000009434412/312023Q1falseP3YP3Y00000943442023-01-012023-03-3100000943442023-05-01xbrli:shares0000094344stc:TitleDirectOperationsMember2023-01-012023-03-31iso4217:USD0000094344stc:TitleDirectOperationsMember2022-01-012022-03-310000094344stc:TitleAgencyOperationsMember2023-01-012023-03-310000094344stc:TitleAgencyOperationsMember2022-01-012022-03-310000094344stc:RealEstateSolutionsAndOtherMember2023-01-012023-03-310000094344stc:RealEstateSolutionsAndOtherMember2022-01-012022-03-3100000943442022-01-012022-03-31iso4217:USDxbrli:shares00000943442023-03-3100000943442022-12-3100000943442021-12-3100000943442022-03-310000094344us-gaap:CommonStockMember2022-12-310000094344us-gaap:AdditionalPaidInCapitalMember2022-12-310000094344us-gaap:RetainedEarningsMember2022-12-310000094344us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000094344us-gaap:TreasuryStockCommonMember2022-12-310000094344us-gaap:NoncontrollingInterestMember2022-12-310000094344us-gaap:RetainedEarningsMember2023-01-012023-03-310000094344us-gaap:CommonStockMember2023-01-012023-03-310000094344us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310000094344us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310000094344us-gaap:NoncontrollingInterestMember2023-01-012023-03-310000094344us-gaap:CommonStockMember2023-03-310000094344us-gaap:AdditionalPaidInCapitalMember2023-03-310000094344us-gaap:RetainedEarningsMember2023-03-310000094344us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310000094344us-gaap:TreasuryStockCommonMember2023-03-310000094344us-gaap:NoncontrollingInterestMember2023-03-310000094344us-gaap:CommonStockMember2021-12-310000094344us-gaap:AdditionalPaidInCapitalMember2021-12-310000094344us-gaap:RetainedEarningsMember2021-12-310000094344us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000094344us-gaap:TreasuryStockCommonMember2021-12-310000094344us-gaap:NoncontrollingInterestMember2021-12-310000094344us-gaap:RetainedEarningsMember2022-01-012022-03-310000094344us-gaap:CommonStockMember2022-01-012022-03-310000094344us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310000094344us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310000094344us-gaap:NoncontrollingInterestMember2022-01-012022-03-310000094344us-gaap:CommonStockMember2022-03-310000094344us-gaap:AdditionalPaidInCapitalMember2022-03-310000094344us-gaap:RetainedEarningsMember2022-03-310000094344us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310000094344us-gaap:TreasuryStockCommonMember2022-03-310000094344us-gaap:NoncontrollingInterestMember2022-03-310000094344stc:TitleInsurancePremiumsDirectMember2023-01-012023-03-310000094344stc:TitleInsurancePremiumsDirectMember2022-01-012022-03-310000094344stc:TitleInsurancePremiumsAgencyMember2023-01-012023-03-310000094344stc:TitleInsurancePremiumsAgencyMember2022-01-012022-03-310000094344stc:EscrowFeesMember2023-01-012023-03-310000094344stc:EscrowFeesMember2022-01-012022-03-310000094344stc:RealEstateSolutionsAndAbstractFeesMember2023-01-012023-03-310000094344stc:RealEstateSolutionsAndAbstractFeesMember2022-01-012022-03-310000094344us-gaap:ProductAndServiceOtherMember2023-01-012023-03-310000094344us-gaap:ProductAndServiceOtherMember2022-01-012022-03-310000094344us-gaap:USStatesAndPoliticalSubdivisionsMember2023-03-310000094344us-gaap:USStatesAndPoliticalSubdivisionsMember2022-12-310000094344us-gaap:CorporateDebtSecuritiesMember2023-03-310000094344us-gaap:CorporateDebtSecuritiesMember2022-12-310000094344us-gaap:ForeignGovernmentDebtSecuritiesMember2023-03-310000094344us-gaap:ForeignGovernmentDebtSecuritiesMember2022-12-310000094344us-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-03-310000094344us-gaap:USGovernmentAgenciesDebtSecuritiesMember2022-12-31stc:investment0000094344us-gaap:FairValueInputsLevel1Memberus-gaap:USStatesAndPoliticalSubdivisionsMember2023-03-310000094344us-gaap:FairValueInputsLevel2Memberus-gaap:USStatesAndPoliticalSubdivisionsMember2023-03-310000094344us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2023-03-310000094344us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2023-03-310000094344us-gaap:FairValueInputsLevel1Memberus-gaap:ForeignGovernmentDebtSecuritiesMember2023-03-310000094344us-gaap:FairValueInputsLevel2Memberus-gaap:ForeignGovernmentDebtSecuritiesMember2023-03-310000094344us-gaap:FairValueInputsLevel1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-03-310000094344us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-03-310000094344us-gaap:FairValueInputsLevel1Member2023-03-310000094344us-gaap:FairValueInputsLevel2Member2023-03-310000094344us-gaap:FairValueInputsLevel1Memberus-gaap:USStatesAndPoliticalSubdivisionsMember2022-12-310000094344us-gaap:FairValueInputsLevel2Memberus-gaap:USStatesAndPoliticalSubdivisionsMember2022-12-310000094344us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2022-12-310000094344us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2022-12-310000094344us-gaap:FairValueInputsLevel1Memberus-gaap:ForeignGovernmentDebtSecuritiesMember2022-12-310000094344us-gaap:FairValueInputsLevel2Memberus-gaap:ForeignGovernmentDebtSecuritiesMember2022-12-310000094344us-gaap:FairValueInputsLevel1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2022-12-310000094344us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2022-12-310000094344us-gaap:FairValueInputsLevel1Member2022-12-310000094344us-gaap:FairValueInputsLevel2Member2022-12-310000094344stc:TitleSegmentMember2022-12-310000094344stc:RealEstateSolutionsMember2022-12-310000094344us-gaap:CorporateAndOtherMember2022-12-310000094344stc:TitleSegmentMember2023-01-012023-03-310000094344stc:RealEstateSolutionsMember2023-01-012023-03-310000094344us-gaap:CorporateAndOtherMember2023-01-012023-03-310000094344stc:TitleSegmentMember2023-03-310000094344stc:RealEstateSolutionsMember2023-03-310000094344us-gaap:CorporateAndOtherMember2023-03-31xbrli:pure0000094344stc:TimeBasedRestrictedStockMember2023-01-012023-03-310000094344us-gaap:PerformanceSharesMember2023-01-012023-03-310000094344us-gaap:ShareBasedCompensationAwardTrancheOneMemberus-gaap:EmployeeStockOptionMember2023-01-012023-03-310000094344us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2023-01-012023-03-310000094344us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2023-01-012023-03-310000094344us-gaap:EmployeeStockOptionMember2023-01-012023-03-310000094344us-gaap:RestrictedStockUnitsRSUMember2023-03-310000094344us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-310000094344us-gaap:RestrictedStockUnitsRSUMember2022-03-310000094344us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310000094344us-gaap:EmployeeStockOptionMember2022-01-012022-03-310000094344stc:RestrictedStockAndRestrictedStockUnitsMember2023-01-012023-03-310000094344stc:RestrictedStockAndRestrictedStockUnitsMember2022-01-012022-03-31stc:segment0000094344stc:TitleSegmentMember2022-01-012022-03-310000094344stc:RealEstateSolutionsMember2022-01-012022-03-310000094344us-gaap:CorporateAndOtherMember2022-01-012022-03-310000094344country:US2023-01-012023-03-310000094344country:US2022-01-012022-03-310000094344us-gaap:NonUsMember2023-01-012023-03-310000094344us-gaap:NonUsMember2022-01-012022-03-310000094344us-gaap:AccumulatedNetInvestmentGainLossIncludingPortionAttributableToNoncontrollingInterestMember2023-01-012023-03-310000094344us-gaap:AccumulatedNetInvestmentGainLossIncludingPortionAttributableToNoncontrollingInterestMember2022-01-012022-03-310000094344us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2023-01-012023-03-310000094344us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2022-01-012022-03-31

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

☑    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
or
☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 001-02658
 STEWART INFORMATION SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
74-1677330
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
1360 Post Oak Blvd.,
Suite 100
 
Houston,
Texas
77056
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (713) 625-8100
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1 par value per share
STC
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    
Yes ☑  No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☑    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☑Large accelerated filer
☐
Non-accelerated filer
☐Emerging growth company
☐Accelerated filer☐Smaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐  No ☑
On May 1, 2023, there were 27,245,097 outstanding shares of the issuer's Common Stock.


FORM 10-Q QUARTERLY REPORT
QUARTER ENDED MARCH 31, 2023
TABLE OF CONTENTS
 
Item Page
PART I – FINANCIAL INFORMATION
1.
2.
3.
4.
PART II – OTHER INFORMATION
1.
1A.
2.
5.
6.
As used in this report, “we,” “us,” “our,” "Registrant," the “Company” and “Stewart” mean Stewart Information Services Corporation and our subsidiaries, unless the context indicates otherwise.




















