Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 04, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | STEWART INFORMATION SERVICES CORP | |
Entity Central Index Key | 94,344 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Trading Symbol | STC | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 23,740,794 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | ||||
Investment income | $ 4,781 | $ 4,567 | $ 14,732 | $ 14,179 |
Investment and other gains (losses) – net | 3,623 | (1,047) | 4,345 | (1,436) |
Revenues | 507,640 | 501,569 | 1,437,739 | 1,430,061 |
Expenses | ||||
Amounts retained by agencies | 224,966 | 221,460 | 623,967 | 605,192 |
Employee costs | 138,288 | 140,054 | 423,389 | 419,184 |
Other operating expenses | 90,810 | 88,489 | 257,029 | 255,593 |
Title losses and related claims | 21,503 | 25,428 | 59,181 | 70,591 |
Depreciation and amortization | 6,221 | 6,578 | 18,609 | 19,397 |
Interest | 1,076 | 963 | 2,722 | 2,492 |
Total expenses | 482,864 | 482,972 | 1,384,897 | 1,372,449 |
Income before taxes and noncontrolling interests | 24,776 | 18,597 | 52,842 | 57,612 |
Income tax expense | 4,371 | 4,686 | 8,679 | 15,536 |
Net income | 20,405 | 13,911 | 44,163 | 42,076 |
Less net income attributable to noncontrolling interests | 2,851 | 2,967 | 8,012 | 8,475 |
Net income attributable to Stewart | 17,554 | 10,944 | 36,151 | 33,601 |
Net income | 20,405 | 13,911 | 44,163 | 42,076 |
Other comprehensive (loss) income, net of taxes: | ||||
Foreign currency translation adjustments | 1,140 | 4,141 | (4,490) | 8,670 |
Change in net unrealized gains and losses on investments | (1,910) | 63 | (12,344) | 2,885 |
Reclassification adjustment for net gains included in net income | (137) | (331) | (617) | (792) |
Other comprehensive (loss) income, net of taxes | (907) | 3,873 | (17,451) | 10,763 |
Comprehensive income | 19,498 | 17,784 | 26,712 | 52,839 |
Less net income attributable to noncontrolling interests | 2,851 | 2,967 | 8,012 | 8,475 |
Comprehensive income attributable to Stewart | $ 16,647 | $ 14,817 | $ 18,700 | $ 44,364 |
Basic average shares outstanding (000) | 23,556 | 23,448 | 23,537 | 23,442 |
Basic earnings per share attributable to Stewart (in usd per share) | $ 0.75 | $ 0.47 | $ 1.54 | $ 1.43 |
Diluted average shares outstanding (000) | 23,699 | 23,564 | 23,677 | 23,571 |
Diluted earnings per share attributable to Stewart (in usd per share) | $ 0.74 | $ 0.46 | $ 1.53 | $ 1.43 |
Title - Direct operations | ||||
Revenues | ||||
Revenues | $ 213,134 | $ 216,830 | $ 622,886 | $ 635,921 |
Title - Agency operations | ||||
Revenues | ||||
Revenues | 272,875 | 268,545 | 756,986 | 736,301 |
Ancillary services | ||||
Revenues | ||||
Revenues | 13,227 | 12,674 | 38,790 | 45,096 |
Operating revenues | ||||
Revenues | ||||
Revenues | $ 499,236 | $ 498,049 | $ 1,418,662 | $ 1,417,318 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and cash equivalents | $ 149,669 | $ 150,079 |
Short-term investments | 23,954 | 24,463 |
Investments in debt and equity securities, at fair value | 662,089 | 709,355 |
Receivables: | ||
Premiums from agencies | 31,656 | 27,903 |
Trade and other | 44,470 | 51,299 |
Income taxes | 559 | 1,267 |
Notes | 3,594 | 3,203 |
Allowance for uncollectible amounts | (4,925) | (5,156) |
Total receivables | 75,354 | 78,516 |
Property and equipment, at cost: | ||
Land | 3,991 | 3,991 |
Buildings | 23,018 | 22,849 |
Furniture and equipment | 234,405 | 226,461 |
Accumulated depreciation | (196,943) | (186,279) |
Total property and equipment, at cost | 64,471 | 67,022 |
Title plants, at cost | 74,737 | 74,237 |
Investments on equity method basis | 8,360 | 9,202 |
Goodwill | 247,190 | 231,428 |
Intangible assets, net of amortization | 10,843 | 9,734 |
Deferred tax assets | 4,186 | 4,186 |
Other assets | 49,576 | 47,664 |
Total assets | 1,370,429 | 1,405,886 |
Liabilities | ||
Notes payable | 106,440 | 109,312 |
Accounts payable and accrued liabilities | 97,233 | 117,740 |
Estimated title losses | 476,870 | 480,990 |
Deferred tax liabilities | 13,152 | 19,034 |
Total liabilities | 693,695 | 727,076 |
Contingent liabilities and commitments | ||
Stockholders’ equity | ||
Common Stock and additional paid-in capital | 185,432 | 184,026 |
Retained earnings | 510,068 | 491,698 |
Accumulated other comprehensive (loss) income: | ||
Net unrealized investment (losses) gains on investments available-for-sale | (8,383) | 7,526 |
Foreign currency translation adjustments | (13,507) | (8,373) |
Treasury stock – 352,161 common shares, at cost | (2,666) | (2,666) |
Stockholders’ equity attributable to Stewart | 670,944 | 672,211 |
Noncontrolling interests | 5,790 | 6,599 |
Total stockholders’ equity (23,740,900 and 23,719,522 shares outstanding) | 676,734 | 678,810 |
Total liabilities and stockholders' equity | $ 1,370,429 | $ 1,405,886 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Treasury stock, common shares | 352,161 | 352,161 |
Common stock, shares outstanding | 23,740,900 | 23,719,522 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Reconciliation of net income to cash provided by operating activities: | ||
Net income | $ 44,163 | $ 42,076 |
Add (deduct): | ||
Depreciation and amortization | 18,609 | 19,397 |
Provision for bad debt | 510 | 697 |
Investment and other (gains) losses – net | (4,345) | 1,436 |
Amortization of net premium on investments available-for-sale | 4,617 | 5,114 |
Payments for title losses (in excess of) lesser than provisions | (1,106) | 6,697 |
Adjustment for insurance recoveries of title losses | 1,023 | 757 |
Decrease (increase) in receivables – net | 2,020 | (13,032) |
Increase in other assets – net | (406) | (5,633) |
Decrease in payables and accrued liabilities – net | (23,480) | (20,482) |
Change in net deferred income taxes | (1,693) | 8,749 |
Net income from equity investees | (1,344) | (1,813) |
Dividends received from equity investees | 2,187 | 2,053 |
Stock-based compensation expense | 3,039 | 2,078 |
Other – net | (61) | (46) |
Cash provided by operating activities | 43,733 | 48,048 |
Investing activities: | ||
Proceeds from sales of investments in securities | 32,500 | 55,533 |
Proceeds from matured investments in debt securities | 25,258 | 33,867 |
Purchases of investments in securities | (35,683) | (125,415) |
Net purchases of short-term investments | (366) | (327) |
Purchases of property and equipment, and real estate – net | (8,478) | (12,411) |
Cash paid for acquisition of businesses | (17,639) | (17,784) |
Other – net | 327 | 960 |
Cash used by investing activities | (4,081) | (65,577) |
Financing activities: | ||
Payments on notes payable | (16,767) | (18,848) |
Proceeds from notes payable | 9,583 | 48,043 |
Distributions to noncontrolling interests | (8,665) | (8,376) |
Repurchases of common stock | (687) | 0 |
Cash dividends paid | (21,195) | (21,100) |
Payment of contingent consideration related to an acquisition | 0 | (1,298) |
Purchase of remaining interest in consolidated subsidiary | (1,102) | (1,014) |
Cash used by financing activities | (38,833) | (2,593) |
Effects of changes in foreign currency exchange rates | (1,229) | 3,096 |
Decrease in cash and cash equivalents | (410) | (17,026) |
Cash and cash equivalents at beginning of period | 150,079 | 185,772 |
Cash and cash equivalents at end of period | $ 149,669 | $ 168,746 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Common Stock ($1 par value) | Additional paid-in capital | Retained earnings | Accumulated other comprehensive loss | Treasury stock | Noncontrolling interests |
Increase (Decrease) in Stockholders' Equity | |||||||
Cumulative effect adjustments on adoption of new accounting standards (Note 1-D) | $ 0 | $ 3,592 | $ (3,592) | ||||
Balances at beginning of period at Dec. 31, 2017 | 678,810 | $ 24,072 | $ 159,954 | 491,698 | (847) | $ (2,666) | $ 6,599 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income attributable to Stewart | 36,151 | 36,151 | |||||
Dividends on Common Stock ($0.90 per share) | (21,373) | (21,373) | |||||
Stock-based compensation and other | 3,039 | 38 | 3,001 | ||||
Stock repurchases | (687) | (17) | (670) | ||||
Purchase of remaining interest in consolidated subsidiary | (1,102) | (946) | (156) | ||||
Net change in unrealized gains and losses on investments, net of taxes | (12,344) | (12,344) | |||||
Net realized gain reclassification, net of taxes | (617) | (617) | |||||
Foreign currency translation adjustments, net of taxes | (4,490) | (4,490) | |||||
Net income attributable to noncontrolling interests | 8,012 | 8,012 | |||||
Distributions to noncontrolling interests | (8,665) | (8,665) | |||||
Balances at end of period at Sep. 30, 2018 | $ 676,734 | $ 24,093 | $ 161,339 | $ 510,068 | $ (21,890) | $ (2,666) | $ 5,790 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED) (Parenthetical) | 9 Months Ended |
Sep. 30, 2018$ / shares | |
Statement of Stockholders' Equity [Abstract] | |
Common stock, par value (in usd per share) | $ 1 |
Cash dividends on common stock (in usd per share) | $ 0.90 |
Interim financial statements
Interim financial statements | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Interim financial statements | Interim financial statements. The financial information contained in this report for the three and nine months ended September 30, 2018 and 2017 , and as of September 30, 2018 , 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, 2017 . A. Management’s responsibility. The accompanying interim financial statements were prepared by management, who is responsible for their integrity and objectivity. These financial statements have been prepared in conformity with U.S. 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 20% through 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, which approximated $468.8 million and $490.8 million at September 30, 2018 and December 31, 2017 , respectively, are required to be fully funded and invested in high-quality securities and short-term investments. Statutory reserve funds are not available for current claim payments, which must be funded from current operating cash flow. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $27.7 million and $14.2 million at September 30, 2018 and December 31, 2017 , 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. Cumulative effect adjustments on adoption of new accounting standards. In February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-02, Income Statement - Reporting Comprehensive Income, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which amended its standard on comprehensive income to provide a one-time option for an entity to reclassify the stranded tax effects of the Tax Cuts and Jobs Act (the 2017 Act) that was passed in December 2017 from accumulated other comprehensive income/loss (AOCI) directly to retained earnings. The stranded tax effects result from the remeasurement of deferred tax assets and liabilities which were originally recorded in comprehensive income but whose remeasurement is reflected in the income statement. The Company adopted ASU 2018-02 effective on January 1, 2018 and reclassified $ 1.0 million of net tax expense from AOCI to retained earnings in the consolidated statement of equity. