	47,954	19,726
Proceeds from matured investments in debt securities	Proceeds from matured investments in debt securities	68,653	46,677	Proceeds from matured investments in debt securities	28,754	68,653
Purchases of investments in securities	Purchases of investments in securities	(111,107)	(75,487)	Purchases of investments in securities	(165,130)	(111,107)
Net sales of short-term investments		2,734	2,431
Net (purchases) sales of short-term investments				Net (purchases) sales of short-term investments	(1,632)	2,734
Purchases of property and equipment, and real estate	Purchases of property and equipment, and real estate	(26,213)	(10,492)	Purchases of property and equipment, and real estate	(35,274)	(26,213)
Proceeds from sale of buildings		10,552	—
Proceeds from sale of property and equipment and other assets				Proceeds from sale of property and equipment and other assets	977	10,552
Cash paid for acquisition of businesses	Cash paid for acquisition of businesses	(149,921)	(146,518)	Cash paid for acquisition of businesses	(102,864)	(149,921)
Cash paid for acquisition of equity method investment	Cash paid for acquisition of equity method investment	(16,080)	—	Cash paid for acquisition of equity method investment	(69)	(16,080)
Other – net	Other – net	988	1,524	Other – net	1,941	988
Cash used by investing activities	Cash used by investing activities	(200,668)	(156,093)	Cash used by investing activities	(225,343)	(200,668)
Financing activities:	Financing activities:			Financing activities:
Proceeds from notes payable	Proceeds from notes payable	331,755	2,361	Proceeds from notes payable	38,012	331,755
Payments on notes payable	Payments on notes payable	(158,031)	(11,737)	Payments on notes payable	(75,505)	(158,031)
Distributions to noncontrolling interests	Distributions to noncontrolling interests	(11,683)	(9,572)	Distributions to noncontrolling interests	(14,863)	(11,683)

Issuance of new Common Stock		—	108,961

Repurchases of Common Stock	Repurchases of Common Stock	(2,145)	(826)	Repurchases of Common Stock	(3,168)	(2,145)
Proceeds from stock option and employee stock purchase plan exercises	Proceeds from stock option and employee stock purchase plan exercises	2,715	—	Proceeds from stock option and employee stock purchase plan exercises	5,799	2,715
Cash dividends paid	Cash dividends paid	(26,558)	(22,214)	Cash dividends paid	(32,464)	(26,558)
Payment of contingent consideration related to an acquisition		(9,489)	—
Payment of contingent consideration related to acquisitions				Payment of contingent consideration related to acquisitions	(15,997)	(9,489)
Purchase of remaining interest in consolidated subsidiaries	Purchase of remaining interest in consolidated subsidiaries	(5,616)	—	Purchase of remaining interest in consolidated subsidiaries	(72)	(5,616)
Other - net	Other - net	(777)	(311)	Other - net	115	(777)
Cash used by financing activities		120,171	66,662
Cash (used) provided by financing activities				Cash (used) provided by financing activities	(98,143)	120,171
Effects of changes in foreign currency exchange rates	Effects of changes in foreign currency exchange rates	(1,898)	(479)	Effects of changes in foreign currency exchange rates	(8,540)	(1,898)
Change in cash and cash equivalents	Change in cash and cash equivalents	174,922	50,951	Change in cash and cash equivalents	(164,986)	174,922
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	432,683	330,609	Cash and cash equivalents at beginning of period	485,919	432,683
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	607,605	381,560	Cash and cash equivalents at end of period	320,933	607,605

See notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)


		Common Stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock	Noncontrolling interests	Total		Common Stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock	Noncontrolling interests	Total
		($000 omitted)								($000 omitted)
Nine Months Ended September 30, 2021
Balance at December 31, 2020		27,080	274,857	688,819	17,022	(2,666)	7,294	1,012,406
Nine Months Ended September 30, 2022									Nine Months Ended September 30, 2022
Balance at December 31, 2021									Balance at December 31, 2021	27,246	282,376	974,800	253	(2,666)	12,726	1,294,735

Net income attributable to Stewart	Net income attributable to Stewart	—	—	237,718	—	—	—	237,718	Net income attributable to Stewart	—	—	148,991	—	—	—	148,991
Dividends on Common Stock ($0.99 per share)		—	—	(27,009)	—	—	—	(27,009)
Dividends on Common Stock ($1.20 per share)									Dividends on Common Stock ($1.20 per share)	—	—	(32,853)	—	—	—	(32,853)

Stock-based compensation	Stock-based compensation	139	8,355	—	—	—	—	8,494	Stock-based compensation	155	9,084	—	—	—	—	9,239
Stock repurchases	Stock repurchases	(41)	(2,104)	—	—	—	—	(2,145)	Stock repurchases	(49)	(3,119)	—	—	—	—	(3,168)
Stock option and employee stock purchase plan exercises	Stock option and employee stock purchase plan exercises	64	2,651	—	—	—	—	2,715	Stock option and employee stock purchase plan exercises	124	5,675	—	—	—	—	5,799
Purchase of remaining interest in consolidated subsidiaries	Purchase of remaining interest in consolidated subsidiaries	—	(4,744)	—	—	—	(872)	(5,616)	Purchase of remaining interest in consolidated subsidiaries	—	—	—	—	—	(72)	(72)
Change in net unrealized gains and losses on investments, net of taxes	Change in net unrealized gains and losses on investments, net of taxes	—	—	—	(10,330)	—	—	(10,330)	Change in net unrealized gains and losses on investments, net of taxes	—	—	—	(41,513)	—	—	(41,513)
Reclassification adjustment for realized gains and losses on investments, net of taxes	Reclassification adjustment for realized gains and losses on investments, net of taxes	—	—	—	(918)	—	—	(918)	Reclassification adjustment for realized gains and losses on investments, net of taxes	—	—	—	(687)	—	—	(687)
Foreign currency translation adjustments, net of taxes	Foreign currency translation adjustments, net of taxes	—	—	—	(997)	—	—	(997)	Foreign currency translation adjustments, net of taxes	—	—	—	(22,861)	—	—	(22,861)
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	—	—	—	—	—	11,639	11,639	Net income attributable to noncontrolling interests	—	—	—	—	—	14,534	14,534
Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—	—	—	—	(11,683)	(11,683)	Distributions to noncontrolling interests	—	—	—	—	—	(14,863)	(14,863)
Net effect of other changes in ownership	Net effect of other changes in ownership	—	—	—	—	—	2,426	2,426	Net effect of other changes in ownership	—	—	—	—	—	220	220
Balance at September 30, 2021		27,242	279,015	899,528	4,777	(2,666)	8,804	1,216,700
Balance at September 30, 2022									Balance at September 30, 2022	27,476	294,016	1,090,938	(64,808)	(2,666)	12,545	1,357,501

Nine Months Ended September 30, 2020
Balance at December 31, 2019		24,062	164,217	564,392	(2,699)	(2,666)	6,453	753,759
Nine Months Ended September 30, 2021									Nine Months Ended September 30, 2021
Balance at December 31, 2020									Balance at December 31, 2020	27,080	274,857	688,819	17,022	(2,666)	7,294	1,012,406

Net income attributable to Stewart	Net income attributable to Stewart	—	—	95,232	—	—	—	95,232	Net income attributable to Stewart	—	—	237,718	—	—	—	237,718
Dividends on Common Stock ($0.90 per share)		—	—	(22,401)	—	—	—	(22,401)
Issuance of Common Stock		3,026	105,935	—	—	—	—	108,961
Dividends on Common Stock ($0.99 per share)									Dividends on Common Stock ($0.99 per share)	—	—	(27,009)	—	—	—	(27,009)

Stock-based compensation	Stock-based compensation	4	4,230	—	—	—	—	4,234	Stock-based compensation	139	8,355	—	—	—	—	8,494
Stock repurchases	Stock repurchases	(20)	(806)	—	—	—	—	(826)	Stock repurchases	(41)	(2,104)	—	—	—	—	(2,145)

Stock option and employee stock purchase plan exercises									Stock option and employee stock purchase plan exercises	64	2,651	—	—	—	—	2,715
Purchase of remaining interest in consolidated subsidiary									Purchase of remaining interest in consolidated subsidiary	—	(4,744)	—	—	—	(872)	(5,616)
Change in net unrealized gains and losses on investments, net of taxes	Change in net unrealized gains and losses on investments, net of taxes	—	—	—	15,055	—	—	15,055	Change in net unrealized gains and losses on investments, net of taxes	—	—	—	(10,330)	—	—	(10,330)
Reclassification adjustment for realized gains and losses on investments, net of taxes, net of taxes	Reclassification adjustment for realized gains and losses on investments, net of taxes, net of taxes	—	—	—	(276)	—	—	(276)	Reclassification adjustment for realized gains and losses on investments, net of taxes, net of taxes	—	—	—	(918)	—	—	(918)
Foreign currency translation adjustments, net of taxes	Foreign currency translation adjustments, net of taxes	—	—	—	(3,404)	—	—	(3,404)	Foreign currency translation adjustments, net of taxes	—	—	—	(997)	—	—	(997)
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	—	—	—	—	—	10,107	10,107	Net income attributable to noncontrolling interests	—	—	—	—	—	11,639	11,639
Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—	—	—	—	(9,572)	(9,572)	Distributions to noncontrolling interests	—	—	—	—	—	(11,683)	(11,683)

Balance at September 30, 2020		27,072	273,576	637,223	8,676	(2,666)	6,988	950,869
Net effect of other changes in ownership									Net effect of other changes in ownership	—	—	—	—	—	2,426	2,426
Balance at September 30, 2021									Balance at September 30, 2021	27,242	279,015	899,528	4,777	(2,666)	8,804	1,216,700

See notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)


		Common Stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock	Noncontrolling interests	Total		Common Stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock	Noncontrolling interests	Total
										($000 omitted)
Three Months Ended September 30, 2022									Three Months Ended September 30, 2022
Balances at June 30, 2022									Balances at June 30, 2022	27,390	288,834	1,073,788	(40,202)	(2,666)	12,677	1,359,821

Net income attributable to Stewart									Net income attributable to Stewart	—	—	29,434	—	—	—	29,434
Dividends on Common Stock ($0.45 per share)									Dividends on Common Stock ($0.45 per share)	—	—	(12,284)	—	—	—	(12,284)

Stock-based compensation									Stock-based compensation	29	2,770	—	—	—	—	2,799
Stock repurchases									Stock repurchases	(12)	(605)	—	—	—	—	(617)
Stock option and employee stock purchase plan exercises									Stock option and employee stock purchase plan exercises	69	3,017	—	—	—	—	3,086
Purchase of remaining interest in consolidated subsidiaries									Purchase of remaining interest in consolidated subsidiaries	—	—	—	—	—	(72)	(72)
Change in net unrealized gains and losses on investments, net of taxes									Change in net unrealized gains and losses on investments, net of taxes	—	—	—	(8,921)	—	—	(8,921)
Reclassification adjustment for realized gains and losses on investments, net of taxes									Reclassification adjustment for realized gains and losses on investments, net of taxes	—	—	—	(385)	—	—	(385)
Foreign currency translation adjustments, net of taxes									Foreign currency translation adjustments, net of taxes	—	—	—	(15,300)	—	—	(15,300)
Net income attributable to noncontrolling interests									Net income attributable to noncontrolling interests	—	—	—	—	—	5,294	5,294
Distributions to noncontrolling interests									Distributions to noncontrolling interests	—	—	—	—	—	(5,380)	(5,380)
Net effect of other changes in ownership									Net effect of other changes in ownership	—	—	—	—	—	26	26
Balance at September 30, 2022									Balance at September 30, 2022	27,476	294,016	1,090,938	(64,808)	(2,666)	12,545	1,357,501
		($000 omitted)
Three Months Ended September 30, 2021	Three Months Ended September 30, 2021								Three Months Ended September 30, 2021
Balances at June 30, 2021	Balances at June 30, 2021	27,177	274,074	819,834	11,558	(2,666)	6,096	1,136,073	Balances at June 30, 2021	27,177	274,074	819,834	11,558	(2,666)	6,096	1,136,073

