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Comprehensive Income (Unaudited)
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Additional Information (Details)
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Securities According to Contractual Terms
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(Exact name of registrant as specified
in its charter)
iDelaware
i74-1677330
(State
or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
i1360 Post Oak Blvd.,
iSuite
100
iHouston,
iTexas
i77056
(Address
of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code:(i713) i625-8100
Securities registered pursuant to Section 12(b) of the Act:
Title
of each class
Trading Symbol(s)
Name of each exchange on which registered
iCommon Stock, $1 par value per share
iSTC
iNew
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.
iYes☑ 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). iYes☑ 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.
☑
iLarge
accelerated filer
☐
Non-accelerated filer
i☐
Emerging growth company
☐
Accelerated filer
i☐
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 i☑
On
August 1, 2023, there were i27,346,403 outstanding shares of the issuer's Common Stock.
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 INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
See
notes to condensed consolidated financial statements.
7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
i
Interim
financial statements. The financial information contained in this report for the three and six months ended June 30, 2023 and 2022, and as of June 30, 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. iManagement’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. iConsolidation.
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. iRestrictions
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 $i519.5
million and $i544.0 million at June 30, 2023 and December 31, 2022, respectively. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $i10.2
million and $i8.6 million at June 30, 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
i
Revenues.
iThe Company's operating revenues, summarized by type, are as follows:
Investments in debt and equity securities. As of June 30, 2023 and December 31, 2022, the net unrealized investment gains relating to investments in equity securities held were $i13.6
million and $i19.2 million, respectively (refer to Note 5).
i
The amortized costs and fair values of investments in debt securities are as follows:
Foreign
debt securities consist of Canadian government, provincial and corporate bonds, United Kingdom treasury and corporate bonds, and Mexican government bonds.
i
Gross unrealized gains and losses on investments in debt securities are as follows:
Debt
securities as of June 30, 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 less
i90,765
i88,947
After
one year through five years
i357,970
i337,352
After
five years through ten years
i171,140
i162,291
After
ten years
i15,372
i13,337
i635,247
i601,927
//
9
i
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 June 30, 2023, were:
Less than 12 months
More than 12 months
Total
Losses
Fair values
Losses
Fair values
Losses
Fair values
($000
omitted)
Municipal
i191
i20,666
i134
i4,033
i325
i24,699
Corporate
i1,990
i50,979
i15,131
i165,730
i17,121
i216,709
Foreign
i1,335
i84,849
i14,541
i206,510
i15,876
i291,359
U.S.
Treasury Bonds
i656
i28,748
i81
i1,278
i737
i30,026
i4,172
i185,242
i29,887
i377,551
i34,059
i562,793
/
The
number of specific debt investment holdings held in an unrealized loss position as of June 30, 2023 was i356. Of these securities, i216
were in unrealized loss positions for more than 12 months. Total gross unrealized investment losses at June 30, 2023 slightly improved compared to December 31, 2022 primarily due to slower interest rate increases during 2023. Since the Company does not intend to sell and will more likely than not 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 months
More than 12 months
Total
Losses
Fair values
Losses
Fair values
Losses
Fair values
($000
omitted)
Municipal
i262
i27,491
i10
i67
i272
i27,558
Corporate
i12,935
i193,239
i5,600
i44,342
i18,535
i237,581
Foreign
i7,608
i186,221
i8,604
i101,294
i16,212
i287,515
U.S.
Treasury Bonds
i413
i25,102
i40
i445
i453
i25,547
i21,218
i432,053
i14,254
i146,148
i35,472
i578,201
NOTE
4
ii
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.
/
10
i
As
of June 30, 2023, financial instruments measured at fair value on a recurring basis are summarized below:
Level 1
Level 2
Fair value
measurements
($000
omitted)
Investments in securities:
Debt securities:
Municipal
i—
i25,949
i25,949
Corporate
i—
i233,200
i233,200
Foreign
i—
i311,354
i311,354
U.S.