2

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
 Three Months Ended 
 March 31,
 20232022
 ($000 omitted, except per share)
Revenues
Title revenues:
Direct operations207,871 317,834 
Agency operations249,021 404,145 
Real estate solutions and other62,592 123,230 
Operating revenues519,484 845,209 
Investment income6,599 3,622 
Net realized and unrealized (losses) gains(1,778)4,085 
524,305 852,916 
Expenses
Amounts retained by agencies205,738 331,191 
Employee costs170,551 204,982 
Other operating expenses120,743 189,751 
Title losses and related claims17,674 29,221 
Depreciation and amortization14,906 13,748 
Interest4,849 4,412 
534,461 773,305 
(Loss) income before taxes and noncontrolling interests(10,156)79,611 
Income tax benefit (expense)4,938 (17,699)
Net (loss) income(5,218)61,912 
Less income attributable to noncontrolling interests2,972 4,015 
Net (loss) income attributable to Stewart(8,190)57,897 
Net (loss) income(5,218)61,912 
Other comprehensive loss, net of taxes:
Foreign currency translation adjustments598 620 
Change in net unrealized gains and losses on investments6,617 (19,898)
Reclassification adjustments for realized gains and losses on investments92 (185)
Other comprehensive income (loss), net of taxes:7,307 (19,463)
Comprehensive income2,089 42,449 
Less income attributable to noncontrolling interests2,972 4,015 
Comprehensive (loss) income attributable to Stewart(883)38,434 
Basic average shares outstanding (000)27,201 26,960 
Basic (loss) earnings per share attributable to Stewart(0.30)2.15 
Diluted average shares outstanding (000)27,201 27,444 
Diluted (loss) earnings per share attributable to Stewart(0.30)2.11 
See notes to condensed consolidated financial statements.
3

CONDENSED CONSOLIDATED BALANCE SHEETS
 
 March 31, 2023 (Unaudited)		 
 December 31, 2022
 ($000 omitted)
Assets
Cash and cash equivalents174,815 248,367 
Short-term investments26,407 24,318 
Investments, at fair value:
Debt securities (amortized cost of $634,616 and $646,728)
608,314 611,934 
Equity securities81,441 98,149 
689,755 710,083 
Receivables:
Premiums from agencies37,231 39,921 
Trade and other74,903 67,348 
Income taxes18,708 10,281 
Notes7,465 7,482 
Allowance for uncollectible amounts(7,440)(7,309)
130,867 117,723 
Property and equipment:
Land2,545 2,545 
Buildings19,042 18,761 
Furniture and equipment219,002 213,707 
Accumulated depreciation(159,909)(153,474)
80,680 81,539 
Operating lease assets128,192 127,830 
Title plants, at cost73,358 73,358 
Investments on equity method basis3,896 4,575 
Goodwill1,094,406 1,072,982 
Intangible assets, net of amortization190,827 199,084 
Deferred tax assets2,586 2,590 
Other assets83,271 75,430 
2,679,060 2,737,879 
Liabilities
Notes payable445,067 447,006 
Accounts payable and accrued liabilities163,001 196,541 
Operating lease liabilities147,594 148,003 
Estimated title losses533,415 549,448 
Deferred tax liabilities30,231 26,616 
1,319,308 1,367,614 
Contingent liabilities and commitments
Stockholders’ equity
Common Stock ($1 par value) and additional paid-in capital
327,823 324,344 
Retained earnings1,071,320 1,091,816 
Accumulated other comprehensive loss:
Foreign currency translation adjustments(23,258)(23,856)
Net unrealized losses on debt securities investments(20,778)(27,487)
Treasury stock – 352,161 common shares, at cost
(2,666)(2,666)
Stockholders’ equity attributable to Stewart1,352,441 1,362,151 
Noncontrolling interests7,311 8,114 
Total stockholders’ equity (27,245,097 and 27,130,412 shares outstanding)
1,359,752 1,370,265 
2,679,060 2,737,879 
See notes to condensed consolidated financial statements.
4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Three Months Ended 
 March 31,
 20232022
 ($000 omitted)
Reconciliation of net (loss) income to cash (used) provided by operating activities:
Net (loss) income(5,218)61,912 
Add (deduct):
Depreciation and amortization14,906 13,748 
Adjustments for bad debt provisions590 14 
Net realized and unrealized losses (gains)1,778 (4,085)
Amortization of net premium on debt securities investments230 690 
Payments for title losses (higher) less than provisions(15,797)8,959 
Adjustments for insurance recoveries of title losses— 220 
(Increase) decrease in receivables – net(13,724)6,226 
Increase in other assets – net(4,506)(5,046)
Decrease in accounts payable and other liabilities – net(34,656)(50,808)
Change in net deferred income taxes1,724 265 
Net income from equity method investments(28)(736)
Dividends received from equity method investments680 1,167 
Stock-based compensation expense2,759 2,239 
Other – net200 110 
Cash (used) provided by operating activities(51,062)34,875 
Investing activities:
Proceeds from sales of investments in securities26,772 17,650 
Proceeds from matured investments in debt securities25,338 15,923 
Purchases of investments in securities(23,965)(66,882)
Net purchases of short-term investments(2,541)(60)
Purchases of property and equipment, and real estate(8,894)(12,291)
Proceeds from sale of property and equipment and other assets49 829 
Cash paid for acquisition of businesses(21,500)(17,904)
Other – net(71)(2,481)
Cash used by investing activities(4,812)(65,216)
Financing activities:
Proceeds from notes payable3,521 140 
Payments on notes payable(5,589)(37,819)
Distributions to noncontrolling interests(3,775)(4,568)
Repurchases of Common Stock(1,271)(2,462)
Proceeds from stock option and employee stock purchase plan exercises1,991 2,492 
Cash dividends paid(12,260)(10,119)
Payment of contingent consideration related to acquisitions— (6,262)
Other - net— 36 
Cash used by financing activities(17,383)(58,562)
Effects of changes in foreign currency exchange rates(295)(367)
Change in cash and cash equivalents(73,552)(89,270)
Cash and cash equivalents at beginning of period248,367 485,919 
Cash and cash equivalents at end of period174,815 396,649 

See notes to condensed consolidated financial statements.
5

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

Common Stock
Additional paid-in capitalRetained earningsAccumulated other comprehensive lossTreasury stockNoncontrolling interestsTotal
($000 omitted)
Three Months Ended March 31, 2023
Balance at December 31, 202227,483 296,861 1,091,816 (51,343)(2,666)8,114 1,370,265 
Net loss attributable to Stewart— — (8,190)— — — (8,190)
Dividends on Common Stock ($0.45 per share)
— — (12,306)— — — (12,306)
Stock-based compensation93 2,666 — — — — 2,759 
Stock repurchases(30)(1,241)— — — — (1,271)
Stock option and employee stock purchase plan exercises52 1,939 — — — — 1,991 
Change in net unrealized gains and losses on investments, net of taxes— — — 6,617 — — 6,617 
Reclassification adjustment for realized gains and losses on investments, net of taxes— — — 92 — — 92 
Foreign currency translation adjustments, net of taxes— — — 598 — — 598 
Net income attributable to noncontrolling interests— — — — — 2,972 2,972 
Distributions to noncontrolling interests— — — — — (3,775)(3,775)
Balance at March 31, 202327,598 300,225 1,071,320 (44,036)(2,666)7,311 1,359,752 
Three Months Ended March 31, 2022
Balance at December 31, 202127,246 282,376 974,800 253 (2,666)12,726 1,294,735 
Net income attributable to Stewart— — 57,897 — — — 57,897 
Dividends on Common Stock ($0.38 per share)
— — (10,241)— — — (10,241)
Stock-based compensation108 2,131 — — — — 2,239 
Stock repurchases(36)(2,426)— — — — (2,462)
Stock option and employee stock purchase plan exercises49 2,443 — — — — 2,492 
Change in net unrealized gains and losses on investments, net of taxes— — — (19,898)— — (19,898)
Reclassification adjustment for realized gains and losses on investments, net of taxes— — — (185)— — (185)
Foreign currency translation adjustments, net of taxes— — — 620 — — 620 
Net income attributable to noncontrolling interests— — — — — 4,015 4,015 
Distributions to noncontrolling interests— — — — — (4,568)(4,568)
Net effect of other changes in ownership— — — — — 144 144 
Balance at March 31, 202227,367 284,524 1,022,456 (19,210)(2,666)12,317 1,324,788 
See notes to condensed consolidated financial statements.

6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1

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

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

B. Consolidation. The condensed consolidated financial statements include all subsidiaries in which the Company owns more than 50% voting rights in electing directors. All significant intercompany amounts and transactions have been eliminated and provisions have been made for noncontrolling interests. Unconsolidated investees, in which the Company typically owns from 20% to 50% of the voting stock, are accounted for using the equity method.

C. Restrictions on cash and investments. The Company maintains investments in accordance with certain statutory requirements for the funding of statutory premium reserves. Statutory reserve funds are required to be fully funded and invested in high-quality securities and short-term investments. Statutory reserve funds are not available for current claim payments, which must be funded from current operating cash flow. Included in investments in debt and equity securities are statutory reserve funds of approximately $541.6 million and $544.0 million at March 31, 2023 and December 31, 2022, respectively. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $10.3 million and $8.6 million at March 31, 2023 and December 31, 2022, respectively. Although these cash statutory reserve funds are not restricted or segregated in depository accounts, they are required to be held pursuant to state statutes. If the Company fails to maintain minimum investments or cash and cash equivalents sufficient to meet statutory requirements, the Company may be subject to fines or other penalties, including potential revocation of its business license. These funds are not available for any other purpose. In the event that insurance regulators adjust the determination of the statutory premium reserves of the Company’s title insurers, these restricted funds as well as statutory surplus would correspondingly increase or decrease.


NOTE 2

Revenues. The Company's operating revenues, summarized by type, are as follows:
 Three Months Ended 
 March 31,
 20232022
($000 omitted)
Title insurance premiums:
Direct130,817 205,562 
Agency249,021 404,145 
Escrow fees32,927 55,792 
Real estate solutions and abstract fees77,160 108,802 
Other revenues29,559 70,908 
519,484 845,209 


7

NOTE 3

Investments in debt and equity securities. As of March 31, 2023 and December 31, 2022, the net unrealized investment gains relating to investments in equity securities held were $13.4 million and $19.2 million, respectively (refer to Note 5).

