Financial Data and Key Metrics Changes - For Q4 2025, the company reported a GAAP net loss attributable to common stockholders of $27.4 million, or -$0.58 per basic common share, which includes a provision for credit losses of $14.4 million, or -$0.30 per share, and an impairment loss in the Miami Beach REO asset of $6.8 million, or -$0.14 per share [15] - The book value at December 31 was $7.29 per common share, a decline of $0.65 per share from Q3, primarily due to the provision for credit losses and impairment loss on REO [15] - The aggregate CECL reserve at December 31 was approximately $148 million, up from $134 million in the previous quarter, reflecting an increase in specific reserves on collateral-dependent loans and worsening macroeconomic forecasts [16] Business Line Data and Key Metrics Changes - The total loan portfolio commitments at year-end were $1.8 billion, with an outstanding principal balance of $1.7 billion and about $77 million of future fundings, accounting for only about 4% of total commitments [9] - The realized loan portfolio yield for Q4 was 6.7%, which would have been 8% excluding nonaccrual loans [9] Market Data and Key Metrics Changes - The commercial real estate industry experienced strong momentum in 2025, with increased capital availability and improved fundamentals across many markets and property types [5] - Lending volume expanded to a wider range of property types and markets, benefiting the CMBS market and strengthening CLO issuance [5][6] Company Strategy and Development Direction - The company aims to reduce higher-cost debt and focus on asset resolutions, with plans to begin regrowing the portfolio in the latter half of 2026 [7][8] - The strategy includes reallocating capital in the portfolio and recycling into new originations as a high priority [8] Management's Comments on Operating Environment and Future Outlook - Management noted that the market momentum from 2025 has continued into early 2026, setting the stage for potentially stronger transaction activity across property types [7] - The company expects to see upgrades and downgrades in credit ratings, with ongoing risks of future losses embedded in their reserves [25][26] Other Important Information - The company had an active year of loan repayments and resolutions totaling about $469 million during 2025, with $45 million of loan repayments in Q4 [10] - The company is focused on resolving remaining rated loans, particularly in the office sector, and is optimistic about the overall performance of the portfolio [26][30] Q&A Session Summary Question: How is the company thinking about the economics of new origination versus returning capital to shareholders? - The company plans to continue resolving loans and decreasing leverage until it starts originating again later in the year [19] Question: What is the current reserve position and likelihood for further reserve build? - The company updates its CECL process quarterly, with the current reserve reflecting the latest economic forecasts, and believes it is appropriately reserved for collateral-dependent loans [21][22] Question: Where may book value per share trough in this cycle? - Management acknowledged the risk of future losses and noted that the majority of the portfolio is performing well, with ongoing resolutions expected [25][26] Question: What are the expectations for the multifamily property type? - The company feels positive about the multifamily sector overall, despite some downgrades, and expects a recovery trend in the second half of the year [31][32] Question: What is the visibility on scheduled maturities? - The company expects the portfolio to decrease through mid-2026 before stabilizing and regrowing, with clear communication with borrowers regarding expectations for loan repayments [37][39]

Financial Data and Key Metrics Changes - In 2025, the company generated over $750 million in free cash flow, which was used to reduce debt by over $300 million, repurchase $136 million of stock, and invest more than $250 million in acquisitions [19][20] - The company achieved a new record of 19 stages per day for a single completion crew in Q4 2025, with an average of over 14 stages per day for the year, representing an 8% increase from 2024 [19] - The drilling team averaged under 5 drilling days per 10,000 feet, which is 4% faster than the 2024 average [19] Business Line Data and Key Metrics Changes - The HG Energy acquisition added 385,000 net acres and over 400 drilling locations, extending the core inventory life by 5 years [5][6] - The transaction is expected to lower the cost structure by nearly 10%, which will further reduce break-even prices [7] Market Data and Key Metrics Changes - Propane inventories were higher than market expectations due to trade tensions and operational