Stewart Information Services Corporation

11/06/2025 | Press release | Distributed by Public on 11/06/2025 07:34

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
MANAGEMENT'S OVERVIEW
Third quarter 2025 overview. We reported net income attributable to Stewart of $44.3 million ($1.55 per diluted share) for the third quarter 2025, compared to net income of $30.1 million ($1.07 per diluted share) for the third quarter 2024. Pretax incomebefore noncontrolling interests for the third quarter 2025 was $61.2 million compared to pretax income before noncontrolling interests of $42.8 million for the prior year quarter. Consolidated operating revenues in the third quarter 2025 were $776.5 million, which was an improvement of $126.9 million, or 20%, compared to the prior year quarter. The third quarter 2025 results included $5.6 million of pretax net realized and unrealized gains, primarily driven by $4.3 million of net unrealized gains on fair value changes of equity securities investments and a $1.2 million realized gain on a sale of real property. Third quarter 2024 results included $4.7 million of pretax net realized and unrealized gains primarily related to net unrealized gains on fair value changes of equity securities investments.
Summary results of the title segment are as follows ($ in millions, except pretax margin):
For the Three Months
Ended September 30,
2025 2024 % Change
Operating revenues 659.9 553.3 19 %
Investment income 14.8 13.6 9 %
Net realized and unrealized gains
4.2 4.8 (11) %
Pretax income 62.0 45.0 38 %
Pretax margin 9.1 % 7.9 %
Title segment operating revenues in the third quarter 2025 increased $106.6 million (19%), driven by revenue improvement of $29.0 million (11%) and $77.6 million (28%) from our direct and agency title operations, respectively, compared to the third quarter 2024. Total segment operating expenses increased $90.3 million (17%) compared to the prior year quarter, primarily due to $65.5 million (28%) increased agency retention expenses, consistent with the gross agency revenue increase, and $27.0 million (10%) higher combined employee costs and other operating expenses, primarily due to increased incentive compensation, outside search and service expenses and premium taxes consistent with higher title revenues, and higher salaries expense related to increased employee count. As a percentage of operating revenues, total employee costs and other operating expenses for the title segment improved to 44% in the third quarter 2025 compared to 47% in the third quarter 2024, primarily due to increased title operating revenues.
Title loss expense in the third quarter 2025 decreased by $1.7 million (8%) compared to the prior year quarter, primarily driven by our continued overall favorable claims experience. As a percentage of title operating revenues, the title loss expense improved to 3.0% in the third quarter 2025 compared to 3.8% in the third quarter 2024.
Investment income improved 9% in the third quarter 2025 compared to the prior year quarter, primarily driven by higher earned interest income from eligible escrow balances. Net realized and unrealized gains presented above were primarily related to net unrealized gains on fair value changes of equity securities investments.
Summary results of the real estate solutions segment are as follows ($ in millions, except pretax margin):
For the Three Months
Ended September 30,
2025 2024 % Change
Total revenues
116.6 96.4 21 %
Pretax income 7.3 7.4 (1) %
Pretax margin 6.2 % 7.7 %
The real estate solutions segment's operating revenues improved by $20.3 million (21%) in the third quarter 2025 compared to the third quarter 2024, primarily driven by our credit information and valuation services businesses and a recently acquired real estate information services provider. Combined employee costs and other operating expenses in the third quarter 2025 increased $19.8 million (24%), primarily resulting from increased costs of services related to higher revenues and higher employee costs supporting revenue growth.
In regard to the corporate segment, pretax results were driven by net expenses attributable to corporate operations, which totaled $9.5 million for both the third quarters 2025 and 2024, while the segment recorded net realized gains of $1.4 million in the third quarter 2025, primarily resulting from a sale of real property.
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 nine months ended September 30, 2025, we made no material changes to our critical accounting estimates as previously disclosed in Management's Discussion and Analysis in the 2024 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 services, online notarization and closing services, and capital markets search services. The corporate segment includes our parent holding company and centralized support services departments.
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 and related state regulations;
•foreign currency exchange rates;
•market share;
•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;
•acquisitions or divestitures of businesses;
•volume of distressed property transactions; and
•seasonality and/or weather.
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, title premium rates for refinance orders are lower compared to a similarly priced purchase transaction.
RESULTS OF OPERATIONS
Comparisons of our results of operations for the three and nine months ended September 30, 2025 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, interest rates 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 September 30, 2025. We also use information from our direct operations.
