STEWART INFORMATION SERVICES CORP Q3 FY2025 earnings call

• Housing Market Perspective: Rate relief in Q3 with mortgage rates around 6.35%; more confident in market improvement over next 12 months. Housing market becoming friendlier for buyers with growing inventory, builder incentives, and price improvement in MSAs. Existing home sales expected to increase 1%-2% Q3 2025 vs Q3 2024; '26 to see transition to 5 million existing home sales.
• Third Quarter Results: Total revenues grew 19%, adjusted earnings per share grew 40%. Direct operations grew 8%, commercial in direct up 18%. National Commercial Services grew domestic commercial revenues 17% in Q3, 33% YTD. Agency Services revenues up 28% Y/Y. Real Estate Solutions revenues up 21% Y/Y. International revenues up 21%.
• Dividend Increase: Announced increase in annual dividend from $2 per share to $2.10 per share, fifth consecutive year of dividend increase.
• Company Recognition: Recognized as a top workplace by USA Today, Forbes list of America's Best Employers for company culture, and Best Employer for Women in 2025 in business services category.

Title Segment

• Operating revenues grew $107 million or 19%, driven by improved direct and agency title operations. Title pretax income increased $17 million or 38%. Adjusted title pretax income was $61 million, 40% higher than prior year quarter. Adjusted pretax margin improved to 9% vs 7.7% last year.
• Direct title: Domestic commercial revenues improved $12 million or 17% across asset classes (e.g., data centers). Domestic residential average fee per file increased 6% to $3,200. International revenues increased $9 million due to increased volumes and large commercial deals.
• Agency operations: Gross revenues $360 million, up 28%, net agency revenues up $12 million or 25%. Title loss ratio for Q3 was 3% vs 3.8% last year; expected to average 3.5% to 4% over coming period.

Real Estate Solutions Segment

• Total revenues improved $20 million or 21%, primarily driven by credit information and valuation services. Adjusted pretax income slightly higher than prior year quarter. Adjusted pretax margin for Q3 was 11.3%, expecting low teens as relationships mature.

International Operations

• Revenue grew 21% in Q3 2025 vs 2024, due to noncommercial growth of 12% and outsized commercial growth from larger transactions. Focus on broadening geographic presence in Canada and increasing commercial penetration.

• Housing Market: Believes housing market will gradually improve over coming year, with '26 marking transition to normal existing home sales (5 million). Commercial real estate recovery expected to continue into '26 and beyond.
• Title Segment: Expect title losses to average 3.5% to 4% over coming period.
• Real Estate Solutions: Margins expected to be in low teens as relationships mature; growth in services businesses tied to volume will leverage normal business flow for improved margins.
• Interest Income: Sensitivity to short-term rate cuts due to escrow and investment balances, but balances have offset rate cuts so far, with future perspective dependent on rate cut effects and volume growth.

• Forward-looking statements involve risks and uncertainties, including those that could cause actual results to differ materially from projections.
• Interest income variability due to short-term rate cuts, as escrows and investments are affected by rate changes.

Q: Can you talk about the strength in agent premiums, share taking, and commercial pipeline?

A: In res side, 16.5% share shift in targeted states and deepening penetration with existing; commercial grew 40% in agency channel, with focus on geography and better service outside NY. Pipeline for commercial is good, with broad growth by class except office.

Q: How is the investment income line sensitive to rate cuts?

A: Nothing significant, but short-term rate cuts cause variability as escrows and investments are affected, though balances have offset rate cuts so far and future perspective depends on rate cut effects and volume growth