Company Quick10K Filing
Stewart Information Services
Price38.50 EPS4
Shares24 P/E9
MCap916 P/FCF9
Net Debt-321 EBIT128
TEV595 TEV/EBIT5
TTM 2019-09-30, in MM, except price, ratios
10-Q 2021-03-31 Filed 2021-05-04
10-K 2020-12-31 Filed 2021-03-01
10-Q 2020-09-30 Filed 2020-11-04
10-Q 2020-06-30 Filed 2020-08-03
10-Q 2020-03-31 Filed 2020-05-04
10-K 2019-12-31 Filed 2020-02-27
10-Q 2019-09-30 Filed 2019-11-07
10-Q 2019-06-30 Filed 2019-08-07
10-Q 2019-03-31 Filed 2019-05-01
10-K 2018-12-31 Filed 2019-02-28
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-06
10-Q 2018-03-31 Filed 2018-05-03
10-K 2017-12-31 Filed 2018-02-28
10-Q 2017-09-30 Filed 2017-11-07
10-Q 2017-06-30 Filed 2017-07-28
10-Q 2017-03-31 Filed 2017-04-28
10-K 2016-12-31 Filed 2017-02-27
10-Q 2016-09-30 Filed 2016-11-01
10-Q 2016-06-30 Filed 2016-07-29
10-Q 2016-03-31 Filed 2016-04-29
10-K 2015-12-31 Filed 2016-02-26
10-Q 2015-09-30 Filed 2015-11-03
10-Q 2015-06-30 Filed 2015-07-31
10-Q 2015-03-31 Filed 2015-05-04
10-K 2014-12-31 Filed 2015-02-27
10-Q 2014-09-30 Filed 2014-10-31
10-Q 2014-06-30 Filed 2014-08-01
10-Q 2014-03-31 Filed 2014-05-01
10-K 2013-12-31 Filed 2014-02-28
10-Q 2013-09-30 Filed 2013-11-06
10-Q 2013-06-30 Filed 2013-08-02
10-Q 2013-03-31 Filed 2013-05-03
10-K 2012-12-31 Filed 2013-03-06
10-Q 2012-09-30 Filed 2012-11-02
10-Q 2012-06-30 Filed 2012-08-03
10-Q 2012-03-31 Filed 2012-05-03
10-K 2011-12-31 Filed 2012-03-12
10-Q 2011-09-30 Filed 2011-11-02
10-Q 2011-06-30 Filed 2011-08-03
10-Q 2011-03-31 Filed 2011-05-04
10-K 2010-12-31 Filed 2011-03-03
10-Q 2010-09-30 Filed 2010-11-03
10-Q 2010-06-30 Filed 2010-08-03
10-Q 2010-03-31 Filed 2010-05-05
10-K 2009-12-31 Filed 2010-03-05
8-K 2020-10-21
8-K 2020-09-01
8-K 2020-08-31
8-K 2020-08-12
8-K 2020-07-22
8-K 2020-06-04
8-K 2020-06-01
8-K 2020-05-07
8-K 2020-04-22
8-K 2020-02-07
8-K 2020-02-05
8-K 2020-01-15
8-K 2019-12-12
8-K 2019-12-09
8-K 2019-10-22
8-K 2019-10-01
8-K 2019-09-20
8-K 2019-09-09
8-K 2019-09-08
8-K 2019-09-06
8-K 2019-07-25
8-K 2019-06-19
8-K 2019-06-10
8-K 2019-04-25
8-K 2019-03-11
8-K 2019-02-14
8-K 2019-01-31
8-K 2019-01-31
8-K 2018-12-31
8-K 2018-12-31
8-K 2018-11-09
8-K 2018-11-02
8-K 2018-10-25
8-K 2018-09-05
8-K 2018-08-24
8-K 2018-08-22
8-K 2018-07-18
8-K 2018-06-18
8-K 2018-05-31
8-K 2018-05-22
8-K 2018-05-03
8-K 2018-03-18
8-K 2018-02-22
8-K 2018-02-08
8-K 2017-12-29