issues, but demand remained strong, with days of supply trending within the 5-year range [8][9] - NGL supply growth is expected to slow down due to lower oil prices, decreasing from 328,000 barrels a day in 2024 to 131,000 barrels a day in 2026 [10] Company Strategy and Development Direction - The company aims to expand its core Marcellus position and increase dry gas exposure to capture demand from LNG exports and regional power plants [5][6] - The company is focused on reducing cash costs and expanding margins while maintaining a flexible capital program that allows for opportunistic investments [20][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate through challenging weather conditions without experiencing shut-in volumes, highlighting operational resilience [4] - The company is well-positioned to capitalize on significant natural gas demand growth, particularly from LNG exports and regional power demand [24][25] Other Important Information - The company issued its inaugural investment-grade bonds, providing substantial flexibility alongside strong free cash flow generation [5] - The hedge program is designed to protect downside risks while maintaining exposure to higher natural gas prices, with approximately 40% of 2026 natural gas volumes hedged [23] Q&A Session Summary Question: Growth capital and in-basin demand - Management indicated that growth capital is flexible and can be adjusted based on gas price assumptions, with the ability to defer projects if necessary [28][30] Question: Free cash flow usage and debt targets - Management stated there are no specific debt targets, but they are positioned to be opportunistic in share buybacks while also focusing on debt reduction [32][33] Question: Synergies from the HG deal - Management noted that synergies from the HG acquisition are better than expected, with improvements in cost structure and local gas demand [36][37] Question: Production ramp and acquired assets - Management clarified that the production ramp is as expected, with a forecast of 4.1 Bcfe a day for 2026, increasing to 4.3 Bcfe a day in 2027 [43] Question: NGL pricing outlook - Management explained that international pricing is driving forecasts for C3 prices, with domestic prices expected to stabilize as export infrastructure improves [44][47] Question: Winter gas realizations - Management confirmed that they participated in favorable pricing during the winter, with a significant portion of sales tied to daily pricing [51] Question: Cost structure changes - Management indicated a potential $0.25 improvement in cost structure, with variable components affecting overall costs [58] Question: Power supply deals - Management highlighted ongoing discussions for gas supply to utilities, with increasing demand for gas-fired power generation [62] Question: Firm transport position management - Management emphasized the optimization of their firm transport portfolio, allowing for flexibility in managing costs and maximizing margins [66] Question: Growth options and inventory visibility - Management expressed confidence in their ability to grow production efficiently, leveraging their extensive inventory and market position [92][93]

Financial Data and Key Metrics Changes - In 2025, the company generated over $750 million in free cash flow, which was used to reduce debt by over $300 million, repurchase $136 million of stock, and invest more than $250 million in acquisitions [20][21] - The company achieved a new record of 19 stages per day for a single completion crew in Q4 2025, with an average of over 14 stages per day for the full year, representing an 8% increase from 2024 [20] - The drilling team averaged under 5 drilling days per 10,000 feet, which is 4% faster than the 2024 average [20] Business Line Data and Key Metrics Changes - The HG Energy acquisition added 385,000 net acres and over 400 drilling locations, extending the core inventory life by 5 years [6] - The transaction is expected to lower the company's cost structure by nearly 10%, which will further reduce peer-leading break-even prices [7] Market Data and Key Metrics Changes - The NGL market faced headwinds in 2025, with propane inventories higher than expected due to trade tensions and operational issues at export terminals [8][9] - Despite these challenges, demand for propane remained strong, with storage levels expected to return to normal by the end of 2026 [11] - Natural gas demand was robust, with residential and commercial demand averaging nearly 42 BCF per day during winter, resulting in a significant increase compared to the five-year average [13][15] Company Strategy and Development Direction - The company aims to expand its core Marcellus position and increase dry gas exposure to capture demand from LNG exports and regional power generation [6][18] - The strategic initiatives include adding hedges to lock in attractive free cash flow yields and reducing cash costs to expand margins [5][7] - The company is positioned to capitalize on significant natural gas demand growth expected from LNG and regional power demand [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate through challenging weather conditions without experiencing shut-in volumes [4] - The company anticipates that higher LNG demand and reduced storage levels in Europe will support robust U.S. LNG exports [16] - Management highlighted the flexibility of their capital program, allowing for adjustments based on market conditions and gas prices [29][30] Other Important Information - The company issued its inaugural investment-grade bonds, providing substantial flexibility alongside free cash flow generation [5] - The acquisition of HG Energy is expected to enhance the company's competitive advantage in the region due to increased production and improved cost structure [18][24] Q&A Session Summary Question: Growth capital and in-basin demand - Management indicated that maintaining a steady state program with three rigs and two completion crews would result in growth, with flexibility to defer capital expenditures based on gas prices [28][30] Question: Free cash flow usage and debt targets - Management stated there are no specific debt targets, but they are positioned to be opportunistic in share buybacks while also focusing on debt reduction [32][33] Question: Synergies from the HG deal - Management reported that synergies from the HG acquisition are better than expected, with improvements in cost structure and local gas demand [36][37] Question: Production ramp and acquired assets - Management clarified that the production ramp is as expected, with a forecast of 4.1 Bcfe per day for 2026 and potential growth to 4.5 Bcfe per day in 2027 [43][44] Question: NGL pricing and export capacity - Management noted that international pricing is driving forecasts for C3 prices, with ongoing debottlenecking in the Gulf Coast expected to improve export capacity [46][47] Question: Winter gas realizations and hedging - Management confirmed that they participated in favorable pricing during winter and are considering layering in incremental hedges for 2027 [52][54] Question: Cost structure changes - Management indicated a potential $0.25 improvement in cost structure, with variable components affecting costs based on natural gas prices [60][61] Question: Power supply deals and demand - Management highlighted ongoing conversations for gas supply to utilities and data centers, indicating strong demand growth in the region [64][102]

Financial Data and Key Metrics Changes - Full year 2025 revenue was $3.2 billion, reflecting an 8.7% year-over-year growth, primarily driven by the acquisition of Parker and strong international expansion [20] - Adjusted EBITDA for the full year was $913 million, an increase of $31 million compared to the prior year [20] - Fourth quarter adjusted EBITDA totaled $222 million, exceeding previous expectations, with an EBITDA margin of 27.8%, down 110 basis points sequentially [21][22] Business Line Data and Key Metrics Changes - International drilling revenue was $424 million, a sequential growth of 4.1%, with EBITDA for the segment increasing to $131 million [22][23] - U.S. drilling revenue for the fourth quarter was $241 million, reflecting a 3.7% sequential decline, while EBITDA totaled $93 million, a decrease of 1% [24][25] - The drilling solutions segment generated revenue of $108 million in the fourth quarter, with EBITDA of $41 million, resulting in an EBITDA margin of 38.3% [28] Market Data and Key Metrics Changes - The average daily rig count in the Lower 48 increased to 62 rigs by the end of the fourth quarter, with a current count of 66 rigs [10][26] - The gas-directed industry rig count in the Lower 48 increased by over 20% in 2025, with Nabors' gas rig count increasing by 50% [10] - International drilling average rig count increased to 93.3 rigs, exceeding expectations by 2.3 rigs [23] Company Strategy and Development Direction - The company aims to focus on performance excellence in the Lower 48 rig market and expand in the international drilling market, leveraging multi-year contracts and innovative technology [6][7] - The integration of Parker Wellbore is progressing well, with expectations to generate at least $70 million in adjusted EBITDA from retained Parker businesses in 2026 [36] - The company is committed to reducing debt, having reduced net debt by over $554 million, the lowest level since 2005 [18][44] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the second half of 2026 due to market uncertainties, but remains confident in customer momentum and operational performance [51][53] - The