Hello, and thank you for joining the Stewart Information Services Corporation's fourth quarter and full year 2025 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the 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 today's conference over to Kat Bass, Director of Investor Relations. Please go ahead.

Good morning, and thank you for joining us today for Stewart's fourth quarter and full year 2025 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 Stewart.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 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 and full year earnings conference call. Yesterday, we released the financial results for the fourth quarter and full year, which David will review with you shortly. I'd like to open today's call with some remarks on the overall progress we made in 25 and before shifting and then shifting to market conditions a little bit and then our fourth quarter results and strategic outlook preaching. We are very pleased with the progress we made in 25, strengthening and growing the earnings power of all our businesses. While commercial markets saw some awakening, in 25, we remained in a multi-year slump for existing home sales, with two years in a row of the lowest existing home sales in 30. Despite this market headwind, we grew revenues by 18%, net income by 48%, and adjusted EPS by 46%. That growth has allowed us to gain share and improve margins. We grew the company's adjusted pre-tax margin to 6.8, up from 5.8 a year prior. We have created momentum for the company through continued execution of our target growth plans and have strengthened our position. We delivered more distinctive products and services for our customers and made good progress on becoming a destination for the best talent in the industry. At the end of 2025, we also rounded out our lender services portfolio with the acquisition of Mortgage Contracting Services, also known. And in 2025, virtually all of our growth was organic, but we will continue to set our sights on additional profitable growth through targeted acquisitions, and we enhanced our financial flexibility to capitalize on potential opportunities in the near term by successfully upsizing our credit facility by $100 million to $300 million and executing an equity offering of 2.2 million shares of stock, raising $140 million to provide additional dry powder. In 2025, we also increased our dividend from $2 to $2.10. Moving towards some highlights for our businesses, in 2025, we grew all domestic commercial revenues by 34% year-over-year. This growth can be attributed to continued success in the expansion of our national commercial services business and growth in our small commercial growth in the commercial services business grew 43% year-over-year. With significant growth across big solution business, we grew revenues by 22% year-over-year and continue to have a very robust pipeline. We have made significant progress on our expansion of this business line since beginning the journey in the late 2000s. We've seen how recently acquired MCS will expand our breadth and client coverage for top lenders and services. Our agency services business also made strong progress in 2025, growing revenue by 21% overall. And our strategy to drive more commercials to our agents was also very successful, delivering 34%. It turned to the broader housing environment in our fourth quarter. We were able to maintain, and in most of our business, we grew revenue 20% and adjusted net income by 52% compared to what was meaning for us, given the existing home sales grew in the quarter just under 1%. While existing home sales purchases improved very slightly in the quarter, we see signs for cautious optimism for housing in 26. In the fourth quarter, 30-year mortgage rates, hovering between, showed a bit more stability. We have also seen a shift in the composition of mortgage holders, with the population of mortgages or higher exceeding the population of those. This implies that we are seeing people continue to buy and sell for life. We are beginning to accept we are unlikely to change, and housing inventory has continued to be a little bit better than last year, and it was up 8% for the quarter. Looking forward, we believe we should begin to develop as the market signals are returning. Our national commercial services business delivered another solid quarter of growth. Success for this group is from geographic markets, the engine of our team, and our ability to underwrite larger transactions. We are focused on continuing to invest in relationships. Because of the work we have done to continually improve, we grew the national commercial services business. It's the use of the progress here, and it really represents the impressive year energy growth was less. Our agency services business had another strong quarter. With the revenues up 20%, we believe we can build dedicated to strength we are committed to doing. This year, I had the opportunity to be with thousands of employees and customers for their