Net income attributable to Stewart	Net income attributable to Stewart	—	—	88,663	—	—	—	88,663	Net income attributable to Stewart	—	—	88,663	—	—	—	88,663
Dividends on Common Stock ($0.33 per share)	Dividends on Common Stock ($0.33 per share)	—	—	(8,969)	—	—	—	(8,969)	Dividends on Common Stock ($0.33 per share)	—	—	(8,969)	—	—	—	(8,969)

Stock-based compensation	Stock-based compensation	8	2,607	—	—	—	—	2,615	Stock-based compensation	8	2,607	—	—	—	—	2,615
Stock repurchases	Stock repurchases	(2)	(141)	—	—	—	—	(143)	Stock repurchases	(2)	(141)	—	—	—	—	(143)
Stock option and employee stock purchase plan exercises		59	2,475	—	—	—	—	2,534

Change in net unrealized gains and losses on investments, net of taxes		—	—	—	(2,183)	—	—	(2,183)
Reclassification adjustment for realized gains and losses on investments, net of taxes		—	—	—	(355)	—	—	(355)
Foreign currency translation adjustments, net of taxes		—	—	—	(4,243)	—	—	(4,243)
Net income attributable to noncontrolling interests		—	—	—	—	—	4,732	4,732
Distributions to noncontrolling interests		—	—	—	—	—	(4,430)	(4,430)
Net effect of other changes in ownership		—	—	—	—	—	2,406	2,406
Balance at September 30, 2021		27,242	279,015	899,528	4,777	(2,666)	8,804	1,216,700

Three Months Ended September 30, 2020
Balances at June 30, 2020		24,052	166,208	589,424	4,087	(2,666)	6,227	787,332

Net income attributable to Stewart		—	—	55,909	—	—	—	55,909
Dividends on Common Stock ($0.30 per share)		—	—	(8,110)	—	—	—	(8,110)
Issuance of Common Stock		3,026	105,935	—	—	—	—	108,961
Stock-based compensation		2	1,783	—	—	—	—	1,785
Stock repurchases		(8)	(350)	—	—	—	—	(358)
Stock option exercises									Stock option exercises	59	2,475					2,534

Change in net unrealized gains and losses on investments, net of taxes	Change in net unrealized gains and losses on investments, net of taxes	—	—	—	920	—	—	920	Change in net unrealized gains and losses on investments, net of taxes	—	—	—	(2,183)	—	—	(2,183)
Reclassification adjustment for realized gains and losses on investments, net of taxes, net of taxes	Reclassification adjustment for realized gains and losses on investments, net of taxes, net of taxes	—	—	—	(175)	—	—	(175)	Reclassification adjustment for realized gains and losses on investments, net of taxes, net of taxes	—	—	—	(355)	—	—	(355)
Foreign currency translation adjustments, net of taxes	Foreign currency translation adjustments, net of taxes	—	—	—	3,844	—	—	3,844	Foreign currency translation adjustments, net of taxes	—	—	—	(4,243)	—	—	(4,243)
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	—	—	—	—	—	4,376	4,376	Net income attributable to noncontrolling interests	—	—	—	—	—	4,732	4,732
Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—	—	—	—	(3,615)	(3,615)	Distributions to noncontrolling interests	—	—	—	—	—	(4,430)	(4,430)

Balance at September 30, 2020		27,072	273,576	637,223	8,676	(2,666)	6,988	950,869
Net effect of other changes in ownership									Net effect of other changes in ownership	—	—	—	—	—	2,406	2,406
Balance at September 30, 2021									Balance at September 30, 2021	27,242	279,015	899,528	4,777	(2,666)	8,804	1,216,700

See notes to condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1

Interim financial statements. The financial information contained in this report for the three and nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, and as of September 30, ~~2021,~~2022, 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, ~~2020~~2021 filed with the Securities and Exchange Commission on ~~March 1, 2021 (2020~~February 28, 2022 (2021 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 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% to 50% of the voting stock, are accounted for using the equity method.

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 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 ~~$524.5~~$541.0 million and ~~$496.6~~$523.5 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. In addition, included within cash and cash equivalents are statutory reserve funds of approximately ~~$24.0~~$10.5 million and ~~$20.0~~$41.4 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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.

D. Recently enacted Inflation Reduction Act. ~~New credit agreement.~~On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the Act) that includes, among other provisions, changes to the U.S. corporate income tax system, including a 15% minimum tax based on book ~~On October 28, 2021, the Company entered into~~income of certain large corporations for tax years beginning after December 31, 2022 and a ~~new senior unsecured credit agreement with~~1% excise tax on net repurchases of stock starting in 2023. Management is still in the ~~creditors~~process of evaluating the Act and its ~~existing $350 million line of credit facility (maturing in March 2026). The new credit agreement provides~~requirements, however it does not believe that the ~~Company with~~Act will have a $200 million unsecured revolving credit facility (maturing in October 2026) and an unsecured $400 million delayed-draw term loan (364-day term), with an option to increase the revolving credit facility by up to $125 million. ~~On the same day, the Company drew $370 million from the term loan commitment and paid off the $273.9 million balance~~material impact on the ~~existing line of credit facility, which was subsequently extinguished. The new credit agreement is guaranteed by our wholly-owned subsidiaries.~~Company's consolidated financial statements.

NOTE 2

Revenues. The Company's operating revenues, summarized by type, are as follows:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2021	2020	2021	2020		2022	2021	2022	2021
		($000 omitted)					($000 omitted)
Title insurance premiums:	Title insurance premiums:					Title insurance premiums:
Direct	Direct	248,738	190,794	687,369	478,822	Direct	209,477	248,738	646,760	687,369
Agency	Agency	401,762	282,605	1,138,023	802,022	Agency	340,470	401,762	1,154,546	1,138,023
Escrow fees	Escrow fees	63,455	53,384	183,638	127,903	Escrow fees	49,407	63,455	166,696	183,638
Appraisal management, abstract and other ancillary services		85,345	42,627	234,677	81,533
Real estate solutions and abstract fees						Real estate solutions and abstract fees	89,519	85,345	302,534	234,677
Other revenues	Other revenues	30,487	21,266	69,471	52,926	Other revenues	28,742	30,487	141,526	69,471
		829,787	590,676	2,313,178	1,543,206		717,615	829,787	2,412,062	2,313,178

NOTE 3

Investments in debt and equity securities. ~~The total fair values of the Company's investments in debt and equity securities are as follows:~~

September 30, 2021 December 31, 2020
($000 omitted)
Investments in:
Debt securities 617,278 631,386
Equity securities 83,441 53,001
700,719 684,387

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the net unrealized investment gains relating to investments in equity securities held ~~were $13.9~~were $8.0 million ~~and $4.4~~and $21.1 million, respectively (refer to Note 5).

The amortized costs and fair values of investments in debt securities are as follows:


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
		Amortized costs	Fair values	Amortized costs	Fair values		Amortized costs	Fair values	Amortized costs	Fair values
		($000 omitted)					($000 omitted)
Municipal	Municipal	38,088	39,885	45,138	47,603	Municipal	30,759	30,119	34,739	36,323
Corporate	Corporate	280,090	292,119	285,962	305,450	Corporate	279,392	257,575	249,757	258,102
Foreign	Foreign	274,938	278,808	261,748	271,711	Foreign	297,490	278,511	287,240	288,883
U.S. Treasury Bonds	U.S. Treasury Bonds	6,426	6,466	6,564	6,622	U.S. Treasury Bonds	16,631	16,256	6,429	6,464

		599,542	617,278	599,412	631,386		624,272	582,461	578,165	589,772

Foreign debt securities primarily consist of Canadian government, provincial and corporate bonds, United Kingdom treasury and corporate bonds, and Mexican government bonds.

Gross unrealized gains and losses on investments in debt securities are as follows:


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
		Gains	Losses	Gains	Losses		Gains	Losses	Gains	Losses
		($000 omitted)					($000 omitted)
Municipal	Municipal	1,798	1	2,465	—	Municipal	2	642	1,585	1
Corporate	Corporate	12,630	601	19,594	106	Corporate	226	22,043	9,389	1,044
Foreign	Foreign	4,784	914	10,024	61	Foreign	92	19,071	3,285	1,642
U.S. Treasury Bonds	U.S. Treasury Bonds	60	20	82	24	U.S. Treasury Bonds	7	382	60	25

		19,272	1,536	32,165	191		327	42,138	14,319	2,712

Debt securities as of September 30, ~~2021~~2022 mature, according to their contractual terms, as follows (actual maturities may differ due to call or prepayment rights):


		Amortized costs	Fair values		Amortized costs	Fair values
		($000 omitted)			($000 omitted)
In one year or less	In one year or less	64,866	65,678	In one year or less	88,203	87,384
After one year through five years	After one year through five years	363,235	371,531	After one year through five years	355,367	333,584
After five years through ten years	After five years through ten years	140,784	146,686	After five years through ten years	155,555	140,592
After ten years	After ten years	30,657	33,383	After ten years	25,147	20,901
		599,542	617,278		624,272	582,461

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 September 30, ~~2021,~~2022, were:


		Less than 12 months		More than 12 months		Total			Less than 12 months		More than 12 months		Total
		Losses	Fair values	Losses	Fair values	Losses	Fair values		Losses	Fair values	Losses	Fair values	Losses	Fair values
		($000 omitted)							($000 omitted)
Municipal	Municipal	1	130	—	—	1	130	Municipal	633	28,835	9	33	642	28,868
Corporate	Corporate	395	40,219	206	4,933	601	45,152	Corporate	17,822	224,128	4,221	29,888	22,043	254,016
Foreign	Foreign	888	83,259	26	246	914	83,505	Foreign	13,264	210,499	5,807	65,721	19,071	276,220
U.S. Treasury Bonds	U.S. Treasury Bonds	3	482	17	508	20	990	U.S. Treasury Bonds	323	13,116	59	951	382	14,067

		1,287	124,090	249	5,687	1,536	129,777		32,042	476,578	10,096	96,593	42,138	573,171

The number of specific debt investment holdings held in an unrealized loss position as of September 30, ~~2021~~2022 was ~~70.~~355. Of these securities, 749 were in unrealized loss positions for more than 12 months. Gross unrealized investment losses at September 30, 2022 increased compared to December 31, 2021, primarily due to the market volatility influenced by higher interest rates and credit spreads during 2022. Since the Company does not intend to sell and will more 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 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.


		Less than 12 months		More than 12 months		Total			Less than 12 months		More than 12 months		Total
		Losses	Fair values	Losses	Fair values	Losses	Fair values		Losses	Fair values	Losses	Fair values	Losses	Fair values
		($000 omitted)							($000 omitted)
Municipal	Municipal	—	—	—	—	—	—	Municipal	1	130	—	—	1	130
Corporate	Corporate	106	13,518	—	—	106	13,518	Corporate	588	42,231	456	12,014	1,044	54,245
Foreign	Foreign	40	2,912	21	254	61	3,166	Foreign	1,502	118,943	140	3,394	1,642	122,337
U.S. Treasury Bonds	U.S. Treasury Bonds	—	—	24	1,022	24	1,022	U.S. Treasury Bonds	8	477	17	508	25	985

		146	16,430	45	1,276	191	17,706		2,099	161,781	613	15,916	2,712	177,697

NOTE 4

Fair value measurements. 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. Under 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.