outlook for natural gas remains positive, with expectations for increased LNG exports and domestic consumption [9] - Management highlighted the potential for increased oil activity in Venezuela and ongoing expansion plans in the Middle East and North Africa [10][46] Other Important Information - The company generated adjusted free cash flow of $132 million in the fourth quarter, significantly exceeding the revised guidance of approximately $80 million [39] - Capital expenditures for the fourth quarter were $158 million, lower than previous guidance, with expectations for 2026 capital expenditures to be in the range of $730 million to $760 million [37][38] Q&A Session Summary Question: Lower 48 outlook and rig count increase - Management noted that the rig count is currently at 66, with a shift towards public operators and an increase in gas rig count, indicating favorable operator economics [49][50] Question: Confidence in Saudi Arabia's rig activation timelines - Management expressed confidence in the activation of suspended rigs and new builds in Saudi Arabia, with a positive outlook for the market driven by Aramco's actions [60][62] Question: Upstream spending in Mexico and additional rigs - Management confirmed ongoing discussions for additional rigs in Mexico, focusing on making current rigs profitable before expanding further [66]

Financial Data and Key Metrics Changes - In Q4 2025, the company generated GAAP EPS of $0.26 and FFO per share of $0.51, with adjusted EPS increasing by 69% to $0.27 compared to Q4 2024 [16][17] - Adjusted EBITDA rose by 25% to $92.5 million from $74.2 million in the same quarter last year [16][17] - The average daily population across all facilities managed was 56,380 individuals, up from 50,202 in the year-ago quarter, reflecting increased demand for services [12][13] Business Line Data and Key Metrics Changes - Revenue from federal partners increased by 49% in Q4 2025 compared to the prior year, with ICE revenue more than doubling to $124.4 million [10][17] - Revenue from state partners grew by 5%, driven by new contracts in Montana and population increases in Georgia and Colorado [11][17] - Total occupancy for safety and community segments was 78.1%, up 2.6 points year-over-year [12] Market Data and Key Metrics Changes - Nationwide ICE detention populations reached historical highs of around 69,900 individuals, an increase of nearly 10,000 from the end of Q3 2025 [7] - The company managed approximately 23% of total ICE populations as of December 31, 2025, compared to 25% at year-end 2024 [17] Company Strategy and Development Direction - The company aims to stabilize occupancy in previously idle facilities by mid-2026, expecting an annual revenue run rate of approximately $2.5 billion and an EBITDA run rate of around $450 million [6][24] - The company is actively exploring additional opportunities at the state level and has engaged in discussions with several states for additional bed capacity [9][10] - The company plans to prioritize cash flow and share repurchases while maintaining balance sheet flexibility for strategic investments [14][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to meet future demand with substantial capacity available, including 5 idle facilities with approximately 7,000 beds [8][10] - The company remains optimistic about the future, citing historic funding levels for border security and immigration detention through 2029 [25] - Management acknowledged the slower-than-expected pace of ICE detentions but noted significant increases in operational capacity since the previous administration [94] Other Important Information - The company amended its bank credit facility to increase the revolving credit capacity from $275 million to $575 million, enhancing balance sheet flexibility [21] - The company repurchased 5.3 million shares in Q4 2025, totaling 11.2 million shares for the year, representing 10.2% of outstanding shares at the beginning of the year [22][23] Q&A Session Summary Question: Were there any new reactivations in Q4? - Management indicated that no new contracts were entered into in Q4, attributing this to the ebb and flow of demand rather than a lack of potential demand [33][34] Question: What is the expectation for safety margins as facilities are activated? - Management confirmed that margins are expected to improve as facilities reach stabilized occupancy, with current margins around 24% excluding newly activated facilities [39] Question: How is the current contracting environment with ICE? - Management stated that they are in constant dialogue with ICE and are well-positioned to support their needs, emphasizing that recent enforcement actions should not be interpreted as a national mandate change [48][50] Question: What are the intentions regarding share buybacks? - Management confirmed plans to continue share repurchases, especially given the current stock price being below historical multiples [52][53] Question: What is the potential upside if ICE contracts for all available beds? - Management estimated that filling 13,000 beds could lead to approximately $593 million in incremental revenue and $136 million in incremental EBITDA [92]