Treasury Bonds
i—
i31,424
i31,424
Equity
securities
i78,226
i—
i78,226
i78,226
i601,927
i680,153
As
of December 31, 2022, financial instruments measured at fair value on a recurring basis are summarized below:
Level 1
Level 2
Fair value
measurements
($000
omitted)
Investments in securities:
Debt securities:
Municipal
i—
i29,835
i29,835
Corporate
i—
i254,316
i254,316
Foreign
i—
i299,137
i299,137
U.S.
Treasury Bonds
i—
i28,646
i28,646
Equity
securities
i98,149
i—
i98,149
i98,149
i611,934
i710,083
/
As
of June 30, 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.iRealized
and unrealized gains and losses are detailed as follows:
Net
unrealized investment gains (losses) recognized on equity securities still held at end of period
i2,047
(i9,917)
i955
(i7,258)
(i1,105)
(i11,905)
(i2,883)
(i7,820)
11
Realized
losses during the second quarter and first six months of 2023 included a $ii3.2/
million contingent receivable loss adjustment resulting from a previous disposition of a business, while realized gains and losses during the second quarter and first six months of 2022 included a loss of $ii3.6/
million from the same disposition of a business, partially offset by a $ii1.0/
million gain from an acquisition contingent liability adjustment.
i
Investment gains and losses recognized related to investments in equity securities are as follows:
During
the first six months of 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, while title purchase accounting adjustments were primarily related to provisional recognition of intangible assets (customer relationships) related to recent acquisitions.
12
NOTE 7
i
Estimated
title losses. iA summary of estimated title losses for the six months ended June 30 is as follows:
2023
2022
($000
omitted)
Balances at January 1
i549,448
i549,614
Provisions:
Current
year
i36,773
i55,760
Previous
policy years
i703
(i141)
Total
provisions
i37,476
i55,619
Payments,
net of recoveries:
Current year
(i6,990)
(i8,927)
Previous
policy years
(i57,954)
(i29,790)
Total
payments, net of recoveries
(i64,944)
(i38,717)
Effects
of changes in foreign currency exchange rates
i2,161
(i3,835)
Balances
at June 30
i524,141
i562,681
Loss
ratios as a percentage of title operating revenues:
Current year provisions
i4.0
%
i3.8
%
Total
provisions
i4.1
%
i3.8
%
/
NOTE
8
iShare-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 ithree years. The stock options vest on each of the first three anniversaries of the grant date at a rate of i20%,
i30% and i50%, chronologically, and expire i10
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 six months of 2023 and 2022, the Company granted time-based and performance-based restricted stock units with an aggregate grant-date
fair values of $i12.0 million (i293,000
units with an average grant price per unit of $i41.01) and $i11.2
million (i174,000 units with an average grant price per unit of $i64.15).
NOTE 9
iEarnings per share. Basic earnings per share (EPS) attributable to Stewart is calculated by dividing net income attributable to Stewart by the weighted-average number of shares of Common Stock outstanding during the reporting periods. Outstanding shares of Common Stock granted to employees that are not yet vested (restricted shares) are excluded from
the calculation of the weighted-average number of shares outstanding for calculating basic EPS. To calculate diluted EPS, the number of shares is adjusted to include the number of additional shares that would have been outstanding if 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.
13
i
The
calculation of the basic and diluted EPS is as follows:
Average
number of dilutive shares relating to options
i43
i154
i52
i226
Average
number of dilutive shares relating to grants of restricted units and shares
i146
i121
i122
i162
Diluted
average shares outstanding
i27,444
i27,293
i27,402
i27,377
Basic
earnings per share attributable to Stewart
i0.58
i2.28
i0.28
i4.43
Diluted
earnings per share attributable to Stewart
i0.58
i2.26
i0.28
i4.37
/
NOTE
10
iContingent liabilities and commitments. In the ordinary course of business, the Company guarantees the third-party indebtedness of certain of its consolidated subsidiaries. As of June 30, 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 June 30, 2023, the Company also had unused letters of credit aggregating $i4.9
million related to workers’ compensation and other insurance. The Company does not expect to make any payments on these guarantees./
NOTE 11
i
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.
14
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
i
Segment information. The
Company has ithree 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.
i
Selected statement of income information related to these segments is as follows:
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.