As of September 30, 2022, financial instruments measured at fair value on a recurring basis are summarized below:


	Level 1	Level 2	Fair value measurements
	($000 omitted)
Investments in securities:
Debt securities:
Municipal	—	30,119	30,119
Corporate	—	257,575	257,575
Foreign	—	278,511	278,511
U.S. Treasury Bonds	—	16,256	16,256
Equity securities	87,166	—	87,166
	87,166	582,461	669,627

As of December 31, 2021, financial instruments measured at fair value on a recurring basis are summarized below:


		Level 1	Level 2	Fair value measurements		Level 1	Level 2	Fair value measurements
		($000 omitted)				($000 omitted)
Investments in securities:	Investments in securities:				Investments in securities:
Debt securities:	Debt securities:				Debt securities:
Municipal	Municipal	—	39,885	39,885	Municipal	—	36,323	36,323
Corporate	Corporate	—	292,119	292,119	Corporate	—	258,102	258,102
Foreign	Foreign	—	278,808	278,808	Foreign	—	288,883	288,883
U.S. Treasury Bonds	U.S. Treasury Bonds	—	6,466	6,466	U.S. Treasury Bonds	—	6,464	6,464
Equity securities	Equity securities	83,441	—	83,441	Equity securities	89,442	—	89,442
		83,441	617,278	700,719		89,442	589,772	679,214

~~As of December 31, 2020, financial instruments measured at fair value on a recurring basis are summarized below:~~

Level 1 Level 2
Fair value
measurements
($000 omitted)
Investments in securities:
Debt securities:
Municipal — 47,603 47,603
Corporate — 305,450 305,450
Foreign — 271,711 271,711
U.S. Treasury Bonds — 6,622 6,622
Equity securities 53,001 — 53,001
53,001 631,386 684,387

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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. The fair value of the Company's investments in debt and equity securities is primarily determined using a third-party pricing service provider. The third-party pricing service provider calculates the fair values using both market approach and model valuation methods, as well as pricing information obtained from brokers, dealers and custodians. Management ensures the reasonableness of the third-party service valuations by comparing them with pricing information from the Company's investment manager.

NOTE 5

Net realized and unrealized ~~gains (losses).~~gains. Realized and unrealized gains and losses are detailed as follows:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2021	2020	2021	2020		2022	2021	2022	2021
		($000 omitted)					($000 omitted)
Realized gains	Realized gains	2,615	241	10,695	1,749	Realized gains	183	2,615	3,460	10,695
Realized losses	Realized losses	(47)	(209)	(2,516)	(1,556)	Realized losses	(65)	(47)	(3,904)	(2,516)
Net unrealized investment gains (losses) recognized on equity securities still held at end of period		319	(39)	9,637	(6,228)
Net unrealized investment (losses) gains recognized on equity securities still held at end of period						Net unrealized investment (losses) gains recognized on equity securities still held at end of period	(6,492)	319	(13,750)	9,637
		2,887	(7)	17,816	(6,035)		(6,374)	2,887	(14,194)	17,816

Realized gains and losses during the first nine months of 2022 included realized losses of $3.6 million from disposals of businesses, a $1.0 million gain from an acquisition contingent liability adjustment, and a $1.0 million realized gain related to a sale of a title plant copy.

Realized gains and losses during the third quarter 2021 included a $2.5 million gain related to an acquisition contingent liability adjustment. Additionally, realized gains and losses for the first nine months of 2021 included $7.3 million of gains on sales of buildings and a $2.5 million loss related to a disposal of an equity method investment. Realized gains and losses for the first nine months of 2020 included $1.3 million of gains from settlements of equity investments with no previously readily determinable fair values (cost-basis investments) and $1.1 million of net realized losses from sale of investment securities.

Investment gains and losses recognized related to investments in equity securities are as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
($000 omitted)
Net investment gains (losses) recognized on equity securities during the period 345 (41) 9,706 (7,136)
Less: Net realized gains (losses) on equity securities sold during the period 26 (2) 69 (908)
Net unrealized investment gains (losses) recognized on equity securities still held at end of period 319 (39) 9,637 (6,228)


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
	($000 omitted)
Net investment (losses) gains recognized on equity securities during the period	(6,489)	345	(13,284)	9,706
Less: Net realized gains on equity securities sold during the period	3	26	466	69
Net unrealized investment (losses) gains recognized on equity securities still held at end of period	(6,492)	319	(13,750)	9,637

Proceeds from sales of investments in securities are as follows:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2021	2020	2021	2020		2022	2021	2022	2021
		($000 omitted)					($000 omitted)
Proceeds from sales of debt securities	Proceeds from sales of debt securities	4,854	10,218	19,425	24,990	Proceeds from sales of debt securities	19,123	4,854	47,405	19,425
Proceeds from sales of equity securities	Proceeds from sales of equity securities	128	56	301	782	Proceeds from sales of equity securities	62	128	549	301
Total proceeds from sales of investments in securities	Total proceeds from sales of investments in securities	4,982	10,274	19,726	25,772	Total proceeds from sales of investments in securities	19,185	4,982	47,954	19,726

NOTE 6

~~Goodwill and other intangible assets.~~Goodwill. The summary of changes in goodwill is as follows.


		Title	Ancillary Services and Corporate	Consolidated Total		Title	Real Estate Solutions	Corporate and Other	Consolidated Total
			($000 omitted)			($000 omitted)
Balances at December 31, 2020		361,433	70,044	431,477
Balances at December 31, 2021					Balances at December 31, 2021	583,944	325,543	15,350	924,837
Acquisitions	Acquisitions	103,744	9,777	113,521	Acquisitions	25,325	—	—	25,325
Purchase accounting adjustments	Purchase accounting adjustments	(4,492)	(4,307)	(8,799)	Purchase accounting adjustments	345	26,961	(14,450)	12,856
Disposals	Disposals	(23)	—	(23)	Disposals	(392)	—	(900)	(1,292)
Balances at September 30, 2021		460,662	75,514	536,176
Balances at September 30, 2022					Balances at September 30, 2022	609,222	352,504	—	961,726

During the first nine months ~~ended September 30, 2021,~~of 2022, goodwill recorded in the title segment was related to acquisitions of a title search and support services provider, a digital customer engagement platform provider, and a number of title offices operating in the states of Arizona, California, New Mexico, Ohio and Texas. Goodwill recorded in the ancillary services and corporate segment wasproviders, while purchase accounting adjustments were primarily related to ~~an acquisition~~measurements of ~~an online notarization~~intangible assets and ~~closing solutions provider. The goodwill balances for~~deferred taxes, and adjustments to provisional estimates within one year of the ~~2021 acquisitions were based on the Company's preliminary purchase accounting, which is expected to be finalized within a year after the acquisitions closed.~~related acquisitions.

~~During the nine months ended September 30, 2021, the Company recorded other intangible assets related to acquisitions of~~ ~~$27.2 million~~ ~~in the title segment, primarily related to technology, customer relationships and trade names, and~~ ~~$18.3 million~~ ~~in the ancillary services and corporate segment, primarily related to customer relationships and technology.~~

Effective October 1, 2021, the Company closed on its $192 million acquisition of a provider of credit, consumer and real estate data and technology services. The acquisition advances the Company on its goal of providing an end-to-end, customer-focused real estate services and technology platform.

NOTE 7

Estimated title losses. A summary of estimated title losses for the nine months ended September 30 is as follows:

2021 2020
($000 omitted)
Balances at January 1 496,275 459,053
Provisions:
Current year 91,259 68,063
Previous policy years 1,428 537
Total provisions 92,687 68,600
Payments, net of recoveries:
Current year (12,181) (9,595)
Previous policy years (40,745) (49,390)
Total payments, net of recoveries (52,926) (58,985)
Effects of changes in foreign currency exchange rates (1,485) (1,856)
Balances at September 30 534,551 466,812
Loss ratios as a percentage of title operating revenues:
Current year provisions 4.3 % 4.5 %
Total provisions 4.3 % 4.6 %

Provisions in the first nine months of 2021 increased compared to the same period in 2020, primarily as a result of increased title revenues, while the effect of changes in foreign currency exchange rates for the first nine months of 2021 and 2020 were primarily influenced by the depreciation of the Canadian dollar against the U.S. dollar during both periods.


	2022		2021
	($000 omitted)
Balances at January 1	549,614		496,275
Provisions:
Current year	81,108		91,259
Previous policy years	(3)		1,428
Total provisions	81,105		92,687
Payments, net of recoveries:
Current year	(14,191)		(12,181)
Previous policy years	(55,964)		(40,745)
Total payments, net of recoveries	(70,155)		(52,926)

Effects of changes in foreign currency exchange rates	(13,350)		(1,485)
Balances at September 30	547,214		534,551
Loss ratios as a percentage of title operating revenues:
Current year provisions	3.8	%	4.3	%
Total provisions	3.8	%	4.3	%

NOTE 8

Share-based payments. As part of its incentive compensation program for executives and senior management employees, the Company provides share-based awards, which usually include a combination of time-based restricted 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, while the performance-based units 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 corresponding vesting period.

During the first nine months of 2022, the Company granted time-based and performance-based restricted stock units with an aggregate grant-date fair value of $11.7 million (183,000 units with an average grant price per unit of $63.68). During the first nine months of 2021, the aggregate grant-date fair values of restricted stock unit and stock option awards, respectively, were $9.2 million (170,000 units with an average grant price per unit of $53.70) and $1.3 million (141,000 options with an average grant price per option of $9.24 and exercise strike price of $53.24). During the first nine months of 2020, the aggregate grant-date fair values of restricted stock unit and stock option awards, respectively, were $3.8 million (96,000 units with an average grant price per unit of $39.36) and $3.4 million (648,000 options with an average grant price per option of $5.32 and exercise strike price of $39.76).

NOTE 9

Earnings per share. 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 to include the number of additional shares that would have been outstanding if restricted units and shares were vested and stock 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.

The calculation of the basic and diluted EPS is as follows:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2021	2020	2021	2020		2022	2021	2022	2021
		($000 omitted, except per share)					($000 omitted, except per share)
Numerator:	Numerator:					Numerator:

Net income attributable to Stewart	Net income attributable to Stewart	88,663	55,909	237,718	95,232	Net income attributable to Stewart	29,434	88,663	148,991	237,718

Denominator (000):	Denominator (000):					Denominator (000):
Basic average shares outstanding	Basic average shares outstanding	26,873	25,148	26,803	24,151	Basic average shares outstanding	27,113	26,873	27,031	26,803
Average number of dilutive shares relating to options	Average number of dilutive shares relating to options	190	—	160	—	Average number of dilutive shares relating to options	124	190	181	160
Average number of dilutive shares relating to grants of restricted units and shares	Average number of dilutive shares relating to grants of restricted units and shares	175	149	127	105	Average number of dilutive shares relating to grants of restricted units and shares	134	175	147	127
Diluted average shares outstanding	Diluted average shares outstanding	27,238	25,297	27,090	24,256	Diluted average shares outstanding	27,371	27,238	27,359	27,090

Basic earnings per share attributable to Stewart	Basic earnings per share attributable to Stewart	3.30	2.22	8.87	3.94	Basic earnings per share attributable to Stewart	1.09	3.30	5.51	8.87

Diluted earnings per share attributable to Stewart	Diluted earnings per share attributable to Stewart	3.26	2.21	8.78	3.93	Diluted earnings per share attributable to Stewart	1.08	3.26	5.45	8.78

NOTE 10

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 September 30, ~~2021,~~2022, 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 guarantees are not more than the Company’s future lease obligations, as presented on the condensed consolidated balance sheets, plus lease operating expenses. As of September 30, ~~2021,~~2022, the Company also had unused letters of credit aggregating $4.9 million related to workers’ compensation and other insurance. The Company does not expect to make any payments on these guarantees.