Financial Data and Key Metrics Changes - The company generated adjusted EPS of $1.99, a 47% improvement from the prior year [5] - GAAP earnings were $2.05 per diluted share, with adjusted earnings including one-time benefits of $28 million or $0.20 per diluted share [12] - Adjusted revenue in the title segment was $1.9 billion, up 14% compared to the same quarter of 2024 [13] - Personnel costs increased by 11% to $581 million, primarily due to incentive compensation [16] - The effective tax rate was 25.7%, higher than the normalized rate of 24% [20] Business Line Data and Key Metrics Changes - Commercial revenue grew by 35% to $339 million, driven by higher average revenue per order and transaction volumes [13][14] - Closed orders increased by 10% in the commercial segment, while average revenue per order rose by 22% [14] - Residential purchase revenue decreased by 4%, with closed orders down by 7% [14] - Refinance revenue increased by 47%, driven by a 44% increase in closed orders [14] Market Data and Key Metrics Changes - Existing home sales are approximately 4 million units, below the normalized level of 5.5 million units [6] - Open purchase orders were down 7% in the fourth quarter, indicating continued weakness in purchase revenue [10] - Refinance open orders were up 72% in January, suggesting a positive trend for the first quarter [10] Company Strategy and Development Direction - The company aims to be the best title and escrow company in the industry, focusing on modern AI-powered products to improve customer experience and operational efficiency [11] - The launch of Endpoint and Sequoia AI is expected to provide a competitive advantage and improve margins over time [8][36] - The company plans to roll out Endpoint nationally over the next two years and expand Sequoia AI capabilities [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, expecting growth across major revenue drivers despite uncertainty [9][10] - The company anticipates a record revenue year in the commercial segment, with a strong pipeline [9] - Management noted that the rate lock-in effect is expected to fade, allowing for improved affordability in the housing market [10] Other Important Information - The company has gained 90 basis points of organic market share over the last 12 months [10] - The bank subsidiary has quickly grown 1031 exchange deposits from $94 million to over $300 million [9] - The company is focused on investing in technology and maintaining a strong balance sheet while returning capital to shareholders [60] Q&A Session Summary Question: Can you help us think about the potential improvement over 2025 in commercial? - Management is optimistic about 2026, noting broad-based strength and a strong pipeline, but specific growth percentages are uncertain [24] Question: What is the contribution from data centers to commercial premiums? - Data centers accounted for roughly 10% of premiums, with significant growth expected [25][26] Question: How should we think about margin impacts from Sequoia and Endpoint? - The margin drag is expected to gradually alleviate as investments in modern platforms increase [36] Question: What are the primary drivers of the adjusted pretax margin expansion? - The higher margin is driven by commercial tailwinds and effective expense management [50] Question: What are the capital allocation priorities heading into 2026? - The first priority is investing in core business technology, followed by acquisitions and returning capital to shareholders [56][58] Question: What is the expected impact of the Texas title insurance rate reduction? - The rate change is expected to lower total revenue and net operating revenue in the title segment by about 50 basis points [86] Question: What is the guidance for investment income for Q1 or the full year? - Investment income for 2026 is expected to be roughly flat compared to 2025 [93]

