Hello, and thank you for joining the Steward Information Service's fourth quarter and full year 2024 earnings call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask a question during the question and answer session. Instructions will be given at that time. Please note today's call is being recorded. Lastly, if you should require operator assistance, please press star zero. It is now my pleasure to turn the conference over to Kat Bass, Director of Investor Relations. Please go ahead.

Thank you for joining us today for Stuart's fourth quarter 2024 earnings conference call. We will be discussing results that were released yesterday after the close. Joining me today are CEO Fred Eppinger and CFO David Heise. To listen online, please go to the Stuart.com website to access the link for this conference call. This conference call may contain forward-looking statements that involve a number of risks and uncertainties. Please refer to the company's press release and other filings with the SEC for a discussion of the risks and uncertainties that could cause some of our actual results to differ materially. During our call, we will discuss some non-GAAP measures. For reconciliation of these non-GAAP measures, please refer to the appendix in today's earnings release, which is available on our website at Stuart.com. Let me now turn the call over to Fred.

Thank you for joining us today for Stuart's fourth quarter 2024 earnings conference call. Yesterday, we released the financial results for the quarter, which David will review with you shortly. I'd like to address three topics in my remarks today. First, I will share my reflections on the progress we made on our journey in 2024. Second, I will share our view on the continued challenge housing market. And finally, I'll offer some commentary on our strategic direction by business. Before jumping into these discussions, I wanted to take a moment to acknowledge all of those who have been affected by the wildfires. Our thoughts are with the many communities impacted by the devastation of these fires. While we are fortunate to say that we did not have offices or employees, we have and will continue. While I am very pleased with the earnings and revenue growth we saw in the fourth quarter, I'd like to take a few minutes and reflect on the progress we made in 2024 to further fortify the company and to build resilience in our position. In 24, we grew revenues by 10% and adjusted net earnings by 42% while confronting a multiple-decade low housing market. These annual results show we are making real progress on our growth plans and have created leverage in the system that we can capitalize on when the market returns to normal levels. In 2024, we took a significant step forward to fortify our position as a destination for top talent. This dedication is why U.S. News... We welcome countless new families to the country. We have a really strong set of leaders at the helm, some of which have effected results of our thoughtful succession plan. Our leadership team, in my view, is now one of the best. I am excited about having the opportunity to work with this team. We stood up dedicated to hospitality and affordable housing teams. We branded our energy team to energy and infrastructure to more accurately reflect the extent of offerings we now provide to our clients and energy renewable infrastructure projects was put in place while growing domestic commercial million dollars to this top priority in this business. Our international business is in service

of our employees and I'm grateful for the continued support of our customers. It's impacted by the market continues to be challenging with existing single-family home sales at multi-decade lows and mortgage rates in the 7%. Quarter net income of $23 million or $0.80 per diluted shares related to net realized and unrealized gains segment, operating revenues increased pre-tax income, increased $18 million, or 65%, primarily due to higher revenues. After adjustments for purchase amortization, severance and office closure expenses, the set margin improved, increased slightly compared to the prior year quarter. Quarters improved 15%, primarily driven by higher domestic, commercial, and refinancing transactions. Our domestic commercial operations generated another solid result, improving revenues by $28 million or 50%, primarily driven by higher transaction size and volume from broad asset classes led by the energy multifamily and office set. Domestic commercial average fee per file increased 33% to $19,600 compared to $14,800 in the prior year quarter. Domestic residential average fee per file decreased 8% to $2,900 compared to $3,200 in the prior year quarter. With our agency operations, fourth quarter gross and net agency revenues both improved 6% or $17 and $3 million respectively. On title losses, total title loss expense in the fourth quarter was comparable to the prior year quarter as favorable claim experience off-quarter title loss ratio improved to 3.7% compared to 4.1% last year, but the full-year ratio was 3.9%. We expect title losses to be in the low 4% range for 2025. Regarding the real estate solution segment, operating revenues improved by $26 million, driven by higher revenues in our credit-related data and valuation services businesses. However, pre-tax income declined as vendor price increases occurred prior to customer contract renewals and elevated employee costs. As Fred noted, we expect to be in the low teens' cash margin mature. Excluding acquisition and tangible amortization, adjusted pre-tax income was $6,007.4% margin and in the fourth. On consolidated operating expenses, our employee cost ratio improved to 31% compared to 32% last year, primarily due to higher revenues. Our other operating expense ratio increased to 25% as our mix of real estate solutions and commercial revenue increased as those businesses have higher third party. On other matters, our financial position continues to be solid to support our customers, employees, and the real estate market during this continually challenging environment. At year end, our total cash and investments were approximately $380 million in excess of our statutory premium reserve requirements. In addition, we have a fully available $200 million line of credit facility. Total Stewart stockholders' equity at December 31, 2024 was approximately $1.4 billion, or a book value of approximately $51 per share. Our net cash from operations was $68 million, which was $29 million higher compared to the prior year quarter as a result of improved net income. Again, thank you to all our customers and employees, and we remain confident in our service to the real estate markets. I'll now turn back to the operator for questions.