NOTE 11

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 plaintiffs 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. The Company believes that it has adequate reserves for the various litigation matters and contingencies referred 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 non-ordinary course of business claims or lawsuits from time to time. To the extent 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 the Company’s financial condition, results of operations or cash flows.

Additionally, the Company occasionally receives various 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.

The Company is subject to various other administrative actions 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 12

Segment information. ~~The~~Prior to 2022, the Company ~~reports 2~~reported two operating segments: the title insurance and related services (title) segment, and the ancillary services and corporate segment. Effective in the first quarter 2022, the Company began reporting three operating segments: the title segment, the real estate solutions segment, and the corporate and other segment. The new segment presentation is primarily due to the increased size of the real estate solutions operations (formerly, ancillary services operations) resulting from strategic acquisitions. Previously, the real estate solutions operations were combined in one segment with the Company's corporate operations, which consist of expenses of the parent holding company and other centralized administrative services departments.

Under the revised segment presentation, the composition of each of the title and real estate solutions segments is substantially unchanged, while the corporate and other segment primarily includes corporate operations and other businesses not related to title or real estate solutions operations. 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 home and personal insurance services, Internal Revenue Code Section 1031 tax-deferred exchanges, and digital customer engagement platform services. The ~~ancillary services and corporate~~real estate solutions segment primarily includes appraisal management services, ~~search and valuation services, and~~ online notarization and closing ~~solutions, which are~~services, credit and real estate information services, and search and valuation services. Amounts for 2021 were recast in the ~~principal offerings of ancillary services, expenses of~~following table to conform with the ~~parent holding company, and certain other enterprise-wide overhead costs (net of centralized administrative services costs allocated to respective operating businesses).~~new segment presentation.

Selected statement of income information related to these segments is as follows:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2021	2020	2021	2020		2022	2021	2022	2021
		($000 omitted)					($000 omitted)
Title segment:	Title segment:					Title segment:
Revenues	Revenues	772,246	567,743	2,157,949	1,506,618	Revenues	646,607	772,246	2,135,000	2,157,949
Depreciation and amortization	Depreciation and amortization	4,556	3,748	13,579	11,302	Depreciation and amortization	7,467	4,556	21,098	13,579
Income before taxes and noncontrolling interest	Income before taxes and noncontrolling interest	119,147	82,376	321,910	152,003	Income before taxes and noncontrolling interest	51,837	119,147	228,212	321,907

Ancillary services and corporate segment:
Real estate solutions segment:						Real estate solutions segment:
Revenues	Revenues	64,481	27,953	186,172	45,083	Revenues	69,738	64,425	241,993	178,549
Depreciation and amortization	Depreciation and amortization	4,588	1,396	8,815	2,134	Depreciation and amortization	6,204	4,376	19,381	8,155
Income (loss) before taxes		(2,701)	(6,033)	(2,006)	(17,371)
Income before taxes						Income before taxes	3,364	2,791	16,249	7,655

Corporate and other segment:						Corporate and other segment:
Revenues						Revenues	54	56	36,394	7,623
Depreciation and amortization						Depreciation and amortization	396	212	1,624	660
Loss before taxes						Loss before taxes	(9,690)	(5,492)	(32,560)	(9,658)

Consolidated Stewart:	Consolidated Stewart:					Consolidated Stewart:
Revenues	Revenues	836,727	595,696	2,344,121	1,551,701	Revenues	716,399	836,727	2,413,387	2,344,121
Depreciation and amortization	Depreciation and amortization	9,144	5,144	22,394	13,436	Depreciation and amortization	14,067	9,144	42,103	22,394
Income before taxes and noncontrolling interest	Income before taxes and noncontrolling interest	116,446	76,343	319,904	134,632	Income before taxes and noncontrolling interest	45,511	116,446	211,901	319,904

The Company does not provide asset information by reportable operating segment as it does not routinely evaluate the asset position by segment.

Total revenues generated in the United States and all international operations are as follows:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2021	2020	2021	2020		2022	2021	2022	2021
		($000 omitted)					($000 omitted)
United States	United States	781,792	559,057	2,196,717	1,463,129	United States	670,846	781,792	2,271,497	2,196,717
International	International	54,935	36,639	147,404	88,572	International	45,553	54,935	141,890	147,404
		836,727	595,696	2,344,121	1,551,701		716,399	836,727	2,413,387	2,344,121

NOTE 13

Other comprehensive ~~(loss) income.~~loss. Changes in the balances of each component of other comprehensive ~~(loss) income~~loss and the related tax effects are as follows:


		Three Months Ended September 30, 2021			Three Months Ended September 30, 2020				Three Months Ended September 30, 2022			Three Months Ended September 30, 2021
		Before-Tax Amount	Tax Expense (Benefit)	Net-of-Tax Amount	Before-Tax Amount	Tax Expense (Benefit)	Net-of-Tax Amount		Before-Tax Amount	Tax Expense (Benefit)	Net-of-Tax Amount	Before-Tax Amount	Tax Expense (Benefit)	Net-of-Tax Amount
		($000 omitted)							($000 omitted)
Net unrealized gains and losses on investments:	Net unrealized gains and losses on investments:							Net unrealized gains and losses on investments:
Change in net unrealized gains and losses on investments	Change in net unrealized gains and losses on investments	(2,764)	(581)	(2,183)	1,164	244	920	Change in net unrealized gains and losses on investments	(11,292)	(2,371)	(8,921)	(2,764)	(581)	(2,183)
Reclassification adjustment for realized gains and losses on investments		(449)	(94)	(355)	(221)	(46)	(175)
Reclassification adjustments for realized gains and losses on investments								Reclassification adjustments for realized gains and losses on investments	(488)	(103)	(385)	(449)	(94)	(355)
		(3,213)	(675)	(2,538)	943	198	745		(11,780)	(2,474)	(9,306)	(3,213)	(675)	(2,538)

Foreign currency translation adjustments	Foreign currency translation adjustments	(4,950)	(707)	(4,243)	4,384	540	3,844	Foreign currency translation adjustments	(18,315)	(3,015)	(15,300)	(4,950)	(707)	(4,243)

Other comprehensive (loss) income		(8,163)	(1,382)	(6,781)	5,327	738	4,589
Other comprehensive loss								Other comprehensive loss	(30,095)	(5,489)	(24,606)	(8,163)	(1,382)	(6,781)


		Nine Months Ended September 30, 2021			Nine Months Ended September 30, 2020				Nine Months Ended September 30, 2022			Nine Months Ended September 30, 2021
		Before-Tax Amount	Tax Expense (Benefit)	Net-of-Tax Amount	Before-Tax Amount	Tax Expense (Benefit)	Net-of-Tax Amount		Before-Tax Amount	Tax Expense (Benefit)	Net-of-Tax Amount	Before-Tax Amount	Tax Expense (Benefit)	Net-of-Tax Amount
		($000 omitted)							($000 omitted)
Net unrealized gains and losses on investments:	Net unrealized gains and losses on investments:							Net unrealized gains and losses on investments:
Change in net unrealized gains and losses on investments	Change in net unrealized gains and losses on investments	(13,076)	(2,746)	(10,330)	19,056	4,001	15,055	Change in net unrealized gains and losses on investments	(52,548)	(11,035)	(41,513)	(13,076)	(2,746)	(10,330)
Reclassification adjustment for realized gains and losses on investments	Reclassification adjustment for realized gains and losses on investments	(1,162)	(244)	(918)	(349)	(73)	(276)	Reclassification adjustment for realized gains and losses on investments	(870)	(183)	(687)	(1,162)	(244)	(918)
		(14,238)	(2,990)	(11,248)	18,707	3,928	14,779		(53,418)	(11,218)	(42,200)	(14,238)	(2,990)	(11,248)

Foreign currency translation adjustments	Foreign currency translation adjustments	(839)	158	(997)	(4,101)	(697)	(3,404)	Foreign currency translation adjustments	(26,668)	(3,807)	(22,861)	(839)	158	(997)

Other comprehensive (loss) income		(15,077)	(2,832)	(12,245)	14,606	3,231	11,375
Other comprehensive loss								Other comprehensive loss	(80,086)	(15,025)	(65,061)	(15,077)	(2,832)	(12,245)

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

MANAGEMENT’S OVERVIEW

Third quarter ~~2021~~2022 overview. We reported net income attributable to Stewart of $29.4 million ($1.08 per diluted share) for the third quarter 2022, compared to net income attributable to Stewart of $88.7 million ($3.26 per diluted share) for the third quarter ~~2021, compared to net~~2021. Pretax income ~~attributable to Stewart of $55.9 million ($2.21 per diluted share)~~before noncontrolling interests for the third quarter ~~2020, while third quarter 2021 pretax income before noncontrolling interests~~2022 was ~~$116.4~~$45.5 million compared to pretax income before noncontrolling interests of ~~$76.3~~$116.4 million for the prior year quarter. The third quarter ~~2020. The~~2022 results included $6.4 million of pretax net realized and unrealized losses, primarily related to net unrealized losses on fair value changes of equity securities investments recorded in the title segment, while the third quarter 2021 results included $2.9 million of pretax net realized and unrealized gains, ~~which included a $2.5 million gain related to~~primarily driven by an acquisition contingent liability adjustment recorded in the ~~ancillary services and corporate~~real estate solutions segment. Excluding net realized and unrealized gains and losses, Stewart’s third quarter 2021 adjusted net income was $86.4 million ($3.17 per diluted share), an improvement of $30.5 million, or 55%, from the prior year quarter.

Summary results of the title segment are as follows ($ in millions, except pretax margin):


		For the Three Months Ended September 30						For the Three Months Ended September 30
		2021		2020		% Change				2022		2021		% Chg

Operating revenues	Operating revenues	767.9		562.7		36	%		Operating revenues	647.9		767.9		(16)	%
Investment income	Investment income	4.1		5.0		(19)	%		Investment income	5.2		4.1		27	%
Net realized and unrealized gains		0.3		—		100	%
Net realized and unrealized (losses) gains									Net realized and unrealized (losses) gains	(6.4)		0.3		(2,042)	%
Pretax income	Pretax income	119.1		82.4		45	%		Pretax income	51.8		119.1		(56)	%
Pretax margin	Pretax margin	15.4	%	14.5	%				Pretax margin	8.0	%	15.4	%

~~Pretax income for the~~The title ~~segment increased by $36.8 million, or 45%, while pretax margin improved 90 basis points to 15.4%~~segment’s operating revenues in the third quarter ~~2021~~2022 decreased $120.0 million, or 16%, compared to the ~~prior year quarter. Title operating revenues grew $205.1 million, or 36%, as~~third quarter 2021, primarily due to volume declines in our direct title and ~~gross independent~~ agency ~~revenues increased $86.0 million, or 31%, and $119.2 million, or 42%, respectively. Consistent with the increased title revenues, overall~~operations. Overall segment operating expenses in the third quarter ~~2021 increased $167.7~~2022 decreased $58 million, or ~~35%~~9%, ~~with~~compared to the prior year quarter, primarily due to lower agency retention and title loss expenses, consistent with lower title revenues, and ~~combined title~~lower total employee costs and other operating ~~expenses increasing by 43% and 30%, respectively, compared to the third quarter 2020.~~expenses. Average independent agency remittance rate in the third quarter ~~2021~~2022 was 17.6% compared to 17.9%~~, slightly lower than 18.2%~~ in the ~~prior year quarter.~~third quarter 2021. As a percentage of ~~title~~operating revenues, combined title employee costs and other operating expenses ~~improved~~were 43.4% in the third quarter 2022 compared to 37.5% in the third quarter 2021, ~~compared~~primarily due to ~~39.5%~~lower revenues in the third quarter ~~2020.~~2022.