Financial Data and Key Metrics Changes - For the full year 2025, revenue was $3.2 billion, reflecting an 8.7% year-over-year growth, primarily driven by the acquisition of Parker and strong international expansion [20] - Adjusted EBITDA for the full year was $913 million, an increase of $31 million compared to the prior year [20] - In the fourth quarter, consolidated revenue was $798 million, a decrease of $21 million or 2.5% sequentially, impacted by the divestiture of Quail Tools [20][21] - Adjusted EBITDA for the fourth quarter totaled $222 million, representing an EBITDA margin of 27.8%, down 110 basis points sequentially [21] Business Line Data and Key Metrics Changes - International drilling revenue was $424 million, a growth of $17 million or 4.1% sequentially, with EBITDA for the segment increasing to $131 million [22] - U.S. drilling revenue for the fourth quarter was $241 million, reflecting a 3.7% sequential decline, while EBITDA totaled $93 million, a decrease of 1% [24][25] - The Drilling Solutions segment generated revenue of $108 million in the fourth quarter, with EBITDA of $41 million, resulting in an EBITDA margin of 38.3% [28] Market Data and Key Metrics Changes - The average daily rig margin in international drilling was $17,630, a decrease of $301 sequentially, primarily due to activity disruptions in Colombia and maintenance days in Saudi Arabia [23] - In the Lower 48, the gas-directed industry rig count increased by over 20% in 2025, with Nabors' gas rig count increasing by 50% [10] - The Baker Hughes weekly Lower 48 land rig count decreased by three rigs from the end of September through December, indicating stability in the market [13] Company Strategy and Development Direction - The company aims to focus on performance excellence in the Lower 48 rig market and expand in the international drilling market, leveraging multi-year contracts and innovative technology [6][7] - The integration of Parker Wellbore is progressing well, with expectations to generate at least $70 million in Adjusted EBITDA in 2026 from retained Parker businesses [36] - The company is committed to reducing debt, having reduced net debt by over $554 million, the lowest level since 2005, which is expected to enhance free cash flow [18][44] Management's Comments on Operating Environment and Future Outlook - The management expressed caution regarding the second half of 2026 due to external market uncertainties, including oil supply exceeding demand and geopolitical tensions [8][81] - The outlook for 2026 envisions EBITDA performance matching last year's, with expected increases in several operations offsetting the impact of the Quail divestiture [18] - The company remains optimistic about the long-term picture for gas and is well-positioned to capitalize on market opportunities [51] Other Important Information - The company generated adjusted free cash flow of $132 million in the fourth quarter, significantly exceeding the revised guidance of approximately $80 million [39] - Capital expenditures for the fourth quarter were $158 million, lower than previous guidance, with expectations for 2026 capital expenditures to be in the range of $730 million to $760 million [37][38] Q&A Session Summary Question: Lower 48 outlook and increasing rig count drivers - The company is currently running 66 rigs, with a shift towards public operators and an increase in gas rig count to 20% [49] - The trend towards longer laterals is significant, with a notable increase in three- and four-mile laterals, positioning the company well in the market [50] Question: Updates on Saudi Arabia operations - The company is confident in the timelines for reactivating suspended rigs and deploying new builds, with a positive outlook for the labor market [60][62] Question: Activity in Mexico and additional rigs - The company is focused on making existing rigs profitable and is optimistic about the market's improvement and payment mechanisms [66] Question: Capital expenditures and SANAD program - The SANAD new build program is expected to have a capital expenditure of around $360 million to $380 million for 2026, with adjustments made for previous delays [67][68]

Financial Data and Key Metrics Changes - The company reported full year 2025 core earnings of $1.50 per share, which is up 10% from 2024, marking the fourth consecutive year of double-digit core EPS growth [5][20] - The 2026 core EPS guidance range has been raised to $1.64-$1.66, implying a 10% EPS growth at the midpoint [5][6] - The company achieved a 43% reduction in serious injuries and fatalities compared to 2024, and a 30% improvement in serious preventable motor vehicle incident rate [6][7] Business Line Data and Key Metrics Changes - Operating and maintenance savings amounted to $0.20 for the year, with $0.09 redeployed back into the system for customer benefits [20] - The company has cut application intake time for new connections by 40%, from an average of 76 days to 45 days [20] - The company has seen significant growth in projects moving into the final engineering stage, now standing at almost 3.6 gigawatts, more than doubling from the previous quarter [18] Market Data and Key Metrics Changes - The company delivered its fourth reduction in electric rates in two years, with bundled residential electric rates now 11% lower than in