The amortized costs and fair values of investments in debt securities are as follows:
 March 31, 2023December 31, 2022
 
Amortized
costs
Fair
values
Amortized
costs
Fair
values
 ($000 omitted)
Municipal26,619 26,487 30,104 29,835 
Corporate259,084 244,479 272,362 254,316 
Foreign318,408 306,885 315,184 299,137 
U.S. Treasury Bonds30,505 30,463 29,078 28,646 
634,616 608,314 646,728 611,934 

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

Gross unrealized gains and losses on investments in debt securities are as follows:
 March 31, 2023December 31, 2022
 GainsLossesGainsLosses
 ($000 omitted)
Municipal29 161 3 272 
Corporate815 15,420 489 18,535 
Foreign1,034 12,557 165 16,212 
U.S. Treasury Bonds129 171 21 453 
2,007 28,309 678 35,472 

Debt securities as of March 31, 2023 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 less63,817 63,214 
After one year through five years380,826 363,161 
After five years through ten years174,554 168,393 
After ten years15,419 13,546 
634,616 608,314 

8

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 March 31, 2023, were:
 Less than 12 monthsMore than 12 monthsTotal
 LossesFair valuesLossesFair valuesLossesFair values
 ($000 omitted)
Municipal89 16,879 72 2,850 161 19,729 
Corporate3,944 111,914 11,476 115,713 15,420 227,627 
Foreign539 33,353 12,018 220,333 12,557 253,686 
U.S. Treasury Bonds96 14,094 75 1,284 171 15,378 
4,668 176,240 23,641 340,180 28,309 516,420 

The number of specific debt investment holdings held in an unrealized loss position as of March 31, 2023 was 321. Of these securities, 181 were in unrealized loss positions for more than 12 months. Gross unrealized investment losses at March 31, 2023 decreased compared to December 31, 2022, primarily due to interest rates declines during the first quarter 2023. Since the Company does not intend to sell and, more likely than not, will maintain each investment security until its maturity or anticipated recovery in value, and no significant credit risk is deemed to exist, these investments are not considered as credit-impaired. The Company believes its investment portfolio is diversified and expects no material loss to result from the failure to perform by issuers of the debt securities it holds. Investments made by the Company are not collateralized.

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


NOTE 4

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

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

9

As of March 31, 2023, financial instruments measured at fair value on a recurring basis are summarized below:
Level 1Level 2
Fair value
measurements
 ($000 omitted)
Investments in securities:
Debt securities:
Municipal— 26,487 26,487 
Corporate— 244,479 244,479 
Foreign— 306,885 306,885 
U.S. Treasury Bonds— 30,463 30,463 
Equity securities81,441 — 81,441 
81,441 608,314 689,755 

As of December 31, 2022, financial instruments measured at fair value on a recurring basis are summarized below:
Level 1Level 2
Fair value
measurements
 ($000 omitted)
Investments in securities:
Debt securities:
Municipal— 29,835 29,835 
Corporate— 254,316 254,316 
Foreign— 299,137 299,137 
U.S. Treasury Bonds— 28,646 28,646 
Equity securities98,149 — 98,149 
98,149 611,934 710,083 

As of March 31, 2023 and December 31, 2022, Level 1 financial instruments consist of equity securities. Level 2 financial instruments consist of municipal, governmental, and corporate bonds, both U.S. and foreign. In accordance with the Company’s policies and guidelines which incorporate relevant statutory requirements, the Company’s third-party registered investment manager invests only in securities rated as investment grade or higher by the major rating services, where observable valuation inputs are significant. The fair value of the Company's investments in debt and equity securities is primarily determined using a third-party pricing service provider. The third-party pricing service provider calculates the fair values using both market approach and model valuation methods, as well as pricing information obtained from brokers, dealers and custodians. Management ensures the reasonableness of the third-party service valuations by comparing them with pricing information from the Company's investment manager.


NOTE 5

Net realized and unrealized gains. Realized and unrealized gains and losses are detailed as follows:
 Three Months Ended 
 March 31,
 20232022
 ($000 omitted)
Realized gains61 1,594 
Realized losses(747)(168)
Net unrealized investment (losses) gains recognized on equity securities still held at end of period(1,092)2,659 
(1,778)4,085 

10

Realized losses during the first quarter 2023 were primarily related to sales of securities investments. Realized gains during the first quarter 2022 included a $1.0 million gain related to a sale of a title plant copy.

Investment gains and losses recognized related to investments in equity securities are as follows:
Three Months Ended 
 March 31,
20232022
($000 omitted)
Net investment (losses) gains recognized on equity securities during the period(1,756)2,785 
Less: Net realized (losses) gains on equity securities sold during the period(664)126 
Net unrealized investment (losses) gains recognized on equity securities still held at end of period(1,092)2,659 

Proceeds from sales of investments in securities are as follows: 
 Three Months Ended 
 March 31,
 20232022
 ($000 omitted)
Proceeds from sales of debt securities7,446 17,280 
Proceeds from sales of equity securities19,326 370 
Total proceeds from sales of investments in securities26,772 17,650 


NOTE 6

Goodwill. The summary of changes in goodwill is as follows:
TitleReal Estate SolutionsCorporate and OtherTotal
($000 omitted)
Balances at December 31, 2022720,478 352,504 — 1,072,982 
Acquisitions3,674 18,000 — 21,674 
Purchase accounting adjustments(250)— — (250)
Balances at March 31, 2023723,902 370,504 — 1,094,406 

During the first quarter 2023, goodwill recorded in the real estate solutions and title segments was related to acquisitions of a financial and personal information online verification services provider and several title offices, respectively.

11

NOTE 7

Estimated title losses. A summary of estimated title losses for the three months ended March 31 is as follows:
20232022
 ($000 omitted)
Balances at January 1549,448 549,614 
Provisions:
Current year17,214 28,882 
Previous policy years460 339 
Total provisions17,674 29,221 
Payments, net of recoveries:
Current year(3,470)(3,192)
Previous policy years(30,001)(17,070)
Total payments, net of recoveries(33,471)(20,262)
Effects of changes in foreign currency exchange rates(236)2,145 
Balances at March 31533,415 560,718 
Loss ratios as a percentage of title operating revenues:
Current year provisions3.8 %4.0 %
Total provisions3.9 %4.0 %


NOTE 8

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

During the first quarters 2023 and 2022, the Company granted time-based and performance-based restricted stock units with aggregate grant-date fair values of $11.4 million (278,000 units with an average grant price per unit of $40.93) and $10.5 million (163,000 units with an average grant price per unit of $64.43), respectively.


NOTE 9

(Loss) earnings per share. Basic earnings (loss) per share (EPS) attributable to Stewart is calculated by dividing net income (loss) attributable to Stewart by the weighted-average number of shares of Common Stock outstanding during the reporting periods. Outstanding shares of Common Stock granted to employees that are not yet vested (restricted shares) are excluded from the calculation of the weighted-average number of shares outstanding for calculating basic EPS. To calculate diluted EPS, the number of shares is adjusted to include the number of additional shares that would have been outstanding if restricted units and shares were vested and stock options were exercised. In periods of loss, dilutive shares are excluded from the calculation of the diluted EPS and diluted EPS is computed in the same manner as basic EPS.

12

The calculation of the basic and diluted EPS is as follows:
 Three Months Ended 
 March 31,
 20232022
($000 omitted, except per share)
Numerator:
Net (loss) income attributable to Stewart(8,190)57,897 
Denominator (000):
Basic average shares outstanding27,201 26,960 
Average number of dilutive shares relating to options— 265 
Average number of dilutive shares relating to grants of restricted units and shares— 219 
Diluted average shares outstanding27,201 27,444 
Basic (loss) earnings per share attributable to Stewart(0.30)2.15 
Diluted (loss) earnings per share attributable to Stewart(0.30)2.11 


NOTE 10

Contingent liabilities and commitments. In the ordinary course of business, the Company guarantees the third-party indebtedness of certain of its consolidated subsidiaries. As of March 31, 2023, the maximum potential future payments on the guarantees are not more than the related notes payable recorded in the condensed consolidated balance sheets. The Company also guarantees the indebtedness related to lease obligations of certain of its consolidated subsidiaries. The maximum future obligations arising from these lease-related guarantees are not more than the Company’s future lease obligations, as presented on the condensed consolidated balance sheets, plus lease operating expenses. As of March 31, 2023, the Company also had unused letters of credit aggregating $4.9 million related to workers’ compensation and other insurance. The Company does not expect to make any payments on these guarantees.


NOTE 11

Regulatory and legal developments. The Company is subject to claims and lawsuits arising in the ordinary course of its business, most of which involve disputed policy claims. In some of these lawsuits, the plaintiffs seek exemplary or treble damages in excess of policy limits. The Company does not expect that any of these ordinary course proceedings will have a material adverse effect on its consolidated financial condition or results of operations. The Company believes that it has adequate reserves for the various litigation matters and contingencies referred to in this paragraph and that the likely resolution of these matters will not materially affect its consolidated financial condition or results of operations.

The Company is subject to non-ordinary course of business claims or lawsuits from time to time. To the extent the Company is currently the subject of these types of lawsuits, the Company has determined either that a loss is not reasonably possible or that the estimated loss or range of loss, if any, will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

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

13

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

NOTE 12

Segment information. The Company has three reportable operating segments: the title segment, the real estate solutions segment, and the corporate and other segment. The title segment provides services needed to transfer title to property in a real estate transaction and includes services such as searching, abstracting, examining, closing and insuring the condition of the title to the property. In addition, the title segment includes home and personal insurance services, Internal Revenue Code Section 1031 tax-deferred exchanges, and digital customer engagement platform services. The real estate solutions segment supports the real estate industry and primarily includes credit and real estate information services, valuation management services, online notarization and closing services, and search services. The corporate and other segment is primarily comprised of the parent holding company and centralized administrative services departments.