Title loss expense ~~increased $1.9 million, or 7%,~~ in the third quarter 2022 decreased by $4.9 million, or 16%, compared to the prior year quarter, primarily due to lower title revenues. As a percentage of title revenues, title loss expense in the third quarter 2022 was 3.9% compared to 4.0% in the third quarter 2021. For the full year 2022, we anticipate our title losses will be approximately 4% of title revenues.

The segment’s net realized and unrealized losses and gains in the third quarters 2022 and 2021, respectively, were primarily related to fair value changes of equity securities investments. Investment income in the third quarter 2022 increased compared to the prior year quarter, primarily as a result of higher ~~title revenues, partially offset~~interest income driven by ~~favorable claims experience. As a percentage of title revenues,~~ the ~~title loss expense~~increased interest rate environment in the third quarter ~~2021 was 4.0% compared to 5.1% in the prior year quarter.~~

The segment’s investment income declined $0.9 million, or 19%, primarily due to lower dividend income on cost-basis investments and decreased interest income resulting from lower interest rates during the third quarter 2021 compared to last year’s quarter.2022.

Summary results of the ~~ancillary services and corporate~~real estate solutions segment are as follows ($ in ~~millions)~~millions, except pretax margin):


		For the Three Months Ended September 30				For the Three Months Ended September 30
		2021	2020	% Change				2022		2021		% Chg

Operating revenues	Operating revenues	61.9	28.0	122	%		Operating revenues	69.7		61.9		13	%
Net realized gains	Net realized gains	2.6	—	100	%		Net realized gains	—		2.5		(100)	%
Pretax loss		(2.7)	(6.0)	55	%
Pretax income							Pretax income	3.4		2.8		21	%
Pretax margin							Pretax margin	4.8	%	4.3	%

~~The segment’s operating revenues increased $34.0 million, or 122%,~~Pretax income for the segment improved in the third quarter ~~2021,~~2022, compared to the prior year quarter, primarily due to $7.8 million, or 13%, net increased revenues, ~~generated~~driven by ~~recent~~revenues from fourth quarter 2021 acquisitions, partially offset by lower revenues from appraisal management and notary solutions operations due to reduced market activity. Total operating expenses increased $4.7 million, or 8%, driven by higher employee costs related to increased employee count resulting from acquisitions and higher ~~appraisal management services revenues. The ancillary services~~purchased intangible asset amortization expenses in the third quarter 2022 compared to the prior year quarter. Total intangible asset amortization expenses in the third quarters 2022 and 2021 were $5.8 million and $4.2 million, respectively.

In regard to the corporate and other segment, net expenses attributable to corporate operations ~~generated~~in the third quarter 2022 increased $4.2 million, or 76%, to $9.7 million, compared to $5.5 million in the third quarter 2021, primarily as a ~~pretax income~~result of $2.8 million (which included a $2.5 million gain related to an acquisition contingent liability adjustment and $4.2 million of purchased intangibles amortization expense), compared to a pretax income of $0.3 million (which included $1.1 million of purchased intangibles amortization expense)higher interest expense resulting from debt issued in the ~~third~~fourth quarter ~~2020. Net expenses attributable to parent company and corporate operations for the third quarters 2021 and 2020 were approximately $5.6 million and $6.3 million, respectively.~~2021.

Consistent with our overall strategy of improving operational performance through targeted growth, focused management, and broader technology and services offerings to improve customer experience and ease of use, weEffective October 1, 2022, Stewart closed on ~~our~~the acquisition of ~~Informative Research (IR) effective October 1, 2021. IR is a leader in providing credit, consumer~~FNC Title Services, LLC and ~~real estate data~~its affiliates (FNC Group), which provides title insurance and ~~technology~~settlement services catering to more than 300 customers across the United States. Our acquisition of IR moves us closer to our goal of streamlining the real estate and loan transaction lifecycle through end-to-end, customer-focused and technology-based solutions. We believe our solid operating results and liquidity position will allow us to continue investing and growing to maximize our operational potential.

~~Update on COVID-19 pandemic measures.~~ ~~We continue to operate under our business continuity plan that we deployed in March 2020 when the pandemic started. Our employees have not fully transitioned back~~ to the ~~workplace, and we are still implementing appropriate measures to protect the safety of all our employees and customers in carrying out our business operations (considered as essential business~~reverse mortgage industry on a nationwide basis. The FNC Group operates from offices located in the ~~U.S.) using digital tools~~states of Alabama, Louisiana, Maryland, Nevada, Texas and ~~innovative solutions, when possible.~~Utah.

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 nine months ended September 30, ~~2021,~~2022, we made no material changes to our critical accounting estimates as previously disclosed in Management’s Discussion and Analysis in the ~~2020~~2021 Form 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 ~~ancillary~~real estate solutions operations include appraisal management services, online notarization and closing services, credit and real estate information services, and search and valuation services. The corporate and other segment includes our parent holding company expenses and certain enterprise-wide overhead costs, along with ~~our ancillary services operations, which are principally appraisal management services, online notarization and closing services, and search 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;

•premium rates;

•foreign currency exchange rates;

•market share;

•ability to attract and retain highly productive sales associates;

•~~departure of revenue-attached employees;~~

•independent agency remittance rates;

•opening of new offices and acquisitions;

•office closures;

•number and value of commercial transactions, which typically yield higher premiums;

•government or regulatory initiatives, including tax incentives and the implementation of the integrated

disclosure requirements;

•acquisitions or divestitures of businesses;

•volume of distressed property transactions;

•seasonality and/or weather; and

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

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 approximately 3.7% change in title premiums. Home price changes may override the seasonal nature of the title insurance business. Historically, our first quarter is the least active in terms of title insurance revenues as home buying is generally depressed during winter months. Our second and third quarters are typically the most active as the summer is the traditional home buying season, and while commercial transaction closings are skewed to the end of the year, individually large commercial transactions can occur any time of year. On average, refinance title premium rates are 60% of the premium rates for a similarly priced sale transaction.

RESULTS OF OPERATIONS

Comparisons of our results of operations for the three and nine months ended September 30, ~~2021~~2022 with the corresponding periods in the prior year are set forth below. Factors contributing to fluctuations in the results of operations are presented in the order of their monetary significance, and we have quantified, when necessary, significant changes. Segment results are included in the discussions and, when relevant, are discussed separately.

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 U.S. Census Bureau as of September 30, ~~2021.~~2022. We also use information from our direct operations.

Operating environment. Existing home sales in September ~~2021,~~2022, on a seasonally-adjusted basis, ~~improved 7% from~~decreased for the eighth consecutive month, decreasing 2% and 24% compared to August ~~2021~~2022 and ~~were down 2% from~~ a year ~~ago. Despite~~ago, respectively. According to NAR, the ~~supply constraints that are currently limiting~~existing homes sales ~~and~~decline was primarily due to the continuous rise in interest rates, accompanied by lower housing inventory NAR saw some improvement in supply in the past months which improved sales in September 2021 and it expects housing demand to remain strong as buyers are securing homes before mortgage rates increase further in the short term. M~~edian and average~~levels. Existing home prices continued to ~~rise, increasing 13% and 9%, respectively,~~climb, with the median price in September ~~2021~~2022 being 8% higher compared to a year ago, which marked ~~the 115th~~a record 127th consecutive month of year-over-year median home price increases. ~~With regard~~In relation to new residential construction, U.S. housing starts in September ~~2021 improved 7% from~~2022 were 8% lower compared to both August 2022 and September ~~2020, but declined 2% from August~~ 2021, while ~~newly issued~~newly-issued building permits in September ~~2021~~2022 were ~~comparable~~1% higher than August 2022, but 3% lower compared to a year ~~ago, but decreased 8% sequentially from August 2021.~~ago.

According to Fannie Mae and MBA (averaged), ~~one-to-four~~total single family mortgage originations during the third quarter ~~2021~~2022 decreased ~~20%~~55% to approximately ~~$994~~$494 billion compared to the third quarter ~~2020,~~2021, primarily ~~driven by~~due to lower refinancing and purchase transactions resulting from the ~~expected decline in refinancing originations. However, the decline in total~~elevated interest rates. Refinancing and purchase originations ~~for~~during the third quarter ~~2021 was better than~~2022 were 84% and 22% lower compared to the ~~34% decrease that was expected based on last quarter's forecasts.~~ third quarter 2021.

As of September ~~2021,~~2022, the average 30-year fixed interest rate ~~for 2021~~ is expected to ~~be 3.0%, lower than~~average 5.3% for 2022 compared to the ~~3.25% anticipated in June 2021, while total originations for~~3.1% average interest rate observed during 2021. For the fourth quarter ~~2021 are~~2022, it is expected tothat total mortgage originations will be ~~43%~~50% lower, than last year's fourth quarter. Supply constraints continue to impede the housing market, resulting in low inventories and slowed down home construction. According to Fannie Mae, this will lead to near-term market softening, withwhile existing and new ~~homes~~home sales inwill decline 23% and 21%, respectively, compared to the fourth quarter ~~2021 expected to decline 11% and 7%, respectively.~~2021.

Title revenues. Direct title revenue information is presented below:


		Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended September 30,					Nine Months Ended September 30,
		2021	2020	Change	% Change		2021	2020	Change	% Change			2022	2021	Change	% Chg		2022	2021	Change	% Chg
		($ in millions)					($ in millions)						($ in millions)					($ in millions)
Non-commercial	Non-commercial											Non-commercial
Domestic	Domestic	249.1	208.2	40.9	20	%	709.1	503.8	205.3	41	%	Domestic	204.4	249.1	(44.7)	(18)	%	659.1	709.1	(50.0)	(7)	%
International	International	44.2	30.4	13.8	45	%	118.8	70.4	48.4	69	%	International	33.8	44.2	(10.4)	(24)	%	106.6	118.8	(12.2)	(10)	%
		293.3	238.6	54.7	23	%	827.9	574.2	253.7	44	%		238.2	293.3	(55.1)	(19)	%	765.7	827.9	(62.2)	(8)	%
Commercial:	Commercial:											Commercial:
Domestic	Domestic	64.5	36.7	27.8	76	%	149.2	108.7	40.5	37	%	Domestic	61.0	64.5	(3.5)	(5)	%	184.5	149.2	35.3	24	%
International	International	8.3	4.8	3.5	73	%	22.0	13.7	8.3	61	%	International	8.2	8.3	(0.1)	(1)	%	26.2	22.0	4.2	19	%
		72.8	41.5	31.3	75	%	171.2	122.4	48.8	40	%		69.2	72.8	(3.6)	(5)	%	210.7	171.2	39.5	23	%
Total direct title revenues	Total direct title revenues	366.1	280.1	86.0	31	%	999.1	696.6	302.5	43	%	Total direct title revenues	307.4	366.1	(58.7)	(16)	%	976.4	999.1	(22.7)	(2)	%

~~Direct title~~Non-commercial revenues ~~improved~~declined in the third quarter and first nine months of ~~2021,~~2022, compared to the same periods in ~~2020, as a result of overall revenue growth in both non-commercial~~2021, primarily due to lower purchase and ~~commercial operations. Non-commercial revenues improved, primarily~~refinancing transactions driven by ~~increased residential~~the high mortgage interest rate environment. Compared to the same periods in 2021, combined purchase ~~transactions~~ and ~~scale. Purchase~~refinancing orders closed ~~improved 8%~~decreased 42% and ~~30%~~32% in the third quarter and first nine months of ~~2021, compared~~2022, respectively, while average residential fee per file increased 38% to the same periods in 2020, while refinancing orders closed increased 19% in the first nine months of 2021, but declined 15% in the third quarter 2021, consistent with the market normalization trend of refinancing originations following the transaction surge that started in early 2020 when interest rates declined as a result of the COVID-19 pandemic. Residential fees per file$3,300 and 36% to $2,900 in the third quarter and first nine months of ~~2021 were approximately $2,400~~2022, respectively, primarily due to the higher mix of purchase transactions and ~~$2,200, respectively, which were 24%~~higher average home prices.

