Schedule I - Parent Company Financial Information | SCHEDULE I STEWART INFORMATION SERVICES CORPORATION (Parent Company) STATEMENTS OF OPERATIONS AND RETAINED EARNINGS For the Years Ended December 31, 2016 2015 2014 ($000 omitted) Revenues Investment income 20,000 15,000 25,087 Other losses — — (869 ) Other income 1,252 922 90 21,252 15,922 24,308 Expenses Employee costs 832 156 1,110 Other operating expenses, including $276 each year to affiliates 6,641 7,617 3,806 Depreciation 69 162 421 Interest 2,726 1,726 2,054 10,268 9,661 7,391 Income before taxes and income (losses) from subsidiaries 10,984 6,261 16,917 Income tax expense 2,928 — 1 Income (losses) from subsidiaries 47,422 (12,465 ) 12,837 Net income (loss) 55,478 (6,204 ) 29,753 Retained earnings at beginning of year 455,519 479,733 452,314 Cash dividends on Common Stock (27,840 ) (18,010 ) (2,334 ) Cash paid on Class B Common Shares conversion (12,000 ) — — Cumulative effect adjustment on adoption of new accounting pronouncement 631 — — Retained earnings at end of year 471,788 455,519 479,733 See accompanying note to financial statement information. See accompanying Report of Independent Registered Public Accounting Firm. STEWART INFORMATION SERVICES CORPORATION (Parent Company) BALANCE SHEETS As of December 31, 2016 2015 ($000 omitted) Assets Cash and cash equivalents 2,890 832 Receivables: Notes - due from subsidiaries 40,879 68,382 Receivables from affiliates 848 1,093 Allowance for uncollectible amounts (4 ) (7 ) 41,723 69,468 Property and equipment, at cost: Furniture and equipment 2,733 2,893 Accumulated depreciation (2,512 ) (2,625 ) 221 268 Title plant, at cost 48 48 Investments in subsidiaries, on an equity-method basis 688,837 653,519 Goodwill 8,470 8,470 Other assets 16,698 17,457 758,887 750,062 Liabilities Notes payable 92,875 98,000 Accounts payable and other liabilities 24,812 22,781 117,687 120,781 Contingent liabilities and commitments — — Stockholders’ equity Common Stock – $1 par, authorized 50,000,000; issued 23,783,440 and 22,643,255; outstanding 23,431,279 and 22,291,094, respectively 23,783 22,643 Class B Common Stock – $1 par, authorized 1,500,000; issued and outstanding 1,050,012 as of December 31, 2015; retired in 2016 — 1,050 Additional paid-in capital 157,176 156,692 Retained earnings (1) 471,788 455,519 Accumulated other comprehensive (loss) income: Foreign currency translation adjustments (16,727 ) (13,360 ) Unrealized investment gains 7,846 9,403 Treasury stock – 352,161 common shares, at cost (2,666 ) (2,666 ) Total stockholders’ equity 641,200 629,281 758,887 750,062 (1) Includes undistributed earnings of subsidiaries of $522,104 in 2016 and $514,522 in 2015. See accompanying note to financial statement information. See accompanying Report of Independent Registered Public Accounting Firm. STEWART INFORMATION SERVICES CORPORATION (Parent Company) STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2016 2015 2014 ($000 omitted) Reconciliation of net income (loss) to cash provided (used) by operating activities: Net income (loss) 55,478 (6,204 ) 29,753 Add (deduct): Depreciation 69 162 421 Other losses — — 869 Decrease (increase) in receivables – net 245 (596 ) (357 ) Decrease (increase) in other assets – net 359 (558 ) (828 ) (Decrease) increase in payables and accrued liabilities – net (496 ) (515 ) 12,395 (Income) losses from subsidiaries (47,421 ) 12,465 (12,837 ) Other – net (6,731 ) (4,593 ) (31,824 ) Cash provided (used) by operating activities 1,503 161 (2,408 ) Investing activities: Dividends from subsidiary 20,000 15,000 25,000 Purchase of property and equipment –net (22 ) — — Collections on notes receivables 27,500 — — Increases in notes receivables — (21,500 ) (46,875 ) Cash provided (used) by investing activities 47,478 (6,500 ) (21,875 ) Financing activities: Proceeds from notes payable 20,000 45,000 60,000 Payments on notes payable (25,125 ) (7,000 ) — Dividends paid (27,840 ) (18,010 ) (2,334 ) Cash paid on Class B Common Shares conversion (12,000 ) — — Repurchases of Common Stock (1,053 ) (27,950 ) (22,048 ) Purchase of remaining interest of consolidated subsidiary (991 ) (209 ) (321 ) Other – net 86 130 — Cash (used) provided by financing activities (46,923 ) (8,039 ) 35,297 Increase (decrease) in cash and cash equivalents 2,058 (14,378 ) 11,014 Cash and cash equivalents at beginning of year 832 15,210 4,196 Cash and cash equivalents at end of year 2,890 832 15,210 Supplemental information: Income taxes paid 1 1 24 Interest paid 2,716 1,681 546 See accompanying note to financial statement information. See accompanying Report of Independent Registered Public Accounting Firm. STEWART INFORMATION SERVICES CORPORATION (Parent Company) NOTE TO FINANCIAL STATEMENT INFORMATION The Parent Company operates as a holding company, transacting substantially all of its business through its subsidiaries. Its consolidated financial statements are included in Part II, Item 8 of Form 10-K. The Parent Company financial statements should be read in conjunction with the aforementioned consolidated financial statements and notes thereto and financial statement schedules. Reclassifications. Certain prior year amounts in the Parent Company financial statements have been reclassified for comparative purposes. Net income (loss) and stockholders’ equity, as previously reported, were not affected. Investment income. During 2016, 2015 and 2014, Guaranty paid to the Parent Company dividends of $20.0 million , $15.0 million and $25.0 million , respectively. Class B Common Stock. In April 2016, the Parent Company's stockholders approved the Class B Exchange Agreement, in which all outstanding shares of Class B Common Stock were retired in exchange for shares of Common Stock plus $12.0 million in cash. Refer to Note 12 to the consolidated financial statements for details. Income taxes. The Parent Company consistently generates losses, exclusive of dividends or equity earnings from its subsidiaries, and is not expected to generate future income without its subsidiaries. As a result, an increased valuation allowance was recorded during 2016 against deferred tax assets, net of definite-lived deferred tax liabilities, which more-likely-than-not will not be realized by the Parent Company. |