Selected statement of operations information related to these segments is as follows:
 Three Months Ended 
 March 31,
 20232022
 ($000 omitted)
Title segment:
Revenues461,645 729,359 
Depreciation and amortization8,104 6,141 
(Loss) income before taxes and noncontrolling interest(664)82,783 
Real estate solutions segment:
Revenues62,625 89,391 
Depreciation and amortization6,300 6,796 
Income before taxes1,366 6,791 
Corporate and other segment:
Revenues35 34,166 
Depreciation and amortization502 811 
Loss before taxes(10,858)(9,963)
Consolidated Stewart:
Revenues524,305 852,916 
Depreciation and amortization14,906 13,748 
(Loss) income before taxes and noncontrolling interest(10,156)79,611 

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

14

Total revenues generated in the United States and all international operations are as follows:
 Three Months Ended 
 March 31,
 20232022
 ($000 omitted)
United States497,531 809,204 
International26,774 43,712 
524,305 852,916 


NOTE 13
Other comprehensive income (loss). Changes in the balances of each component of other comprehensive income (loss) and the related tax effects are as follows:
Three Months Ended 
 March 31, 2023		Three Months Ended 
 March 31, 2022
Before-Tax AmountTax Expense (Benefit)Net-of-Tax AmountBefore-Tax AmountTax Expense (Benefit)Net-of-Tax Amount
($000 omitted)
Net unrealized gains and losses on investments:
Change in net unrealized gains and losses on investments8,376 1,759 6,617 (25,188)(5,290)(19,898)
Reclassification adjustments for realized gains and losses on investments116 24 92 (234)(49)(185)
8,492 1,783 6,709 (25,422)(5,339)(20,083)
Foreign currency translation adjustments710 112 598 976 356 620 
Other comprehensive income (loss)9,202 1,895 7,307 (24,446)(4,983)(19,463)
15

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

MANAGEMENT’S OVERVIEW

First quarter 2023 overview. We reported a net loss attributable to Stewart of $8.2 million ($0.30 loss per diluted share) for the first quarter 2023, compared to net income attributable to Stewart of $57.9 million ($2.11 per diluted share) for the first quarter 2022. Pretax loss before noncontrolling interests for the first quarter 2023 was $10.2 million compared to pretax income before noncontrolling interests of $79.6 million for the prior year quarter. The first quarter 2023 results included $1.8 million of pretax net realized and unrealized losses, primarily composed of net unrealized losses on fair value changes of equity securities investments and realized losses on sales of investment securities, while the first quarter 2022 results included $4.1 million of pretax net realized and unrealized gains, primarily composed of net unrealized gains on fair value changes of equity securities investments and realized gains on title plant copy and other asset sales.

Summary results of the title segment are as follows ($ in millions, except pretax margin):
For the Three Months
Ended March 31
 20232022% Chg
Operating revenues456.9 722.0 (37)%
Investment income6.6 3.6 82 %
Net realized and unrealized (losses) gains(1.8)3.8 (148)%
Pretax (loss) income(0.7)82.8 (101)%
Pretax margin(0.1)%11.4 %

Title segment operating revenues for the first quarter 2023 decreased $265.1 million, or 37%, compared to the first quarter 2022, primarily due to volume declines in our direct title and agency operations, while total segment operating expenses decreased $184.3 million, or 28%, primarily due to lower revenues. Agency retention expenses in the first quarter 2023 decreased $125.5 million, or 38%, due to reduced gross agency revenues, while the average independent agency remittance rate in the first quarter 2023 was 17.4% compared to 18.1% in the prior year quarter.

Total title segment employee costs and other operating expenses in the first quarter 2023 decreased $49.6 million, or 18%, compared to the prior year quarter, and as a percentage of operating revenues, these expenses were 50.4% in the first quarter 2023 compared to 38.8% in the first quarter 2022, primarily due to lower revenues in the first quarter 2023. Title loss expense in the first quarter 2023 decreased $11.5 million, or 40%, compared to the prior year quarter, primarily due to lower title revenues. As a percentage of title revenues, title loss expense was 3.9% in the first quarter 2023 compared to 4.0% in the first quarter 2022.

The title segment’s net realized and unrealized losses and gains in the first quarters 2023 and 2022 were primarily driven by fair value changes of equity securities investments and realized losses and gains on sale of investment securities. Additionally, the segment recorded a realized gain of $1.0 million on a title plant copy sale during the first quarter 2022. Investment income in the first quarter 2023 increased $3.0 million, compared to the prior year quarter, primarily as a result of higher interest income resulting from increased interest rates and higher short-term investments in the first quarter 2023. Included in the segment's pretax (loss) income for the first quarters 2023 and 2022 were total acquired intangible asset amortization expenses of $2.8 million and $1.8 million, respectively.

Summary results of the real estate solutions segment are as follows ($ in millions, except pretax margin):
For the Three Months
Ended March 31
 20232022% Chg
Operating revenues62.6 89.4 (30)%
Pretax income1.4 6.8 (80)%
Pretax margin2.2 %7.6 %

16

Operating revenues for the real estate solutions segment decreased $26.8 million, or 30 percent, in the first quarter 2023 compared to the first quarter 2022, primarily due to lower transaction volumes resulting from the current economic environment. Combined employee costs and other operating expenses decreased $20.8 million, or 27 percent, in the first quarter 2023, consistent with lower operating revenues. Included in the pretax income for the first quarters 2023 and 2022 were acquired intangible asset amortization expenses of $5.8 million and $6.4 million, respectively.

In regard to the corporate and other segment, net expenses attributable to corporate operations during the first quarter 2023 were $10.9 million compared to $8.9 million in the prior year quarter, primarily due to higher legal and technology expenses during the first quarter 2023. Segment results for the first quarter 2022 included a real estate brokerage company that was sold in the second quarter 2022 (refer to Note 12 to the condensed consolidated financial statements for segment information).


CRITICAL ACCOUNTING ESTIMATES

The preparation of the Company’s condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosures surrounding contingencies and commitments.

Actual results can differ from our accounting estimates. While we do not anticipate significant changes in our estimates, there is a risk that such changes could have a material impact on our consolidated financial condition or results of operations for future periods. During the three months ended March 31, 2023, we made no material changes to our critical accounting estimates as previously disclosed in Management’s Discussion and Analysis in the 2022 Form 10-K.

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

Factors affecting revenues. The principal factors that contribute to changes in our operating revenues include:
•interest rates;
•availability of mortgage loans;
•number and average value of mortgage loan originations;
•ability of potential purchasers to qualify for loans;
•inventory of existing homes available for sale;
•ratio of purchase transactions compared with refinance transactions;
•ratio of closed orders to open orders;
•home prices;
•consumer confidence, including employment trends;
•demand by buyers;
•premium rates;
•foreign currency exchange rates;
•market share;
•ability to attract and retain highly productive sales associates;
•independent agency remittance rates;
•opening and integration of new offices and acquisitions;
•office closures;
•number and value of commercial transactions, which typically yield higher premiums;
•government or regulatory initiatives, including tax incentives and the implementation of the integrated disclosure requirements;
•acquisitions or divestitures of businesses;
•volume of distressed property transactions;
•seasonality and/or weather; and
17

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

Premiums are determined in part by the values of the transactions we handle. To the extent inflation or market conditions cause increases in the prices of homes and other real estate, premium revenues are also increased. Conversely, falling home prices cause premium revenues to decline. Home price changes may override the seasonal nature of the title insurance business. Historically, our first quarter is the least active in terms of title insurance revenues as home buying is generally depressed during winter months. Our second and third quarters are typically the most active as the summer is the traditional home buying season, and while commercial transaction closings are skewed to the end of the year, individually large commercial transactions can occur any time of year. On average, refinance title premium rates are 60% of the premium rates for a similarly priced sale transaction.


RESULTS OF OPERATIONS

Comparisons of our results of operations for the three months ended March 31, 2023 with the corresponding periods in the prior year are set forth below. Factors contributing to fluctuations in the results of operations are presented in the order of their monetary significance, and we have quantified, when necessary, significant changes. Segment results are included in the discussions and, when relevant, are discussed separately.

Our statements on home sales and loan activity are based on published U.S. industry data from sources including Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors® (NAR) and the U.S. Census Bureau as of March 31, 2023. We also use information from our direct title operations.

Operating environment. According to NAR, existing home sales (seasonally-adjusted basis) in March 2023 declined 22% from a year ago and 2% from February 2023, primarily due to the elevated mortgage interest rate environment. The existing home median price in March 2023 was 3% higher compared to February 2023, but was slightly (1%) lower compared to a year ago. In relation to new residential construction (seasonally-adjusted), U.S. housing starts in March 2023 were 17% lower compared to a year ago, and were 1% lower than February 2023, while newly-issued building permits in March 2023 were 25% and 9% lower compared to March 2022 and February 2023, respectively.

In regard to lending activity, single family mortgage originations during the first quarter 2023 decreased 56% to $315 billion compared to the first quarter 2022, primarily driven by lower refinancing transactions, which declined 82% from the prior year quarter, according to Fannie Mae and MBA (averaged). Purchase originations decreased 34% to $254 billion in the first quarter 2023 compared to the first quarter 2022. During the first quarter 2023, the average 30-year fixed interest rate was 6.4% compared to 3.9% during the same quarter in 2022. For the year 2023, Fannie Mae and MBA expect the interest rate to average 5.9%, slightly lower than the 6.0% average observed during 2022, while total originations for the year 2023 are expected to decline 26% compared to 2022.

