Overview of Financial Performance

The Company reported a decrease in total revenues of $75.1 million, or 5.1%, in the third quarter of 2024 compared to the same period in 2023. This was primarily due to net investment losses of $311.5 million in the current quarter compared to $163.6 million in the prior year. However, the Company saw increases in direct premiums and escrow fees in the title insurance business of 8.6% and agent premiums of 2.9%.

Revenue and Profit Trends

The title insurance and services segment, which accounts for the majority of the Company’s revenues, saw a 15.4% decrease in total revenues in the third quarter and a 6.2% decrease for the first nine months of 2024 compared to the prior year periods. This was driven by the net investment losses mentioned above, partially offset by increases in direct premiums and escrow fees and agent premiums.

In the home warranty segment, revenues increased 2.5% in the third quarter and 1.4% for the first nine months of 2024 compared to the prior year periods. This was due to an increase in the average price per policy.

The Company’s pretax margins for the title insurance business were (10.1)% in the third quarter and 2.9% for the first nine months of 2024, compared to 10.5% and 9.9% in the respective prior year periods. The home warranty segment had pretax margins of 8.1% and 14.2% in the third quarter and first nine months of 2024, compared to 8.7% and 12.4% in the prior year periods.

Strengths and Weaknesses

A key strength of the Company is its diversified business model, with the title insurance and home warranty segments providing complementary revenue streams. The title insurance business benefits from increases in real estate activity, while the home warranty segment generates more stable revenues from renewals.

However, the Company’s financial performance is heavily dependent on conditions in the real estate and mortgage markets, which can be cyclical and seasonal. Periods of rising interest rates and reduced affordability tend to have an adverse effect on the Company’s revenues. The title insurance business in particular is vulnerable to these market fluctuations.

Another weakness is the Company’s exposure to investment portfolio losses, as evidenced by the significant net investment losses in the current quarter. While the investment portfolio is generally high-quality and liquid, it can be impacted by broader market volatility.

Outlook and Future Prospects

Looking ahead, the Company’s financial outlook appears mixed. According to the Mortgage Bankers Association’s forecast, residential mortgage originations in the U.S. are expected to increase 21.3% in the third quarter of 2024 compared to the prior year. This should provide a boost to the title insurance business, as direct premiums and escrow fees are closely tied to mortgage origination activity.

However, the Company’s investment portfolio rebalancing project resulted in significant realized losses in the current quarter, and the outlook for future investment income and gains is uncertain given ongoing market volatility.

Additionally, the Company faces ongoing regulatory and competitive pressures in the title insurance industry, which can limit its ability to raise prices and maintain profit margins.

Overall, the Company’s diversified business model and strong market position provide some resilience, but its financial performance remains closely linked to the cyclical real estate and mortgage markets as well as the performance of its investment portfolio.

Key Financial Data

The following tables summarize the Company’s key financial data for the three and nine months ended September 30, 2024 and 2023:

Total Revenues by Segment

(dollars in millions)	Q3 2024	Q3 2023	$ Change	% Change	YTD 2024	YTD 2023	$ Change	% Change
Title Insurance and Services	$1,290.3	$1,524.4	$(234.1)	(15.4)%	$4,132.0	$4,403.7	$(271.7)	(6.2)%
Home Warranty	$110.9	$108.2	$2.7	2.5%	$322.9	$318.4	$4.5	1.4%
Corporate and Eliminations	$4.9	$(151.4)	$156.3	103.2%	$(11.9)	$(147.9)	$136.0	92.0%
Total	$1,406.1	$1,481.2	$(75.1)	(5.1)%	$4,443.0	$4,574.2	$(131.2)	(2.9)%

Title Insurance and Services Segment

(dollars in millions)	Q3 2024	Q3 2023	$ Change	% Change	YTD 2024	YTD 2023	$ Change	% Change
Direct premiums and escrow fees	$536.2	$493.7	$42.5	8.6%	$1,472.4	$1,416.1	$56.3	4.0%
Agent premiums	$683.9	$664.5	$19.4	2.9%	$1,864.0	$1,879.6	$(15.6)	(0.8)%
Net investment income	$136.5	$141.7	$(5.2)	(3.7)%	$378.9	$408.2	$(29.3)	(7.2)%
Net investment losses	$(308.0)	$(15.6)	$(292.4)	NM	$(283.1)	$(6.2)	$(276.9)	NM
Pretax (Loss) Income	$(130.3)	$160.3	$(290.6)	(181.3)%	$119.8	$434.2	$(314.4)	(72.4)%
Pretax Margins	(10.1)%	10.5%	(20.6)%	(196.2)%	2.9%	9.9%	(7.0)%	(70.7)%

Home Warranty Segment

(dollars in millions)	Q3 2024	Q3 2023	$ Change	% Change	YTD 2024	YTD 2023	$ Change	% Change
Direct premiums	$103.5	$101.8	$1.7	1.7%	$300.8	$296.9	$3.9	1.3%
Pretax Income	$9.0	$9.4	$(0.4)	(4.3)%	$45.8	$39.6	$6.2	15.7%
Pretax Margins	8.1%	8.7%	(0.6)%	(6.9)%	14.2%	12.4%	1.8%	14.5%

Corporate Segment

(dollars in millions)	Q3 2024	Q3 2023	$ Change	% Change	YTD 2024	YTD 2023	$ Change	% Change
Net investment income (losses)	$9.2	$(3.8)	$13.0	342.1%	$23.6	$11.7	$11.9	101.7%
Net investment losses	$(4.0)	$(147.3)	$143.3	97.3%	$(34.1)	$(158.7)	$124.6	78.5%
Pretax Loss	$(23.0)	$(171.4)	$148.4	86.6%	$(100.0)	$(237.8)	$137.8	57.9%

Conclusion

The Company’s financial performance in the third quarter and first nine months of 2024 was mixed, with the title insurance business facing headwinds from investment losses, while the home warranty segment saw modest growth. The Company’s diversified business model provides some resilience, but its results remain closely tied to the cyclical real estate and mortgage markets as well as the volatility of its investment portfolio. Going forward, the Company will need to navigate these challenges while also addressing ongoing regulatory and competitive pressures in the title insurance industry.