steadfast support in the slow residential real estate. Index A of our press release shows adjustments to our consolidated and segment results, primarily related to net realized and unrealized gains and losses, acquired and tangible asset amortization, and office closure and severance expenses that we use to measure operating performance. On an adjusted basis, fourth quarter net income was 50% higher at $48 million or $1.62 million or $1.17. In the final segment, operating revenues improved $106 million or 19%, driven by strong results from both our direct and agency title operations. As a result, title pre-tax income increased $13 million or 28%. On an adjusted basis, title pre-tax income improved $68 million from 50%. Adjusted pre-tax margin improved to 10% compared to approximately 9% last year. Title business, total fourth quarter open and closed orders for commercial and residential transactions improved compared to last year. Domestic commercial revenues increased 32 million or 38% with growth in all asset classes led by data centers and energy. Transaction size increases, our average domestic commercial fee per file improved 39% to approximately $27,000, $20,000 last year. Average domestic fee per file improved 13% to $3,300 compared to $2,900 last year, primarily as a result of transaction mix. Total international revenues increased modestly. Our agency operations were robust, with gross agency revenues of $334 million, 20% higher than last year. This increase was primarily driven by improved volumes in our key agency states, such as Florida, New York, and commercial transactions. After agent retention, net agency revenues increased to $11 million, or 22%. On title losses, total title losses in the fourth quarter increased slightly due to increased title revenues. The fourth quarter title loss ratio improved to 3.4% from 3.7% last year due to our continued overall favorable claims experience. We expect our title losses in 2026 to average into 3.5% to 4%. In the real estate solution segment, total revenues improved 29% by $25 million, primarily driven by our credit information services business. As Fred mentioned, we recently added MCS and expect it to be a major contributor to the segment's revenues and profits going forward. The segment's adjusted pre-tax income improved 47% to $10 million compared to $6 million last year. We focused on the overall cost of services and strengthening customer relationships. Adjusted pre-tax margin was 8.5%, a percent better than last year's, and to normalize in the low teens as these relationships matured. On consolidated expenses, our employee cost ratio improved 29% compared to 31% last year, primarily due to increased revenues, while our other operating expense ratio was 25%. Our financial position remained solid to support our customers, employees, and the real estate market. Our total cash and investments were approximately $480 million in excess of statutory premium reserve requirements. As Fred noted, our line of credit and December common share equity offering provide us financial flexibility. Total Stewart stockholders' equity at December 31, 2025 was approximately $1.6 billion with the book value of $54 per share, which is $4 better than last year. Net cash provided by operations improved by 22 million or 32 percent, primarily due to higher net income. Again, thank you to our customers and employees. We remain confident in our service to the real estate markets. I'll now turn the call over to the operator for questions. Thank you. If you'd like

to ask a question, press star 1 on your keypad. To leave the queue at any time, press star 2. Once again, that is star 1 to ask a question. And we'll pause for just a moment to allow everyone a chance to join the queue. And our first question comes from Boz George with KBW. Please go ahead, your line is now open.

Good morning, everyone. Good morning. I just wanted to start with the commercial. So given the strong commercial activity in 2025, Can you talk about your expectations for commercial revenue growth in 26? And then this related question, usually there's been meaningful seasonality in 1Q, but given what you see in the commercial pipeline, on the commercial side, do you think 1Q could be sort of a little better than usual?

Yeah, great question. So I feel very confident in our kind of our pipeline and the activity. It's pretty bought. It's pretty good. I do think there is seasonality. will continue to be seasonality in commercial. And the fourth quarter in particular this year, I think, was very robust. I think you're going to see that for a lot of people in the industry for some reasons. So I do think we've got our first quarter in general should be a little bit better than last year, but we'll still have the difficulties of the first. In general, I think it will be a good year for us next year, looking at the activity and the breadth of the activity. Some of the comparisons will be interesting to see. If I think we can grow commercial next year, yes. I just think percent is not a – there's going to be some comparison given how – but, again, it's going in the right direction about the depth. The other thing that's really interesting qualitatively is we're leading more deals. Like some of these big deals, right, historically we would participate that we're moving in the right direction. So even if we went a little sideways this year and digested the growth, in the next two years, I'm as confident as I've always been. I'm being able to go for probably 14% share right now in the market. I think in the next two, three years, we're going to get close. I can't time that, but I do think the market in general is going to.

Yes, that's great. That's very helpful. Thanks. And then, actually, can you remind us what percentage of your agent premiums are commercial?

So we've been obviously trying to grow that business. And let me just have some of the information on that. But we grew 20% growth. We grew purchase about 16% for the quarter and 15% for the year. We grew refi with real estate, with the agents, about 40. but that's only about 3 million of growth because it's such a small percentage of our business. And then we grew, and so you can look at the mix. I don't have the, but it's very small we buy. Again, as the growth of 5 million of the growth, heavy purchase, it's probably somewhere around 15. What's nice about it to me is that when you look at them.

Actually, just one last one on commercial. Have you talked about commercial, the direct margins versus the residential direct margins? Is that something I can't remember if you've discussed that?

They're a little better.

Again, it has a lot, it's a tad better. And the other thing about an answer.

Thanks a lot for the call.

And once again, if you would like to ask a question, please press star and one on your keypad now. We'll now move on to Jeffrey Dunn with Dowling & Partners. Your line is now open.

Morning, Jeff.