January 2024 [8][15] - The average monthly bill for typical customers is about $20 less than before, indicating a positive impact on affordability [8][15] - The company reported an 18% EV penetration in the final quarter of the year, indicating strong demand for electric vehicle load [50] Company Strategy and Development Direction - The company aims for a growth outlook of 9%+ annually from 2027 through 2030, focusing on safety, reliability, and affordability [6][10] - The company is committed to addressing California's wildfire challenges and has initiated a new venture, Emberpoint, to integrate next-generation wildfire solutions [12][13] - The company plans to file for approximately 5,000 miles of additional undergrounding over 10 years, starting in 2028, as part of its wildfire mitigation strategy [14][15] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of legislative outcomes related to wildfire risk and affordability, indicating that the current model is not sustainable for customers [27][36] - The company is focused on ensuring that the risk associated with the current legal construct is quantifiable and manageable for both customers and investors [36][39] - Management expressed confidence in the ongoing legislative process and the potential for positive outcomes that would benefit both customers and investors [36][81] Other Important Information - The company has a $73 billion 5-year capital plan, with no new common equity required through 2030 [21][22] - The company has doubled its annual share dividend to $0.20 for 2026, with expectations for consistent increases in the next two years [22] - The company reduced non-fuel O&M by 2.5% in 2025, exceeding its target for four consecutive years [24] Q&A Session Summary Question: What is the company's view on the CEA process and legislative timing? - Management indicated that the legislative effort is complex and emphasized the importance of getting it right, expressing hope for timely resolution [33][34] Question: How would the company prioritize capital allocation if progress on legislation stalls? - Management stated that all aspects of the plan would be on the table if progress halts, emphasizing the need for an attractive legislative construct to sustain valuation [37][40] Question: What are the expectations regarding the Kincade and Dixie cost recovery proceedings? - Management outlined the recovery of over $1 billion in claims related to the Kincade and Dixie wildfires, emphasizing the prudency of their actions [90][91]

Financial Data and Key Metrics Changes - Underlying net income reached CAD 1.1 billion, contributing to underlying earnings per share growth of 17% year-over-year and an underlying return on equity of 19.1% [5][15] - Total company reported net income was CAD 722 million, 34% lower than underlying net income, primarily due to market-related impacts [17] - The LICAT ratio ended at 157%, demonstrating a strong capital position, up 3 percentage points from the previous quarter [5][18] Business Line Data and Key Metrics Changes - SLC Management achieved CAD 242 million in underlying net income, exceeding its investor day target of CAD 235 million [6][21] - In Canada, gross sales were up 46% year-over-year, driven by strong results in Group Retirement Services and individual mutual funds [7][24] - Group Health and Protection underlying earnings increased by 16% year-over-year, while individual protection underlying net income rose by 17% [16][25] Market Data and Key Metrics Changes - Asia saw a 50% year-over-year growth in protection sales, with standout performances in Hong Kong and Indonesia [8][29] - U.S. Medical Stop-Loss business reported robust sales growth of 58% [9][25] - MFS experienced net outflows of approximately CAD 18.2 billion, consistent with industry trends, but had positive net flows in fixed income and ETF products [19][20] Company Strategy and Development Direction - The company is focused on a balanced and diversified growth strategy, with a commitment to digital transformation and enhancing client experiences [10][11] - The introduction of a management equity plan for SLC aims to motivate and retain talent in the alternative asset management space [6][21] - The company plans to complete the buyouts of BGO and Crescent Capital in the first half of 2026, further strengthening its alternative asset management platform [22][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the business mix and disciplined execution of long-term strategies, despite a complex operating environment [14][30] - The company anticipates continued strong earnings growth aligned with medium-term objectives, with underlying EPS growth at 12% and underlying ROE at 18.2% [11][29] - Management highlighted the importance of maintaining a strong culture and commitment to client