Thank you. And at this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star and 1 to ask a question, and we will pause for a moment to allow questions to queue. And we will take our first question from Boz George with KPW. Please go ahead.

Good morning, Boz. Hey, everyone. Good morning, Chris, everyone. So I want to start with commercial, and I just wanted to confirm, you know, Fred, you said, I think, on commercial that you expect modest growth in 2025. And just trying to think about, is that against the full year 24 or against the back half of 25, where the commercial market looks like it's, you know, entered kind of a stronger phase of activity?

Yeah. Yeah. So it's kind of funny. The market is off really choppy right now. There's a lot of uncertainty, frankly, that's entered in the last month or so. But our view is that it'll be single-digit, you know, kind of for the low end of single-digit growth in commercial right now. That's what we think for the market on top. But there's a very uncertain, but we see, to your point, that the second half of the year was better than the first half of the year last year. And we see the continuation of those trends a little bit, although it's very, you know, it's a little bit more uncertain right now. But we're positive. It'll be in a positive territory. And, again, it's going to be very sector-oriented. There's going to be continued real robustness around, like, data centers.

Okay. And so for now, just to think about it as modest growth on a year-over-year basis has given just the uncertainty that's in the market.

That's what I believe. And, again, our pipeline's been fine. And, as you know, those transactions take a lot longer, so we have more transparency in the shorter window because we have a lot of stuff in the pipeline.

Okay, great. And then, actually, in the real estate solution segment, David noted the repricings that are likely to happen. In terms of the margins on that sort of normalizing, does that happen fairly soon in 2025, or is there a little bit of a transition?

Yeah, a little choppy this year because of the excesses of that kind of bump in the night here in the fourth quarter. One is we have, you know, startup costs for these big transactions. We have a number of new clients coming on. And if the timing doesn't hit exactly right, you have all these expenses without any revenue. So that'll take care of itself. The other is this pricing. So at the end of the third quarter of this industry, you tend to have a lot of the input cost come in. So we're working with our clients, right? And so I feel very good that teams have done a really good job. And so those pricing changes have been started inputted this week and start building into ships. So I think that's relatively rapid. I think this year is going to be a little bit better. For the full year, my guess is that business, Archie, because it's, because you've asked that before, in my view, 5 million market, that market also, we know, is the issue business, and our data business is low. So I think that's very helpful.

Thank you. And as a reminder, if you would like to ask a question, please press the star and one on your telephone keypad now. And we will take our next question from John Campbell with Stevens. Please go ahead.

Good morning, John. Hey, guys. Congrats on a great close of the year. Okay, let's stay on commercial here. I'm just looking at maybe some of your competition here. It looks like you're going to maybe outgrow both your skilled guys by about three hacks on the year. So I know there's some nuances there. Fred, you've talked, you know, often about asset class exposure, kind of mix shift. I want to get your best sense. I know this is probably tough to unpack, but your best sense for share gains versus maybe your unique exposure?