/
15
i
Total
revenues generated in the United States and all international operations are as follows:
Other comprehensive (loss) income. iChanges in the balances of each component of other comprehensive (loss) income and the related tax
effects are as follows:
Change
in net unrealized gains and losses on investments
i1,078
i226
i852
(i41,256)
(i8,664)
(i32,592)
Reclassification
adjustment for realized gains and losses on investments
i396
i83
i313
(i382)
(i80)
(i302)
i1,474
i309
i1,165
(i41,638)
(i8,744)
(i32,894)
Foreign
currency translation adjustments
i5,812
i960
i4,852
(i8,353)
(i792)
(i7,561)
Other
comprehensive income (loss)
i7,286
i1,269
i6,017
(i49,991)
(i9,536)
(i40,455)
16
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
MANAGEMENT’S OVERVIEW
Second quarter 2023 overview. We reported net income attributable to Stewart of $15.8 million ($0.58 per diluted share) for the second quarter 2023, compared to net income attributable to Stewart of $61.7 million ($2.26 per diluted share) for the second quarter 2022. Pretax income before noncontrolling interests for the second quarter 2023 was $25.2 million compared to pretax income before noncontrolling interests of $86.8 million for the prior year quarter. The second quarter 2023 results included $1.1 million of pretax net realized and unrealized losses, primarily composed of
a contingent receivable loss adjustment resulting from a previous disposition of a business, partially offset by net unrealized gains on fair value changes of equity securities investments, while the second quarter 2022 results included $11.9 million of pretax net realized and unrealized losses, primarily related to net unrealized losses on fair value changes of equity securities investments.
Summary results of the title segment are as follows ($ in millions, except pretax margin):
For the Three Months Ended
June 30
2023
2022
% Change
Operating
revenues
466.7
761.1
(39)
%
Investment income
12.1
6.7
80
%
Net
realized and unrealized (losses) gains
2.0
(8.8)
123
%
Pretax income
35.5
93.6
(62)
%
Pretax
margin
7.4
%
12.3
%
Title segment operating revenues for the second quarter 2023 decreased $294.3 million, or 39%, compared to the second quarter 2022, as a result of transaction volume declines in our direct and agency title businesses, while total segment operating expenses decreased $220.1 million, or 33%, primarily driven by lower revenues. Agency retention expenses in the second quarter 2023 decreased $168.1 million, or 49%, in
line with $201.2 million, or 49%, lower gross agency revenues, while the average independent agency remittance rate in the second quarter 2023 slightly improved to 17.7% compared to 17.1% in the prior year quarter, primarily as a result of geographic mix.
Total employee costs and other operating expenses in the second quarter 2023 decreased $47.2 million, or 16%, compared to the prior year quarter. As a percentage of operating revenues, these expenses were 52.4% in the second quarter 2023 compared to 38.3% in the second quarter 2022, primarily due to lower second quarter 2023 revenues. Title loss expense decreased $6.6 million, or 25%, in the second quarter 2023 compared to the prior year quarter primarily as a result of lower title revenues. As a percentage of title revenues, title loss expense was 4.2% in the second quarter 2023 compared to 3.5% in the second quarter 2022, which benefited from last year’s
favorable claims experience.
The title segment’s net realized and unrealized gains in the second quarter 2023 were primarily driven by $2.0 million of unrealized gains from fair value changes of equity securities investments, while the segment’s net realized and unrealized losses in the prior year quarter were primarily due to $9.9 million of net unrealized losses on fair value changes of equity securities investments, partially offset by a $1.0 million gain related to an acquisition contingent liability adjustment. Investment income in the second quarter 2023 increased $5.4 million compared to the second quarter 2022, primarily due to higher interest income resulting from earned interest from eligible escrow balances and increased interest rates and higher short-term investment balances in the second quarter 2023. The segment's pretax income included $3.3 million and $2.5 million of acquisition intangible
asset amortization and other expenses in the second quarters 2023 and 2022, respectively.