Good morning. thank you um a couple questions first what are the plans for the line of credit do you do you have an aggressive pay down schedule there or do you think it's just uh the plan to let that

leverage come down gradually with equity growth hey jeff it's david um i would i would say the latter i mean we could pay it off at any point i think we're just trying to keep flexibility as fred talked about and so i think um we're about 200 million drawn we may bring it down a little but You may see that for the year.

And then bigger picture, I wanted to ask you about AI and the effect you feel it's had on your business and if that's still accelerating, but also the effect it's had on the broader business. It looks like there's been some capital investment coming into the space for data collection, data mining, data organization. I'm curious if you view those as M&A opportunities or is that something we should think about in terms of longer-term competitive consideration?

Yeah, it's a great question. It's obviously, as I've said previously, because of the way we have so much unstructured documents, there's a big benefit both on efficiency, customer satisfaction, quality, because our losses are because you make a mistake, right? We're a warranty. And so the more efficient you can examine the documents and get to the right points quickly, the better you are. We have, gosh, probably 75 individual initiatives going on right now that have AI to apply in our businesses around customer service or efficiency or data consolidation and management. My view from a competitive point of view is an enormous advantage of the bigger people. It's not going to eliminate our business or anything. It's going to make us better, higher quality, better kind of consistency. It's a lot of little singles is the way I describe it. There are tools. You are exactly right. There are innovation and tools. There's one, you know, this is right now, to your point, that I'm likely to buy. Plugged in and make our service better on one of our businesses. And, again, because our business is so unique and weird, this isn't a revolution. This is kind of, in my view, a way to make so many parts of your business better. And title's weird, so the opportunities tend to be smallish in these, you know, the market opportunity. And so there will be some of that tool thing. And just if you remember, jump in the PNC world after the crisis, you know, the dot-com, same exact thing happened. All these companies failed, but some of the solutions, the models were extracted by the bigger companies to accelerate some of their innovation. And I think there will be some of that. There's going to be massive now. But I'm pretty excited about what's happening. It's just another thing that's going to, you know, we have a really interesting oligopoly, right, because of the scale, size, and the data, and the reach. And if the big players also say there's some of these things. I tell our folks what I like about it is that it's not about intervention.

And then, David, just an accounting question related to this. Given the digitization at the municipal level and the increase ease of collecting data, is there any implication for the title plan assets, particularly the more legacy plants, because it's now cheaper to create those?

No, I mean, as you probably know, tidal plants vary in access. The tidal data varies across the country, and the plants are needed in the markets that we're in to access data, so there shouldn't be any issues if you're talking about recoverability.

What is happening, right? Again, what is happening is we're able to, the way we've set up the centralized processing and management, the enhancing of the value of those plants has been kind of because we can supplement the data in those plants more efficiently, and it's becoming...

Okay, thank you.

Thank you. We'll now move on to Oscar Neves with Stevens. Your line is now open.

Good morning. How are you all? earlier you mentioned seeing signs of cautious optimism for housing as we're looking to 26 can you talk a bit uh more about the specific and uh whether those uh are drug based or concentrating in certain yeah good question so

last year everybody said at this time last year or earlier say the fourth quarter we had that little downturn in rates, and we had a nice little spurt in December orders, and it ended up translating into some March close orders. People were saying, oh, by the end of the year, we're going to see, you know, 8% to 10% improvement. I didn't see any of that, right? Because your under 3% mortgage was still really high, and the inventory quality, and matter of fact, I think we got to a point where 20% of all transactions were really old. People were flippers. Now, what I see is the under three has ticked down. The inventory has gotten a little bit better and has increased. And people will say it goes up and down. And it's 8% up. And we're seeing more activity. Do I think it's going to be more than 6% to 7% or 8% growth? No. It's modest. But I was, you know, it's hard to guess, but it feels like that this year. Whereas last year, You know, right from the get, I figured it was going to be flat, even though the estimates from some of the economists were up. This year, I could feel it. And you saw, I don't think it's going to be over the top, but I believe we're going to start seeing some moves. Again, the first one is always hard. And as far as the breadth, I think there is some breadth, too. Some of the places that didn't go up as much don't move as much, like the Midwest kind of.

And touching on rates, looking at data from the ICE Mortgage Monitor, I can see that once rates go below, say, 6%, the number of people with in-demand mortgages increases significantly. Could you give some color and maybe quantify the impact that would have in your revenues if that were to happen and ultimately in earnings?