STC 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Note 10
Note 11
Note 12
Note 13
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 5. Other Information
Item 6. Exhibits
EX-10.1 eppinger2021restrictedstoc.htm
EX-10.2 eppinger2021restrictedperf.htm
EX-10.3 eppinger2021stockoption.htm
EX-10.4 hisey2021restrictedstockun.htm
EX-10.5 hisey2021restrictedperform.htm
EX-10.6 hisey2021stockoption.htm
EX-10.7 killea2021restrictedstocku.htm
EX-10.8 killea2021restrictedperfor.htm
EX-10.9 killea2021stockoption.htm
EX-10.10 lessack2021restrictedstock.htm
EX-10.11 lessack2021restrictedunitc.htm
EX-10.12 lessack2021restrictedperfo.htm
EX-10.13 lessack2021stockoption.htm
EX-10.14 smith2021restrictedstockun.htm
EX-10.15 smith2021restrictedperform.htm
EX-10.16 smith2021stockoption.htm
EX-31.1 q1-2021ex311.htm
EX-31.2 q1-2021ex312.htm
EX-32.1 q1-2021ex321.htm
EX-32.2 q1-2021ex322.htm

Stewart Information Services Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
1.61.31.00.60.30.02012201420172020
Assets, Equity
0.60.50.30.20.0-0.12012201420172020
Rev, G Profit, Net Income
0.20.10.10.0-0.0-0.12012201420172020
Ops, Inv, Fin