17
Summary results of the real estate solutions segment are as follows ($ in millions):
For the Three Months Ended
June 30
2023
2022
% Change
Operating
revenues
71.4
82.9
(14)
%
Pretax income
3.3
6.1
(46)
%
Pretax
margin
4.6
%
7.4
%
The segment’s operating revenues in the second quarter 2023 decreased $11.5 million, or 14%, compared to the second quarter 2022, primarily due to lower transaction volumes resulting from the continuing elevated interest rate environment. Consistent with the revenue decline, combined employee costs and other operating expenses in the second quarter 2023 decreased $8.5 million, or 12%. The segment's pretax income included acquisition
intangible asset amortization expenses of $5.8 million and $6.1 million in the second quarters 2023 and 2022, respectively, and a $1.2 million state sales tax assessment expense in the second quarter 2023 related to an acquisition.
In regard to the corporate and other segment, pretax results for the second quarter 2023 included net realized losses of $3.1 million, primarily driven by a contingent receivable loss adjustment resulting from a previous disposition of a business, while second quarter 2022 results included net realized losses of $3.2 million primarily resulting from the same disposition of a business. Net expenses attributable to corporate operations during the second quarter 2023 were $10.5 million compared to $10.2 million in the prior year quarter.
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 six months ended June 30, 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;
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•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
•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 the 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 and six months ended June 30, 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 June 30, 2023.
We also use information from our direct operations.
Operating environment. According to NAR, existing home sales (seasonally-adjusted basis) in June 2023 were 4.2 million units, a decrease of 19% from a year ago and 3% from May 2023, primarily due to the current elevated mortgage interest rate environment. Housing inventory continued to be low and was 14% lower in June 2023 compared to June 2022, while home prices have steadily increased. The existing home median price in June 2023 was $410,200, which was the second highest since 1999, when NAR began tracking the data. The June 2023 median price was 3% higher than May 2023, but 1% lower compared to $413,800 observed in June 2022 which was the all-time high. With new residential construction, U.S. housing starts (seasonally-adjusted)
in June 2023 were 8% lower compared to both June 2022 and May 2023, while newly-issued building permits in June 2023 were 15% and 4% lower compared to a year ago and May 2023, respectively.
With regard to lending activity, single family mortgage originations during the second quarter 2023 decreased 34% to $450 billion compared to the second quarter 2022, resulting from 58% and 25% lower refinancing and purchase transactions, respectively, according to Fannie Mae and MBA (averaged). During the second quarter 2023, the average 30-year fixed interest rate was 6.5% compared to 5.3% during the second quarter 2022. For the year 2023, Fannie Mae and MBA expect the interest rate to average 6.3%, higher than the 5.4% average observed during 2022, while total originations for the year 2023 are expected to decline 27% compared to 2022.
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Title
revenues.Direct title revenue information is presented below:
Non-commercial revenues decreased in the
second quarter and first six months of 2023, compared to the same periods in 2022, primarily resulting from lower residential purchase and refinancing transactions influenced by the rising mortgage interest rates during 2023. Combined purchase and refinancing orders closed declined 31% and 41% in the second quarter and first six months of 2023, respectively, compared to the same periods in 2022, while average residential fee per file in both the second quarter and first six months of 2023 increased to $3,300 (or 11% and 19%, respectively), primarily due to the higher mix of purchase transactions.
Commercial revenues in the second quarter and first six months of 2023 were lower compared to the same periods in 2022, as a result of lower transaction volume and average transaction size. Domestic commercial orders closed decreased 30% and 22% in the second quarter and first six months of 2023, respectively, while
average domestic commercial fee per file decreased 12% to $11,600 and 23% to $9,900 in the second quarter and first six months of 2023, respectively, compared to the same periods in 2022. Total international revenues in the second quarter and first six months of 2023 declined by $17.6 million, or 35%, and $33.9 million, or 37%, respectively, primarily due to lower transaction volumes in our Canadian operations compared to the same periods in 2022.
Orders information for the three and six months ended June 30 is as follows:
Gross
revenues from independent agency operations in the second quarter and first six months of 2023 decreased $201.2 million, or 49%, and $356.3 million, or 44%, respectively, compared to the same periods in 2022, primarily influenced by lower commercial and residential market activity. Agency revenues, net of retention, declined $33.1 million, or 47%, and $62.8 million, or 44%, in the second quarter and first six months of 2023 compared to the same periods in 2022, generally in line with the change in gross agency revenues. Refer further to the "Retention by agencies" discussion under Expenses below.