Yeah, again, there's a lot of talk about it. I don't know how scientific any of that is. But, you know, again, I look at last October and we, you know, we had a cup of coffee, a little bit under six and things jumped, right? So there is some, there is some optics around that six. What I would tell you about our economics, our big swing of our economics is really existing home sales, as we've said. And we've been sitting at 4 million for three years, right, with zero growth. And the reason it's such a swing for us is because, you know, it's the fixed cost of our locations. And particularly in the first quarter, when you're at that level, you've got so little volume going through the system. It's a real drag on your returns. And what I've said is if we got to $5 million, our margins go to 12% because you're filling the excess capacity. and it particularly if you want to go look at the first quarter results and when things were still really strong it's an enormous so you can think about a straight line almost between the four million and the five million uh of leverage of our business and again it a little seasonal because again the volumes are so low but that's the way we think about it and again it's tied and so that's the big course but it's everywhere right by appraisal bit like the appraisal you go through the businesses, there's a fixed, and once you're at a 30-year low, you strain kind of on the margin. That's why what I say in a kind of lender services business, you know, I think, you know, we're 11 to 12, now I think we're 12 to 13 is kind of where we're going for this kind of year, but if we got back to 5 million, that thing's going to get to mid-teens, because all those businesses are affected too, right? A little less. And things that are most interesting about us is if you look at 19 to 24, for example, the volumes, all our competitors' margins went down more than ours because of the volume decrease. And ours went up, but that's because we started bad. So we've made improvements, but we're still very, I'm trying to get less. The other thing I would say, I've mentioned a number of things in public settings, because I think there's some chance that the journey beyond four and a half is going to take longer. I mean, I think we're going to get some improvement, but it could get installed for various reasons. We're working hard to make that, you know, try to get to double digit at four and a half. You know, a lot of work to do, but with geographic focus, some product portfolio stuff we're doing, some operating model, because I'd like us to be able to show kind of improvement if we get stalled, because there is some chance this is going to take a little bit longer to get to five. So I'm kind of, I'm optimistic on an improvement, but I'm cautious about how quickly it gets to that five, five and a half million and really focusing on continuing earnings growth while we're getting there.

Yeah. And maybe a last one, and I'll get back in the queue. You've highlighted efforts to grow agency in a few targeted MSAs, including Texas. with the Texas Department of Insurance finalizing the reduction in total payment rates affected March 1st. If you can walk us through how that change will flow through your financials and how

you're thinking about the impact on the business, both near term and longer term. Yeah. So the rate again is like six. What that agreed to is a six percent reduction and it's like July or something. And so that's much less of an issue than it was when it was 10, first of all, low single-digit impact. So we managed it well. Now, I'm concerned for some of our agent partners in rural places in particular because they don't make a lot of money, and that's a meaningful change. And so I do think it's going to cause some disruption in the agency, some of the agencies, particularly small agents in parts of Texas, because there is a, you know, in my view right now, there's not a ton of margin for agents given the rate structure. What's weird about our world, right, is that people think about it as a cyclical three-year average or a five-year average or whatever. The problem is that 21 and 22 are once-in-a-lifetime, never-happened-again kind of event. And if you rate them too much, you overreact to the excess earnings that were made. And this is a perfect example where that reduction is overstated, given what today's environment is. But for us, it's not. We put it in our plan and everything, but it doesn't change my expectations of growth.

Thank you. And once again, if you would like to ask a question, please press star and one on your keypad now. We do have a follow-up from Oscar. Your line is open. Please go ahead.

All right. I guess this is really my last one. You've had a lot of efforts to grow. You talked about prioritizing share gains in those key MSAs, both organically and through Can you give us a bit more color on how you're thinking about that strategy today, including whether you have a target level of capital that you're going to deploy this year and how that might be split between the title business and the real estate business business?