impact as key differentiators [11][13] Other Important Information - The company achieved a full-year underlying earnings growth of 9% and concluded 2025 with over CAD 1.6 trillion in overall assets under management [12][13] - The company launched a fully digital group retirement solution, Sun Life Essentials, to capture market share in the small to medium business segment [10] Q&A Session Summary Question: Regarding stop-loss experience and future improvements - Management noted a modest improvement in the loss ratio and expressed confidence heading into 2026 [33][36] Question: On pricing increases in stop-loss - Management confirmed a 17% average price increase on renewal business, which aligns with target margins [40][42] Question: Capital deployment strategy and buybacks - Management emphasized a disciplined approach to capital deployment, prioritizing organic growth and completing private asset affiliate purchases before resuming share buybacks [49][50] Question: Strategy for growth in the dental market - Management highlighted a strong distribution footprint and growth in the commercial dental segment, expecting continued expansion [60][61] Question: Future growth expectations in Asia - Management anticipates moderation in growth rates but remains optimistic about performance in Hong Kong and other markets like Indonesia [69]

Financial Data and Key Metrics Changes - The company generated adjusted EPS of $1.99, a 47% improvement from the prior year [5] - GAAP earnings were $2.05 per diluted share, with adjusted earnings including one-time benefits of $28 million or $0.20 per diluted share [12] - Adjusted revenue in the title segment was $1.9 billion, up 14% compared to the same quarter of 2024 [13] - Personnel costs increased by 11% to $581 million, primarily due to incentive compensation [16] Business Line Data and Key Metrics Changes - Commercial revenue grew by 35% to $339 million, driven by higher average revenue per order and transaction volumes [13][14] - Closed orders increased by 10% year-over-year, while average revenue per order rose by 22% to a record $18,600 per closing [14] - Residential purchase revenue decreased by 4%, reflecting a 7% decline in closed orders [14] - Refinance revenue increased by 47%, driven by a 44% increase in closed orders [14] Market Data and Key Metrics Changes - Existing home sales are running at approximately 4 million units, below the normalized level of 5.5 million units [6] - Open purchase orders were down 7% in the fourth quarter, indicating continued weakness in purchase revenue [10] - Refinance open orders were up 72% in January, suggesting a positive trend for the first quarter [10] Company Strategy and Development Direction - The company aims to be the best title and escrow company in the industry, focusing on modern AI-powered products to improve customer experience and operational efficiency [11] - The launch of the Endpoint platform and the Sequoia title production engine are key strategic initiatives, with plans for national rollout over the next two years [8][36] - The company is also focused on enhancing its competitive advantage through data assets and adjacent businesses [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, expecting growth across major revenue drivers: commercial, purchase, and refinance [9] - The company anticipates a record revenue year for commercial, with a strong pipeline despite uncertainty [9] - Management noted that the rate lock-in effect is expected to fade, allowing for improved affordability in many markets [10] Other Important Information - The company ended the year with $94 million in 1031 exchange deposits, which have grown to over $300 million [9] - The effective tax rate for the quarter was 25.7%, higher than the normalized rate of 24% due to higher income from non-insurance businesses [20] Q&A Session Summary Question: Potential improvement in commercial revenue for 2026 - Management is optimistic about commercial revenue growth in 2026, citing strong momentum and a robust pipeline, but specific growth percentages are uncertain [24] Question: Contribution from data centers to commercial premiums - Data centers accounted for roughly 10% of commercial premiums, with significant growth expected [25][26] Question: Impact of Sequoia and Endpoint on margins - Management indicated that margin drag from legacy platforms will gradually alleviate as investments in modern platforms increase [34] Question: Drivers of adjusted pretax margin expansion - The higher margin is attributed to commercial tailwinds, effective expense management, and a favorable revenue mix [50] Question: Texas title insurance rate reduction impact - The rate change is expected to lower total revenue and net operating revenue in the title segment by about 50 basis points [86]