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , which, among others, (i) required equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplified the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminated the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and (iv) required separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. The Company adopted ASU 2016-01 effective on January 1, 2018, which resulted in a reclassification of the outstanding net unrealized investment gains, net of taxes, of $ 4.6 million relating to investments in equity securities previously carried in AOCI to retained earnings in the consolidated statement of equity. E. Recent significant accounting pronouncements. In February 2016, the FASB issued ASU 2016-02, Topic 842: Leases (Topic 842), which updates the current guidance related to leases. Topic 842 includes the requirement for the lessee to recognize in the balance sheet a liability equal to the present value of contractual lease payments with terms of more than twelve months and a right-of-use asset representing the right to use the underlying asset for the lease term. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Additional financial statement disclosures are required to meet the objective of enabling users to assess the amount, timing, and uncertainty of cash flows arising from leases. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842: Leases and ASU 2018-11, Leases (Topic 842) - Targeted Improvements . ASU 2018-10 clarifies certain aspects of the new lease standard which include amendments addressing, among others, the rate implicit in the lease, lessee reassessment of lease classification, variable payments that depend on an index or rate and certain transition adjustments. ASU 2018-11 provides an optional transition method which will allow the application of the recognition and measurement requirements of Topic 842 in the period of adoption. If elected, the comparative periods would continue to be reported under the legacy lease guidance in Topic 840, including the related disclosures, and a cumulative effect adjustment would be made to retained earnings as of the adoption date. These ASUs are effective for annual and interim periods beginning after December 15, 2018 and early adoption is permitted. The Company expects to adopt Topic 842 on January 1, 2019 using the optional transition method of adoption. The adoption is expected to result in material increases in the assets and liabilities to be reported on its 2019 consolidated balance sheets based on the Company's estimate of undiscounted future minimum lease payments of approximately $90 million to $100 million as of December 31, 2018. However, the Company expects the new lease standard will likely have an insignificant impact on its consolidated statements of income and comprehensive income and cash flows. The Company is currently in the process of system implementation and data migration, and expects the transition to be completed during the fourth quarter 2018. The Company is planning to elect most of the practical expedients permitted by Topic 842 at adoption date. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which removes Topic 820 disclosure requirements relating to the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. Also, ASU 2018-13 adds new requirements to disclose changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted. The Company expects this ASU will have minimal effect on its financial statements and related disclosures when it is adopted on January 1, 2020 considering the Company does not have any Level 3 fair value measurements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract . ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted. The Company is currently evaluating the effect that the new guidance will have on its consolidated financial statements and related disclosures. F. Merger Agreement. On March 18, 2018, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with Fidelity National Financial, Inc., a Delaware corporation (FNF), A Holdco Corp., a Delaware corporation and a wholly-owned direct subsidiary of FNF (Merger Sub I), and S Holdco LLC, a Delaware limited liability company and a wholly-owned direct subsidiary of FNF (Merger Sub II and, together with Merger Sub I, the Merger Subs). Upon the terms and subject to the conditions set forth in the Merger Agreement, at the Effective Time (as defined below), Merger Sub I will merge with and into the Company (Merger I), with the Company surviving Merger I as a direct wholly-owned subsidiary of FNF, and at the Subsequent Effective Time (as defined in the Merger Agreement), the Company will merge with and into Merger Sub II (Merger II and, together with Merger I, the Mergers), with Merger Sub II surviving Merger II as a direct wholly-owned subsidiary of FNF. Subject to the terms and conditions of the Merger Agreement, at the effective time of Merger I (the Effective Time, each share of the Company's Common Stock outstanding immediately prior to the Effective Time (other than (i) shares owned by the Company, its subsidiaries, FNF or the Merger Subs and (ii) shares in respect of which appraisal rights have been properly exercised and perfected under Delaware law) will be converted into the right to receive cash consideration of $25.00 and 0.6425 shares of FNF common stock, par value $0.0001 per share (FNF Common Stock), subject to potential adjustment as described below. Pursuant to the terms of the Merger Agreement, the Company's stockholders have the option to elect to receive the merger consideration in all cash (the Cash Election Consideration), all FNF Common Stock (the Stock Election Consideration) or a mix of 50% cash and 50% FNF Common Stock (the Mixed Election Consideration), subject to pro-rata reductions to the extent either the election for the Cash Election Consideration or the election for the Stock Election Consideration is oversubscribed. Stockholders that elect to receive the Cash Election Consideration will receive $50.00 per share, subject to potential adjustment as described below and proration to the extent the cash option is oversubscribed. The Stock Election Consideration and the stock portion of the Mixed Election Consideration will be calculated using a fixed exchange ratio that is based on the average of the volume weighted average prices of FNF Common Stock for each of the twenty ( 20 ) trading days prior to the signing of the Merger Agreement, or $38.91 (the Parent Share Price). The exchange ratio for the Stock Election Consideration will be equal to 1.2850 shares of FNF Common Stock per share of Common Stock (the Exchange Ratio), subject to potential adjustment described below and proration to the extent the stock option is oversubscribed. Under the terms of the Merger Agreement, if the combined company is required to divest assets or businesses with 2017 annual revenues in excess of $75 million in order to receive required regulatory approvals (up to a cap of $225 million of 2017 annual revenues), the per share purchase price will be adjusted downwards on a sliding scale between such amounts of divestitures up to a maximum reduction of $4.50 in value in the event that businesses or assets with 2017 annual revenues of $225 million are divested, with such adjustment to consist of (i) in the case shares of Common Stock with respect to which Cash Election Consideration has been elected, a reduction of the amount of cash paid in respect of each share, (ii) in the case shares of Common Stock with respect to which Stock Election Consideration has been elected, a reduction in the Exchange Ratio based on the Parent Share Price, and (iii) in the case of shares of Common Stock with respect to which Mixed Election Consideration has been elected, a reduction in both the amount of cash and the Exchange Ratio to be paid to the holders of such shares, with 50% of the aggregate value of such reduction to consist of a reduction of the cash consideration and 50% of the aggregate value of such reduction to consist of a reduction in the Exchange Ratio based on the Parent Share Price. The consummation of the Mergers, which is expected during the first or second quarter of 2019, is subject to the satisfaction or waiver of customary conditions, including, among other things, (i) the adoption of the Merger Agreement by the holders of a majority of the outstanding shares of Common Stock entitled to vote on the Mergers (the Company Stockholder Approval), (ii) the absence of any injunction or court or other governmental order (with respect to applicable antitrust or insurance laws, solely with respect to the Required Antitrust Regulatory Filings/Approvals and the Required Insurance Regulatory Filings/Approvals (each as defined in the Merger Agreement)) enjoining, prohibiting or rendering illegal the consummation of the Mergers, (iii) obtaining certain Required Antitrust Regulatory Filings/Approvals, (iv) obtaining certain Required Insurance Regulatory Filings/Approvals, (v) the Securities and Exchange Commission (SEC) declaring the Registration Statement (as defined in the Merger Agreement) on Form S-4 effective, (vi) the shares of FNF Common Stock to be issued in the Mergers having been approved for listing on the New York Stock Exchange, (vii) the representations and warranties made by each of the Company and FNF being true at and as of the Closing Date (as defined in the Merger Agreement), subject to the materiality standards contained in the Merger Agreement, (viii) the performance, in all material respects, by each of the Company, FNF and the Merger Subs of all of their respective obligations under the Merger Agreement and (ix) no Company Material Adverse Effect or Parent Material Adverse Effect (each as defined in the Merger Agreement) having occurred since the signing of the Merger Agreement. The Company Stockholder Approval was obtained during a special stockholders' meeting held on September 5, 2018. The Merger Agreement contains certain customary representations, warranties and covenants made by the Company