Domestic commercial revenues in the third quarter 2022 decreased primarily due to reduced transaction size, while revenues in the first nine months of 2022 improved primarily due to increased commercial transaction size and ~~13% higher, respectively,~~volume, compared to the same periods in ~~2020.~~

~~Commercial revenues increased~~2021. Domestic commercial orders closed in ~~the~~ third quarter and first nine months of ~~2021 compared~~2022 were 6% and 12% higher, respectively, while average domestic commercial fee per file decreased 11% to ~~same periods in 2020, primarily due to growth in commercial transaction size and volume. Domestic commercial orders closed improved 11% and 19%~~$13,700 in the third quarter 2022 and increased 11% to $13,200 in first nine months of 2021, respectively, while domestic commercial fees per file in the third quarter and first nine months of 2021 were approximately $15,400 and $11,900, respectively, which were 59% and 16% higher, respectively,2022, compared to the same periods in ~~2020.~~2021.

Total international revenues in the third quarter and first nine months of ~~2021 increased $17.3~~2022 decreased by $10.5 million, or ~~49%~~20%, and ~~$56.7~~$8.0 million, or ~~67%~~6%, ~~respectively,~~ compared to the same periods ~~last year,~~in 2021, primarily due to ~~improved volumes across~~lower transaction volume in our ~~international~~Canadian operations ~~primarily in Canada.~~and the weaker foreign currency exchange rates against the U.S. dollar.

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


		Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended September 30,					Nine Months Ended September 30,
		2021	2020	Change	% Change		2021	2020	Change	% Change			2022	2021	Change	% Chg		2022	2021	Change	% Chg
Opened Orders:	Opened Orders:											Opened Orders:
Commercial	Commercial	4,449	3,703	746	20	%	13,612	11,281	2,331	21	%	Commercial	4,456	4,461	(5)	—	%	16,028	13,635	2,393	18	%
Purchase	Purchase	73,213	73,668	(455)	(1)	%	220,420	184,224	36,196	20	%	Purchase	60,646	73,558	(12,912)	(18)	%	201,228	220,979	(19,751)	(9)	%
Refinance	Refinance	64,201	86,823	(22,622)	(26)	%	205,558	223,318	(17,760)	(8)	%	Refinance	20,047	64,374	(44,327)	(69)	%	85,574	205,834	(120,260)	(58)	%
Other	Other	1,761	1,067	694	65	%	5,253	2,293	2,960	129	%	Other	1,825	1,762	63	4	%	4,546	5,254	(708)	(13)	%
Total	Total	143,624	165,261	(21,637)	(13)	%	444,843	421,116	23,727	6	%	Total	86,974	144,155	(57,181)	(40)	%	307,376	445,702	(138,326)	(31)	%

Closed Orders:	Closed Orders:											Closed Orders:
Commercial	Commercial	4,199	3,799	400	11	%	12,531	10,549	1,982	19	%	Commercial	4,444	4,204	240	6	%	14,007	12,538	1,469	12	%
Purchase	Purchase	56,376	52,407	3,969	8	%	160,458	123,529	36,929	30	%	Purchase	46,592	56,570	(9,978)	(18)	%	149,272	160,763	(11,491)	(7)	%
Refinance	Refinance	47,437	56,027	(8,590)	(15)	%	165,642	138,906	26,736	19	%	Refinance	14,343	47,549	(33,206)	(70)	%	71,507	165,843	(94,336)	(57)	%
Other	Other	1,101	555	546	98	%	3,372	1,316	2,056	156	%	Other	1,419	1,139	280	25	%	4,778	3,492	1,286	37	%
Total	Total	109,113	112,788	(3,675)	(3)	%	342,003	274,300	67,703	25	%	Total	66,798	109,462	(42,664)	(39)	%	239,564	342,636	(103,072)	(30)	%

Gross revenues from independent agency operations ~~increased $119.2 million and $336.0 million (both 42%)~~ in the third quarter ~~and~~2022 declined $61.3 million, or 15%, compared to the third quarter 2021 primarily due to the effect of higher mortgage interest rates on the market in the third quarter 2022. Gross agency revenues during the first nine months of 2022 were $16.5 million, or 2%, higher than the same period in 2021 ~~compared~~primarily due to ~~same periods in 2020, which was consistent with~~increased market activity during the ~~improvement seen in our direct title operations and the housing market.~~early part of 2022. Agency revenues, net of retention, ~~improved $20.3~~decreased $11.9 million, or ~~39%, and $59.3 million, or 42%~~17%, in the third quarter 2022 and were flat in the first nine months of ~~2021, respectively,~~2022 compared to the same periods ~~last year,~~in 2021, generally driven by changes in ~~line with increased~~ gross agency revenues. Refer further to the "Retention by agencies" discussion under Expenses below.

~~Ancillary services~~Real estate solutions and other revenues. ~~Ancillary services operating~~Real estate solutions and other revenues are comprised of revenues generated by our real estate solutions operations and, for the first half of 2022, by a real estate brokerage company which we recently sold. These revenues increased ~~$34.0~~$7.8 million, or ~~122%~~13%, and ~~$131.5~~$105.1 million, or ~~295%~~60%, in the third quarter and first nine months of ~~2021,~~2022, respectively, compared to the same periods in ~~2020. The significant revenue growth was~~2021, primarily ~~generated~~due to additional revenues from acquisitions completed in the fourth quarter 2021, which were partially offset by ~~recent acquisitions of~~reduced revenues from our appraisal management and ~~online notarization and closing services companies, partially offset by lower revenues from our legacy valuation services business~~notary solutions operations due to ~~lower home equity volume.~~reduced market activity.

Investment income. Investment income increased $1.1 million, or 27%, and $2.4 million, or 18%, in the third quarter and first nine months of ~~2021 decreased $1.0 million, or 19%,~~2022, respectively, primarily due to higher interest income driven by increased interest rates and ~~$1.4 million, or 10%, respectively,~~higher dividend income from investments in 2022, compared to the same periods in ~~2020, primarily driven by reduced interest income resulting from the lower interest rates applicable to our short-term and securities investments during~~ 2021.

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

Expenses. An analysis of expenses is shown below:


		Three Months Ended September 30,							Nine Months Ended September 30,								Three Months Ended September 30,							Nine Months Ended September 30,
		2021		2020		Change	% Change		2021		2020		Change	% Change			2022		2021		Change*	% Chg		2022		2021		Change*	% Chg
		($ in millions)							($ in millions)								($ in millions)							($ in millions)

Amounts retained by agencies	Amounts retained by agencies	329.9		231.1		98.9	43	%	935.9		659.1		276.7	42	%	Amounts retained by agencies	280.5		329.9		(49.4)	(15	%)	951.6		935.9		15.7	2	%
As a % of agency revenues	As a % of agency revenues	82.1	%	81.8	%				82.2	%	82.2	%				As a % of agency revenues	82.4	%	82.1	%				82.4	%	82.2	%
Employee costs	Employee costs	197.6		155.6		41.9	27	%	555.5		428.8		126.6	30	%	Employee costs	195.1		197.6		(2.5)	(1	%)	610.3		555.5		54.8	10	%
As a % of operating revenues	As a % of operating revenues	23.8	%	26.3	%				24.0	%	27.8	%				As a % of operating revenues	27.2	%	23.8	%				25.3	%	24.0	%
Other operating expenses	Other operating expenses	152.6		98.5		54.1	55	%	415.9		245.0		170.9	70	%	Other operating expenses	151.2		152.6		(1.4)	(1	%)	503.0		415.9		87.1	21	%
As a % of operating revenues	As a % of operating revenues	18.4	%	16.7	%				18.0	%	15.9	%				As a % of operating revenues	21.1	%	18.4	%				20.9	%	18.0	%
Title losses and related claims	Title losses and related claims	30.3		28.4		1.9	7	%	92.7		68.6		24.1	35	%	Title losses and related claims	25.5		30.3		(4.9)	(16	%)	81.1		92.7		(11.6)	(12	%)
As a % of title revenues	As a % of title revenues	4.0	%	5.1	%				4.3	%	4.6	%				As a % of title revenues	3.9	%	4.0	%				3.8	%	4.3	%

*Amounts change may not add due to rounding.

Retention by agencies. Amounts retained by title agencies are based on agreements between agencies and our title underwriters. Amounts retained by independent agencies, as a percentage of revenues generated by them, averaged ~~82.1% and 82.2%~~82.4% in both the third quarter and first nine months of ~~2021, respectively, as~~2022 compared to ~~81.8%~~82.1% and 82.2%, respectively, in the same periods in ~~2020.~~2021 primarily due to higher revenues generated by our agents from higher retention states. The average retention percentage may vary from period to period due to the geographical mix of agency operations, the volume of title revenues and, in some states, laws or regulations. Due to the variety of such laws or regulations, as well as competitive factors, the average retention rate can differ significantly from state to state. In addition, a high proportion of our independent agencies are in states with retention rates greater than 80%. We continue to focus on increasing profit margins in every state, increasing premium revenue in states where remittance rates are 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.

Employee costs. Consolidated employee costs decreased $2.5 million, or 1%, in the third quarter 2022 and increased $54.8 million, or 10%, in the first nine months of ~~2021 increased $41.9 million, or 27%, and $126.6 million, or 30%, respectively,~~2022, compared to the same periods in ~~2020. These increases were~~2021. Employee costs decreased in the third quarter 2022 due to reduced incentive compensation and temporary labor costs driven by lower volumes, partially offset by higher salaries and employee benefits primarily resulting from acquisitions. Employee costs increased in the first nine months of 2022 primarily due to higher salaries and employee benefits resulting from increased employee counts driven by ~~23% and 19% higher average~~acquisitions. Average employee counts in the third quarter and first nine months of ~~2021,~~2022 increased 16% and 21%, respectively, ~~and increased incentive compensation on higher overall operating results. As~~compared to the same periods in 2021. Employee costs, as a percentage of total operating revenues, ~~consolidated employee costs improved to 23.8%~~were higher at 27.2% and ~~24.0%~~25.3% in the third quarter and first nine months of ~~2021,~~2022, respectively, compared to ~~26.3%~~23.8% and ~~27.8%~~24.0% in the ~~third quarter and first nine months of 2020, respectively,~~same periods in 2021, primarily ~~influenced by our continued focus on managing operating costs.~~due to lower revenues in 2022.