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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 2022, by a real estate brokerage company which we sold during the second quarter 2022. Real estate solutions revenues decreased $11.5 million, or 14%, and $38.3 million, or 22%, in the second quarter and first six months of 2023, primarily due to the decreased market activity resulting from the continued elevated interest rate environment. The disposed real estate brokerage company generated revenues of $5.3 million and $39.2 million during the second quarter and first six months of 2022, respectively.
Investment income. Investment income increased by $5.4 million, or 80%, and $8.4 million, or 81%, in the second quarter and first six months of 2023, respectively, compared to the same periods in 2022, primarily as a result of higher interest income resulting from earned interest from eligible escrow balances
and increased interest rates and higher short-term investments balances in 2023.
Net realized and unrealized gains. Refer to Note 5 to the condensed consolidated financial statements.
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 82.3% and 82.5% in the second quarter and first six months of 2023, respectively, compared to 82.9% and 82.4% in the same periods in 2022. 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, it is not as important as margins, risk mitigation and profitability.
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Employee costs. Consolidated employee costs in the second quarter and first six months of 2023 decreased $27.6 million, or 13%, and $62.0 million, or 15%, respectively, compared to the second quarter and first six months of 2022, primarily resulting from lower salaries expenses, incentive compensation and temporary labor costs related to lower volumes and 11% and 10% lower average employee counts in the second quarter and first six months of 2023, respectively. Compared to corresponding periods in the prior year, employee
costs for the second quarter and first six months of 2023 in the title segment decreased $27.9 million, or 14%, and $58.6 million, or 15%, respectively, while employee costs in the real estate solutions segment decreased $0.3 million, or 2%, and $1.3 million, or 5%, respectively.
Total employee costs, as a percentage of total operating revenues, were higher at 33.9% and 33.4% in the second quarter and first six months of 2023, respectively, compared to 24.8% and 24.5% in the same periods in 2022, primarily as a result of lower revenues in 2023. As of June 30, 2023, we had approximately 6,900 employees compared to approximately 7,700 and 7,100 employees as of June 30, 2022 and December 31, 2022, respectively.
Other
operating expenses. Other operating expenses include costs that are primarily 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.
Consolidated other operating expenses in the second quarter
and first six months of 2023 declined $32.7 million, or 20%, and $101.7 million, or 29%, respectively, compared to the second quarter and first six months of 2022, primarily due to decreased costs tied to lower title and real estate solutions revenues. Total variable costs in the second quarter and first six months of 2023 decreased $25.7 million, or 26%, and $90.3 million, or 40%, respectively, primarily due to lower appraisal and outside search expenses and premium taxes. Total costs that are primarily fixed in nature in the second quarter and first six months of 2023 decreased $5.0 million, or 10%, and $7.3 million, or 7%, respectively, primarily due to reduced outsourcing and insurance expenses, while independent costs decreased $2.0 million, or 13%, and $4.1 million, or 14%, respectively, primarily due to lower business promotion and marketing costs and bank fees expense.
As a percentage of total operating
revenues, consolidated other operating expenses in the second quarter and first six months of 2023 increased to 24.0% and 23.6%, respectively, compared to 19.1% and 20.8% in the same periods in 2022, primarily due to lower operating revenues in 2023.
Title losses. Provisions for title losses, as a percentage of title operating revenues, were 4.2% and 4.1% for the second quarter and first six months of 2023, respectively, compared to 3.5% and 3.8% for the second quarter and first six months of 2022, respectively. The slightly higher title loss ratios in 2023 were primarily due to the favorable claims experience during 2022. Title loss expense in the second quarter and first six months of 2023 decreased $6.6 million, or 25%, and $18.1 million, or 33%, respectively, primarily as a result of lower title revenues in 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.
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The composition of title policy loss expense is as follows:
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.