Operating environment.Existing home sales in September 2025 were approximately 4.06 million units (seasonally-adjusted basis), a slight improvement of 4% and 3% compared to September 2024 and June 2025, respectively, which was primarily due to gradually falling mortgage rates and improving housing affordability. According to NAR, the September 2025 median existing home price of $415,200 marked the 27th consecutive month of year-over-year median price increases, but it was 4% lower than June 2025 as home prices declined during the third quarter 2025. As of September 2025, the unsold home inventory in the U.S. was equivalent to 1.55 million units, or 14% higher compared to last year. In regard tonew residential construction, U.S. housing starts (seasonally-adjusted) as of September 2025 were 6% lower compared to last year, while newly-issued building permits as of September 2025 declined by 11% compared to last year.
Based on averaged estimates by Fannie Mae and MBA, total U.S. single family mortgage originations in the third quarter 2025 were $518 billion, or an improvement of 14% compared to the third quarter 2024, with total refinancing and purchasing transactions growing 46% and 6%, respectively, during the third quarter 2025. The 30-year fixed mortgage interest rate averaged 6.6% during the third quarter 2025 which was comparable to 6.5% from the third quarter 2024, but improved from 6.8% in the second quarter 2025. It is expected that the 30-year fixed mortgage interest rate will average around 6.4% in the fourth quarter 2025. Fourth quarter 2025 existing and new homes sales (seasonally-adjusted) are forecast to improve 3% and 5%, respectively, while fourth quarter total loan originations dollars are anticipated to increase 2% compared to the third quarter 2025, resulting from 32% higher refinancing transactions and 9% lower purchase transactions.
Title revenues. Direct title revenue information is presented below:
Three Months Ended September 30,
Nine Months Ended September 30,
2025 2024 Change
% Chg
2025 2024 Change % Chg
(in $ millions)
($ in millions)
Non-commercial
Domestic 176.8 168.2 8.6 5 % 491.0 472.9 18.1 4 %
International 32.5 29.0 3.5 12 % 84.0 76.3 7.7 10 %
209.3 197.2 12.1 6 % 575.0 549.2 25.8 5 %
Commercial:
Domestic 79.1 67.4 11.7 17 % 223.1 168.1 55.0 33 %
International 11.3 6.1 5.2 85 % 24.5 19.5 5.0 26 %
90.4 73.5 16.9 23 % 247.6 187.6 60.0 32 %
Total direct title revenues 299.7 270.7 29.0 11 % 822.6 736.8 85.8 12 %
Domestic commercial revenues improved 17% and 33% in the third quarter and first nine months of 2025, respectively, compared to the same periods of 2024, primarily due to increased commercial closed transactions in 2025 across all asset sectors, including data center, energy, mixed-use and retail. The average domestic commercial fee per file in the third quarter 2025 was $17,700, which was comparable to the prior year quarter, while the average fee per file in the first nine months of 2025 improved 11% to $16,800, compared to the same period in 2024, primarily driven by large data center and energy transaction sizes.
Domestic non-commercial revenues in the third quarter 2025 increased 5%, primarily driven by improved purchase and refinancing closed transactions compared to the third quarter 2024, while these revenues improved 4% in the first nine months of 2025, compared to the same period in 2024, primarily due to increased residential refinancing and real estate investors transactions. Higher average residential fee per file also contributed to improved domestic non-commercial revenues and was $3,200 and $3,100 for the third quarter and first nine months of 2025, respectively, compared to $3,000 for both the same periods in 2024.
Total international revenues improved $8.7 million, or 25%, and $12.7 million, or 13%, in the third quarter and first nine months of 2025, respectively, primarily driven by large commercial transactions and overall increased volumes compared to the same periods in 2024.
Orders information for the three and nine months ended September 30 is as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
Change
% Chg**
2025
2024
Change % Chg
Opened Orders:
Commercial 4,520 3,665 855 23 % 13,374 10,884 2,490 23 %
Purchase 50,661 49,458 1,203 2 % 149,704 152,539 (2,835) (2) %
Refinance 22,399 20,920 1,479 7 % 59,697 54,022 5,675 11 %
Other*
9,823 13,421 (3,598) (27) % 33,217 36,075 (2,858) (8) %
Total 87,403 87,464 (61) - % 255,992 253,520 2,472 1 %
Closed Orders:
Commercial 4,478 3,794 684 18 % 13,283 11,149 2,134 19 %
Purchase 36,209 35,590 619 2 % 98,875 103,166 (4,291) (4) %
Refinance 12,778 11,766 1,012 9 % 34,841 31,097 3,744 12 %
Other*
5,847 8,225 (2,378) (29) % 24,580 23,921 659 3 %
Total 59,312 59,375 (63) - % 171,579 169,333 2,246 1 %
*Other orders are primarily related to real estate investor and reverse mortgage transactions.
