Stewart Information Services Corp 10-Q for FY2024 Q3

Stewart Information Services Corp (STC)

10-Q 2024-11-06 For: 2024-09-30

Added on April 09, 2026

About this 10-Q

Stewart Information Services Corp filed this 10-Q on November 6, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).

Headline figures

Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $667.94M; up 11.0% from $601.71M a year earlier
Net income: $30.1M; up 115.0% from net income of $14M a year earlier
Diluted EPS: $1.07; up 109.8% from $0.51 a year earlier

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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)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1 par value per share	STC	New York Stock Exchange


Item		Page
	PART I – FINANCIAL INFORMATION

1.	Financial Statements	3

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

3.	Quantitative and Qualitative Disclosures About Market Risk	27

4.	Controls and Procedures	27
	PART II – OTHER INFORMATION
1.	Legal Proceedings	28

1A.	Risk Factors	28

2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

5.	Other Information	28

6.	Exhibits	29

	Signature	29


	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
	($000 omitted, except per share)
Revenues
Title revenues:
Direct operations	270,706	256,377	736,774	722,242
Agency operations	282,549	265,700	764,081	723,476
Real estate solutions	96,346	68,190	271,561	202,169
Operating revenues	649,601	590,267	1,772,416	1,647,887
Investment income	13,626	13,393	40,833	32,114
Net realized and unrealized gains (losses)	4,714	(1,946)	11,238	(4,829)
	667,941	601,714	1,824,487	1,675,172
Expenses
Amounts retained by agencies	233,980	218,983	634,083	596,498
Employee costs	193,862	181,493	545,987	534,710
Other operating expenses	155,646	130,455	444,890	380,530
Title losses and related claims	21,282	22,251	59,754	59,727
Depreciation and amortization	15,480	16,414	46,062	46,848
Interest	4,899	5,054	14,768	14,777
	625,149	574,650	1,745,544	1,633,090
Income before taxes and noncontrolling interests	42,792	27,064	78,943	42,082
Income tax expense	(9,123)	(9,134)	(17,999)	(9,588)
Net income	33,669	17,930	60,944	32,494
Less net income attributable to noncontrolling interests	3,573	3,931	10,375	10,870
Net income attributable to Stewart	30,096	13,999	50,569	21,624

Net income	33,669	17,930	60,944	32,494
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments	4,842	(5,847)	(884)	(995)
Change in net unrealized gains and losses on investments	13,015	(7,468)	10,853	(6,616)
Reclassification adjustments for realized gains and losses on investments	402	20	942	333
Other comprehensive income (loss), net of taxes:	18,259	(13,295)	10,911	(7,278)
Comprehensive income	51,928	4,635	71,855	25,216
Less net income attributable to noncontrolling interests	3,573	3,931	10,375	10,870
Comprehensive income attributable to Stewart	48,355	704	61,480	14,346

Basic average shares outstanding (000)	27,688	27,348	27,592	27,269
Basic earnings per share attributable to Stewart	1.09	0.51	1.83	0.79
Diluted average shares outstanding (000)	28,200	27,650	28,069	27,445
Diluted earnings per share attributable to Stewart	1.07	0.51	1.80	0.79


	September 30, 2024 (Unaudited)	December 31, 2023
	($000 omitted)
Assets
Cash and cash equivalents	183,772	233,365
Short-term investments	44,911	39,023
Investments, at fair value:
Debt securities (amortized cost of $613,668 and $631,294)	607,540	610,236
Equity securities	81,121	69,700
	688,661	679,936
Receivables:
Premiums from agencies	40,730	38,676
Trade and other	93,698	75,706
Income taxes	5,356	3,535
Notes	21,403	14,570
Allowance for uncollectible amounts	(8,851)	(7,583)
	152,336	124,904
Property and equipment:
Land	2,545	2,545
Buildings	19,926	19,219
Furniture and equipment	260,131	234,370
Accumulated depreciation	(192,566)	(173,799)
	90,036	82,335
Operating lease assets	105,510	115,879
Title plants, at cost	76,028	73,359
Goodwill	1,080,681	1,072,129
Intangible assets, net of amortization	175,166	193,196
Deferred tax assets	3,749	3,776
Other assets	128,720	84,959
	2,729,570	2,702,861
Liabilities
Notes payable	445,704	445,290
Accounts payable and accrued liabilities	196,670	190,054
Operating lease liabilities	122,788	135,654
Estimated title losses	517,592	528,269
Deferred tax liabilities	32,481	25,045
	1,315,235	1,324,312
Contingent liabilities and commitments
Stockholders’ equity
Common Stock ($1 par value) and additional paid-in capital	353,172	338,451
Retained earnings	1,080,879	1,070,841
Accumulated other comprehensive loss:
Foreign currency translation adjustments	(19,463)	(18,579)
Net unrealized losses on debt securities investments	(4,841)	(16,636)