stc-20210331
000009434412/312021Q1falseP3Y00000943442021-01-012021-03-31xbrli:shares00000943442021-04-27iso4217:USD0000094344stc:TitleDirectOperationsMember2021-01-012021-03-310000094344stc:TitleDirectOperationsMember2020-01-012020-03-310000094344stc:TitleAgencyOperationsMember2021-01-012021-03-310000094344stc:TitleAgencyOperationsMember2020-01-012020-03-310000094344stc:AncillaryServicesMember2021-01-012021-03-310000094344stc:AncillaryServicesMember2020-01-012020-03-3100000943442020-01-012020-03-31iso4217:USDxbrli:shares00000943442021-03-3100000943442020-12-3100000943442019-12-3100000943442020-03-310000094344us-gaap:CommonStockMember2020-12-310000094344us-gaap:AdditionalPaidInCapitalMember2020-12-310000094344us-gaap:RetainedEarningsMember2020-12-310000094344us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000094344us-gaap:TreasuryStockMember2020-12-310000094344us-gaap:NoncontrollingInterestMember2020-12-310000094344us-gaap:RetainedEarningsMember2021-01-012021-03-310000094344us-gaap:CommonStockMember2021-01-012021-03-310000094344us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000094344us-gaap:NoncontrollingInterestMember2021-01-012021-03-310000094344us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000094344us-gaap:CommonStockMember2021-03-310000094344us-gaap:AdditionalPaidInCapitalMember2021-03-310000094344us-gaap:RetainedEarningsMember2021-03-310000094344us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000094344us-gaap:TreasuryStockMember2021-03-310000094344us-gaap:NoncontrollingInterestMember2021-03-310000094344us-gaap:CommonStockMember2019-12-310000094344us-gaap:AdditionalPaidInCapitalMember2019-12-310000094344us-gaap:RetainedEarningsMember2019-12-310000094344us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000094344us-gaap:TreasuryStockMember2019-12-310000094344us-gaap:NoncontrollingInterestMember2019-12-310000094344us-gaap:RetainedEarningsMember2020-01-012020-03-310000094344us-gaap:CommonStockMember2020-01-012020-03-310000094344us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310000094344us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310000094344us-gaap:NoncontrollingInterestMember2020-01-012020-03-310000094344us-gaap:CommonStockMember2020-03-310000094344us-gaap:AdditionalPaidInCapitalMember2020-03-310000094344us-gaap:RetainedEarningsMember2020-03-310000094344us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310000094344us-gaap:TreasuryStockMember2020-03-310000094344us-gaap:NoncontrollingInterestMember2020-03-310000094344us-gaap:LineOfCreditMember2021-03-220000094344us-gaap:LineOfCreditMember2021-03-230000094344us-gaap:LineOfCreditMember2021-03-222021-03-220000094344us-gaap:LineOfCreditMember2021-03-232021-03-230000094344us-gaap:UnsecuredDebtMember2021-03-222021-03-220000094344us-gaap:UnsecuredDebtMember2021-03-232021-03-2300000943442021-03-230000094344stc:TitleInsurancePremiumsDirectMember2021-01-012021-03-310000094344stc:TitleInsurancePremiumsDirectMember2020-01-012020-03-310000094344stc:TitleInsurancePremiumsAgencyMember2021-01-012021-03-310000094344stc:TitleInsurancePremiumsAgencyMember2020-01-012020-03-310000094344stc:EscrowFeesMember2021-01-012021-03-310000094344stc:EscrowFeesMember2020-01-012020-03-310000094344stc:AppraisalManagementAbstractAndOtherAncillaryServicesMember2021-01-012021-03-310000094344stc:AppraisalManagementAbstractAndOtherAncillaryServicesMember2020-01-012020-03-310000094344us-gaap:ProductAndServiceOtherMember2021-01-012021-03-310000094344us-gaap:ProductAndServiceOtherMember2020-01-012020-03-310000094344us-gaap:USStatesAndPoliticalSubdivisionsMember2021-03-310000094344us-gaap:USStatesAndPoliticalSubdivisionsMember2020-12-310000094344us-gaap:CorporateDebtSecuritiesMember2021-03-310000094344us-gaap:CorporateDebtSecuritiesMember2020-12-310000094344us-gaap:ForeignGovernmentDebtSecuritiesMember2021-03-310000094344us-gaap:ForeignGovernmentDebtSecuritiesMember2020-12-310000094344us-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-03-310000094344us-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-31stc:investment0000094344us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueInputsLevel1Member2021-03-310000094344us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueInputsLevel2Member2021-03-310000094344us-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMember2021-03-310000094344us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2021-03-310000094344us-gaap:ForeignGovernmentDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2021-03-310000094344us-gaap:ForeignGovernmentDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2021-03-310000094344us-gaap:FairValueInputsLevel1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-03-310000094344us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-03-310000094344us-gaap:FairValueInputsLevel1Member2021-03-310000094344us-gaap:FairValueInputsLevel2Member2021-03-310000094344us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueInputsLevel1Member2020-12-310000094344us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueInputsLevel2Member2020-12-310000094344us-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMember2020-12-310000094344us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2020-12-310000094344us-gaap:ForeignGovernmentDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2020-12-310000094344us-gaap:ForeignGovernmentDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-12-310000094344us-gaap:FairValueInputsLevel1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310000094344us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310000094344us-gaap:FairValueInputsLevel1Member2020-12-310000094344us-gaap:FairValueInputsLevel2Member2020-12-310000094344stc:TitleSegmentMember2020-12-310000094344stc:AncillaryServicesAndCorporateSegmentMember2020-12-310000094344stc:TitleSegmentMember2021-01-012021-03-310000094344stc:AncillaryServicesAndCorporateSegmentMember2021-01-012021-03-310000094344stc:TitleSegmentMember2021-03-310000094344stc:AncillaryServicesAndCorporateSegmentMember2021-03-31xbrli:pure0000094344stc:TimeBasedRestrictedStockMember2021-01-012021-03-310000094344us-gaap:PerformanceSharesMember2021-01-012021-03-310000094344us-gaap:ShareBasedCompensationAwardTrancheOneMemberus-gaap:EmployeeStockOptionMember2021-01-012021-03-310000094344us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2021-01-012021-03-310000094344us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2021-01-012021-03-310000094344us-gaap:EmployeeStockOptionMember2021-01-012021-03-310000094344us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310000094344us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-03-31stc:segment0000094344stc:TitleSegmentMember2020-01-012020-03-310000094344stc:AncillaryServicesAndCorporateSegmentMember2020-01-012020-03-310000094344country:US2021-01-012021-03-310000094344country:US2020-01-012020-03-310000094344us-gaap:NonUsMember2021-01-012021-03-310000094344us-gaap:NonUsMember2020-01-012020-03-310000094344us-gaap:AccumulatedNetInvestmentGainLossIncludingPortionAttributableToNoncontrollingInterestMember2021-01-012021-03-310000094344us-gaap:AccumulatedNetInvestmentGainLossIncludingPortionAttributableToNoncontrollingInterestMember2020-01-012020-03-310000094344us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2021-01-012021-03-310000094344us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2020-01-012020-03-31