** Percent changes are rounded up to whole percentages.
Gross revenues from independent agency operations increased $77.6 million, or 28%, and $164.9 million, or 22%, in the third quarter and first nine months of 2025, respectively, primarily due to improved volumes in our key agency states and increased commercial transactions compared to the same periods in 2024. Agency revenues, net of retention, increased $12.1 million, or 25%, and $26.0 million, or 20%, in the third quarter and first nine months of 2025, respectively, in line with the gross agency revenue increases. Refer further to the "Retention by agencies" discussion under Expenses below.
Real estate solutions revenues.Real estate solutions revenues improved $20.3 million, or 21%, in the third quarter 2025 and $54.8 million, or 20%, in the first nine months of 2025, primarily driven by our credit information and valuation services businesses compared to the same periods in 2024. The third quarter 2025 revenues included $3.6 million from a recently acquired real estate information services provider.
Investment income. Investment income in the third quarter and first nine months of 2025 increased $1.2 million, or 9%, and $2.9 million, or 7%, respectively, compared to the same periods in 2024, primarily driven by higher interest income from eligible escrow balances and increased dividend income from our cost-basis investments in 2025.
Net realized and unrealized gains.Refer to Note 5to the condensed consolidated financial statements.
Expenses.An analysis of expenses is shown below:
Three Months Ended September 30,
Nine Months Ended September 30,
2025 2024 Change* % Chg 2025 2024 Change* % Chg
(in $ millions)
($ in millions)
Amounts retained by agencies 299.5 234.0 65.5 28 % 773.0 634.1 138.9 22 %
As a % of agency title revenues
83.2 % 82.8 % 83.2 % 83.0 %
Employee costs 211.2 193.9 17.4 9 % 605.2 546.0 59.3 11 %
As a % of operating revenues 27.2 % 29.8 % 29.1 % 30.8 %
Other operating expenses 185.2 155.6 29.5 19 % 519.6 444.9 74.7 17 %
As a % of operating revenues 23.8 % 24.0 % 25.0 % 25.1 %
Title losses and related claims 19.5 21.3 (1.7) (8) % 58.7 59.8 (1.1) (2) %
As a % of title revenues 3.0 % 3.8 % 3.4 % 4.0 %
*May not foot due to rounding.
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 83.2% in both the third quarter and first nine months of 2025, compared to 82.8% and 83.0% in the third quarter and first nine months of 2024, respectively, primarily as a result of increased 2025 revenues from states with relatively higher retention rates. 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 higher, 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.
Employee costs. Consolidated employee costs increased $17.4 million, or 9%, and $59.3 million, or 11%, in the third quarter and first nine months of 2025, respectively, compared to the same periods in 2024, primarily driven by higher salaries and employee benefits expenses primarily resulting from increased average employee counts (which increased 9% and 5%, respectively) and higher incentive compensation consistent with overall improved revenues. Employee costs in the title segment increased $15.4 million, or 9%, and $53.7 million, or 11%, in the third quarter and first nine months of 2025, respectively, while employee costs in the real estate solutions segment increased $2.0 million, or 14%, and $5.4 million, or 13%, in the third quarter 2025 and first nine months of 2025, respectively, primarily driven by volume growth in both segments.
Total employee costs, as a percentage of total operating revenues, improved to 27.2% and 29.1% in the third quarter and first nine months of 2025, respectively, compared to 29.8% and 30.8% in the respective periods in 2024, primarily driven by higher 2025 operating revenues. During the third quarter and first nine months of 2025, we had an average of approximately 7,400 and 7,100 employees, respectively, compared to 6,800 and 6,700 in the third quarter and first nine months of 2024, respectively. Average cost per employee in the third quarter 2025 was comparable to the prior year quarter, while average cost per employee increased 5% in the first nine months of 2025 primarily due to increased incentive compensation expense compared to the same period in 2024.
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 and telecommunications expenses. Variable costs include third-party service and appraiser expenses related to real estate solutions operations, title 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 increased $29.5 million, or 19%, in the third quarter 2025 and $74.7 million, or 17%, in the first nine months of 2025, compared to the same periods in 2024. Total variable costs in the third quarter and first nine months of 2025 increased $23.9 million and $64.7 million (both 24%), respectively, primarily due to higher third-party service and appraiser expenses and title outside search fees related to increased operating revenues, primarily from our real estate solutions and commercial services operations. Total costs that are primarily fixed in nature increased $2.4 million, or 5%, and $4.8 million, or 4%, third quarter and first nine months of 2025, respectively, primarily due to higher technology costs and third-party consulting expenses compared to the same period in 2024. Independent costs increased $3.2 million, or 25%, and $5.2 million, or 14%, in the third quarter and first nine months of 2025, respectively, primarily due to higher travel, business promotion and litigation defense expenses, partially offset by lower office closure costs compared to the same periods in 2024.