and FNF. The Merger Agreement also contains customary covenants for each of the parties, including the obligation for the parties to refrain from taking specified actions without the consent of the other party, and, in the case of the Company, conduct its business in the ordinary course and use commercially reasonable efforts to preserve intact its business organizations and relationships with third parties. Under the Merger Agreement, each of the Company and FNF has agreed to use its reasonable best efforts to take all actions and to do all things necessary or advisable under applicable law to consummate the Mergers, including preparing and filing as promptly as practicable with any governmental authority or other third party all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents and obtaining and maintaining all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any governmental authority or other third party that are necessary, proper or advisable to consummate the transactions contemplated by this Agreement. Notwithstanding such obligation, in connection with obtaining any required regulatory approval, (a) FNF is not required to sell, divest, dispose of, license or hold separate (i) title plants and rights to title plants, businesses, product lines or assets to the extent that such title plants, rights to title plants, businesses, product lines or assets generated 2017 revenues in excess of $225 million in the aggregate, or (ii) any of its own brands in full and (b) FNF and its affiliates are not required to litigate in order to avoid or have terminated any legal restraint that would prevent the Mergers from being consummated. The Merger Agreement contains certain customary termination rights in favor of either the Company or FNF, which are exercisable (i) by mutual consent, (ii) upon the failure to complete the Mergers by March 18, 2019 (the End Date), subject to certain exceptions and subject to up to two ( 2 ) extensions of up to three (3) months each upon the election of either the Company or FNF if, as of such date, all closing conditions (other than the receipt of the Required Antitrust Regulatory Filings/Approvals, the receipt of the Required Insurance Regulatory Filings/Approvals and the absence of any law or court or other governmental order relating thereto) having been met or being capable of being satisfied as of such time, (iii) in the event of a final and non-appealable law or order that prohibits the consummation of the Mergers or (iv) if the Company’s stockholders do not vote to approve the Mergers. The Merger Agreement contains certain customary termination rights in favor of the Company, which are exercisable (i) for a breach of any representation, warranty, covenant or agreement made by FNF under the Merger Agreement that would result in failure to satisfy a closing condition (subject to certain cure periods) or (ii) if, prior to the Company Stockholder Approval being obtained, the Company’s board of directors authorizes the Company to enter into, and the Company enters into, an alternative acquisition agreement in connection with a superior proposal. Under the Merger Agreement, the Company will be obligated to pay a termination fee of $33 million to FNF if the Merger Agreement is terminated due to the Company’s board of directors changing its recommendation or if the Company terminates the Merger Agreement to enter into an agreement for a superior proposal. The Merger Agreement also contains certain customary termination rights in favor of FNF. If the Merger Agreement is terminated due to (i) the failure to complete the Mergers by the End Date because of a failure to obtain the Required Antitrust Regulatory Filings/Approvals or Required Insurance Regulatory Filings/Approvals, and all other closing conditions have been or are capable of being satisfied at the time of such termination, or (ii) an injunction or governmental or other court order enjoining, prohibiting or rendering illegal the consummation of the Mergers that is based on the failure to obtain the Required Antitrust Regulatory Filings/Approvals or Required Insurance Regulatory Filings/Approvals, then FNF will be obligated to pay a reverse termination fee of $50 million to the Company. The Merger Agreement was included as Exhibit 2.1 to the Form 8-K filed with the SEC on March 19, 2018. |
Revenues
Revenues | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues. The Company's operating revenues, summarized by type, are as follows: Three Months Ended Nine Months Ended 2018 2017 2018 2017 ($000 omitted) ($000 omitted) Title insurance premiums: Direct 152,739 146,314 444,447 436,803 Agency 272,875 268,545 756,986 736,301 Escrow fees 32,649 37,478 95,984 109,688 Search, abstract and valuation services 24,105 24,201 71,006 80,401 Other revenues 16,868 21,511 50,239 54,125 499,236 498,049 1,418,662 1,417,318 Direct premiums - Premiums from title insurance policies directly issued or issued by affiliate offices are recognized at the time of the closing of the related real estate transaction. Agency premiums - Premiums from title insurance policies written by independent agencies (agencies) are recognized when the policies are reported to the Company. In addition, where reasonable estimates can be made, the Company accrues for policies issued but not reported until after period end. The Company believes that reasonable estimates can be made when recent and consistent policy issuance information is available. Estimates are based on historical reporting patterns and other information obtained about agencies, as well as current trends in direct operations and in the title industry. In this accrual, future transactions are not being estimated. The Company is estimating revenues on policies that have already been issued by agencies but not yet reported to or received by the Company. The Company has consistently followed the same basic method of estimating unreported policy revenues for more than 10 years. Escrow fees - An escrow is a transaction pursuant to an agreement of a buyer, seller, borrower, or lender wherein an impartial third party, such as the Company, acts in a fiduciary capacity on behalf of the parties in accordance with the terms of such agreement in order to accomplish the directions stated therein. Services provided include, among others, acting as escrow or other fiduciary agent, obtaining releases, and conducting the actual closing or settlement. Escrow fees are recognized upon closing of the escrow, which is generally at the same time of the closing of the related real estate transaction. Search, abstract and valuation services - These services are primarily related to establishing the ownership, legal status and valuation of the property in a real estate transaction. In these cases, the Company does not issue a title insurance policy or perform duties of an escrow agent. Revenues from these services are recognized upon delivery of the service to the customer. Other revenues - Other revenues consist primarily of fees related to tax-deferred property exchange services, information technology products related to real property records and closing settlement services, income from equity investees, and other services performed to facilitate the closing of real estate transactions. For those products and services that are delivered at a point in time, the related revenue is recognized upon delivery based on the unit price of the product or service. For those products and services where delivery occurs over time, the related revenue is recognized ratably over the duration of the contract. |
Investments in debt and equity
Investments in debt and equity securities | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments in debt and equity securities | Investments in debt and equity securities. The total fair values of the Company's investments in debt and equity securities are detailed below: September 30, 2018 December 31, 2017 ($000 omitted) Investments in: Debt securities 624,422 671,441 Equity securities 37,667 37,914 662,089 709,355 Investments in debt securities are classified as available-for-sale and the net unrealized gains and losses on such investments, net of applicable deferred taxes, are included as a component of AOCI within stockholders' equity. As a result of the Company's adoption of ASU 2016-01 (as discussed in Note 1-D), fair value changes relating to investments in equity securities are recognized as part of investment and other (losses) gains - net in the condensed consolidated statement of income and comprehensive income beginning on January 1, 2018. Previously, the investments in equity securities, which consist of common stocks and master limited partnership interests, were accounted for similar to investments in debt securities. As of September 30, 2018 and December 31, 2017 , the net unrealized investment gains relating to investments in equity securities held were $ 7.0 million and $ 5.8 million, respectively. The amortized costs and fair values of investments in debt securities are as follows: September 30, 2018 December 31, 2017 Amortized costs Fair values Amortized costs Fair values ($000 omitted) Municipal 62,097 61,703 71,581 72,669 Corporate 346,429 340,919 351,477 357,933 Foreign 213,559 209,329 229,750 228,237 U.S. Treasury Bonds 12,948 12,471 12,838 12,602 635,033 624,422 665,646 671,441 Foreign debt securities consist of Canadian government, municipal and corporate bonds, United Kingdom treasury bonds, and Mexican government bonds. Gross unrealized gains and losses on investments in debt securities are as follows: September 30, 2018 December 31, 2017 Gains Losses Gains Losses ($000 omitted) Municipal 261 655 1,263 175 Corporate 2,045 7,555 6,953 497 Foreign 1,115 5,345 1,742 3,255 U.S. Treasury Bonds — 477 — 236 3,421 14,032 9,958 4,163 Debt securities as of September 30, 2018 mature, according to their contractual terms, as follows (actual maturities may differ due to call or prepayment rights): Amortized costs Fair values ($000 omitted) In one year or less 48,839 48,844 After one year through five years 364,717 359,727 After five years through ten years 182,578 177,919 After ten years 38,899 37,932 635,033 624,422 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, 2018 , were: Less than 12 months More than 12 months Total Losses Fair values Losses Fair values Losses Fair values ($000 omitted) Municipal 314 33,036 341 6,808 655 39,844 Corporate 6,862 266,231 693 15,359 7,555 281,590 Foreign 1,242 70,048 4,103 104,795 5,345 174,843 U.S. Treasury Bonds 150 4,277 327 8,088 477 12,365 8,568 373,592 5,464 135,050 14,032 508,642 The number of specific debt investment holdings held in an unrealized loss position as of September 30, 2018 was 334 . Of these securities, 83 securities were in unrealized loss positions for more than 12 months. The increased gross unrealized losses on corporate and foreign debt securities were primarily driven by increases in the overall rate environment, while the decline in value of the Canadian dollar against the U.S. dollar also contributed to higher gross unrealized losses on foreign debt securities. Since the Company does not intend to sell and will more likely than not maintain each investment security until its maturity or anticipated recovery, and no significant credit risk is deemed to exist, these investments are not considered as other-than-temporarily impaired. The Company believes its investment portfolio is diversified and expects no material loss to result from the failure to perform by issuers of the debt securities it holds. Investments made by the Company are not collateralized. Gross unrealized losses on investments in debt securities and the fair values of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2017 , were: Less than 12 months More than 12 months Total Losses Fair values Losses Fair values Losses Fair values ($000 omitted) Municipal 58 17,023 117 5,784 175 22,807 Corporate 386 81,632 111 4,926 497 86,558 Foreign 1,528 116,130 1,727 39,031 3,255 155,161 U.S. Treasury Bonds 53 5,830 183 6,772 236 12,602 2,025 220,615 2,138 56,513 4,163 277,128 |