Title revenues. Direct title revenue information is presented below:
 Three Months Ended March 31,
 20232022 Change% Chg
 ($ in millions)
Non-commercial
Domestic150.3 220.2 (69.9)(32)%
International19.2 31.5 (12.3)(39)%
169.5 251.7 (82.2)(33)%
Commercial:
Domestic32.7 56.4 (23.7)(42)%
International5.7 9.7 (4.0)(41)%
38.4 66.1 (27.7)(42)%
Total direct title revenues207.9 317.8 (109.9)(35)%

18

Total non-commercial domestic revenues decreased $69.9 million, or 32%, primarily due to a 50% decline in residential purchase and refinancing transactions during the first quarter 2023 compared to the prior year quarter. Total closed orders during the first quarter 2023 were the lowest for Stewart in over 15 years. Domestic commercial revenues in the first quarter 2023 decreased $23.7 million, or 42%, primarily due to 11% lower commercial orders closed and lower transaction size compared to the prior year quarter. Average domestic commercial fee per file in the first quarter 2023 was $8,300, which was 34% lower compared to $12,700 in the first quarter 2022, while average residential fee per file in the first quarter 2023 increased 30% to $3,400, compared to $2,600 in the prior year quarter due to a higher purchase mix in the first quarter 2023. Total international revenues in the first quarter 2023 declined by $16.3 million, or 40%, primarily as a result of lower transaction volumes in our Canadian operations compared to the prior year quarter.

Orders information for the three months ended March 31 is as follows:
20232022Change% Chg
Opened Orders:
Commercial3,842 6,042 (2,200)(36)%
Purchase49,469 68,498 (19,029)(28)%
Refinance16,129 40,574 (24,445)(60)%
Other4,421 1,642 2,779 169 %
Total73,861 116,756 (42,895)(37)%
Closed Orders:
Commercial3,924 4,431 (507)(11)%
Purchase31,628 47,326 (15,698)(33)%
Refinance9,613 34,487 (24,874)(72)%
Other2,734 1,640 1,094 67 %
Total47,899 87,884 (39,985)(45)%


Gross revenues from independent agency operations declined $155.1 million, or 38%, in the first quarter 2023 compared to the prior year quarter, consistent with the trend of our direct title revenues. Net agency revenues (net of agency retention) decreased $29.7 million, or 41%, in the first quarter 2023 compared to the first quarter 2022, primarily driven by lower gross agency revenues. Refer further to the "Retention by agencies" discussion under Expenses below.

Real estate solutions and other revenues. Real estate solutions and other revenues are comprised of revenues generated by our real estate solutions segment and, for the first quarter 2022, by a real estate brokerage company which we sold during the second quarter 2022. Real estate solutions revenues in the first quarter 2023 decreased $26.8 million, or 30%, compared to the prior year quarter, primarily due to lower transaction volumes resulting from the current elevated interest rate environment, while the disposed real estate brokerage company generated revenues of $33.9 million during the first quarter 2022.

Investment income. Investment income in the first quarter 2023 increased $3.0 million, or 82%, compared to the prior year quarter, primarily as a result of higher interest income resulting from increased interest rates and higher short-term investments in the first quarter 2023.

Net realized and unrealized gains. Refer to Note 5 to the condensed consolidated financial statements.
19


Expenses. An analysis of expenses is shown below:
 Three Months Ended March 31,
 20232022Change*% Chg
 ($ in millions)
Amounts retained by agencies205.7 331.2 (125.5)(38 %)
As a % of agency revenues82.6 %81.9 %
Employee costs170.6 205.0 (34.4)(17 %)
As a % of operating revenues32.8 %24.3 %
Other operating expenses120.7 189.8 (69.0)(36 %)
As a % of operating revenues23.2 %22.5 %
Title losses and related claims17.7 29.2 (11.5)(40 %)
As a % of title revenues3.9 %4.0 %
*Changes in amounts may not add due to rounding.

Retention by agencies. Amounts retained by title agencies are based on agreements between agencies and our title underwriters. Amounts retained by independent agencies, as a percentage of revenues generated by them, averaged higher at 82.6% in the first quarter 2023, compared to 81.9% in the prior year quarter, primarily due to higher mix of agency revenues from higher retention states. The average retention percentage may vary from period to period due to the geographical mix of agency operations, the volume of title revenues and, in some states, laws or regulations. Due to the variety of such laws or regulations, as well as competitive factors, the average retention rate can differ significantly from state to state. In addition, a high proportion of our independent agencies are in states with retention rates greater than 80%. We continue to focus on increasing profit margins in every state, increasing premium revenue in states where remittance rates are above 20%, and maintaining the quality of our agency network, which we believe to be the industry’s best, in order to mitigate claims risk and drive consistent future performance. While market share is important in our agency operations channel, we also focus on margins, risk mitigation and profitability.

Employee costs. Consolidated employee costs in the first quarter 2023 decreased $34.4 million, or 17%, compared to the first quarter 2022, primarily resulting from lower salaries and benefit expenses, incentive compensation and temporary labor costs related to lower volumes and 8% lower average employee count in the first quarter 2023. Employee costs for the title and real estate solutions segments decreased $30.8 million, or 17%, and $1.0 million, or 7%, respectively, in the first quarter 2023 compared to the prior year quarter. Total employee costs, as a percentage of total operating revenues, were higher at 32.8% in the first quarter 2023 compared to 24.3% in the prior year quarter, primarily due to lower revenues in the first quarter 2023.

As of March 31, 2023, we had approximately 6,900 employees compared to approximately 7,800 and 7,100 employees as of March 31, 2022 and December 31, 2022, respectively.

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

20

Consolidated other operating expenses in the first quarter 2023 decreased $69.0 million, or 36%, compared to the first quarter 2022, primarily as a result of reduced costs tied to lower title and real estate solutions revenues. Total variable costs decreased $64.6 million, or 51%, primarily driven by lower outside search and appraisal expenses and decreased premium taxes. Total costs that are fixed in nature decreased $2.3 million, or 5%, primarily due to lower rent and occupancy and insurance expenses, while independent costs decreased $2.1 million, or 16%, primarily due to lower marketing, bank fees and general supplies expenses, partially offset by higher legal expenses. As a percentage of total operating revenues, consolidated other operating expenses in the first quarter 2023 was 23.2% compared to 22.5% for the prior year quarter.

Title losses. Provisions for title losses, as a percentage of title operating revenues, were 3.9% for the first quarter 2023 compared to 4.0% for the first quarter 2022. Title loss expense in the first quarter 2023 decreased $11.5 million, or 40%, compared to the prior year quarter, primarily due to lower title revenues in the first quarter 2023. The title loss ratio in any given quarter can be significantly influenced by changes in new large claims incurred, escrow losses and adjustments to reserves for existing large claims.

The composition of title policy loss expense is as follows:
 Three Months Ended March 31,
 20232022Change% Chg
 ($ in millions)
Provisions – known claims:
Current year2.5 4.8 (2.3)(48)%
Prior policy years18.0 14.9 3.1 21 %
20.5 19.7 0.8 4 %
Provisions – IBNR
Current year14.7 24.1 (9.4)(39)%
Prior policy years0.5 0.3 0.2 67 %
15.2 24.4 (9.2)(38)%
Transferred from IBNR to known claims(18.0)(14.9)(3.1)21 %
Total provisions17.7 29.2 (11.5)(39)%

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

Current year IBNR provisions in the first quarter 2023 decreased $9.4 million, or 39%, compared to the prior year quarter, primarily due to lower title revenues. As a percentage of title operating revenues, provisions - IBNR for the current policy year were 3.2% and 3.3% for the first quarters 2023 and 2022, respectively. Cash claim payments in the first quarter 2023 were higher by $13.2 million, or 65%, primarily driven by payments on existing large claims and non-large claims related to prior policy years. We continue to manage and resolve large claims prudently and in keeping with our commitments to our policyholders.

In addition to title policy claims, we incur losses in our direct operations from escrow, closing and disbursement functions. These escrow losses typically relate to errors or other miscalculations of amounts to be paid at closing, including timing or amount of a mortgage payoff, payment of property or other taxes and payment of homeowners’ association fees. Escrow losses also arise in cases of fraud, and in those cases, the title insurer incurs the loss under its obligation to ensure that an unencumbered title is conveyed. Escrow losses are recognized as expenses when discovered or when contingencies associated with them (such as litigation) are resolved and are typically paid less than 12 months after the loss is recognized.
21


Total title policy loss reserve balances are as follows:
March 31, 2023December 31, 2022
 ($ in millions)
Known claims74.3 87.3 
IBNR459.1 462.1 
Total estimated title losses533.4 549.4 

The actual timing of estimated title loss payments may vary since claims, by their nature, are complex and paid over long periods of time. Based on historical payment patterns, the outstanding loss reserves are substantially paid out within eight years. As a result, the estimate of the ultimate amount to be paid on any claim may be modified over that time period. Due to the inherent uncertainty in predicting future title policy losses, significant judgment is required by both our management and our third party actuaries in estimating reserves. As a consequence, our ultimate liability may be materially greater or less than current reserves and/or our third party actuary’s calculated estimates.

Depreciation and amortization. Depreciation and amortization expenses increased $1.2 million, or 8%, in the first quarter 2023 compared to the prior year quarter, primarily due to increased depreciation expenses related to internal-use systems placed into operation starting in the second quarter 2022.

Income taxes. Our effective tax rates, based on (loss) income before taxes and after deducting income attributable to noncontrolling interests, were 38% in the first quarter 2023 compared to 23% in the first quarter 2022. Excluding discrete tax adjustments, primarily related to increased utilization of net operating loss carryforwards of prior years' acquisitions, the effective tax rate for the first quarter 2023 would have been 25%.


LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital resources reflect our ability to generate cash flow to meet our obligations to stockholders, customers (payments to satisfy claims on title policies), vendors, employees, lenders and others. As of March 31, 2023, our total cash and investments, including amounts related to statutory premium reserves requirements aggregated $891.0 million. Of our total cash and investments at March 31, 2023, $505.6 million ($230.2 million, net of statutory premium reserves) was held in the United States and the rest internationally (principally in Canada).

As a holding company, the parent company is funded principally by cash from its subsidiaries' earnings in the form of dividends, operating and other administrative expense reimbursements and pursuant to intercompany tax sharing agreements. Cash held at the parent company and its unregulated subsidiaries (which totaled $48.4 million at March 31, 2023) is available for funding the parent company's operating expenses, interest payments on debt and dividend payments to common stockholders. The parent company also receives distributions from Stewart Title Guaranty Company (Guaranty), its regulated title insurance underwriter, to meet cash requirements for acquisitions and other strategic investments.