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

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
or
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 001-02658
 STEWART INFORMATION SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
74-1677330
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
1360 Post Oak Blvd.,
Suite 100
 
Houston,
Texas
77056
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (713625-8100
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1 par value per share
STC
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    
Yes   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes     No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Emerging growth company
Accelerated filerSmaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   No
On April 27, 2021, there were 26,811,242 outstanding shares of the issuer's Common Stock.



FORM 10-Q QUARTERLY REPORT
QUARTER ENDED MARCH 31, 2021
TABLE OF CONTENTS
 
Item Page
PART I – FINANCIAL INFORMATION
1.
2.
3.
4.
PART II – OTHER INFORMATION
1.
1A.
2.
5.
6.
As used in this report, “we,” “us,” “our,” "Registrant," the “Company” and “Stewart” mean Stewart Information Services Corporation and our subsidiaries, unless the context indicates otherwise.




















2


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
 Three Months Ended 
 March 31,
 20212020
 ($000 omitted, except per share)
Revenues
Title revenues:
Direct operations279,504 198,283 
Agency operations345,932 242,030 
Ancillary services55,931 5,461 
Operating revenues681,367 445,774 
Investment income3,945 5,218 
Net realized and unrealized gains (losses)3,274 (11,091)
688,586 439,901 
Expenses
Amounts retained by agencies283,935 199,366 
Employee costs169,397 135,652 
Other operating expenses125,482 71,858 
Title losses and related claims28,773 18,632 
Depreciation and amortization6,430 4,231 
Interest567 892 
614,584 430,631 
Income before taxes and noncontrolling interests74,002 9,270 
Income tax expense(16,880)(1,896)
Net income57,122 7,374 
Less net income attributable to noncontrolling interests2,886 2,197 
Net income attributable to Stewart54,236 5,177 
Net income57,122 7,374 
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments1,867 (11,442)
Change in net unrealized gains and losses on investments(9,156)(2,580)
Reclassification adjustment for realized gains and losses on investments(145)(80)
Other comprehensive loss, net of taxes:(7,434)(14,102)
Comprehensive income (loss)49,688 (6,728)
Less net income attributable to noncontrolling interests2,886 2,197 
Comprehensive income (loss) attributable to Stewart46,802 (8,925)
Basic average shares outstanding (000)26,736 23,638 
Basic earnings per share attributable to Stewart2.03 0.22 
Diluted average shares outstanding (000)26,984 23,749 
Diluted earnings per share attributable to Stewart2.01 0.22 
See notes to condensed consolidated financial statements.
3


CONDENSED CONSOLIDATED BALANCE SHEETS
As of 
 March 31, 2021 (Unaudited)
As of 
 December 31, 2020
 ($000 omitted)
Assets
Cash and cash equivalents412,763 432,683 
Short-term investments17,855 20,678 
Investments in debt and equity securities, at fair value682,799 684,387 
Receivables:
Premiums from agencies37,713 34,507 
Trade and other63,106 56,054 
Income taxes172 501 
Notes1,531 1,557 
Allowance for uncollectible amounts(5,393)(4,807)
97,129 87,812 
Property and equipment:
Land2,964 2,964 
Buildings22,617 22,598 
Furniture and equipment172,874 168,147 
Accumulated depreciation(144,723)(142,038)
53,732 51,671 
Operating lease assets110,586 106,479 
Title plants, at cost73,113 72,863 
Investments on equity method basis20,537 6,765 
Goodwill480,159 431,477 
Intangible assets, net of amortization38,912 37,382 
Deferred tax assets4,359 4,330 
Other assets50,862 42,048 
2,042,806 1,978,575 
Liabilities
Notes payable125,572 101,773 
Accounts payable and accrued liabilities212,774 225,180 
Operating lease liabilities123,121 119,089 
Estimated title losses509,541 496,275 
Deferred tax liabilities23,900 23,852 
994,908 966,169 
Contingent liabilities and commitments
Stockholders’ equity
Common Stock ($1 par value) and additional paid-in capital
300,978 301,937 
Retained earnings733,973 688,819 
Accumulated other comprehensive income (loss):
Foreign currency translation adjustments(6,371)(8,238)
Net unrealized gains on debt securities investments15,959 25,260 
Treasury stock – 352,161 common shares, at cost
(2,666)(2,666)
Stockholders’ equity attributable to Stewart1,041,873 1,005,112 
Noncontrolling interests6,025 7,294 
Total stockholders’ equity (26,806,025 and 26,728,242 shares outstanding)
1,047,898 1,012,406 
2,042,806 1,978,575 
See notes to condensed consolidated financial statements.
4