Treasury stock – 352,161 common shares, at cost	(2,666)	(2,666)
Stockholders’ equity attributable to Stewart	1,407,081	1,371,411
Noncontrolling interests	7,254	7,138
Total stockholders’ equity (27,713,557 and 27,370,227 shares outstanding)	1,414,335	1,378,549
	2,729,570	2,702,861


	Common Stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive loss	Treasury stock	Noncontrolling interests	Total
	($000 omitted)
Nine Months Ended September 30, 2024
Balance at December 31, 2023	27,723	310,728	1,070,841	(35,215)	(2,666)	7,138	1,378,549

Net income attributable to Stewart	—	—	50,569	—	—	—	50,569
Dividends on Common Stock ($1.45 per share)	—	—	(40,531)	—	—	—	(40,531)

Stock-based compensation	198	9,395	—	—	—	—	9,593
Stock repurchases	(59)	(3,559)	—	—	—	—	(3,618)
Stock option and employee stock purchase plan exercises	204	8,542	—	—	—	—	8,746

Change in net unrealized gains and losses on investments, net of taxes	—	—	—	10,853	—	—	10,853
Reclassification adjustment for realized gains and losses on investments, net of taxes	—	—	—	942	—	—	942
Foreign currency translation adjustments, net of taxes	—	—	—	(884)	—	—	(884)
Net income attributable to noncontrolling interests	—	—	—	—	—	10,375	10,375
Distributions to noncontrolling interests	—	—	—	—	—	(10,313)	(10,313)
Net effect of other changes in ownership	—	—	—	—	—	54	54
Balance at September 30, 2024	28,066	325,106	1,080,879	(24,304)	(2,666)	7,254	1,414,335

Nine Months Ended September 30, 2023
Balance at December 31, 2022	27,483	296,861	1,091,816	(51,343)	(2,666)	8,114	1,370,265

Net income attributable to Stewart	—	—	21,624	—	—	—	21,624
Dividends on Common Stock ($1.38 per share)	—	—	(38,216)	—	—	—	(38,216)

Stock-based compensation	134	10,176	—	—	—	—	10,310
Stock repurchases	(37)	(1,539)	—	—	—	—	(1,576)
Stock option and employee stock purchase plan exercises	129	4,717	—	—	—	—	4,846

Change in net unrealized gains and losses on investments, net of taxes	—	—	—	(6,616)	—	—	(6,616)
Reclassification adjustment for realized gains and losses on investments, net of taxes, net of taxes	—	—	—	333	—	—	333
Foreign currency translation adjustments, net of taxes	—	—	—	(995)	—	—	(995)
Net income attributable to noncontrolling interests	—	—	—	—	—	10,870	10,870
Distributions to noncontrolling interests	—	—	—	—	—	(11,646)	(11,646)

Balance at September 30, 2023	27,709	310,215	1,075,224	(58,621)	(2,666)	7,338	1,359,199


	September 30, 2024		December 31, 2023
	Amortized costs	Fair values	Amortized costs	Fair values
	($000 omitted)
Municipal	14,629	14,559	22,201	22,031
Corporate	219,160	214,031	242,656	231,474
Foreign	333,428	332,310	332,723	323,391
U.S. Treasury Bonds	46,451	46,640	33,714	33,340