A substantial majority of our consolidated cash and investments as of March 31, 2023 was held by Guaranty and its subsidiaries. The use and investment of these funds, dividends to the parent company, and cash transfers between Guaranty and its subsidiaries and the parent company are subject to certain legal and regulatory restrictions. In general, Guaranty uses its cash and investments in excess of its legally-mandated statutory premium reserve (established in accordance with requirements under Texas law) to fund its insurance operations, including claims payments. Guaranty may also, subject to certain limitations, provide funds to its subsidiaries (whose operations consist principally of field title offices and real estate solutions operations) for their operating and debt service needs.

22

We maintain investments in accordance with certain statutory requirements for the funding of statutory premium reserves. Statutory reserve funds are required to be fully funded and invested in high-quality securities and short-term investments. Statutory reserve funds are not available for current claim payments, which must be funded from current operating cash flow. Included in investments in debt and equity securities are statutory reserve funds of approximately $541.6 million and $544.0 million at March 31, 2023 and December 31, 2022, respectively. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $10.3 million and $8.6 million at March 31, 2023 and December 31, 2022, respectively. As of March 31, 2023, our known claims reserve totaled $74.3 million and our estimate of claims that may be reported in the future, under generally accepted accounting principles, totaled $459.1 million. In addition to this, we had cash and investments (excluding equity method investments) of $263.9 million, which are available for underwriter operations, including claims payments, and acquisitions.

The ability of Guaranty to pay dividends to its parent is governed by Texas insurance law. The Texas Department of Insurance (TDI) must be notified of any dividend declared, and any dividend in excess of the greater of the statutory net operating income or 20% of surplus (which was approximately $158.1 million as of December 31, 2022) would be, by regulation, considered extraordinary and subject to pre-approval by the TDI. Also, the Texas Insurance Commissioner may raise an objection to a planned distribution during the notification period. Guaranty’s actual ability or intent to pay dividends to its parent may be constrained by business and regulatory considerations, such as the impact of dividends on surplus and liquidity, which could affect its ratings and competitive position, the amount of insurance it can write and its ability to pay future dividends. During the three months ended March 31, 2023 and 2022, no dividends have been paid by Guaranty to the parent company.

As the parent company conducts no operations apart from its wholly-owned subsidiaries, the discussion below focuses on consolidated cash flows.
 Three Months Ended March 31,
 20232022
 ($ in millions)
Net cash (used) provided by operating activities(51.1)34.9 
Net cash used by investing activities(4.8)(65.2)
Net cash used by financing activities(17.4)(58.6)

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

Net cash used by operations in the first quarter 2023 was $51.1 million compared to net cash provided by operations of $34.9 million in the first quarter 2022, primarily driven by the net loss and higher claims payments for the first quarter 2023. Although our business is labor intensive, we are focused on a cost-effective, scalable business model which includes utilization of technology, centralized back and middle office functions and business process outsourcing. We are continuing our emphasis on cost management, especially in light of the current economic environment due to elevated mortgage interest rates, specifically focusing on lowering unit costs of production and improving operating margins in our direct title and real estate solutions operations. Our plans to improve margins include additional automation of manual processes, further consolidation of our various systems and production operations, and full integration of acquisitions. We continue to invest in the technology necessary to accomplish these goals.

Investing activities. Net cash used by investing activities is primarily driven by proceeds from matured and sold investments, purchases of investments, capital expenditures and acquisition of businesses. During the first quarter 2023, total proceeds from securities investments sold and matured were $52.1 million compared to $33.6 million during the same period in 2022, while cash used for purchases of securities investments was $24.0 million in the first quarter 2023 compared to $66.9 million in the first quarter 2022.

23

We used $21.5 million and $17.9 million of net cash for acquisitions in the title and real estate solutions segments during the first quarters 2023 and 2022, respectively. We also used $8.9 million and $12.3 million of cash for purchases of property and equipment during the first quarters 2023 and 2022, respectively. We maintain investment in capital expenditures at a level that enables us to implement technologies for increasing our operational and back-office efficiencies and to pursue growth in key markets.

Financing activities and capital resources. Total debt and stockholders’ equity were $445.1 million and $1.36 billion, respectively, as of March 31, 2023. During the first quarters 2023 and 2022, payments on notes payable of $5.5 million and $37.3 million, respectively, and notes payable additions of $3.5 million and $0.1 million, respectively, were related to short-term loan agreements in connection with our Section 1031 tax-deferred property exchange (Section 1031) business.

At March 31, 2023, our line of credit facility was fully available, while our debt-to-equity and debt-to-capitalization ratios, excluding our Section 1031 notes, were approximately 33% and 25%, respectively. During the first quarter 2023, we paid total dividends of $12.3 million ($0.45 per common share), compared to the total dividends paid in the same period in 2022 of $10.1 million ($0.38 per common share).

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

Contingent liabilities and commitments. See discussion of contingent liabilities and commitments in Note 10 to the condensed consolidated financial statements.

Other comprehensive income (loss). Unrealized gains and losses on available-for-sale debt securities investments and changes in foreign currency exchange rates are reported net of deferred taxes in accumulated other comprehensive income (loss), a component of stockholders’ equity, until they are realized. During the first quarter 2023, net unrealized investment gains of $6.7 million, net of taxes, which increased our other comprehensive income, were primarily related to net increases in the fair values of our corporate and foreign bond securities investments, primarily driven by the lower interest rates during the first quarter 2023. During the first quarter 2022, net unrealized investment losses of $20.1 million, net of taxes, which increased our other comprehensive loss, were primarily related to net decreases in the fair values of our corporate and foreign bond securities investments, primarily driven by the effect of higher interest rates and credit spreads.

Changes in foreign currency exchange rates, primarily related to our Canadian and United Kingdom operations, increased our other comprehensive income, net of taxes, by $0.6 million for both the first quarters 2023 and 2022.

Off-balance sheet arrangements. We do not have any material source of liquidity or financing that involves off-balance sheet arrangements, other than our contractual obligations under operating leases. We also routinely hold funds in segregated escrow accounts pending the closing of real estate transactions and have qualified intermediaries in tax-deferred property exchanges for customers pursuant to Section 1031 of the Internal Revenue Code. The Company holds the proceeds from these transactions until a qualifying exchange can occur. In accordance with industry practice, these segregated accounts are not included on the balance sheet. See Note 15 in our 2022 Form 10-K.

24

Forward-looking statements. Certain statements in this report are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to future, not past, events and often address our expected future business and financial performance. These statements often contain words such as “may,” "expect," "anticipate," "intend," "plan," "believe," "seek," "will," "foresee" or other similar words. Forward-looking statements by their nature are subject to various risks and uncertainties that could cause our actual results to be materially different than those expressed in the forward-looking statements. These risks and uncertainties include, among other things, the following:
•the volatility of economic conditions;
•adverse changes in the level of real estate activity;
•changes in mortgage interest rates, existing and new home sales, and availability of mortgage financing;
•our ability to respond to and implement technology changes, including the completion of the implementation of our enterprise systems;
•our ability to prevent and mitigate cyber risks;
•the impact of unanticipated title losses or the need to strengthen our policy loss reserves;
•any effect of title losses on our cash flows and financial condition;
•the ability to attract and retain highly productive sales associates;
•the impact of vetting our agency operations for quality and profitability;
•independent agency remittance rates;
•changes to the participants in the secondary mortgage market and the rate of refinancing that affects the demand for title insurance products;
•regulatory non-compliance, fraud or defalcations by our title insurance agencies or employees;
•our ability to timely and cost-effectively respond to significant industry changes and introduce new products and services;
•our ability to realize anticipated benefits of our previous acquisitions;
•the outcome of pending litigation;
•the impact of changes in governmental and insurance regulations, including any future reductions in the pricing of title insurance products and services;
•our dependence on our operating subsidiaries as a source of cash flow;
•our ability to access the equity and debt financing markets when and if needed;
•effects of seasonality and weather; and
•our ability to respond to the actions of our competitors.

The above risks and uncertainties, as well as others, are discussed in more detail in our documents filed with the Securities and Exchange Commission, including in Part I, Item 1A "Risk Factors" in our 2022 Form 10-K, and as may be further updated and supplemented from time to time in our future Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K filed subsequently. All forward-looking statements included in this report are expressly qualified in their entirety by such cautionary statements. We expressly disclaim any obligation to update, amend or clarify any forward-looking statements contained in this report to reflect events or circumstances that may arise after the date hereof, except as may be required by applicable law.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes during the quarter ended March 31, 2023 in our investment strategies, types of financial instruments held or the risks associated with such instruments that would materially alter the market risk disclosures made in our 2022 Form 10-K.


25

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. Our principal executive officer and principal financial officer are responsible for establishing and maintaining disclosure controls and procedures. They evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2023, and have concluded that, as of such date, our disclosure controls and procedures are adequate and effective to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. There was no change in our internal control over financial reporting during the quarter ended March 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



PART II – OTHER INFORMATION
 
Item 1. Legal Proceedings

See discussion of legal proceedings in Note 11 to the condensed consolidated financial statements included in Item 1 of Part I of this Report, which is incorporated by reference into this Part II, Item 1, as well as Item 3. Legal Proceedings, in our 2022 Form 10-K.


Item 1A. Risk Factors

Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A. “Risk Factors” in our 2022 Form 10-K. There have been no material changes to our risk factors since our 2022 Form 10-K.


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

There were no repurchases of our Common Stock during the three months ended March 31, 2023, except for repurchases of approximately 30,300 shares (aggregate purchase price of approximately $1.3 million) related to the statutory income tax withholding on the vesting of restricted unit grants to executives and senior management employees.