Fair value measurements
Fair value measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | Fair value measurements. The Fair Value Measurements and Disclosures Topic (Topic 820) of the FASB Accounting Standards Codification (ASC) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal, or most advantageous, market for the asset or liability in an orderly transaction between market participants at the measurement date. Topic 820 establishes 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, 2018 , 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 — 61,703 61,703 Corporate — 340,919 340,919 Foreign — 209,329 209,329 U.S. Treasury Bonds — 12,471 12,471 Equity securities 37,667 — 37,667 37,667 624,422 662,089 As of December 31, 2017 , 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 — 72,669 72,669 Corporate — 357,933 357,933 Foreign — 228,237 228,237 U.S. Treasury Bonds — 12,602 12,602 Equity securities 37,914 — 37,914 37,914 671,441 709,355 As of September 30, 2018 , 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 available-for-sale securities are 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. There were no transfers of investments between levels during the nine months ended September 30, 2018 and 2017. |
Investment and other gains (los
Investment and other gains (losses) - net | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment and other gains (losses) - net | Investment and other gains (losses) - net. Investments and other gains (losses) are detailed as follows: Three Months Ended Nine Months Ended 2018 2017 2018 2017 ($000 omitted) Investment and other gains 1,597 548 2,763 1,392 Investment and other losses (151 ) (1,595 ) (220 ) (2,828 ) Net unrealized investment gains (losses) recognized on equity securities held 2,177 — 1,802 — 3,623 (1,047 ) 4,345 (1,436 ) Investment and other gains for the third quarter and first nine months of 2018 included a net unrealized gain of $1.2 million that resulted from a fair value change of an equity investment with previously no readily determinable fair value. Following the adoption of ASU 2016-01, as discussed in Notes 1 and 3, net investment gains recognized during the three and nine months ended September 30, 2018 related to investments in equity securities still held as of September 30, 2018 are calculated as follows ($000 omitted): September 30, 2018 Three Months Ended Nine Months Ended ($000 omitted) Total net investment gains recognized on equity securities during the period 2,775 2,161 Less: Net realized gains on equity securities sold during the period 598 359 Net unrealized investment gains recognized on equity securities still held 2,177 1,802 Proceeds from sales of investments in securities are as follows: Three Months Ended Nine Months Ended 2018 2017 2018 2017 ($000 omitted) Proceeds from sales of debt securities 6,326 1,419 27,475 50,245 Proceeds from sales of equity securities 452 4,459 5,025 5,288 Total proceeds from sales of investment in securities 6,778 5,878 32,500 55,533 |
Goodwill and other intangibles
Goodwill and other intangibles | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and other intangibles | Goodwill and other intangibles. The summary of changes in goodwill is as follows. Title Ancillary Services and Corporate Consolidated Total ($000 omitted) Balances at December 31, 2017 225,699 5,729 231,428 Acquisitions 15,804 — 15,804 Disposals (42 ) — (42 ) Balances at September 30, 2018 241,461 5,729 247,190 During 2018, the Company acquired several title businesses which increased goodwill related to the title segment by a total of $ 15.8 million, which is substantially deductible for income tax purposes over a period of 15 years . Also, in connection with the acquisitions, the Company identified and recorded $4.4 million of other intangibles, primarily related to employment and non-compete agreements, to be amortized between 1 year to 3 years from the dates of acquisition. The Company evaluates goodwill for impairment annually based on information as of June 30 of the current year or more frequently if circumstances suggest that an impairment may exist. The Company performed its annual goodwill impairment analysis during the quarter ended September 30, 2018, utilizing the quantitative assessment method for its direct operations, agency operations, international operations and ancillary services reporting units. Based on the quantitative analysis performed, the Company concluded that the goodwill related to all reporting units was not impaired. |
Estimated title losses
Estimated title losses | 9 Months Ended |
Sep. 30, 2018 | |
Insurance [Abstract] | |
Estimated title losses | Estimated title losses. A summary of estimated title losses for the nine months ended September 30 is as follows: 2018 2017 ($000 omitted) Balances at January 1 480,990 462,572 Provisions: Current year 62,592 69,067 Previous policy years (3,410 ) 1,524 Total provisions 59,182 70,591 Payments, net of recoveries: Current year (9,466 ) (10,403 ) Previous policy years (50,822 ) (53,491 ) Total payments, net of recoveries (60,288 ) (63,894 ) Effects of changes in foreign currency exchange rates (3,014 ) 6,576 Balances at September 30 476,870 475,845 Loss ratios as a percentage of title operating revenues: Current year provisions 4.5 % 5.0 % Total provisions 4.3 % 5.1 % During the nine months ended September 30, 2018, the Company decreased its loss provisioning rate due to lower loss experience and also reduced its prior policy year reserves as a result of its semi-annual actuarial reserve review. This primarily resulted in a $3.4 million net favorable loss development for previous policy years and also decreased the total title loss provisions for the nine months ended September 30, 2018 compared to the same period in 2017. |
Share-based payments
Share-based payments | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based payments | Share-based payments. Prior to 2018, the Company granted executives and senior management shares of restricted common stock, consisting of time-based shares, which vest on each of the first three anniversaries of the grant date, and performance-based shares, which vest upon achievement of certain financial objectives over the period of three years . Starting on January 1, 2018, the Company began granting time-based and performance-based restricted stock units, which have vesting conditions generally similar to those restricted common stock shares awarded previously. Each restricted stock unit represents a contractual right to receive a share of the Company's common stock. The aggregate grant-date fair values of these awards during 2018 and 2017 were $4.8 million ( 110,600 shares with an average grant price per share of $43.39 ) and $5.1 million ( 120,000 shares with an average grant price per share of $42.55 ), respectively. Awards were made pursuant to the Company’s employee incentive compensation plans and the compensation expense associated with restricted stock awards is recognized over the corresponding vesting period. Additionally, during the second quarters 2018 and 2017, the Company granted its board of directors, as a component of annual director retainer compensation, 14,300 and 13,000 shares, respectively, of common stock, which vested immediately. The aggregate fair values of these director awards at the grant dates in 2018 and 2017 were both $0.6 million. |
Earnings per share
Earnings per share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings per share | 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 the restricted shares and restricted units were vested. 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 Nine Months Ended 2018 2017 2018 2017 ($000 omitted, except per share) Numerator: Net income attributable to Stewart 17,554 10,944 36,151 33,601 Denominator (000): Basic average shares outstanding 23,556 23,448 23,537 23,442 Average number of dilutive shares relating to grants of restricted shares and units 143 116 140 129 Diluted average shares outstanding 23,699 23,564 23,677 23,571 Basic earnings per share attributable to Stewart 0.75 0.47 1.54 1.43 Diluted earnings per share attributable to Stewart 0.74 0.46 1.53 1.43 |
Contingent liabilities and comm
Contingent liabilities and commitments | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingent liabilities and commitments | 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, 2018 , 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 minimum lease payments. As of September 30, 2018 , the Company also had unused letters of credit aggregating $ 5.7 million related to workers’ compensation and other insurance. The Company does not expect to make any payments on these guarantees. |
Regulatory and legal developmen