As a percentage of total operating revenues, consolidated other operating expenses in the third quarter and first nine months of 2025 slightly improved to 23.8% and 25.0%, respectively, compared to 24.0% and 25.1% in the same periods in 2024.
Title losses.Provisions for title losses, as a percentage of title operating revenues, improved to 3.0% and 3.4% for the third quarter and first nine months of 2025, respectively, compared to 3.8% and 4.0% in the same periods in 2024, while total title loss expense in the third quarter and first nine months of 2025 decreased by $1.7 million (or 8%) and $1.1 million (or 2%), respectively, primarily as a result of our overall favorable claims experience, which was partially offset by increased title revenues in 2025. The title loss ratio in any given quarter can be significantly influenced by changes in large claims incurred, escrow losses and adjustments to reserves for existing large claims.
The composition of title policy loss expense is as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
2025 2024 Change % Chg 2025 2024 Change % Chg
(in $ millions)
($ in millions)
Provisions - known claims:
Current year 2.8 4.2 (1.4) (33) % 7.7 9.8 (2.1) (21) %
Prior policy years 18.2 9.0 9.2 102 % 47.7 51.4 (3.7) (7) %
21.0 13.2 7.8 59 % 55.4 61.2 (5.8) (9) %
Provisions - IBNR
Current year 15.9 18.0 (2.1) (12) % 49.4 50.2 (0.8) (2) %
Prior policy years 0.8 (0.9) 1.7 (189) % 1.6 (0.2) 1.8 (900) %
16.7 17.1 (0.4) (2) % 51.0 50.0 1.0 2 %
Transferred from IBNR to known claims (18.2) (9.0) (9.2) (102) % (47.7) (51.4) 3.7 (7) %
Total provisions 19.5 21.3 (1.7) (8) % 58.7 59.8 (1.1) (2) %
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 $7.8 million, or 59%, in the third quarter 2025 and decreased $5.8 million, or 9%, in the first nine months of 2025 compared to the same periods in 2024, primarily as a result of activity on existing large and non-large claims relating to prior policy years. Current year IBNR provisions decreased in the third quarter and first nine months of 2025, primarily due to overall favorable claims experience, while prior policy years IBNR provisions increased in the third quarter and first nine months of 2025, primarily as a result of recoveries recorded in the same periods in 2024.As a percentage of title operating revenues, provisions - IBNR for the current policy year were 2.4% and 2.8% for the third quarter and firstnine months of 2025, respectively, compared to 3.3% for both periods in 2024.
Cash claim payments increased $1.5 million, or 8%, in the third quarter 2025 compared to the prior year quarter, primarily due to timing of payments on non-large claims, while cash claim payments decreased $13.0 million, or 19%, in the first nine months of 2025 compared to the same period in 2024, primarily due to lower payments on large and non-large claims related to prior policy years during 2025. 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. There were no material escrow losses for both the three and nine-month periods ended September 30, 2025 and 2024.
Total title policy loss reserve balances are as follows:
September 30, 2025 December 31, 2024
(in $ millions)
Known claims 66.5 66.9
IBNR 453.9 444.6
Total estimated title losses 520.4 511.5
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. Total depreciation and amortization expenses in the third quarter and first nine months of 2025 were comparable to the same periods in 2024. This was primarily due to the higher fixed asset depreciation expense related to new internal systems placed into operations in 2025 and increased acquisition intangible amortization expense driven by a business acquisition in the third quarter 2025. These were both offset by the lower depreciation and amortization expenses resulting from several assets becoming fully depreciated or amortized in 2025.
Income taxes.Our effective tax rates (based on income before taxes and after deducting income attributable to noncontrolling interests) of 22.7% and 23.7% in the third quarter and first nine months of 2025, respectively, were lower compared to 23.3% and 26.2% in the same periods in 2024, primarily due to discrete income tax benefits recognized in the third quarter 2025 related to higher utilization of foreign income tax and research and development credits.
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 September 30, 2025, our total cash and investments, including amounts reserved pursuant to statutory requirements, aggregated $928.0 million, of which $491.4 million ($254.4 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 $37.3 million at September 30, 2025) 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 September 30, 2025 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.