	613,668	607,540	631,294	610,236


	September 30, 2024		December 31, 2023
	Gains	Losses	Gains	Losses
	($000 omitted)
Municipal	9	79	—	170
Corporate	1,406	6,535	764	11,946
Foreign	4,656	5,774	1,765	11,097
U.S. Treasury Bonds	383	194	106	480

	6,454	12,582	2,635	23,693


	Less than 12 months		More than 12 months		Total
	Losses	Fair values	Losses	Fair values	Losses	Fair values
	($000 omitted)
Municipal	1	1,447	78	10,188	79	11,635
Corporate	8	5,201	6,527	171,050	6,535	176,251
Foreign	28	21,133	5,746	158,489	5,774	179,622
U.S. Treasury Bonds	15	10,312	179	12,389	194	22,701

	52	38,093	12,530	352,116	12,582	390,209


	Level 1	Level 2	Fair value measurements
	($000 omitted)
Investments in securities:
Debt securities:
Municipal	—	14,559	14,559
Corporate	—	214,031	214,031
Foreign	—	332,310	332,310
U.S. Treasury Bonds	—	46,640	46,640
Equity securities	81,121	—	81,121
	81,121	607,540	688,661


	Title	Real Estate Solutions	Consolidated Total
	($000 omitted)
Balances at December 31, 2023	707,935	364,194	1,072,129
Acquisitions	8,366	—	8,366
Purchase accounting adjustments	186	—	186

Balances at September 30, 2024	716,487	364,194	1,080,681


	Three Months Ended September 30, 2024			Three Months Ended September 30, 2023
	Before-Tax Amount	Tax Expense (Benefit)	Net-of-Tax Amount	Before-Tax Amount	Tax Expense (Benefit)	Net-of-Tax Amount
	($000 omitted)
Net unrealized gains and losses on investments:
Change in net unrealized gains and losses on investments	16,474	3,459	13,015	(9,452)	(1,984)	(7,468)
Reclassification adjustments for realized gains and losses on investments	509	107	402	25	5	20
	16,983	3,566	13,417	(9,427)	(1,979)	(7,448)

Foreign currency translation adjustments	5,333	491	4,842	(6,931)	(1,084)	(5,847)

Other comprehensive income (loss)	22,316	4,057	18,259	(16,358)	(3,063)	(13,295)


	Nine Months Ended September 30, 2024			Nine Months Ended September 30, 2023
	Before-Tax Amount	Tax Expense (Benefit)	Net-of-Tax Amount	Before-Tax Amount	Tax Expense (Benefit)	Net-of-Tax Amount
	($000 omitted)
Net unrealized gains and losses on investments:
Change in net unrealized gains and losses on investments	13,738	2,885	10,853	(8,374)	(1,758)	(6,616)
Reclassification adjustment for realized gains and losses on investments	1,192	250	942	421	88	333
	14,930	3,135	11,795	(7,953)	(1,670)	(6,283)

Foreign currency translation adjustments	(1,755)	(871)	(884)	(1,119)	(124)	(995)

Other comprehensive income (loss)	13,175	2,264	10,911	(9,072)	(1,794)	(7,278)


	For the Three Months Ended September 30
	2024		2023		% Change

Operating revenues	553.3		522.1		6	%
Investment income	13.6		13.4		2	%
Net realized and unrealized gains (losses)	4.8		(1.8)		361	%
Pretax income	45.0		35.4		27	%
Pretax margin	7.9	%	6.6	%


	Three Months Ended September 30,					Nine Months Ended September 30,
	2024	2023	Change	% Chg*		2024	2023	Change	% Chg
	($ in millions)					($ in millions)
Non-commercial
Domestic	168.2	167.6	0.6	—	%	472.9	502.4	(29.5)	(6)	%
International	29.0	29.1	(0.1)	—	%	76.3	74.1	2.2	3	%
	197.2	196.7	0.5	—	%	549.2	576.5	(27.3)	(5)	%
Commercial:
Domestic	67.4	51.9	15.5	30	%	168.1	126.1	42.0	33	%
International	6.1	7.8	(1.7)	(22)	%	19.5	19.6	(0.1)	(1)	%
	73.5	59.7	13.8	23	%	187.6	145.7	41.9	29	%
Total direct title revenues	270.7	256.4	14.3	6	%	736.8	722.2	14.6	2	%