Regulatory and legal developments | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Regulatory and legal developments | Regulatory and legal developments. The Company is subject to claims and lawsuits arising in the ordinary course of its business, most of which involve disputed policy claims. In some of these lawsuits, the plaintiff seeks exemplary or treble damages in excess of policy limits. The Company does not expect that any of these ordinary course proceedings will have a material adverse effect on its consolidated financial condition or results of operations. In addition, along with the other major title insurance companies, the Company is party to class action lawsuits concerning the title insurance industry. The Company believes that it has adequate reserves for the various litigation matters and contingencies discussed in this paragraph and that the likely resolution of these matters will not materially affect its consolidated financial condition or results of operations. Additionally, the Company receives from time to time various other inquiries from governmental regulators concerning practices in the insurance industry. Many of these practices do not concern title insurance. To the extent the Company is in receipt of such inquiries, it believes that 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. |
Segment information
Segment information | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment information | Segment information. The Company reports two operating segments: title and ancillary services and corporate . The title segment provides services needed to transfer title to property in a real estate transaction and includes services such as searching, examining, closing and insuring the condition of the title to the property. In addition, the title segment includes centralized title services, home and personal insurance services and Internal Revenue Code Section 1031 tax-deferred exchanges. The ancillary services and corporate segment includes search and valuation services, which are the principal offerings of ancillary services, and expenses of the parent holding company and certain other enterprise-wide overhead costs, net of centralized administrative services costs allocated to respective operating businesses. Selected statement of income information related to these segments is as follows: Three Months Ended Nine Months Ended 2018 2017 2018 2017 ($000 omitted) Title segment: Revenues 493,186 488,612 1,397,722 1,384,857 Depreciation and amortization 5,362 5,534 15,929 16,081 Income before taxes and noncontrolling interest 35,999 24,610 78,860 76,354 Ancillary services and corporate segment: Revenues 14,454 12,957 40,017 45,204 Depreciation and amortization 859 1,044 2,680 3,316 Loss before taxes and noncontrolling interest (11,223 ) (6,013 ) (26,018 ) (18,742 ) Consolidated Stewart: Revenues 507,640 501,569 1,437,739 1,430,061 Depreciation and amortization 6,221 6,578 18,609 19,397 Income before taxes and noncontrolling interest 24,776 18,597 52,842 57,612 The Company does not provide asset information by reportable operating segment as it does not routinely evaluate the asset position by segment. Revenues generated in the United States and all international operations are as follows: Three Months Ended Nine Months Ended 2018 2017 2018 2017 ($000 omitted) United States 473,477 464,111 1,347,310 1,335,129 International 34,163 37,458 90,429 94,932 507,640 501,569 1,437,739 1,430,061 |
Other comprehensive (loss) inco
Other comprehensive (loss) income | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Other comprehensive (loss) income | Other comprehensive (loss) income. Changes in the balances of each component of other comprehensive (loss) income and the related tax effects are as follows: Three Months Ended Three Months Ended Before-Tax Amount Tax Expense (Benefit) Net-of-Tax Amount Before-Tax Amount Tax Expense (Benefit) Net-of-Tax Amount ($000 omitted) Net unrealized (losses) gains on investments: Change in net unrealized gains and losses on investments (2,417 ) (507 ) (1,910 ) 95 32 63 Less: reclassification adjustment for net gains included in net income (174 ) (37 ) (137 ) (508 ) (177 ) (331 ) (2,591 ) (544 ) (2,047 ) (413 ) (145 ) (268 ) Foreign currency translation adjustments 1,620 480 1,140 5,817 1,676 4,141 Other comprehensive (loss) income (971 ) (64 ) (907 ) 5,404 1,531 3,873 Nine Months Ended Nine Months Ended Before-Tax Amount Tax Expense (Benefit) Net-of-Tax Amount Before-Tax Amount Tax Expense (Benefit) Net-of-Tax Amount ($000 omitted) Net unrealized (losses) gains on investments: Change in net unrealized gains and losses on investments (15,625 ) (3,281 ) (12,344 ) 4,438 1,553 2,885 Less: reclassification adjustment for net gains included in net income (781 ) (164 ) (617 ) (1,218 ) (426 ) (792 ) (16,406 ) (3,445 ) (12,961 ) 3,220 1,127 2,093 Foreign currency translation adjustments (5,234 ) (744 ) (4,490 ) 11,831 3,161 8,670 Other comprehensive (loss) income (21,640 ) (4,189 ) (17,451 ) 15,051 4,288 10,763 |
Interim financial statements (P
Interim financial statements (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Management's responsibility | Management’s responsibility. The accompanying interim financial statements were prepared by management, who is responsible for their integrity and objectivity. These financial statements have been prepared in conformity with U.S. 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. |
Consolidation | 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 20% through 50% of the voting stock, are accounted for using the equity method. |
Restrictions on cash and investments | Restrictions on cash and investments. The Company maintains investments in accordance with certain statutory requirements for the funding of statutory premium reserves. Statutory reserve funds, which approximated $468.8 million and $490.8 million at September 30, 2018 and December 31, 2017 , respectively, are required to be fully funded and invested in high-quality securities and short-term investments. Statutory reserve funds are not available for current claim payments, which must be funded from current operating cash flow. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $27.7 million and $14.2 million at September 30, 2018 and December 31, 2017 , 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. |
Cumulative effect adjustments on adoption of new accounting standards and Recent significant accounting pronouncements | Cumulative effect adjustments on adoption of new accounting standards. In February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-02, Income Statement - Reporting Comprehensive Income, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which amended its standard on comprehensive income to provide a one-time option for an entity to reclassify the stranded tax effects of the Tax Cuts and Jobs Act (the 2017 Act) that was passed in December 2017 from accumulated other comprehensive income/loss (AOCI) directly to retained earnings. The stranded tax effects result from the remeasurement of deferred tax assets and liabilities which were originally recorded in comprehensive income but whose remeasurement is reflected in the income statement. The Company adopted ASU 2018-02 effective on January 1, 2018 and reclassified $ 1.0 million of net tax expense from AOCI to retained earnings in the consolidated statement of equity. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , which, among others, (i) required equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplified the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminated the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and (iv) required separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. The Company adopted ASU 2016-01 effective on January 1, 2018, which resulted in a reclassification of the outstanding net unrealized investment gains, net of taxes, of $ 4.6 million relating to investments in equity securities previously carried in AOCI to retained earnings in the consolidated statement of equity. Recent significant accounting pronouncements. In February 2016, the FASB issued ASU 2016-02, Topic 842: Leases (Topic 842), which updates the current guidance related to leases. Topic 842 includes the requirement for the lessee to recognize in the balance sheet a liability equal to the present value of contractual lease payments with terms of more than twelve months and a right-of-use asset representing the right to use the underlying asset for the lease term. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Additional financial statement disclosures are required to meet the objective of enabling users to assess the amount, timing, and uncertainty of cash flows arising from leases. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842: Leases and ASU 2018-11, Leases (Topic 842) - Targeted Improvements . ASU 2018-10 clarifies certain aspects of the new lease standard which include amendments addressing, among others, the rate implicit in the lease, lessee reassessment of lease classification, variable payments that depend on an index or rate and certain transition adjustments. ASU 2018-11 provides an optional transition method which will allow the application of the recognition and measurement requirements of Topic 842 in the period of adoption. If elected, the comparative periods would continue to be reported under the legacy lease guidance in Topic 840, including the related disclosures, and a cumulative effect adjustment would be made to retained earnings as of the adoption date. These ASUs are effective for annual and interim periods beginning after December 15, 2018 and early adoption is permitted. The Company expects to adopt Topic 842 on January 1, 2019 using the optional transition method of adoption. The adoption is expected to result in material increases in the assets and liabilities to be reported on its 2019 consolidated balance sheets based on the Company's estimate of undiscounted future minimum lease payments of approximately $90 million to $100 million as of December 31, 2018. However, the Company expects the new lease standard will likely have an insignificant impact on its consolidated statements of income and comprehensive income and cash flows. The Company is currently in the process of system implementation and data migration, and expects the transition to be completed during the fourth quarter 2018. The Company is planning to elect most of the practical expedients permitted by Topic 842 at adoption date. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which removes Topic 820 disclosure requirements relating to the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. Also, ASU 2018-13 adds new requirements to disclose changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted. The Company expects this ASU will have minimal effect on its financial statements and related disclosures when it is adopted on January 1, 2020 considering the Company does not have any Level 3 fair value measurements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract . ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted. The Company is currently evaluating the effect that the new guidance will have on its consolidated financial statements and related disclosures. |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Summary of operating revenues | The Company's operating revenues, summarized by type, are as follows: Three Months Ended Nine Months Ended 2018 2017 2018 2017 ($000 omitted) ($000 omitted) Title insurance premiums: Direct 152,739 146,314 444,447 436,803 Agency 272,875 268,545 756,986 736,301 Escrow fees 32,649 37,478 95,984 109,688 Search, abstract and valuation services 24,105 24,201 71,006 80,401 Other revenues 16,868 21,511 50,239 54,125 499,236 498,049 1,418,662 1,417,318 |