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 $526.4 million and $535.5 million at September 30, 2025 and December 31, 2024, respectively. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $7.8 million and $9.5 million at September 30, 2025 and December 31, 2024, respectively. As of September 30, 2025, our known claims reserve totaled $66.5 million and our estimate of claims that may be reported in the future, under generally accepted accounting principles, totaled $453.9 million. In addition to this, we had cash and investments (at amortized cost and excluding equity method investments) of $288.0 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 $173.0 million as of December 31, 2024) 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 nine months ended September 30, 2025 and 2024, Guaranty paid dividends of $50.0 million and $30.0 million, respectively, to the parent company.
Effective March 31, 2025, Stewart Title Insurance Company (STIC) was merged into Guaranty, primarily to streamline our underwriting operations. Prior to the merger, STIC, our second largest underwriter, was a wholly-owned subsidiary of Guaranty and was domiciled in the state of New York. This merger contributed to the decrease of our total statutory reserve funds at September 30, 2025 compared to December 31, 2024.
As the parent company conducts no operations apart from its wholly-owned subsidiaries, the discussion below focuses on consolidated cash flows.
Nine Months Ended September 30,
2025 2024
(in $ millions)
Net cash provided by operating activities
116.1 67.7
Net cash used by investing activities (92.0) (71.6)
Net cash used by financing activities (54.7) (45.7)
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 provided by operations improved to $116.1 million during the first nine months of 2025, compared to net cash provided by operations of $67.7 million during the same period in 2024, primarily driven by the higher net income and lower claims payments in 2025. 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. Cash used and provided by investing activities is primarily related to proceeds from matured and sold investments, purchases of investments, capital expenditures and acquisition of businesses. During the first nine months of 2025 and 2024, total proceeds from securities investments sold and matured were $112.3 million and $113.1 million, respectively, while cash used for purchases of securities investments was $100.6 million and $99.2 million, respectively. Additionally, cash paid for cost-basis and other investments was $1.8 million and $31.1 million during the first nine months of 2025 and 2024, respectively.
During the first nine months of 2025 and 2024, we used $46.2 million and $28.1 million, respectively, of cash for expenditures related to property and equipment and other long-lived assets, while we used net cash of $38.6 million and $14.4 million, respectively, for acquisitions of businesses and intangible assets. 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 $446.1 million and $1.48 billion, respectively, as of September 30, 2025. As disclosed in Note 1-D to our condensed consolidated financial statements, we recently renewed and increased our line of credit facility, which was unused at the date of this report. At September 30, 2025, our debt-to-equity and debt-to-capitalization ratios, excluding our Section 1031 tax-deferred property exchange notes, were approximately 30% and 23%, respectively, which were better than 32% and 24%, respectively, at December 31, 2024.
During the first nine months of 2025, we paid total dividends of $42.6 million ($1.53 per common share), compared to total dividends paid of $40.0 million ($1.45 per common share) during the same period in 2024.
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 elevated 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 10to the condensed consolidated financial statements.
Other comprehensive income (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 nine months of 2025, net unrealized investment gains of $9.7 million, net of taxes, which increased our other comprehensive income, were primarily related to net increases in the fair values of our foreign and corporate bond securities investments. These increases were primarily due to lower interest rates during the first nine months of 2025. During the first nine months of 2024, net unrealized investment gains of $11.8 million, net of taxes, which increased our other comprehensive income, were primarily related to net increases in the fair values of our foreign and corporate bond securities investments, primarily influenced by the Federal Reserve's reduction of interest rates during the third quarter 2024.
Changes in foreign currency spot exchange rates (primarily related to our Canadian and United Kingdom operations) resulted in other comprehensive income, net of taxes, of $9.2 million in the first nine months of 2025 and other comprehensive loss, net of taxes, of $0.9 million during the first nine months of 2024. During the first nine months of 2025, the Canadian dollar and British pound both appreciated relative to the U.S. dollar, while during the same period in 2024, the effect of the British pound's appreciation were more than offset by the depreciation of the Canadian dollar relative to the U.S. dollar.
Off-balance sheet arrangements. We do not have any material source of liquidity or financing that involves off-balance sheet arrangements. 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 2024 Form 10-K.
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, including economic changes that may result from new or increased tariffs, trade restrictions, prolonged federal government shutdowns or geopolitical tensions;
•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;
•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;
•our ability to manage risks associated with potential cybersecurity or other privacy or data security breaches;
•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 2024 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.
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