	Amortized costs	Fair values
	($000 omitted)
In one year or less	84,595	83,992
After one year through five years	328,164	323,155
After five years through ten years	188,330	188,725
After ten years	12,579	11,668
	613,668	607,540


	2024		2023
	($000 omitted)
Balances at January 1	528,269		549,448
Provisions:
Current year	59,959		59,036
Previous policy years	(205)		691
Total provisions	59,754		59,727
Payments, net of recoveries:
Current year	(14,171)		(12,911)
Previous policy years	(54,636)		(73,233)
Total payments, net of recoveries	(68,807)		(86,144)

Effects of changes in foreign currency exchange rates	(1,624)		(1,636)
Balances at September 30	517,592		521,395
Loss ratios as a percentage of title operating revenues:
Current year provisions	4.0	%	4.1	%
Total provisions	4.0	%	4.1	%


	Three Months Ended September 30,					Nine Months Ended September 30,
	2024	2023	Change	% Chg		2024	2023	Change	% Chg
Opened Orders:
Commercial	3,665	3,320	345	10	%	10,884	10,456	428	4	%
Purchase	49,458	53,285	(3,827)	(7)	%	152,539	160,197	(7,658)	(5)	%
Refinance	20,920	16,032	4,888	30	%	54,022	49,021	5,001	10	%
Other	13,421	8,630	4,791	56	%	36,075	20,639	15,436	75	%
Total	87,464	81,267	6,197	8	%	253,520	240,313	13,207	5	%

Closed Orders:
Commercial	3,794	3,661	133	4	%	11,149	11,170	(21)	—	%
Purchase	35,590	39,903	(4,313)	(11)	%	103,166	113,757	(10,591)	(9)	%
Refinance	11,766	10,397	1,369	13	%	31,097	30,593	504	2	%
Other	8,225	6,347	1,878	30	%	23,921	12,936	10,985	85	%
Total	59,375	60,308	(933)	(2)	%	169,333	168,456	877	1	%


	Three Months Ended September 30,							Nine Months Ended September 30,
	2024		2023		Change*	% Chg		2024		2023		Change*	% Chg
	($ in millions)							($ in millions)

Amounts retained by agencies	234.0		219.0		15.0	7	%	634.1		596.5		37.6	6	%
As a % of agency revenues	82.8	%	82.4	%				83.0	%	82.4	%
Employee costs	193.9		181.5		12.4	7	%	546.0		534.7		11.3	2	%
As a % of operating revenues	29.8	%	30.7	%				30.8	%	32.4	%
Other operating expenses	155.6		130.5		25.2	19	%	444.9		380.5		64.4	17	%
As a % of operating revenues	24.0	%	22.1	%				25.1	%	23.1	%
Title losses and related claims	21.3		22.3		(1.0)	(4)	%	59.8		59.7		0.1	—	%
As a % of title revenues	3.8	%	4.3	%				4.0	%	4.1	%


Exhibit
3.1	—	Restated Certificate of Incorporation of the Registrant, dated April 28, 2016 (incorporated by reference in this report from Exhibit 3.1 of the Current Report on Form 8-K filed April 29, 2016)
3.2	—	Fifth Amended and Restated By-Laws of the Registrant, as of December 27, 2022 (incorporated by reference in this report from Exhibit 3.1 of the Current Report on Form 8-K filed December 30, 2022)


31.1*	—	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	—	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	—	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	—	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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)


						Stewart Information Services Corporation
						Registrant

By:						/s/ David C. Hisey
						David C. Hisey, Chief Financial Officer and Treasurer


(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


(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.


/s/ Frederick H. Eppinger
Name:						Frederick H. Eppinger
Title:						Chief Executive Officer


/s/ David C. Hisey
Name:						David C. Hisey
Title:						Chief Financial Officer and Treasurer