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Three Months Ended 
 March 31,
 20212020
 ($000 omitted)
Reconciliation of net income to cash provided by operating activities:
Net income57,122 7,374 
Add (deduct):
Depreciation and amortization6,430 4,231 
Provision for bad debt708 154 
Net realized and unrealized (gains) losses(3,274)11,091 
Amortization of net premium on debt securities investments938 1,144 
Payments for title losses less than (in excess of) provisions12,234 (2,809)
Adjustments for insurance recoveries of title losses(205)173 
(Increase) decrease in receivables – net(3,513)11,542 
Increase in other assets – net(7,869)(3,813)
Decrease in accounts payable and other liabilities – net(20,116)(43,165)
Change in net deferred income taxes2,007 1,495 
Net income from equity method investments(924)(645)
Dividends received from equity method investments764 1,235 
Stock-based compensation expense3,174 887 
Other – net(34)(254)
Cash provided (used) by operating activities47,442 (11,360)
Investing activities:
Proceeds from sales of investments in securities3,051 11,796 
Proceeds from matured investments in debt securities42,836 18,814 
Purchases of investments in securities(47,881)(30,703)
Net sales (purchases) of short-term investments2,648 2,982 
Purchases of property and equipment, and real estate – net(5,721)(4,781)
Cash paid for acquisition of businesses(52,575)(1,449)
Cash paid for acquisition of equity method investment(16,080) 
Other – net131 38 
Cash used by investing activities(73,591)(3,303)
Financing activities:
Proceeds from notes payable178,975 204 
Payments on notes payable(154,910)(8,223)
Distributions to noncontrolling interests(3,844)(3,326)
Repurchases of Common Stock(1,935)(393)
Proceeds from stock option exercises61  
Cash dividends paid(8,840)(7,099)
Purchase of remaining interest in consolidated subsidiary(2,570) 
Other - net(777) 
Cash provided (used) by financing activities6,160 (18,837)
Effects of changes in foreign currency exchange rates69 (3,510)
Change in cash and cash equivalents(19,920)(37,010)
Cash and cash equivalents at beginning of period432,683 330,609 
Cash and cash equivalents at end of period412,763 293,599 
See notes to condensed consolidated financial statements.
5


CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

Common Stock
Additional paid-in capitalRetained earningsAccumulated other comprehensive income (loss)Treasury stockNoncontrolling interestsTotal
($000 omitted)
Three Months Ended March 31, 2021
Balance at December 31, 202027,080 274,857 688,819 17,022 (2,666)7,294 1,012,406 
Net income attributable to Stewart— — 54,236 — — — 54,236 
Dividends on Common Stock ($0.33 per share)
— — (9,082)— — — (9,082)
Stock-based compensation113 3,061 — — — — 3,174 
Stock repurchases(37)(1,898)— — — — (1,935)
Stock option exercises2 59 — — — — 61 
Purchase of remaining interest in consolidated subsidiary— (2,259)— — — (311)(2,570)
Change in net unrealized gains and losses on investments, net of taxes— — — (9,156)— — (9,156)
Reclassification adjustment for realized gains and losses on investments, net of taxes— — — (145)— — (145)
Foreign currency translation adjustments, net of taxes— — — 1,867 — — 1,867 
Net income attributable to noncontrolling interests— — — — — 2,886 2,886 
Distributions to noncontrolling interests— — — — — (3,844)(3,844)
Balance at March 31, 202127,158 273,820 733,973 9,588 (2,666)6,025 1,047,898 
Three Months Ended March 31, 2020
Balance at December 31, 201924,062 164,217 564,392 (2,699)(2,666)6,453 753,759 
Net income attributable to Stewart— — 5,177 — — — 5,177 
Dividends on Common Stock ($0.30 per share)
— — (7,124)— — — (7,124)
Stock-based compensation(20)907 — — — — 887 
Stock repurchases(10)(383)— — — — (393)
Change in net unrealized gains and losses on investments, net of taxes— — — (2,580)— — (2,580)
Reclassification adjustment for realized gains and losses on investments, net of taxes, net of taxes— — — (80)— — (80)
Foreign currency translation adjustments, net of taxes— — — (11,442)— — (11,442)
Net income attributable to noncontrolling interests— — — — — 2,197 2,197 
Distributions to noncontrolling interests— — — — — (3,326)(3,326)
Balance at March 31, 202024,032 164,741 562,445 (16,801)(2,666)5,324 737,075 
See notes to condensed consolidated financial statements.

6


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1

Interim financial statements. The financial information contained in this report for the three months ended March 31, 2021 and 2020, and as of March 31, 2021, 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, 2020 filed with the Securities and Exchange Commission on March 1, 2021 (2020 Form 10-K).

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

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

C. Restrictions on cash and investments. The Company maintains investments in accordance with certain statutory requirements for the funding of statutory premium reserves. Statutory reserve funds are required to be fully funded and invested in high-quality securities and short-term investments. Statutory reserve funds are not available for current claim payments, which must be funded from current operating cash flow. Included in investments in debt and equity securities are statutory reserve funds of approximately $491.3 million and $496.6 million at March 31, 2021 and December 31, 2020, respectively. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $25.6 million and $20.0 million at March 31, 2021 and December 31, 2020, 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.

D. Amendment to line of credit agreement. On March 23, 2021, in relation to its line of credit facility (as disclosed in Note 10 of the 2020 Form 10-K), the Company entered into a second amendment and restated credit agreement (Second Amendment), which increased the available unsecured line of credit commitment from $200 million to $350 million, and extended the maturity of the line of credit to March 2026. Other changes that the Second Amendment made effective were: the addition of new lender banks to the lenders group, the increase of the restricted payment limitation from $40 million to $100 million, the increase of the additional unsecured indebtedness provision from $100 million to $250 million, the removal of the annual capital expenditures limit, and the new definitions of EBITDA and fixed charge coverage ratio. The additional $50 million that the Company can request in addition to the line of credit commitment was not changed.
7


NOTE 2

Revenues. The Company's operating revenues, summarized by type, are as follows:
 Three Months Ended 
 March 31,
 20212020
($000 omitted)
Title insurance premiums:
Direct194,993 138,283 
Agency345,932 242,030 
Escrow fees56,649 33,086 
Appraisal management, abstract and other ancillary services68,620 16,077 
Other revenues15,173 16,298 
681,367 445,774 


NOTE 3

Investments in debt and equity securities. The total fair values of the Company's investments in debt and equity securities are as follows:
 March 31, 2021December 31, 2020
($000 omitted)
Investments in:
Debt securities615,445 631,386 
Equity securities67,354 53,001 
682,799 684,387 

As of March 31, 2021 and December 31, 2020, the net unrealized investment gains relating to investments in equity securities held were $9.9 million and $4.4 million, respectively (refer to Note 5).