Investments in debt and equit_2
Investments in debt and equity securities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments in debt securities | The total fair values of the Company's investments in debt and equity securities are detailed below: September 30, 2018 December 31, 2017 ($000 omitted) Investments in: Debt securities 624,422 671,441 Equity securities 37,667 37,914 662,089 709,355 The amortized costs and fair values of investments in debt securities are as follows: September 30, 2018 December 31, 2017 Amortized costs Fair values Amortized costs Fair values ($000 omitted) Municipal 62,097 61,703 71,581 72,669 Corporate 346,429 340,919 351,477 357,933 Foreign 213,559 209,329 229,750 228,237 U.S. Treasury Bonds 12,948 12,471 12,838 12,602 635,033 624,422 665,646 671,441 |
Investments in equity securities | The total fair values of the Company's investments in debt and equity securities are detailed below: September 30, 2018 December 31, 2017 ($000 omitted) Investments in: Debt securities 624,422 671,441 Equity securities 37,667 37,914 662,089 709,355 Following the adoption of ASU 2016-01, as discussed in Notes 1 and 3, net investment gains recognized during the three and nine months ended September 30, 2018 related to investments in equity securities still held as of September 30, 2018 are calculated as follows ($000 omitted): September 30, 2018 Three Months Ended Nine Months Ended ($000 omitted) Total net investment gains recognized on equity securities during the period 2,775 2,161 Less: Net realized gains on equity securities sold during the period 598 359 Net unrealized investment gains recognized on equity securities still held 2,177 1,802 |
Gross unrealized gains and losses | Gross unrealized gains and losses on investments in debt securities are as follows: September 30, 2018 December 31, 2017 Gains Losses Gains Losses ($000 omitted) Municipal 261 655 1,263 175 Corporate 2,045 7,555 6,953 497 Foreign 1,115 5,345 1,742 3,255 U.S. Treasury Bonds — 477 — 236 3,421 14,032 9,958 4,163 |
Debt securities according to contractual terms | Debt securities as of September 30, 2018 mature, according to their contractual terms, as follows (actual maturities may differ due to call or prepayment rights): Amortized costs Fair values ($000 omitted) In one year or less 48,839 48,844 After one year through five years 364,717 359,727 After five years through ten years 182,578 177,919 After ten years 38,899 37,932 635,033 624,422 |
Gross unrealized losses on investments and fair values of related securities | 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, 2018 , were: Less than 12 months More than 12 months Total Losses Fair values Losses Fair values Losses Fair values ($000 omitted) Municipal 314 33,036 341 6,808 655 39,844 Corporate 6,862 266,231 693 15,359 7,555 281,590 Foreign 1,242 70,048 4,103 104,795 5,345 174,843 U.S. Treasury Bonds 150 4,277 327 8,088 477 12,365 8,568 373,592 5,464 135,050 14,032 508,642 Gross unrealized losses on investments in debt securities and the fair values of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2017 , were: Less than 12 months More than 12 months Total Losses Fair values Losses Fair values Losses Fair values ($000 omitted) Municipal 58 17,023 117 5,784 175 22,807 Corporate 386 81,632 111 4,926 497 86,558 Foreign 1,528 116,130 1,727 39,031 3,255 155,161 U.S. Treasury Bonds 53 5,830 183 6,772 236 12,602 2,025 220,615 2,138 56,513 4,163 277,128 |
Fair value measurements (Tables
Fair value measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Financial instruments measured at fair value on recurring basis | As of September 30, 2018 , 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 — 61,703 61,703 Corporate — 340,919 340,919 Foreign — 209,329 209,329 U.S. Treasury Bonds — 12,471 12,471 Equity securities 37,667 — 37,667 37,667 624,422 662,089 As of December 31, 2017 , 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 — 72,669 72,669 Corporate — 357,933 357,933 Foreign — 228,237 228,237 U.S. Treasury Bonds — 12,602 12,602 Equity securities 37,914 — 37,914 37,914 671,441 709,355 |
Investment and other gains (l_2
Investment and other gains (losses) - net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Gross realized investment and other gains and losses | Investments and other gains (losses) are detailed as follows: Three Months Ended Nine Months Ended 2018 2017 2018 2017 ($000 omitted) Investment and other gains 1,597 548 2,763 1,392 Investment and other losses (151 ) (1,595 ) (220 ) (2,828 ) Net unrealized investment gains (losses) recognized on equity securities held 2,177 — 1,802 — 3,623 (1,047 ) 4,345 (1,436 ) |
Investments in equity securities still held | The total fair values of the Company's investments in debt and equity securities are detailed below: September 30, 2018 December 31, 2017 ($000 omitted) Investments in: Debt securities 624,422 671,441 Equity securities 37,667 37,914 662,089 709,355 Following the adoption of ASU 2016-01, as discussed in Notes 1 and 3, net investment gains recognized during the three and nine months ended September 30, 2018 related to investments in equity securities still held as of September 30, 2018 are calculated as follows ($000 omitted): September 30, 2018 Three Months Ended Nine Months Ended ($000 omitted) Total net investment gains recognized on equity securities during the period 2,775 2,161 Less: Net realized gains on equity securities sold during the period 598 359 Net unrealized investment gains recognized on equity securities still held 2,177 1,802 |
Proceeds from sale of investments available-for-sale | Proceeds from sales of investments in securities are as follows: Three Months Ended Nine Months Ended 2018 2017 2018 2017 ($000 omitted) Proceeds from sales of debt securities 6,326 1,419 27,475 50,245 Proceeds from sales of equity securities 452 4,459 5,025 5,288 Total proceeds from sales of investment in securities 6,778 5,878 32,500 55,533 |
Goodwill and other intangibles
Goodwill and other intangibles (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of changes in goodwill | The summary of changes in goodwill is as follows. Title Ancillary Services and Corporate Consolidated Total ($000 omitted) Balances at December 31, 2017 225,699 5,729 231,428 Acquisitions 15,804 — 15,804 Disposals (42 ) — (42 ) Balances at September 30, 2018 241,461 5,729 247,190 |
Estimated title losses (Tables)
Estimated title losses (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Insurance [Abstract] | |
Summary of estimated title losses | A summary of estimated title losses for the nine months ended September 30 is as follows: 2018 2017 ($000 omitted) Balances at January 1 480,990 462,572 Provisions: Current year 62,592 69,067 Previous policy years (3,410 ) 1,524 Total provisions 59,182 70,591 Payments, net of recoveries: Current year (9,466 ) (10,403 ) Previous policy years (50,822 ) (53,491 ) Total payments, net of recoveries (60,288 ) (63,894 ) Effects of changes in foreign currency exchange rates (3,014 ) 6,576 Balances at September 30 476,870 475,845 Loss ratios as a percentage of title operating revenues: Current year provisions 4.5 % 5.0 % Total provisions 4.3 % 5.1 % |
Earnings per share (Tables)
Earnings per share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share, basic and diluted | The calculation of the basic and diluted EPS is as follows: Three Months Ended Nine Months Ended 2018 2017 2018 2017 ($000 omitted, except per share) Numerator: Net income attributable to Stewart 17,554 10,944 36,151 33,601 Denominator (000): Basic average shares outstanding 23,556 23,448 23,537 23,442 Average number of dilutive shares relating to grants of restricted shares and units 143 116 140 129 Diluted average shares outstanding 23,699 23,564 23,677 23,571 Basic earnings per share attributable to Stewart 0.75 0.47 1.54 1.43 Diluted earnings per share attributable to Stewart 0.74 0.46 1.53 1.43 |
Segment information (Tables)
Segment information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Selected statement of operations and income (loss) information related to segments | Selected statement of income information related to these segments is as follows: Three Months Ended Nine Months Ended 2018 2017 2018 2017 ($000 omitted) Title segment: Revenues 493,186 488,612 1,397,722 1,384,857 Depreciation and amortization 5,362 5,534 15,929 16,081 Income before taxes and noncontrolling interest 35,999 24,610 78,860 76,354 Ancillary services and corporate segment: Revenues 14,454 12,957 40,017 45,204 Depreciation and amortization 859 1,044 2,680 3,316 Loss before taxes and noncontrolling interest (11,223 ) (6,013 ) (26,018 ) (18,742 ) Consolidated Stewart: Revenues 507,640 501,569 1,437,739 1,430,061 Depreciation and amortization 6,221 6,578 18,609 19,397 Income before taxes and noncontrolling interest 24,776 18,597 52,842 57,612 |
Revenues generated in domestic and all international operations | Revenues generated in the United States and all international operations are as follows: Three Months Ended Nine Months Ended 2018 2017 2018 2017 ($000 omitted) United States 473,477 464,111 1,347,310 1,335,129 International 34,163 37,458 90,429 94,932 507,640 501,569 1,437,739 1,430,061 |
Other comprehensive (loss) in_2