Item 5. Other Information

Book value per share. Our book value per share was $49.64 and $50.21 as of March 31, 2023 and December 31, 2022, respectively. As of March 31, 2023, our book value per share was based on approximately $1.35 billion of stockholders’ equity attributable to Stewart and 27,245,097 shares of Common Stock outstanding. As of December 31, 2022, our book value per share was based on approximately $1.36 billion of stockholders’ equity attributable to Stewart and 27,130,412 shares of Common Stock outstanding.


26

Item 6. Exhibits
Exhibit  
3.1—
3.2—
10.1†*—
10.2†*—
31.1*—
31.2*—
32.1*—
32.2*—
101.INS*—XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*—XBRL Taxonomy Extension Schema Document
101.CAL*—XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*—XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*—XBRL Taxonomy Extension Label Linkbase Document
101.PRE*—XBRL Taxonomy Extension Presentation Linkbase Document
104*—Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Filed herewith
† Management contract or compensatory plan


27

SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
May 8, 2023
Date
 Stewart Information Services Corporation
 Registrant
By: /s/ David C. Hisey
 David C. Hisey, Chief Financial Officer, Secretary and Treasurer
28

EXHIBIT 10.1
STEWART INFORMATION SERVICES CORPORATION
STOCK UNIT AWARD AGREEMENT
THIS STOCK UNIT AWARD AGREEMENT (the “Award Agreement”) is hereby granted as of March 8, 2023 (the “Grant Date”) by Stewart Information Services Corporation, a Delaware corporation (the “Company”), to NAME (the “Participant”) pursuant to the Stewart Information Services Corporation 2020 Incentive Plan (the “Plan”), subject to the terms and conditions set forth therein and as set out in this Award Agreement. Capitalized terms used herein shall, unless otherwise required by the context, have the meaning ascribed to such terms in the Plan.
By action of the Committee, and subject to the terms of the Plan, the Participant is hereby granted Stock Units (the “Units”), each of which represent a contractual right that entitles the Participant potentially to receive a share of the Company’s Common Stock (each, a “Share”), provided all of the conditions for settlement of the Units have been satisfied, subject to the Plan and to the restrictions and risks of forfeiture as set forth in this Award Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual covenants contained in this Award Agreement, the Company and the Participant agree as follows:
1.Grant. The Company grants to the Participant, upon the terms and conditions set forth in this Award Agreement and as set forth in the Plan NUMBER Units.
2.Vesting and Forfeiture.
a.Any Units that are not vested as of the date of the Participant’s termination of employment for any reason shall be automatically forfeited without any further action required to be taken by the Participant or the Company.
b.In general, the Units shall become vested on the dates set forth below (each, a “Vesting Date”), as to the specified percentage of the Units indicated:
Vesting DateIncremental Vesting PercentageCumulative Vesting Percentage
First anniversary of the Grant Date33⅓%33⅓%
Second anniversary of the Grant Date33⅓%66⅔%
Third Anniversary of the Grant Date33⅓%100%

The vesting of the Participant’s Units, as set forth above, shall only occur if the Participant has remained continuously employed through the relevant Vesting Date.
c.Notwithstanding any other provision of this Award Agreement, in the event the Participant is terminated in connection with a Change in Control, the Participant shall be vested in the number of Units set forth in Section 1 as of the date of the Participant’s termination of employment.
d.Special Pro-Rata Vesting. The Units (if not already vested under any other provision of this Award Agreement) shall be vested pursuant to this Section 2(d) immediately prior to the Participant’s termination of employment under any of the following circumstances (“Special Vesting Termination Events”):


EXHIBIT 10.1
i.Termination of the Participant’s employment due to Executive’s death;
ii.Termination of the Participant’s employment due to Executive’s Disability;
iii.Termination of the Participant’s employment by the Company without Cause;
iv.Termination of the Participant’s employment by the Participant for Good Reason (if the Participant’s employment agreement has provisions for severance pay benefits in such circumstances).
In order for the Participant to be eligible for special pro-rata vesting under this Section 2(d), the Participant must have been continuously employed for at least twenty-five percent (25%) of the period covered by the vesting schedule set forth in Section 2(a), unless stated otherwise under the terms of the Participant’s Employment Agreement, and the Participant must execute and not, thereafter, revoke, a full release of all claims that Executive may have against the Company, its Subsidiaries and affiliates, and all of their respective officers, employees, directors, and agents, and that shall include the Participant’s agreement not to disparage the Company and not to divulge any of the Company’s confidential information, in a form acceptable to the Company in a form satisfactory to the Committee (the “Release”).
e.Calculation of Special Pro-Rata Vesting. If the Participant is eligible for special pro-rata vesting under Section 2(d), vesting shall be calculated as follows:
i.Special Pro-rata Vesting shall be based on semi-annual time increments (e.g. 6, 12, 18, 24, 30 or 36 months) with time worked during the applicable incentive period rounded up to the nearest semi-annual time increment. For example, if Executive worked (6) months and four (4) days during the applicable incentive period, the semi-annual time increment will be 12 months. The calculation of Special Pro-Rata Vesting shall be determined by dividing the semi-annual time increment by the total months in the performance period.
ii.By way of hypothetical example only: (1) if Executive shall experience a Special Vesting Termination Event after having worked exactly 24 months of a 36-month incentive program, Executive would receive 66.67% of the applicable LTI Award. Alternatively, (2) if Executive shall experience a Special Vesting Termination Event after having worked 24 months and 1 day of a 36-month incentive program, Executive would receive 83.33% of the applicable LTI Award. The formula for calculating Special Pro-Rata Vesting based on the foregoing hypothetical examples is as follows:
Example 1: (24 / 36) = 66.67%
Example 2: (30 / 36) = 83.33%
iii.The time of payment of LTI Awards subject to Special Pro-Rata Vesting shall occur as provided in the applicable LTI Awards.


EXHIBIT 10.1
f.Voluntary Retirement. Notwithstanding anything in this Section 2 to the contrary, the Participant’s Units shall be fully vested if the Participant is eligible to resign from employment with the Company and have that resignation treated as a Voluntary Retirement (as that term is defined in the Stewart Information Services Corporation Executive Voluntary Retirement Plan, or “EVRP”), provided the Participant satisfies all of the requirements of the EVRP to receive benefits under that plan.
3.Settlement of Vested Units. Vested Units shall generally be settled on or as soon as practicable following the Vesting Dates set forth in Section 2(b), and shall be settled by the delivery of Shares corresponding to the portion of the Units that are indicated as being vested on each of the Vesting Dates. Notwithstanding anything herein to the contrary, the accelerated vesting of Units that may occur based on the circumstances of the Participant’s termination of employment, or eligibility for Voluntary Retirement, shall not have any impact on the settlement date for the Units, so that no acceleration of settlement or payment occurs as a result of any such change in vesting. Settlement of Units shall be contingent on the Participant making appropriate arrangements for payment of amounts required to be withheld for federal, state and local income and wage taxes, and the Company shall also have the right to withhold or cancel Units or Shares that are otherwise to be delivered on settlement of Units so as to enable the Company to comply with its withholding obligations (and any such cancellation of withholding of Units or Shares shall be deemed to be a taxable distribution of Shares and a repurchase of such Shares for federal income tax purposes at the time that occurs). In addition, in the event any dividends are paid to shareholders during the period following the Grant Date and up to the delivery of any Shares, the Participant shall be entitled to a payment, at the same time the Shares are delivered to the Participant, equal to the amount that would have been paid as dividends to the Participant had the Participant held the Shares during that period (“Dividend Equivalents”). The Committee shall have the right to determine whether the Dividend Equivalents shall be paid in cash or in the form of a distribution of additional shares of Common Stock having the same value and to determine whether to deem such dividends to have been reinvested in shares at the time the dividends were paid.
4.Status of Units and Certain Tax Matters. The Units subject to this Award Agreement are only a contractual right of the Participant potentially to receive Shares corresponding to the number of Units granted to the Participant. As a consequence, the Units do not constitute property for purposes of Code Section 83. As a consequence, the Participant will be taxable for federal income tax purposes on the value of the Shares distributed to the Participant at the time the Shares are distributed, and not at the time the Units vest. Notwithstanding the foregoing, the value of the Units is treated as creating a form of nonqualified deferred compensation to which Code Sections 409A and 3121(v) are applicable. As a consequence, the value of the Units is subject to certain wages taxes (for Social Security and Medicare) at the time of vesting and the Company shall be entitled to cancel vested Units as a means to cover the Company’s wage withholding obligations that arise on vesting. Vesting is not, however, intended generally to be a taxable event for purposes of federal income taxation or Code Section 409A. Because the time of


EXHIBIT 10.1
settlement or payment is, in all cases, fixed by reference to a specified schedule of payments that is not subject to acceleration, except for the cancellation of Units for withholding purposes, which is permissible under Code Section 409A, all requirements of Code Section 409A are intended to be met, and this Award Agreement shall be interpreted in a manner consistent with the Company’s intent to satisfy all applicable requirements of Code Section 409A.
5.Employment. Nothing in the Plan or in this Award Agreement shall confer upon the Participant any right to be continued as an employee of the Company or interfere in any way with the right of the Company to remove the Grantee as an employee at any time for any cause.
6.Binding Effect. This Award Agreement shall be binding upon and shall inure to the benefit of any successor of the Company, but except as provided above, the Shares subject to this Award Agreement shall not be assigned or otherwise disposed of by the Participant.
7.The Plan. This Award Agreement is subject to the terms and conditions of the Plan. In the event of a conflict between the Plan and this Agreement, the terms of the Plan shall control.
IN WITNESS WHEREOF, this Award Agreement, effective March 8, 2023, has been entered into and executed on this day of __________.