That's a great question, John, because, as you know, I've talked a little bit about energy. Well, I don't know the books of everybody else. our page our energy book this year grew kind of its percentage is 35 or so percent of our book higher probably that used to be about 18 okay and and what's happened obviously is a surge of some of that in that category of some of the alternative energy particularly solar and and frankly, some of the infrastructure stuff that's in that category for us. So I believe that part of our outsized growth is our mix. I don't know how much. I know our competitors do that stuff, too. But I've said that because I think that's part of it. But I will tell you that when I look at the 10 next categories, our growth is 50%. So we have invested a lot of people in people and sectors and segments to match up with our great underwriting capability. And as I've said, you know, when the company had issues and was sold, our capital was about half as much as it is now. And we were for sale. So with the uncertainty, we didn't get our fair share of the market because of that. And now we're starting to get. So to your point, my view is we've gone somewhere between 9% of the market to 14% of the market or something, and it's been pretty material. And I think most of it is sustainable, but again, the reason I say that about the energy is that, to your point, if our mix in that category is bigger than others, we're probably getting the benefit of the growth of that, right? So say that could back down a little bit in a more normalized market. But there's no question, when I look at every single category, we've grown much bigger than the market, much better than the market, which tells me that underlying we're doing that. And, again, we should, right? We have as much underwriting capacity as anybody, but we're so much. We started this journey at, as I said, 9% share, which was not, you know, there should be a better spread of risk in the commercial space if we can invest properly and have the right capabilities matched up to the market. So I'm encouraged by what we've done, but again, I'm happy to say that some of it is the benefit of the mix.

Okay, that's very helpful. I appreciate that. And then, David, historically, I think maybe the last two or three years, you've kind of talked or expected, like, low to maybe mid 4% loss provision rate. Obviously, you've been pretty consistently below that. It sounds like now you just mentioned low 4%, so maybe tightening that range a bit. But maybe if you could talk to maybe your past expectations, what you built in that maybe didn't occur that maybe you expected or maybe it was overly conservative, Just more commentary on that and kind of also what you're seeing on the back book and lost trends.

Yeah, John, I mean, I think it's just really a combination of the mix. And so, you know, we had had a little bit more elevated going back a few years because of some of the international exposure. I think that's moderated a little bit. And then, you know, the thing that you always have to be concerned about, and that's why we try to be a little, you know, a little more balanced and things, is that you can have what we call jumbo or large claims come in, and the timing of those is hard to predict. And so, you know, I'd say it's a combination of just overall favorable macros, and then some of the higher loss items haven't been hitting as much, and that's why you've seen the better performance recently. But those are always out there, right? So you have to be prepared for them. Yeah, so I think our guidance is still going to be in that row for us, right,

Okay. And the last one for me on the investment income, just any kind of sense for a broad range of expectations over the next quarter

Yeah, I think, you know, we've been in that $13 million range. We were a little bit better in Q4. We just had some, you know, a little bit better volume on some of our escrows and things like that. I think we've been able to hold, you know, keep in mind if you're looking at us versus First American, And we're not hair-triggered at rates because we don't trade off the money market because we're not a bank. And so our rates are negotiated, assuming that the banks always give themselves a little cushion in that negotiation. And so because of that, you know, we don't necessarily go down as quickly as rates do. And so we've been able to basically hold. And so I think unless you were to have a, you know, really big extra drop in rates, and right now it's one to two, maybe three for the year, sort of the range of betting, you know, we should be able to hold pretty well.

Okay. Excellent. Thanks, guys.

Thank you.

Thank you. And it appears that there are no further questions at this time. I will now turn the program back to our presenters for any additional or closing remarks.

I want to thank everybody for your interest in Stewart. Thank you so much.

Thank you. This does conclude today's presentation. Thank you for your participation. You may disconnect.