Other comprehensive (loss) income (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Schedule of changes in the balances of each component of other comprehensive income (loss) | Changes in the balances of each component of other comprehensive (loss) income and the related tax effects are as follows: Three Months Ended Three Months Ended Before-Tax Amount Tax Expense (Benefit) Net-of-Tax Amount Before-Tax Amount Tax Expense (Benefit) Net-of-Tax Amount ($000 omitted) Net unrealized (losses) gains on investments: Change in net unrealized gains and losses on investments (2,417 ) (507 ) (1,910 ) 95 32 63 Less: reclassification adjustment for net gains included in net income (174 ) (37 ) (137 ) (508 ) (177 ) (331 ) (2,591 ) (544 ) (2,047 ) (413 ) (145 ) (268 ) Foreign currency translation adjustments 1,620 480 1,140 5,817 1,676 4,141 Other comprehensive (loss) income (971 ) (64 ) (907 ) 5,404 1,531 3,873 Nine Months Ended Nine Months Ended Before-Tax Amount Tax Expense (Benefit) Net-of-Tax Amount Before-Tax Amount Tax Expense (Benefit) Net-of-Tax Amount ($000 omitted) Net unrealized (losses) gains on investments: Change in net unrealized gains and losses on investments (15,625 ) (3,281 ) (12,344 ) 4,438 1,553 2,885 Less: reclassification adjustment for net gains included in net income (781 ) (164 ) (617 ) (1,218 ) (426 ) (792 ) (16,406 ) (3,445 ) (12,961 ) 3,220 1,127 2,093 Foreign currency translation adjustments (5,234 ) (744 ) (4,490 ) 11,831 3,161 8,670 Other comprehensive (loss) income (21,640 ) (4,189 ) (17,451 ) 15,051 4,288 10,763 |
Interim financial statements -
Interim financial statements - Restrictions on Cash and Investments (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Investments restricted for statutory reserve funds | $ 468.8 | $ 490.8 |
Restricted cash and cash equivalent | $ 27.7 | $ 14.2 |
Interim financial statements _2
Interim financial statements - Cumulative Effect Adjustments on Adoption of New Accounting Standards (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net unrealized investment gains related to equity securities reclassified | $ 2,177 | $ 0 | $ 1,802 | $ 0 |
Retained earnings | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Tax Cuts and Jobs Act of 2017, Reclassification from AOCI to retained earnings, tax effect | 1,000 | |||
Retained earnings | ASU 2016-01 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net unrealized investment gains related to equity securities reclassified | 4,600 | |||
AOCI | ASU 2016-01 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net unrealized investment gains related to equity securities reclassified | $ (4,600) |
Interim financial statements _3
Interim financial statements - Recent Significant Accounting Pronouncement (Details) - Scenario, Forecast $ in Millions | Dec. 31, 2018USD ($) |
Minimum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Undiscounted future minimum lease payments | $ 90 |
Maximum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Undiscounted future minimum lease payments | $ 100 |
Interim financial statements _4
Interim financial statements - Merger Agreement (Details) | Mar. 18, 2018USD ($)extensionday$ / shares | Dec. 31, 2017USD ($)$ / shares | Sep. 30, 2018$ / shares |
Business Acquisition [Line Items] | |||
Common stock, par value (in usd per share) | $ 1 | $ 1 | |
Termination fee to be paid by the Company | $ | $ 33,000,000 | ||
FNF | |||
Business Acquisition [Line Items] | |||
Cash consideration to be received (in usd per share) | $ 25 | ||
Common stock portion, conversion ratio of shares | 0.6425 | ||
Common stock, par value (in usd per share) | $ 0.0001 | ||
Percentage of cash consideration | 50.00% | ||
Percentage of stock consideration | 50.00% | ||
Weighted average price of common stock, trading days | day | 20 | ||
Parent share price (in usd per share) | $ 38.91 | ||
Number of extensions per merger agreement | extension | 2 | ||
Extension period for merger agreement | 3 months | ||
Reduction in share price (in usd per share) | $ 4.50 | ||
Percentage of reduction in cash consideration | 50.00% | ||
Percentage of reduction in stock consideration | 50.00% | ||
Termination fee to be paid by FNF | $ | $ 50,000,000 | ||
FNF | Minimum | |||
Business Acquisition [Line Items] | |||
Annual revenues, divestiture of assets or businesses for regulatory approval | $ | $ 75,000,000 | ||
FNF | Maximum | |||
Business Acquisition [Line Items] | |||
Annual revenues, divestiture of assets or businesses for regulatory approval | $ | $ 225,000,000 | ||
FNF | Cash Election Consideration | |||
Business Acquisition [Line Items] | |||
Cash consideration to be received (in usd per share) | $ 50 | ||
FNF | Stock Election Consideration | |||
Business Acquisition [Line Items] | |||
Common stock portion, conversion ratio of shares | 1.2850 |
Revenues (Details)
Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 507,640 | $ 501,569 | $ 1,437,739 | $ 1,430,061 |
Title insurance premiums, Direct | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 152,739 | 146,314 | 444,447 | 436,803 |
Title insurance premiums, Agency | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 272,875 | 268,545 | 756,986 | 736,301 |
Escrow fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 32,649 | 37,478 | 95,984 | 109,688 |
Search, abstract and valuation services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 24,105 | 24,201 | 71,006 | 80,401 |
Other revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 16,868 | 21,511 | 50,239 | 54,125 |
Operating revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 499,236 | $ 498,049 | $ 1,418,662 | $ 1,417,318 |
Investments in debt and equit_3
Investments in debt and equity securities - Investments in Debt and Equity Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Investments, Debt and Equity Securities [Abstract] | ||
Debt securities | $ 624,422 | $ 671,441 |
Equity securities | 37,667 | |
Equity securities | 37,914 | |
Investments in debt and equity securities | $ 662,089 | 709,355 |
Investments in debt and equity securities | $ 709,355 |
Investments in debt and equit_4
Investments in debt and equity securities - Additional Information (Details) $ in Millions | Sep. 30, 2018USD ($)investment | Dec. 31, 2017USD ($) |
Investments, Debt and Equity Securities [Abstract] | ||
Net unrealized investment gains on equity securities held | $ | $ 7 | $ 5.8 |
Number of investments in an unrealized loss position | 334 | |
Number of investments in an unrealized loss positions for more than 12 months | 83 |
Investments in debt and equit_5
Investments in debt and equity securities - Amortized Costs and Fair Values (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized costs | $ 635,033 | $ 665,646 |
Fair values | 624,422 | 671,441 |
Municipal | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized costs | 62,097 | 71,581 |
Fair values | 61,703 | 72,669 |
Corporate | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized costs | 346,429 | 351,477 |
Fair values | 340,919 | 357,933 |
Foreign | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized costs | 213,559 | 229,750 |
Fair values | 209,329 | 228,237 |
U.S. Treasury Bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized costs | 12,948 | 12,838 |
Fair values | $ 12,471 | $ 12,602 |
Investments in debt and equit_6
Investments in debt and equity securities - Gross Unrealized Gains and Losses (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Securities, Available-for-sale [Line Items] | ||
Gains | $ 3,421 | $ 9,958 |
Losses | 14,032 | 4,163 |
Municipal | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gains | 261 | 1,263 |
Losses | 655 | 175 |
Corporate | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gains | 2,045 | 6,953 |
Losses | 7,555 | 497 |
Foreign | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gains | 1,115 | 1,742 |
Losses | 5,345 | 3,255 |
U.S. Treasury Bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gains | 0 | 0 |
Losses | $ 477 | $ 236 |
Investments in debt and equit_7
Investments in debt and equity securities - Debt Securities According to Contractual Terms (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Amortized costs | ||
In one year or less | $ 48,839 | |
After one year through five years | 364,717 | |
After five years through ten years | 182,578 | |
After ten years | 38,899 | |
Amortized costs, total | 635,033 | $ 665,646 |
Fair values | ||
In one year or less | 48,844 | |
After one year through five years | 359,727 | |
After five years through ten years | 177,919 | |
After ten years | 37,932 | |
Fair values, total | $ 624,422 | $ 671,441 |
Investments in debt and equit_8
Investments in debt and equity securities - Gross Unrealized Losses on Investments and Fair Values of Related Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Losses | ||
Less than 12 months | $ 8,568 | $ 2,025 |
More than 12 months | 5,464 | 2,138 |
Total | 14,032 | 4,163 |
Fair values | ||
Less than 12 months | 373,592 | 220,615 |
More than 12 months | 135,050 | 56,513 |
Total | 508,642 | 277,128 |
Municipal | ||
Losses | ||
Less than 12 months | 314 | 58 |
More than 12 months | 341 | 117 |
Total | 655 | 175 |
Fair values | ||
Less than 12 months | 33,036 | 17,023 |
More than 12 months | 6,808 | 5,784 |
Total | 39,844 | 22,807 |
Corporate | ||
Losses | ||
Less than 12 months | 6,862 | 386 |
More than 12 months | 693 | 111 |
Total | 7,555 | 497 |
Fair values | ||
Less than 12 months | 266,231 | 81,632 |
More than 12 months | 15,359 | 4,926 |
Total | 281,590 | 86,558 |
Foreign | ||
Losses | ||
Less than 12 months | 1,242 | 1,528 |
More than 12 months | 4,103 | 1,727 |
Total | 5,345 | 3,255 |
Fair values | ||
Less than 12 months | 70,048 | 116,130 |
More than 12 months | 104,795 | 39,031 |
Total | 174,843 | 155,161 |
U.S. Treasury Bonds | ||
Losses | ||
Less than 12 months | 150 | 53 |
More than 12 months | 327 | 183 |
Total | 477 | 236 |
Fair values | ||
Less than 12 months | 4,277 | 5,830 |
More than 12 months | 8,088 | 6,772 |
Total | $ 12,365 | $ 12,602 |
Fair value measurements (Detail
Fair value measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | $ 624,422 | $ 671,441 |
Equity securities | 37,667 | |
Investments in debt and equity securities | 662,089 | 709,355 |
Investments in securities | 709,355 | |
Municipal | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 61,703 | 72,669 |
Corporate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 340,919 | 357,933 |
Foreign | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 209,329 | 228,237 |
U.S. Treasury Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 12,471 | 12,602 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 37,667 | |
Investments in debt and equity securities | 662,089 | |
Investments in securities | 709,355 | |
Fair Value, Measurements, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 37,667 | |
Investments in debt and equity securities | 37,667 | |
Investments in securities | 37,914 | |
Fair Value, Measurements, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 0 | |
Investments in debt and equity securities | 624,422 | |
Investments in securities | 671,441 | |
Fair Value, Measurements, Recurring | Municipal | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 61,703 | |