Great question. So indirect, you know, to me, to direct, as I said, there's more of a kind of a fixed cost, minimum scale way to think about direct in MSA levels. And early on, the problem we had is we were an inch deep and a mile wide. So we had a lot of offices that were chronically unprofitable unless the market was at its peak. And so we shut some stuff down, reallocated capital. We actually purchased in about 30 MSAs some business because the scale difference, if you get over 10% share locally, the margins are much better. The ability to manage the ups and downs is better. Your service consistency is better. Your ability to centralize things and variabilize the cost of them. So we reviewed the 140 MSAs. We said which ones are mostly agent-oriented, which ones are we strong, which ones we liked the market. market, but we're not where we need to be. And we have 30 or so MSAs in particular that we think we can move the dial and it'd be good for the company to get to the areas. We also have what I call micro markets, which is the markets, the suburbs of Nashville, the difference between Austin and San Antonio, the growth in between, where we can do fill-ins and acquisitions and tie it to the bigger offices in those locations. So we have these targets that would materially both improve top line and bottom line to the company. For the last three years, we thought we kind of didn't do, because what happened is agents weren't making any money. And so their price expectations, they weren't going to get enough to communicate with us, but there wasn't a price point, even with an earn-out. What has happened is, as people have re-engineered their operations through, you know, getting through the tough, tough times, they're making a little bit of money, they're seeing the improvement in these target markets, those conversations are becoming society, this is what. And so, for me, I've said, you know, over the next three years, I've said a bunch of times, $300 billion. That channel against these kind of markets, move on margin regard. And so what I'm saying, what I said, I am much more optimistic that this year some of that can start. And, again, I only want people that want to be here. I only want it to work for both of us. So it's getting to that right trading price. And so that $300,000 in my mind over the next three years is kind of the way I've thought about it. And, you know, most of the transactions in that space are small, you know, $10 million to $30 million. dollars. It's because you're geared to a market or a market opportunity. And that, by far, I would say the other businesses I'm in are in, we don't need to do acquisitions. What I have said out loud recently is that in lender services, there's a couple of spots where we've got really good traction. It might make sense to consolidate. Again, those wouldn't be big transactions, But what's emerging is we've got so much momentum with some of the big lenders that filling in our network or buying some of those customer relationships could make some sense. And that's a little bit more opportunistic. I don't think you're going to see a $300 million trade. Those, again, are, you know, will there be a $20 million or $30 million opportunity? The other thing I would say is what Jeff just said. There are a handful of really teeny, like $3 million that I do think will be available in some of these businesses that accelerate some of the development we want to do to make our service better and our delivery better because of what's happening with not just AI. There's a bunch of things happening. So that's where our capital is. I don't think it's going to be a huge number. I think what happens quickly through margins, we generate a lot of cash. So I believe the majority of what we're going to be doing is self-funded. I still believe that, and it was just a timing thing here that I wanted to give myself some flexibility because of what I saw happening. I'm going to speak to my ward the answer to follow that I would have, but yeah, thanks.

Thank you. We'll go next to Jeffrey Dunn with Dowling & Partners.

Hey, Jeff. Sorry, just a couple number of questions. David, did you update us on what you saw January trend-wise for orders? and also share your thoughts for investment income in the coming year relative to 25?

Yeah, Jeff. I mean, with respect to words, I think Jeff or Fred just covered it a little bit. Things have been, you know, opening up a little, particularly relative to last year's quarter, they're up a bit. We just have to see how things play out here because rates have been a little volatile, as you've seen, But right now, you know, things seem to be a little bit better than last year. With respect to interest income, and this also goes to Fred's comment on the flow benefit of getting commercial. So as it stands now, you know, if you plan on maybe one or two rate cuts and, you know, assume most escrow earnings are tied to short-term rates, we may come down a little bit. But most, we don't expect it to come down that much. And the main reason is because the escrow balances will grow.

Okay, so largely a volume offset to rate cut impact.

Yeah, I mean, I would say it could come down a bit, like, you know, several million or so. But it's really a function of how quickly, you know, like if they don't drop rates till the fall, right, and volume continues to pick up, then you're sort of holding, maybe increasing a little, right? if volume doesn't pick up as quickly and they drop rates like at the next meeting or two right then you could go down a little okay all right thank you thank you we'll now move to boz george

with kbw please go ahead hey guys one more for me as well the uh there's an idea about the revenue contribution from mcs uh and and is there much seasonality there as that comes in yeah both

questions a little seasonality uh particularly the first and we um i think when we bought the

company we talked yeah um but i think we had covered this a little bit in different forms but it's about 165 million a year revenue company um you know sort of in the 40 million even a or so range you know we'll just have to see see where it goes from there because you know foreclosures have been increasing as you've seen fha delinquencies have been increasing But that's about how they're running now. So a little lower in the first quarter.

Okay. Thanks a lot.

Thank you.

Thank you. At this time, there are no further questions in queue. I will now turn the meeting back to management for closing remarks.

I just want to thank everybody for their interest in Stuart. As I said earlier, I'm very pleased with 25. We've made good progress and we have good momentum. And I believe that momentum will continue into 26 if we stay focused. So I thank you for all your attention and interest in the company.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.