~~Employee~~Compared to the same periods in 2021, employee costs in the title segment ~~increased $38.1~~decreased $7.2 million, or ~~26%~~4%, in the third quarter 2022 and increased $33.9 million, or 6%, in the first nine months of 2022 due to the factors mentioned above. Employee costs in the real estate solutions segment increased $4.8 million, or 63%, and ~~$112.8~~$16.5 million, or ~~27%~~75%, in the third quarter and first nine months of ~~2021,~~2022, respectively, ~~compared to the same periods in 2020,~~ primarily due to increased salaries expense driven by higher average employee counts, mostly from recent title office acquisitions, and increased incentive compensation on improved title operating results. Employee costs in the ancillary services and corporate segment increased $3.8 million, or 58%, and $13.8 million, or 80%, inacquisitions. During the third quarter and first nine months of ~~2021,~~2022, average employee counts in the title segment increased 12% and 17%, respectively, while average employee counts in the real estate solutions segment increased 64% and 68%, respectively, compared to the same periods in ~~2020,~~2021. Employee costs in the corporate and other segment in the third quarter 2022 were flat, and increased $4.4 million, or 49%, in the first nine months of 2022, compared to the same periods in 2021, primarily due to ~~increased average employee counts driven by recent acquisitions~~the acquired real estate brokerage company which we sold in the ~~ancillary services operations.~~second quarter 2022.

As of September 30, ~~2021,~~2022, we had approximately 7,400 employees compared to approximately 6,600 employees ~~an increase~~as of ~~approximately 800 employees from December 31, 2020, primarily due to acquisitions.~~September 30, 2021.

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

Consolidated other operating expenses in the third quarter 2022 decreased $1.4 million, 1%, compared to the third quarter 2021, primarily due to decreased costs tied to lower title and appraisal management and notary services revenues, partially offset by higher technology and office closure costs. Consolidated other operating expenses in the first nine months of 2022 increased ~~$54.1~~$87.1 million, or ~~55%~~21%, compared to the same period in 2021, primarily due to higher service expenses tied to increased real estate solutions revenues, higher technology, marketing and travel costs, and increased rent and other occupancy expenses resulting from acquisitions, partially offset by lower title-related expenses related to decreased title revenues.

Total variable costs decreased $15.7 million, or 16%, in the third quarter 2022 primarily due to lower title and appraisal management and notary services revenues, while these costs increased $44.8 million, or 17%, in the first nine months of 2022 primarily driven by acquisitions in the fourth quarter 2021, which were partially offset by lower volumes in existing businesses. Total costs that are fixed in nature increased $8.6 million, or 21%, and ~~$170.9~~$29.0 million, or ~~70%~~25%, in the third quarter and first nine months of ~~2021,~~2022, respectively, ~~compared~~primarily due to ~~the same periods in 2020, primarily as a result of recently-acquired businesses~~higher technology costs, rent and ~~increased variable costs relating to increased revenues. Total variable~~occupancy expenses, and insurance costs. Independent costs increased ~~$41.6~~$5.7 million, or ~~71%~~47%, and ~~$136.9~~$13.3 million, or ~~107%~~41%, in the third quarter and first nine months of 2021, respectively, mainly due to higher appraisal and service expenses by recently-acquired ancillary services businesses, and increased outside search, premium taxes, attorney fee splits and delivery fees consistent with higher title operating revenues. Total costs that are fixed in nature increased $8.3 million, or 26%, and $22.6 million, or 24%, in the third quarter and first nine months of 2021,2022, respectively, primarily due to ~~increased professional fees, rent~~office closure costs and ~~occupancy expenses and technology costs. Independent costs increased $4.1 million and $11.3 million (both 52%) in the third quarter and first nine months of 2021, respectively, primarily due to~~ higher ~~bank fees, litigation-related accruals, office closures expenses,~~ marketing and travel costs ~~and charitable contributions.~~ due to increased activity following the pandemic period.

As a percentage of total operating revenues, consolidated other operating expenses in the third quarter and first nine months of ~~2021~~2022, increased to 21.1% and 20.9%, respectively, compared to 18.4% and 18.0%~~, respectively, compared to 16.7% and 15.9%~~ in the same periods in ~~2020,~~2021, primarily due to ~~appraisal~~lower title operating revenues and ~~service expenses related to~~the increased size of our ~~recently-acquired ancillary services businesses.~~real estate solutions operations which typically have higher other operating expenses.

~~As of September 30, 2021, we lease space at approximately 490 locations for title office operations, production, administrative and technology centers.~~

Title losses. Provisions for title losses, as a ~~percentage~~percentage of title operating revenues, were 3.9% and 3.8% for the third quarter and first nine months of 2022, compared to 4.0% and 4.3% for the third quarter and first nine months of ~~2021, respectively, compared to 5.1% and 4.6% for the same periods in 2020.~~2021. Title loss expense ~~increased $1.9 million, or 7%, and $24.1 million, or 35%,~~ in the third quarter and first nine months of ~~2021,~~2022 decreased $4.9 million, or 16%, and $11.6 million, or 12%, respectively, compared to the same periods in ~~2020,~~2021, primarily ~~as a result of increased~~due to favorable claims experience and lower title revenues ~~partially offset by favorable claims experience.~~during 2022. 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.

The composition of title policy loss expense is as follows:


		Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended September 30,					Nine Months Ended September 30,
		2021	2020	Change	% Change		2021	2020	Change	% Change			2022	2021	Change	% Chg		2022	2021	Change	% Chg
		($ in millions)					($ in millions)						($ in millions)					($ in millions)
Provisions – known claims:	Provisions – known claims:											Provisions – known claims:
Current year	Current year	4.2	3.0	1.2	40	%	10.8	7.6	3.2	42	%	Current year	4.4	4.2	0.2	5	%	12.9	10.8	2.1	19	%
Prior policy years	Prior policy years	13.8	16.9	(3.1)	(18)	%	41.5	45.0	(3.5)	(8)	%	Prior policy years	25.3	13.8	11.5	83	%	56.9	41.5	15.4	37	%
		18.0	19.9	(1.9)	(10)	%	52.3	52.6	(0.3)	(1)	%		29.7	18.0	11.7	65	%	69.8	52.3	17.5	33	%
Provisions – IBNR	Provisions – IBNR											Provisions – IBNR
Current year	Current year	25.9	25.3	0.6	2	%	80.5	60.5	20.0	33	%	Current year	21.0	25.9	(4.9)	(19)	%	68.2	80.5	(12.3)	(15)	%
Prior policy years	Prior policy years	0.2	0.1	0.1	100	%	1.4	0.5	0.9	180	%	Prior policy years	0.1	0.2	(0.1)	(50)	%	—	1.4	(1.4)	(100)	%
		26.1	25.4	0.7	3	%	81.9	61.0	20.9	34	%		21.1	26.1	(5.0)	(19)	%	68.2	81.9	(13.7)	(17)	%
Transferred from IBNR to known claims	Transferred from IBNR to known claims	(13.8)	(16.9)	3.1	(18)	%	(41.5)	(45.0)	3.5	(8)	%	Transferred from IBNR to known claims	(25.3)	(13.8)	(11.5)	83	%	(56.9)	(41.5)	(15.4)	37	%
Total provisions	Total provisions	30.3	28.4	1.9	7	%	92.7	68.6	24.1	35	%	Total provisions	25.5	30.3	(4.8)	(16)	%	81.1	92.7	(11.6)	(13)	%

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 year IBNR provisions in the third quarter and first nine months of ~~2021 increased $0.6~~2022 decreased $4.9 million, or 2%19%, and ~~$20~~$12.3 million, or ~~33%~~15%, respectively, compared to the same periods in ~~2020, p~~2021, ~~rimarily~~ due to ~~increased~~lower title ~~premiums in 2021, partially offset by the effect~~ ~~of lowered provisioning rates due to~~loss provisions resulting from favorable claims ~~experience.~~experience and lower title revenues. As a percentage of title operating revenues, provisions - IBNR for the current policy year were 3.2% for both the third quarter and first nine months of 2022, compared to 3.4% and 3.8% in the third quarter and first nine months of 2021, ~~respectively, compared to 4.5% and 4.0%~~respectively. Cash claim payments in the third quarter and first nine months of ~~2020, respectively.~~

~~Cash~~2022 increased $14.6 million, or 87%, and $17.2 million, or 33%, respectively, primarily as a result of increased large claim payments ~~decreased $3.2 million, or 16%, and $6.1 million, or 10%,~~ in ~~the third quarter and first nine months of 2021,~~2022 compared to the same periods ~~last year, primarily due to lower payments on non-large claims.~~in 2021. 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 fraud, and in those cases, the title insurer incurs the loss under its obligation to ensure that an unencumbered title is conveyed. Escrow losses are recognized as expenses when discovered or when contingencies associated with them (such as litigation) are resolved and are typically paid less than 12 months after the loss is recognized.

Total title policy loss reserve balances are as follows:


		September 30, 2021	December 31, 2020		September 30, 2022	December 31, 2021
		($ in millions)			($ in millions)
Known claims	Known claims	68.2	68.9	Known claims	75.6	75.9
IBNR	IBNR	466.4	427.4	IBNR	471.6	473.7
Total estimated title losses	Total estimated title losses	534.6	496.3	Total estimated title losses	547.2	549.6

The actual timing of estimated title loss payments may vary since claims, by their nature, are complex and paid over long periods of time. Based on historical payment patterns, the outstanding loss reserves are substantially paid out within ~~six~~seven 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 increased ~~$4.0~~$4.9 million, or ~~78%~~54%, and ~~$9.0~~$19.7 million, or ~~67%~~88%, in the third quarter and first nine months of ~~2021,~~2022 compared to the same periods in ~~2020,~~2021, primarily due to ~~purchased~~acquisitions, which generated higher intangible asset amortization expenses of $2.4 million and ~~fixed asset~~$14.6 million, respectively, and higher depreciation ~~expenses related to recent acquisitions.~~expense resulting from increased capital expenditures.

Income taxes. Our effective tax rates, based on income before taxes and after deducting income attributable to noncontrolling interests, were ~~21%~~27% and ~~22% for~~25% in the third ~~quarters 2021~~quarter and ~~2020, respectively, and 23% and 24% for the~~ first nine months of ~~2021~~2022, respectively, compared to 21% and ~~2020, respectively.~~23% in the corresponding periods in 2021. The ~~lower effective tax~~higher rates in ~~the third quarters 2021 and 2020, relative to the year-to-date rates,~~2022 were primarily due to ~~discrete income tax benefits in the~~ third quarter discrete adjustments related to the annual filing of our federal income tax ~~return.~~return, which resulted in an additional income tax expense compared to an income tax benefit in 2021.

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 September 30, ~~2021,~~2022, our total cash and investments, including amounts reserved pursuant to statutory requirements ~~and excluding cash to be used for the acquisition of Informative Research (which closed on October 1, 2021),~~ aggregated ~~$1.13 billion ($585.1 million, net of statutory reserves on cash and investments).~~$1.01 billion. Of our total cash and investments at September 30, ~~2021, $757.4~~2022, $637.3 million ($~~477.4~~340.7 million, net of statutory reserves) was held in the United States and the rest internationally ~~principally~~(principally in ~~Canada.~~Canada).

~~Cash held at the parent company totaled $204.3 million at September 30, 2021, the majority of which was used to close on the IR acquisition on October 1, 2021.~~ As a holding company, the parent company is funded principally by cash from its ~~operating companies, cash from its subsidiaries~~subsidiaries' 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 $28.3 million at September 30, 2022) is ~~used~~available 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, the~~stockholders. The parent company ~~is dependent on~~also 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 September 30, ~~2021~~2022 was held by Guaranty and its subsidiaries. The use and investment of these funds, dividends to the parent company, and cash transfers between Guaranty and its subsidiaries and the parent company are subject to certain legal and regulatory restrictions. In general, Guaranty ~~may use~~uses its cash and investments in excess of its legally-mandated statutory premium reserve (established in accordance with requirements under Texas law) to fund its insurance operations, including ~~claim~~claims payments. Guaranty may also, subject to certain limitations, provide funds to its subsidiaries (whose operations consist principally of field title offices and ~~ancillary services~~real estate solutions operations) for their operating and debt service needs.