The amortized costs and fair values of investments in debt securities are as follows:
 March 31, 2021December 31, 2020
 
Amortized
costs
Fair
values
Amortized
costs
Fair
values
 ($000 omitted)
Municipal42,015 44,089 45,138 47,603 
Corporate276,870 289,159 285,962 305,450 
Foreign269,792 275,585 261,748 271,711 
U.S. Treasury Bonds6,567 6,612 6,564 6,622 
595,244 615,445 599,412 631,386 

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

8


Gross unrealized gains and losses on investments in debt securities are as follows:
 March 31, 2021December 31, 2020
 GainsLossesGainsLosses
 ($000 omitted)
Municipal2,077 3 2,465  
Corporate13,124 835 19,594 106 
Foreign6,572 779 10,024 61 
U.S. Treasury Bonds70 25 82 24 
21,843 1,642 32,165 191 

Debt securities as of March 31, 2021 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 less58,344 59,145 
After one year through five years311,487 321,937 
After five years through ten years194,553 201,439 
After ten years30,860 32,924 
595,244 615,445 

Gross unrealized losses on investments in debt securities and the fair values of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2021, were:
 Less than 12 monthsMore than 12 monthsTotal
 LossesFair valuesLossesFair valuesLossesFair values
 ($000 omitted)
Municipal3 130   3 130 
Corporate835 27,208   835 27,208 
Foreign756 65,568 23 254 779 65,822 
U.S. Treasury Bonds1 109 24 1,022 25 1,131 
1,595 93,015 47 1,276 1,642 94,291 

The number of specific debt investment holdings held in an unrealized loss position as of March 31, 2021 was 47. Of these securities, 3 were in unrealized loss positions for more than 12 months. Since the Company does not intend to sell and will more likely than not maintain each investment security until its maturity or anticipated recovery, and no significant credit risk is deemed to exist, these investments are not considered as other-than-temporarily 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.

9


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, 2020, were:
 Less than 12 monthsMore than 12 monthsTotal
 LossesFair valuesLossesFair valuesLossesFair values
 ($000 omitted)
Municipal      
Corporate106 13,518   106 13,518 
Foreign40 2,912 21 254 61 3,166 
U.S. Treasury Bonds  24 1,022 24 1,022 
146 16,430 45 1,276 191 17,706 


NOTE 4

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

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

As of March 31, 2021, financial instruments measured at fair value on a recurring basis are summarized below:
Level 1Level 2
Fair value
measurements
 ($000 omitted)
Investments in securities:
Debt securities:
Municipal 44,089 44,089 
Corporate 289,159 289,159 
Foreign 275,585 275,585 
U.S. Treasury Bonds 6,612 6,612 
Equity securities67,354  67,354 
67,354 615,445 682,799 
10



As of December 31, 2020, financial instruments measured at fair value on a recurring basis are summarized below:
Level 1Level 2
Fair value
measurements
 ($000 omitted)
Investments in securities:
Debt securities:
Municipal 47,603 47,603 
Corporate 305,450 305,450 
Foreign 271,711 271,711 
U.S. Treasury Bonds 6,622 6,622 
Equity securities53,001  53,001 
53,001 631,386 684,387 

As of March 31, 2021 and December 31, 2020, 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 (losses) gains. Realized and unrealized gains and losses are detailed as follows:
 Three Months Ended 
 March 31,
 20212020
 ($000 omitted)
Realized gains170 153 
Realized losses(2,469)(690)
Net unrealized investment (losses) gains recognized on equity securities still held at end of period5,573 (10,554)
3,274 (11,091)

Net realized losses for the first quarter 2021 included a $2.5 million loss related to a disposal of an equity method investment.

Investment gains and losses recognized related to investments in equity securities are as follows:
Three Months Ended 
 March 31,
20212020
($000 omitted)
Net investment gains (losses) recognized on equity securities during the period5,582 (11,061)
Less: Net realized gains (losses) on equity securities sold during the period9 (507)
Net unrealized investment gains (losses) recognized on equity securities still held at end of period5,573 (10,554)

11


Proceeds from sales of investments in securities are as follows: 
 Three Months Ended 
 March 31,
 20212020
 ($000 omitted)
Proceeds from sales of debt securities115 11,503 
Proceeds from sales of equity securities2,936 293 
Total proceeds from sales of investments in securities3,051 11,796 


NOTE 6

Goodwill and other intangibles. The summary of changes in goodwill is as follows.
TitleAncillary Services and CorporateConsolidated Total
($000 omitted)
Balances at December 31, 2020361,433 70,044 431,477 
Acquisitions32,619 20,202 52,821 
Purchase accounting adjustments(4,397)258 (4,139)
Balances at March 31, 2021389,655 90,504 480,159 

During the first quarter 2021, goodwill acquired in the title segment was related to an acquisition of a title search and support services provider, while goodwill acquired in the ancillary services and corporate segment was related to an acquisition of an online notarization and closing solutions provider. The goodwill balances for both acquisitions were based on the Company's preliminary purchase accounting, which is expected to be finalized in the second half of 2021.