Investments in securities | 72,669 | |
Fair Value, Measurements, Recurring | Municipal | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | |
Investments in securities | 0 | |
Fair Value, Measurements, Recurring | Municipal | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 61,703 | |
Investments in securities | 72,669 | |
Fair Value, Measurements, Recurring | Corporate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 340,919 | |
Investments in securities | 357,933 | |
Fair Value, Measurements, Recurring | Corporate | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | |
Investments in securities | 0 | |
Fair Value, Measurements, Recurring | Corporate | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 340,919 | |
Investments in securities | 357,933 | |
Fair Value, Measurements, Recurring | Foreign | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 209,329 | |
Investments in securities | 228,237 | |
Fair Value, Measurements, Recurring | Foreign | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | |
Investments in securities | 0 | |
Fair Value, Measurements, Recurring | Foreign | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 209,329 | |
Investments in securities | 228,237 | |
Fair Value, Measurements, Recurring | U.S. Treasury Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 12,471 | |
Investments in securities | 12,602 | |
Fair Value, Measurements, Recurring | U.S. Treasury Bonds | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | |
Investments in securities | 0 | |
Fair Value, Measurements, Recurring | U.S. Treasury Bonds | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | $ 12,471 | |
Investments in securities | 12,602 | |
Fair Value, Measurements, Recurring | Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments in securities | 37,914 | |
Fair Value, Measurements, Recurring | Equity securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments in securities | 37,914 | |
Fair Value, Measurements, Recurring | Equity securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments in securities | $ 0 |
Investment and other gains (l_3
Investment and other gains (losses) - net - Gross Realized Investment and Other Gains and Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Investment and other gains | $ 1,597 | $ 548 | $ 2,763 | $ 1,392 |
Investment and other losses | (151) | (1,595) | (220) | (2,828) |
Net unrealized investment gains (losses) recognized on equity securities held | 2,177 | 0 | 1,802 | 0 |
Investments and other (losses) gains | $ 3,623 | $ (1,047) | $ 4,345 | $ (1,436) |
Investment and other gains (l_4
Investment and other gains (losses) - net - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | ||
Unrealized investment gains recognized on equity securities still held | $ 1.2 | $ 1.2 |
Investment and other gains (l_5
Investment and other gains (losses) - net - Net Gains on Investments in Equity Securities Still Held (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Total net investment gains recognized on equity securities during the period | $ 2,775 | $ 2,161 | ||
Less: Net realized gains on equity securities sold during the period | 598 | 359 | ||
Net unrealized investment gains recognized on equity securities still held | $ 2,177 | $ 0 | $ 1,802 | $ 0 |
Investment and other gains (l_6
Investment and other gains (losses) - net - Proceeds from the Sale of Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Proceeds from sales of debt securities | $ 6,326 | $ 1,419 | $ 27,475 | $ 50,245 |
Proceeds from sales of equity securities | 452 | 4,459 | 5,025 | 5,288 |
Total proceeds from sales of investment in securities | $ 6,778 | $ 5,878 | $ 32,500 | $ 55,533 |
Goodwill and other intangible_2
Goodwill and other intangibles - Changes in Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Goodwill [Roll Forward] | |
Balance at beginning of period | $ 231,428 |
Acquisitions | 15,804 |
Disposals | (42) |
Balance at end of period | 247,190 |
Title | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 225,699 |
Acquisitions | 15,804 |
Disposals | (42) |
Balance at end of period | 241,461 |
Ancillary Services and Corporate | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 5,729 |
Acquisitions | 0 |
Disposals | 0 |
Balance at end of period | $ 5,729 |
Goodwill and other intangible_3
Goodwill and other intangibles - Additional Information (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Business Acquisition [Line Items] | |
Increase in goodwill | $ 15,804 |
Intangibles recorded in connection with acquisitions | $ 4,400 |
Acquired software | Minimum | |
Business Acquisition [Line Items] | |
Acquired intangibles, amortization period | 1 year |
Acquired software | Maximum | |
Business Acquisition [Line Items] | |
Acquired intangibles, amortization period | 3 years |
Title | |
Business Acquisition [Line Items] | |
Increase in goodwill | $ 15,804 |
Estimated title losses (Details
Estimated title losses (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Balances at beginning of period | $ 480,990 | $ 462,572 |
Provisions: | ||
Current year | 62,592 | 69,067 |
Previous policy years | (3,410) | 1,524 |
Total provisions | 59,182 | 70,591 |
Payments, net of recoveries: | ||
Current year | (9,466) | (10,403) |
Previous policy years | (50,822) | (53,491) |
Total payments, net of recoveries | (60,288) | (63,894) |
Effects of changes in foreign currency exchange rates | (3,014) | 6,576 |
Balances at end of period | $ 476,870 | $ 475,845 |
Loss ratios as a percentage of title operating revenues: | ||
Current year provisions | 4.50% | 5.00% |
Total provisions | 4.30% | 5.10% |
Share-based payments (Details)
Share-based payments (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Board of Directors | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares granted | 14,300 | 13,000 | ||
Aggregate fair value of awards at grant dates | $ 0.6 | $ 0.6 | ||
Time-Based Restricted Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting period | 3 years | |||
Performance-Based Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting period | 3 years | |||
Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Aggregate fair values at grant date | $ 4.8 | |||
Share-based incentives, shares issued | 110,600 | |||
Average grant price (in usd per share) | $ 43.39 | |||
Restricted Stock Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Aggregate fair values at grant date | $ 5.1 | |||
Share-based incentives, shares issued | 120,000 | |||
Average grant price (in usd per share) | $ 42.55 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Numerator: | ||||
Net income attributable to Stewart | $ 17,554 | $ 10,944 | $ 36,151 | $ 33,601 |
Denominator (000): | ||||
Basic average shares outstanding | 23,556 | 23,448 | 23,537 | 23,442 |
Average number of dilutive shares relating to grants of restricted shares and units | 143 | 116 | 140 | 129 |
Diluted average shares outstanding | 23,699 | 23,564 | 23,677 | 23,571 |
Basic earnings per share attributable to Stewart (in usd per share) | $ 0.75 | $ 0.47 | $ 1.54 | $ 1.43 |
Diluted earnings per share attributable to Stewart (in usd per share) | $ 0.74 | $ 0.46 | $ 1.53 | $ 1.43 |
Contingent liabilities and co_2
Contingent liabilities and commitments (Details) $ in Millions | Sep. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Guarantee of indebtedness, relating to unused letters of credit | $ 5.7 |
Segment information - Additiona
Segment information - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2018segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment information - Selected
Segment information - Selected Statement of Operations and Income (Loss) Information Related to Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 507,640 | $ 501,569 | $ 1,437,739 | $ 1,430,061 |
Depreciation and amortization | 6,221 | 6,578 | 18,609 | 19,397 |
Income before taxes and noncontrolling interest | 24,776 | 18,597 | 52,842 | 57,612 |
Title segment | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 493,186 | 488,612 | 1,397,722 | 1,384,857 |
Depreciation and amortization | 5,362 | 5,534 | 15,929 | 16,081 |
Income before taxes and noncontrolling interest | 35,999 | 24,610 | 78,860 | 76,354 |
Ancillary services and corporate segment | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 14,454 | 12,957 | 40,017 | 45,204 |
Depreciation and amortization | 859 | 1,044 | 2,680 | 3,316 |
Income before taxes and noncontrolling interest | $ (11,223) | $ (6,013) | $ (26,018) | $ (18,742) |
Segment information - Revenues
Segment information - Revenues Generated in United States and All International Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 507,640 | $ 501,569 | $ 1,437,739 | $ 1,430,061 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 473,477 | 464,111 | 1,347,310 | 1,335,129 |
International | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 34,163 | $ 37,458 | $ 90,429 | $ 94,932 |
Other comprehensive (loss) in_3
Other comprehensive (loss) income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Before-Tax Amount | ||||
Other comprehensive (loss) income | $ (971) | $ 5,404 | $ (21,640) | $ 15,051 |
Tax Expense (Benefit) | ||||
Other comprehensive (loss) income | (64) | 1,531 | (4,189) | 4,288 |
Net-of-Tax Amount | ||||
Other comprehensive (loss) income | (907) | 3,873 | (17,451) | 10,763 |
Net unrealized (losses) gains on investments | ||||
Before-Tax Amount | ||||
Change in net unrealized gains and losses on investments | (2,417) | 95 | (15,625) | 4,438 |
Less: reclassification adjustment for net gains included in net income | (174) | (508) | (781) | (1,218) |
Other comprehensive (loss) income | (2,591) | (413) | (16,406) | 3,220 |
Tax Expense (Benefit) | ||||
Change in net unrealized gains and losses on investments | (507) | 32 | (3,281) | 1,553 |
Less: reclassification adjustment for net gains included in net income | (37) | (177) | (164) | (426) |
Other comprehensive (loss) income | (544) | (145) | (3,445) | 1,127 |
Net-of-Tax Amount | ||||
Change in net unrealized gains and losses on investments | (1,910) | 63 | (12,344) | 2,885 |
Less: reclassification adjustment for net gains included in net income | (137) | (331) | (617) | (792) |
Other comprehensive (loss) income | (2,047) | (268) | (12,961) | 2,093 |
Foreign currency translation adjustments | ||||
Before-Tax Amount | ||||
Other comprehensive (loss) income | 1,620 | 5,817 | (5,234) | 11,831 |
Tax Expense (Benefit) | ||||
Other comprehensive (loss) income | 480 | 1,676 | (744) | 3,161 |
Net-of-Tax Amount | ||||
Other comprehensive (loss) income | $ 1,140 | $ 4,141 | $ (4,490) | $ 8,670 |