We maintain investments in accordance with certain statutory requirements for the funding of statutory premium reserves. Statutory reserve funds are required to be fully funded and invested in high-quality securities and short-term investments. Statutory reserve funds are not available for current claim payments, which must be funded from current operating cash flow. Included in investments in debt and equity securities are statutory reserve funds of approximately ~~$524.5~~$541.0 million and ~~$496.6~~$523.5 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. In addition, included within cash and cash equivalents are statutory reserve funds of approximately ~~$24.0~~$10.5 million and ~~$20.0~~$41.4 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. As of September 30, ~~2021,~~2022, our known claims reserve totaled ~~$68.2~~$75.6 million and our estimate of claims that may be reported in the future, under generally accepted accounting principles, totaled ~~$466.4~~$471.6 million. In addition to this, we had cash and investments (excluding equity method investments) of ~~$388.9~~$330.3 million, which are available for underwriter operations, including claims payments, and acquisitions.

The ability of Guaranty to pay dividends to its parent is governed by Texas insurance law. The ~~TDI~~Texas Department of Insurance (TDI) must be notified of any dividend declared, and any dividend in excess of the greater of the statutory ~~maximum of~~net operating income or 20% of surplus (approximately ~~$158.9~~$210.1 million as of December 31, ~~2020)~~2021) would be, by regulation, considered extraordinary and subject to pre-approval by the TDI. Also, the Texas Insurance Commissioner may raise an objection to a planned distribution during the notification period. Guaranty’s actual ability or intent to pay dividends to its parent may be constrained by business and regulatory considerations, such as the impact of dividends on surplus and liquidity, which could affect its ratings and competitive position, the amount of insurance it can write and its ability to pay future dividends. During the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, Guaranty paid dividends of ~~$158.9~~$70.0 million and ~~$30.0~~$158.9 million, respectively, to ~~its parent. In October 2021, Guaranty paid an additional dividend of $135.0 million to its parent.~~the parent company.

As the parent company conducts no operations apart from its wholly-owned subsidiaries, the discussion below focuses on consolidated cash flows.


		Nine Months Ended September 30,			Nine Months Ended September 30,
		2021	2020		2022	2021
		($ in millions)			($ in millions)
Net cash provided by operating activities	Net cash provided by operating activities	257.3	140.9	Net cash provided by operating activities	167.0	257.3
Net cash used by investing activities	Net cash used by investing activities	(200.7)	(156.1)	Net cash used by investing activities	(225.3)	(200.7)
Net cash provided by financing activities		120.2	66.7
Net cash (used) provided by financing activities				Net cash (used) provided by financing activities	(98.1)	120.2

Operating activities. Our principal sources of cash from operations are premiums on title policies and revenue from title service-related transactions, ~~ancillary services~~real estate solutions and other operations. Our independent agencies remit cash to us net of their contractual retention. Our principal cash expenditures for operations are employee costs, operating costs and title claims payments.

Net cash provided by operations in the first nine months of ~~2021 improved by $116.5~~2022 decreased $90.3 million compared to the same period ~~last year,~~in 2021, primarily due to ~~the higher~~lower net income and ~~lower~~higher payments of ~~claims.~~previously-outstanding operating liabilities in 2022. Although our business is labor intensive, we are focused on a cost-effective, scalable business model which includes utilization of technology, centralized back and middle office functions and business process outsourcing. We are continuing our emphasis on cost management, especially in light of the current economic environment due to ~~the COVID-19 pandemic,~~rising mortgage interest and inflation rates, specifically focusing on lowering unit costs of production and improving operating margins in our direct title and ~~ancillary services businesses.~~real estate solutions operations. Our plans to improve margins include additional automation of manual processes, and further consolidation of our various systems and production operations. We continue to invest in the technology necessary to accomplish these goals.

Investing activities. Net cash used by investing activities is primarily driven by proceeds from matured and sold investments, purchases of investments, capital expenditures and acquisition of businesses. During the first nine months of ~~2021,~~2022, total proceeds from securities investments sold and matured were ~~$88.4~~$76.7 million, compared to ~~$72.4~~$88.4 million during the ~~same period in 2020.~~first nine months of 2021. Cash used for purchases of securities investments was ~~$111.1 million during first nine months of 2021, compared to $75.5~~$165.1 million during the first nine months of ~~2020.~~2022 compared to $111.1 million during the same period in 2021.

We used ~~$149.9~~$102.9 million ~~and $146.5 million~~ of net cash for acquisitions ofin the title ~~and ancillary services businesses~~segment during the first nine months of ~~2021~~2022, compared to net cash used of $149.9 million for acquisitions in the title and ~~2020, respectively. We used~~real estate solutions segments and $16.1 million ~~of cash in~~for acquiring an equity method investment in a title company ~~and generated total proceeds of $10.6 million from sales of our buildings~~ during the ~~first nine months of~~same period in 2021. We used ~~$26.2~~$35.3 million and ~~$10.5~~$26.2 million of cash for purchases of property and equipment during the first nine months of ~~2021~~2022 and ~~2020,~~2021, 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 ~~$275.3~~$446.4 million and ~~$1,216.7 million,~~$1.36 billion, respectively, as of September 30, ~~2021.~~2022. During the first nine months of ~~2021~~2022 and ~~2020,~~2021, payments on notes payable of ~~$157.3~~$73.6 million and ~~$10.3~~$157.3 million, respectively, and notes payable additions of ~~$156.8~~$38.0 million and ~~$2.4~~$156.8 million, respectively, were related to short-term loan agreements in connection with our Section 1031 tax-deferred property exchange (Section 1031) business.

~~During the first quarter 2021, we amended our existing line of credit agreement, resulting in an increase in the total line of credit commitment from our lenders from $200 million to $350 million.~~ At September 30, ~~2021, the outstanding balance of~~2022, our line of credit facility was ~~$273.9 million, which included total draws of $175.0 million we made from the facility during the first nine months of 2021. At September 30, 2021,~~fully available, while our debt-to-equity and debt-to-capitalization ratios, excluding our Section 1031 notes, were approximately ~~23%~~33% and ~~18%~~25%, respectively. ~~In October 2021, we entered into a new senior unsecured credit agreement, which replaced our current line of credit facility with a new revolving credit facility and a term loan - refer to~~ ~~Note 1-D~~ ~~for details.~~

During the first nine months of ~~2020, we generated net proceeds of approximately $109.0 million, from an issuance of new shares of Common Stock, which we used for acquisitions. During the first nine months of 2021,~~2022, we paid total dividends of ~~$26.6~~$32.5 million ($~~0.99~~1.20 per common share), compared to the total dividends paid in the ~~first nine months~~same period in 2021 of ~~2020 of $22.2~~$26.6 million ($~~0.90~~0.99 per common share).

~~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 decrease of $1.9 million during the first nine months of 2021, primarily due to depreciation of the British pound and Australian dollar relative to the U.S. dollar, compared to a net decrease of $0.5 million during the first nine months of 2020. Our principal foreign operating unit is in Canada, and, on average, the value of the Canadian dollar relative to the U.S. dollar did not change in 2021, while it depreciated in 2020.

***********

We believe we have sufficient liquidity and capital resources to meet the cash needs of our ongoing operations, including in the current economic and real estate environment created by the ~~COVID-19 pandemic.~~increasing mortgage interest and inflation 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 10 to the condensed consolidated financial statements.

Other comprehensive ~~(loss) income.~~loss. Unrealized gains and losses on available-for-sale debt securities investments and changes in foreign currency exchange rates are reported net of deferred taxes in accumulated other comprehensive income (loss), a component of stockholders’ equity, until they are realized. During the first nine months of 2022, net unrealized investment losses of $42.2 million, net of taxes, which increased our other comprehensive loss, were primarily related to net decreases in the fair values of our corporate and foreign bond securities investments, primarily driven by the effect of higher interest rates and credit spreads in 2022. During the first nine months of 2021, net unrealized investment losses of $11.2 million, net of taxes, which increased our other comprehensive loss, were primarily related to a net decrease in the fair values of our overall bond securities investment portfolio mainly driven by the effect of rising interest rates. During the first nine months of 2020, net unrealized investment gains of $14.8 million, net of taxes, which increased our other comprehensive income, were primarily related to a net increase in the fair values of our overall bond securities investment portfolio mainly driven by the effect of lower interest rates and partially offset by higher credit spreads.

Changes in foreign currency exchange rates, primarily related to our Canadian and United Kingdom operations, increased our other comprehensive loss, net of taxes, by $22.9 million and $1.0 million in the first nine months of ~~2021; while they decreased our other comprehensive income, net of taxes, by $3.4 million in the same period in 2020.~~2022 and 2021, respectively.

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 1615 in our ~~2020~~2021 Form 10-K.

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

•the volatility of economic ~~conditions, including the duration and ultimate impact of the COVID-19 pandemic;~~ 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;

•our ability to access the equity and debt financing markets when and if needed;

•our ability to grow our international operations; 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 ~~2020~~2021 Form 10-K, and as maybe 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 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 September 30, ~~2021~~2022 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 ~~2020~~2021 Form 10-K.

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 September 30, ~~2021,~~2022, 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 September 30, ~~2021,~~2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See discussion of legal proceedings in Note 11 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 ~~2020~~2021 Form 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 ~~2020~~2021 Form 10-K. There have been no material changes to our risk factors since our ~~2020~~2021 Form 10-K.

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

There were no repurchases of our Common Stock during the nine months ended September 30, ~~2021,~~2022, except for repurchases of approximately ~~40,900~~48,800 shares (aggregate purchase price of approximately ~~$2.1~~$3.2 million) related to the statutory income tax withholding on the vesting of restricted unit grants to executives and senior ~~management.~~management employees.

Item 5. Other Information

Book value per share. Our book value per share was ~~$44.92~~$49.59 and ~~$37.60~~$47.67 as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. As of September 30, 2022, our book value per share was based on approximately $1.34 billion of stockholders’ equity attributable to Stewart and 27,123,388 shares of Common Stock outstanding. As of December 31, 2021, our book value per share was based on approximately ~~$1.2~~$1.28 billion of stockholders’ equity attributable to Stewart and 26,890,064 shares of Common Stock outstanding. As of December 31, 2020, our book value per share was based on approximately $1.0 billion of stockholders’ equity attributable to Stewart and 26,728,24226,893,430 shares of Common Stock outstanding.

Item 6. 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)
10.110.1†	—	~~Credit~~Amended and Restated Employment Agreement, ~~dated~~effective October ~~28, 2021, among~~13, 2022, by and between the Registrant ~~PNC Bank, as Administrative Agent, Swingline Loan Lender~~ and ~~Issuing Lender, the Guarantors, and Lenders Party thereto~~Frederick Eppinger
~~10.2~~	—	Stock purchase agreement, dated August 23, 2021, by and among Informative Research, the Shareholders of Informative Research listed on Exhibit A thereto, Sean Buckner, solely in the capacity of shareholder representative thereunder, and the Registrant (incorporated by reference in this report from Exhibit 10.1 of the Current Report on Form 8-K filed on August 26, 2021)










31.1*	—	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	—	Certification of 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
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
† Management contract or compensatory plan

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 ~~3, 2021~~8, 2022
Date


						Stewart Information Services Corporation
						Registrant

By:						/s/ David C. Hisey
						David C. Hisey, Chief Financial Officer, Secretary and Treasurer

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