SCHEDULE I

STEWART INFORMATION SERVICES CORPORATION

(Parent Company)

STATEMENTS OF INCOME AND RETAINED EARNINGS



	For the Years Ended December 31,
	2018		2017		2016
	($000 omitted)
Revenues
Investment income	25,000		20,000		20,000
Other income	665		784		1,252
	25,665		20,784		21,252
Expenses
Interest	3,511		3,123		2,726
Other operating expenses, including $276 each year to affiliates	15,174		5,840		7,542
	18,685		8,963		10,268
Income before taxes and income from subsidiaries	6,980		11,821		10,984
Income tax expense (benefit)	126		(776	)	2,928
Income from subsidiaries	40,669		36,062		47,422
Net income	47,523		48,659		55,478

Retained earnings at beginning of year	491,698		471,788		455,519
Cash dividends on Common Stock	(28,565	)	(28,749	)	(27,840	)
Cash paid on Class B Common Shares conversion	—		—		(12,000	)
Cumulative effect adjustments on adoption of new accounting pronouncements	3,592		—		631
Retained earnings at end of year	514,248		491,698		471,788

See accompanying notes to financial statement information.

See accompanying Report of Independent Registered Public Accounting Firm.

STEWART INFORMATION SERVICES CORPORATION

(Parent Company)

BALANCE SHEETS



	As of December 31,
	2018		2017
	($000 omitted)
Assets
Cash and cash equivalents	24,823		11,622
Receivables:
Notes - due from subsidiaries	6,609		26,316
Receivables from affiliates	7		930
Allowance for uncollectible amounts	—		(1	)
	6,616		27,245
Property and equipment, at cost:
Furniture and equipment	2,662		2,733
Accumulated depreciation	(2,449	)	(2,517	)
	213		216
Title plant, at cost	48		48
Investments in subsidiaries, on an equity-method basis	737,273		731,975
Goodwill	8,470		8,470
Other assets	17,421		18,274
	794,864		797,850
Liabilities
Notes payable	98,875		98,875
Accounts payable and other liabilities	22,464		26,764
	121,339		125,639
Contingent liabilities and commitments	—		—
Stockholders’ equity
Common Stock – $1 par, authorized 50,000,000; issued 24,071,508 and 24,071,683; outstanding 23,719,347 and 23,719,522, respectively	24,072		24,072
Additional paid-in capital	162,642		159,954
Retained earnings	514,248		491,698
Accumulated other comprehensive (loss) income (AOCI):
Foreign currency translation adjustments	(19,505	)	(8,373	)
Unrealized investment gains	(5,266	)	7,526
Treasury stock – 352,161 common shares, at cost	(2,666	)	(2,666	)
Total stockholders’ equity	673,525		672,211
	794,864		797,850

See accompanying notes to financial statement information.

See accompanying Report of Independent Registered Public Accounting Firm.

STEWART INFORMATION SERVICES CORPORATION

(Parent Company)

STATEMENTS OF CASH FLOWS



	For the Years Ended December 31,
	2018		2017		2016
	($000 omitted)
Reconciliation of net income to cash provided by operating activities:
Net income	47,523		48,659		55,478
Add (deduct):
Depreciation	4		5		69
Decrease (increase) in receivables – net	922		(81	)	245
Decrease (increase) in other assets – net	853		(1,576	)	359
(Decrease) increase in payables and accrued liabilities – net	(4,476	)	563		(496	)
Income from subsidiaries	(40,669	)	(36,062	)	(47,421	)
Other – net	(5,124	)	1,705		(6,731	)
Cash (used) provided by operating activities	(967	)	13,213		1,503
Investing activities:
Dividends from subsidiary	25,000		20,000		20,000
Purchase of property and equipment –net	—		—		(22	)
Collections on notes receivables	24,900		23,375		27,500
Increases in notes receivables	(5,193	)	(16,000	)	—
Contributions to a subsidiary	—		(7,184	)	—
Cash provided by investing activities	44,707		20,191		47,478
Financing activities:
Proceeds from notes payable	—		16,000		20,000
Payments on notes payable	—		(10,000	)	(25,125	)
Dividends paid	(28,263	)	(28,135	)	(27,840	)
Cash paid on Class B Common Shares conversion	—		—		(12,000	)
Repurchases of Common Stock	(1,175	)	(727	)	(1,053	)
Purchase of remaining interest of consolidated subsidiary	(1,101	)	(1,810	)	(991	)
Other – net	—		—		86
Cash used by financing activities	(30,539	)	(24,672	)	(46,923	)
Increase in cash and cash equivalents	13,201		8,732		2,058
Cash and cash equivalents at beginning of year	11,622		2,890		832
Cash and cash equivalents at end of year	24,823		11,622		2,890
Supplemental information:
Income taxes paid	—		—		1
Interest paid	3,849		3,128		2,716

See accompanying notes to financial statement information.

See accompanying Report of Independent Registered Public Accounting Firm.

STEWART INFORMATION SERVICES CORPORATION

(Parent Company)

NOTES TO FINANCIAL STATEMENT INFORMATION

The Parent Company operates as a holding company, transacting substantially all of its business through its subsidiaries. Its consolidated financial statements are included in Part II, Item 8 of Form 10-K. The Parent Company financial statements should be read in conjunction with the aforementioned consolidated financial statements and notes thereto and financial statement schedules.

Merger agreement. During March 2018, the Parent Company entered into an agreement and plan of merger with Fidelity National Financial, Inc. (FNF), in which the outstanding shares of the Parent Company will be exchanged for a combination of cash and shares of FNF, and the Parent Company and its subsidiaries will be merged into a subsidiary of FNF (the Mergers). The Mergers are subject to obtaining all federal and state regulatory approvals and the satisfaction of other customary closing conditions. For details on the Mergers, refer to Note 1 to the audited consolidated financial statements.

Investment income. During 2018, 2017 and 2016, Stewart Title Guaranty Company paid to the Parent Company dividends of $25.0 million, $20.0 million and $20.0 million, respectively.

Other operating expenses. Other operating expenses included $12.7 million and $2.9 million of expenses related to the Mergers and strategic alternatives review in 2018 and 2017, respectively. 2016 other operating expenses included $3.4 million of expenses related to the Class B Common Stock exchange agreement and shareholder activism.

Stockholders' equity. In 2018, the Parent Company adopted two new accounting standards which resulted in a reclassification of $1.0 million of net tax expense and $4.6 million of net unrealized investment gains from AOCI to retained earnings. In 2016, the Parent Company's stockholders approved the Class B Exchange Agreement, in which all outstanding shares of Class B Common Stock were retired in exchange for shares of Common Stock plus $12.0 million in cash. Also at the beginning of 2016, the Parent Company reclassified $0.6 million of unrecognized excess tax benefits related to share-based awards from additional paid-in capital to retained earnings as a result of adopting a new accounting standard. Refer to Note 12 to the audited consolidated financial statements for details for these equity transactions.

Income taxes. The Parent Company consistently generates losses, exclusive of dividends or equity earnings from its subsidiaries, and is not expected to generate future income without its subsidiaries. On December 22, 2017, the United States (U.S.) enacted the Tax Cuts and Jobs Act (the 2017 Act), which revised the U.S. corporate income tax regime by, among other things, lowering the corporate tax rate from 35% to 21% effective on January 1, 2018. As a result of the 2017 Act, the Parent Company recorded an income tax benefit of $1.2 million related to the remeasurement of its deferred tax assets and liabilities at December 31, 2017.