NOTE 7

Estimated title losses. A summary of estimated title losses for the three months ended March 31 is as follows:
20212020
 ($000 omitted)
Balances at January 1496,275 459,053 
Provisions:
Current year28,407 18,521 
Previous policy years366 111 
Total provisions28,773 18,632 
Payments, net of recoveries:
Current year(3,606)(2,214)
Previous policy years(12,933)(19,227)
Total payments, net of recoveries(16,539)(21,441)
Effects of changes in foreign currency exchange rates1,032 (8,662)
Balances at March 31509,541 447,582 
Loss ratios as a percentage of title operating revenues:
Current year provisions4.5 %4.2 %
Total provisions4.6 %4.2 %

12


Provisions in the first quarter 2021 increased compared to the first quarter 2020, primarily as a result of increased title revenues. Claim payments in the first quarter 2021 decreased compared to the same period in 2020, primarily due to lower payments on large and non-large claims relating to prior policy years; while the effect of changes in foreign currency exchange rates for the first quarters 2021 and 2020 were primarily influenced by the appreciation and depreciation, respectively, of the Canadian dollar against the U.S. dollar during those periods.


NOTE 8

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

During the first quarter 2021, the aggregate grant-date fair values of restricted stock unit and stock option awards were $8.3 million (155,000 units with an average grant price per unit of $53.24) and $1.3 million (139,000 options with an average grant price per option of $9.24 and exercise strike price of $53.24). During the first quarter 2020, the aggregate grant-date fair values of restricted stock unit and stock option awards were $2.4 million (60,000 units with an average grant price per unit of $39.76) and $3.4 million (650,000 options with an average grant price per option of $5.32 and exercise strike price of $39.76), respectively.


NOTE 9

Earnings 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 shares and units 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


The calculation of the basic and diluted EPS is as follows:
 Three Months Ended 
 March 31,
 20212020
($000 omitted, except per share)
Numerator:
Net income attributable to Stewart54,236 5,177 
Denominator (000):
Basic average shares outstanding26,736 23,638 
Average number of dilutive shares relating to options103  
Average number of dilutive shares relating to grants of restricted units and shares145 111 
Diluted average shares outstanding26,984 23,749 
Basic earnings per share attributable to Stewart2.03 0.22 
Diluted earnings per share attributable to Stewart2.01 0.22 


NOTE 10

Contingent liabilities and commitments. In the ordinary course of business, the Company guarantees the third-party indebtedness of certain of its consolidated subsidiaries. As of March 31, 2021, the maximum potential future payments on the guarantees are not more than the related notes payable recorded in the condensed consolidated balance sheets. The Company also guarantees the indebtedness related to lease obligations of certain of its consolidated subsidiaries. The maximum future obligations arising from these lease-related guarantees are not more than the Company’s future lease obligations, as presented on the condensed consolidated balance sheets, plus lease operating expenses. As of March 31, 2021, the Company also had unused letters of credit aggregating $4.9 million related to workers’ compensation and other insurance. The Company does not expect to make any payments on these guarantees.


NOTE 11

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

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

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

14


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

NOTE 12

Segment information. The Company reports two operating segments: title and ancillary services and corporate. The title segment provides services needed to transfer title to property in a real estate transaction and includes services such as searching, examining, closing and insuring the condition of the title to the property. In addition, the title segment includes home and personal insurance services and Internal Revenue Code Section 1031 tax-deferred exchanges. The ancillary services and corporate segment includes appraisal management services, search and valuation services, and online notarization and closing solutions, which are the principal offerings of ancillary services, expenses of the parent holding company, and certain other enterprise-wide overhead costs (net of centralized administrative services costs allocated to respective operating businesses).

Selected statement of income information related to these segments is as follows:
 Three Months Ended 
 March 31,
 2021