Total
known claims provision increased in the second quarter and first six months of 2023, compared to the same periods in 2022, as a result of increases to existing large and non-large claims related to prior policy years, while current year IBNR provisions in the second quarter and first six months of 2023 decreased, primarily due to lower title premiums. As a percentage of title operating revenues, provisions - IBNR for the current policy year were 3.5% and 3.4% in the second quarter and first six months of 2023, respectively, compared to 3.0% and 3.2% in the second quarter and first six months of 2022, respectively. Cash claim payments in the second quarter and first six months of 2023 increased $13.0 million, or 71%, and $26.2 million, or 68%, respectively, compared to the same periods in 2022, primarily due to payments on existing large claims related to prior policy years resulting from resolution
of those claims in 2023. 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.
Total
title policy loss reserve balances are as follows:
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 and $2.4 million (both 9%) in the second quarter and first six months of 2023, respectively, compared to the same periods in 2022, primarily due to increased depreciation expenses related to internal-use systems placed into operation starting in the second quarter 2022. Acquisition intangible amortization expenses for the second quarter and first six months of 2023 were $8.7 million and $17.0 million, respectively, compared to $8.5 million and $16.9 million, respectively, for the same periods in 2022.
Income taxes. Our effective tax rates,
based on income before taxes and after deducting income attributable to noncontrolling interests, were 25% and 6% in the second quarter and first six months of 2023, respectively, compared to 24% for both the second quarter and first six months of 2022. Excluding discrete tax adjustments, primarily recorded during the first quarter 2023 and related to increased utilization of net operating loss carryforwards of prior years' acquisitions, the effective tax rate for the first six months of 2023 would have been 26%.
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 June 30, 2023, our total cash and investments, including amounts reserved pursuant to statutory requirements aggregated $896.8 million. Of our total cash and investments at June 30, 2023, $497.5 million ($244.2 million, net of statutory 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 $42.3 million at June 30, 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 June 30, 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.
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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 $519.5 million and $544.0 million at June 30, 2023 and December 31, 2022, respectively. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $10.2 million and $8.6 million at June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023, our known claims reserve totaled $70.5 million and our estimate of claims that may be reported in the
future, under generally accepted accounting principles, totaled $453.6 million. In addition to this, we had cash and investments (excluding equity method investments) of $289.6 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 six months ended June 30, 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.
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 six months of 2023 was $16.0 million compared to net cash provided by operations of $118.2 million in the same period in 2022, primarily driven by lower net income and higher
claims payments during 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 six months of 2023, total proceeds from securities investments sold and matured were $94.7 million, compared to $52.3 million during the first six months of 2022. Cash used for purchases of securities investments was $55.5 million during the first six months of 2023 compared to $117.9 million during the same period in 2022.
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We used $22.4 million and $23.3 million of net cash for acquisitions in the title and real estate solutions segments during the first six months of 2023 and 2022, respectively, while we received $6.6 million during the first six months of 2022 from the sale of a subsidiary. We used $15.5 million
and $26.2 million of cash for purchases of property and equipment during the first six months of 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 $445.0 million and $1.37 billion, respectively, as of June 30, 2023. During the first six months of 2023 and 2022, payments on notes payable of $5.7 million and $42.9 million, respectively, and notes payable additions of $3.5 million and $5.7 million, respectively, were related to short-term loan agreements in connection with our Section 1031 tax-deferred property exchange (Section 1031) business.
At
June 30, 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 six months of 2023, we paid total dividends of $24.5 million ($0.90 per common share), compared to the total dividends paid in the same period in 2022 of $20.3 million ($0.75 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 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 six months of 2023, net unrealized investment gains of $1.2 million, net of taxes, which increased our other comprehensive income, were primarily related to net increases in the fair values of our corporate bond securities investments. During the first six months of 2022, net unrealized investment losses of $32.9 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 $4.9 million in the first six months of 2023, while they increased our other comprehensive loss, net of taxes, by $7.6 million in the first six months of 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.
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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 June 30, 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.
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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 June 30, 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 June 30, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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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 six months ended June 30, 2023, except for repurchases of approximately 32,200 shares (aggregate purchase price of approximately $1.4 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 $49.82 and $50.21 as of June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023, our book value per share was based on approximately $1.36 billion of stockholders’ equity attributable to Stewart and 27,266,830 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.
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.
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.