STEWART INFORMATION SERVICES CORPORATION



By: ________________________________
Its Chairman of the Board or Chief Executive                             Officer


ACKNOWLEDGED


By: ________________________________
PARTICIPANT



EXHIBIT 10.2
STEWART INFORMATION SERVICES CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
THIS RESTRICTED PERFORMANCE UNIT AGREEMENT (the “Award Agreement”) is hereby granted as of March 8, 2023 (the “Grant Date”) by Stewart Information Services Corporation, a Delaware corporation (the “Company”), to NAME (the “Participant”) pursuant to the Stewart Information Services Corporation 2020 Incentive Plan (the “Plan”), and subject to the terms and conditions set forth therein and as set out in this Award Agreement. Capitalized terms used herein shall, unless otherwise required by the context, have the meaning ascribed to such terms in the Plan or as set forth herein.
By action of the Committee, and subject to the terms of the Plan, the Participant is hereby granted Restricted Stock Units as described in Article VII of the Plan, subject to the terms of the Plan and to the provisions set forth in this Award Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual covenants contained in this Award Agreement, the Company and the Participant agree as follows:
1.Grant. The Company hereby grants to the Participant, upon the terms and conditions set forth in this Award Agreement and as set forth in the Plan, NUMBER Restricted Stock Units (the “Units”), representing a contractual right of the Participant potentially to receive shares of Common Stock (“Shares”). The number of Shares to be delivered at settlement, if any, shall be determined by reference to the number of Units that are deemed vested and to be settled, provided all of the conditions for settlement of the Units have been satisfied and subject to the terms and conditions of the Plan and this Award Agreement.
2.Performance Criteria. The Units subject to this Award Agreement shall be earned and vested based on the satisfaction of the Performance Restriction and the Time-Based Restriction, each of which is described below.
a.Performance Restriction
In order for the Units to vest, the Committee must determine that the Company has achieved 5% or greater Pre-Tax Margin (defined below) in at least three calendar quarters of any of the next seven calendar quarters starting April 1, 2023 (the “Performance Restriction”). The seven calendar quarters beginning April 1, 2023, and ending December 31, 2024 are defined as the (“Measurement Period”). This determination shall occur during the ninety (90) day period following the end of the Measurement Period.
For purposes of this Agreement, the following definitions shall apply:
i.“Pre-Tax Margin” is the amount calculated by dividing (i) Modified Pre-Tax Profits, by (ii) Modified Gross Revenues.
ii.“Modified Pre-Tax Profits” is “Income before taxes and non controlling interests”, as reported in the 10-Q/10-K, as modified by the Committee in its sole discretion, as necessary to remove the effect of investment and other gains (losses), as well as the effects of non-recurring, unusual and/or extraordinary items (in each event as determined by the Committee).


EXHIBIT 10.2
iii.“Modified Gross Revenues” is Total Revenues as reported in the 10-Q/10-K, as modified by the Committee in its sole discretion, as necessary to remove the effect of investment and other gains (losses), as well as the effects of non-recurring, unusual and/or extraordinary items (in each event as determined by the Committee).
b.Time-Based Restriction
Anniversary Date% of Restricted Stock Units
Third (3rd) anniversary of the Grant Date
100.0%

3.Vesting and Forfeiture.
a.If the Performance Restriction has been achieved prior to the Anniversary Date, then the percentage of Units indicated next to the Anniversary Date shall vest on the Anniversary Date (referred to as the “Time-Based Restriction”).
i.Notwithstanding any provision of this Agreement or the Plan, if the Company does not satisfy the Performance Restriction for the Measurement Period, all Units shall be forfeited to the Company.
ii.Except as expressly provided in Section 3(c) below, any Units that are not vested as of the date of the Participant’s termination of employment for any reason shall be automatically forfeited without any further action required to be taken by the Participant or the Company.
b.Notwithstanding any other provision of this Award Agreement, and except as provided in Section 2(a)(i) above, in the event the Participant is terminated in connection with a Change in Control, the Participant shall be vested in the number of Units set forth in Section 1 as of the date of the Participant’s termination of employment.
c.Waiver of Continued Employment Requirement. The general requirement that the Participant be satisfying the Time-Based Restriction by being continuously employed through the date the Units are settled (the “Employment Requirement”) shall be waived to the extent provided in this Section 2(c), subject, however, in all regards, to the Committee’s discretionary authority as provided under the Plan. Specifically, the Employment Requirement shall not be applicable in the following circumstances (“Special Circumstances”):
i.The Participant’s termination of employment under circumstances where the Participant is eligible for benefits under the Company’s Executive Voluntary Retirement Plan;
ii.Termination of the Participant’s employment due to Executive’s death;
iii.Termination of the Participant’s employment due to Executive’s Disability;
iv.Termination of the Participant’s employment by the Company without Cause; or


EXHIBIT 10.2
v.Termination of the Participant’s employment by the Participant by Executive for Good Reason (but only in circumstances where the Participant’s employment agreement provides for severance pay benefits on a resignation for Good Reason.
In order for the Participant to receive any Shares with respect to Units following the occurrence of any of the above Special Circumstances, the Participant must execute and not, thereafter, revoke, a full release of all claims that Executive may have against the Company, its Subsidiaries and affiliates, and all of their respective officers, employees, directors, and agents, and that shall include the Participant’s agreement not to disparage the Company and not to divulge any of the Company’s confidential information, in a form acceptable to the Company in a form satisfactory to the Committee (the “Release”)
d.Calculation of Special Pro-Rata Vesting. If the Participant is eligible for special pro-rata vesting under Section 2(c), vesting shall be calculated as follows:
i.Special Pro-rata Vesting shall be based on semi-annual time increments (e.g. 6, 12, 18, 24, 30 or 36 months) with time worked during the applicable incentive period rounded up to the nearest semi-annual time increment. For example, if Executive worked (6) months and four (4) days during the applicable incentive period, the semi-annual time increment will be 12 months. The calculation of Special Pro-Rata Vesting shall be determined by dividing the semi-annual time increment by the total months in the performance period.
ii.By way of hypothetical example only: (1) if Executive shall experience a Special Vesting Termination Event after having worked exactly 24 months of a 36-month incentive program, Executive would receive 66.67% of the applicable LTI Award. Alternatively, (2) if Executive shall experience a Special Vesting Termination Event after having worked 24 months and 1 day of a 36-month incentive program, Executive would receive 83.33% of the applicable LTI Award. The formula for calculating Special Pro-Rata Vesting based on the foregoing hypothetical examples is as follows:
Example 1: (24 / 36) = 66.67%
Example 2: (30 / 36) = 83.33%
i.The time of payment of LTI Awards subject to Special Pro-Rata Vesting shall occur as provided in the applicable LTI Awards.
e.Notwithstanding anything herein to the contrary, in the event the Participant is terminated for Cause, the Participant’s rights to any payments otherwise due under this Award Agreement are forfeited in their entirety.
4.Status of Units. The Units subject to this Award Agreement are not intended to constitute property for purposes of Section 83 of the Code. The Units represent a right to receive a payment, in the form Shares, at the time the Units are settled.
5.Time of Payment/Settlement. In all cases, Units that are vested and settled under the terms of this Award Agreement shall be settled on or as soon as practicable following the


EXHIBIT 10.2
Anniversary Date set forth in Section 2(b), and shall be settled by the delivery of Shares corresponding to the portion of the Units that are indicated as being vested on the Anniversary Date. In addition, in the event any dividends are paid to shareholders during the Measurement Period or thereafter prior to the settlement of the Units, the Participant shall be entitled to a payment equal to the amount that would have been paid as dividends to the Participant had the Participant held the Shares actually delivered to the Participant throughout that period (“Dividend Equivalents”). The Committee shall have the right to determine whether the Dividend Equivalents shall be paid in cash or in the form of a distribution of additional shares of Common Stock having the same value and to determine whether to deem such dividends to have been reinvested in shares at the time the dividends were paid.
6.Employment. Nothing in the Plan or in this Award Agreement shall confer upon the Participant any right to be continued as an employee of the Company or interfere in any way with the right of the Company to remove the Grantee as an employee at any time for any cause.
7.Binding Effect. This Award Agreement shall be binding upon and shall inure to the benefit of any successor of the Company, but except as provided above, the Units subject to this Award Agreement shall not be assigned or otherwise disposed of by the Participant.
8.The Plan. This Award Agreement is subject to the terms and conditions of the Plan. In the event of a conflict between the Plan and this Agreement, the terms of the Plan shall control.

IN WITNESS WHEREOF, this Award Agreement, effective March 8, 2023, has been entered into and executed on this day of __________.

STEWART INFORMATION SERVICES CORPORATION

By: ________________________________
Its Chairman of the Board or Chief Executive Officer

ACKNOWLEDGED

By: ________________________________
PARTICIPANT



EXHIBIT 31.1
CERTIFICATION
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Frederick H. Eppinger, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Stewart Information Services Corporation (registrant);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:  
(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: May 8, 2023
/s/ Frederick H. Eppinger
Name:Frederick H. Eppinger
Title:Chief Executive Officer

EXHIBIT 31.2
CERTIFICATION
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, David C. Hisey, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Stewart Information Services Corporation (registrant);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: May 8, 2023
/s/ David C. Hisey
Name:David C. Hisey
Title:Chief Financial Officer and Treasurer

EXHIBIT 32.1
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Stewart Information Services Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frederick H. Eppinger, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: May 8, 2023
 
/s/ Frederick H. Eppinger
Name:Frederick H. Eppinger
Title:Chief Executive Officer
A signed original of this written statement required by Section 906 has been provided to Stewart Information Services Corporation and will be retained by Stewart Information Services Corporation and furnished to the Securities and Exchange Commission or its staff upon request.


EXHIBIT 32.2
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Stewart Information Services Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David C. Hisey, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: May 8, 2023
 
/s/ David C. Hisey
Name:David C. Hisey
Title:Chief Financial Officer and Treasurer
A signed original of this written statement required by Section 906 has been provided to Stewart Information Services Corporation and will be retained by Stewart Information Services Corporation and furnished to the Securities and Exchange Commission or its staff upon request.