We currently lease under a non-cancelable operating lease that expires in year 2025 approximately 150,000 square feet of space in an office building in Houston, Texas, which is used for our corporate offices and for offices of several of our subsidiaries. Additionally, we lease offices at approximately 490 locations for title office operations, production, administrative and technology centers. These additional locations include significant leased facilities in New York, New York; Glendale, California; Houston, Texas; Anchorage, Alaska; Denver, Colorado; Las Vegas, Nevada; and St. Louis, Missouri.
During the fourth quarter 2019, we commenced initiatives to reposition Stewart for improved long-term financial performance and to create a more competitive and resilient independent company. Such initiatives included Board, senior executive and managerial changes, as well as office closures and asset impairment. As part of our plan to grow our business and improve margins, we have identified areas where we will make targeted investments to improve our competitive position in each of our businesses and identified improvements needed around our basic execution. We plan to invest in building scale in some key direct markets, manage our agency geographic footprint, build a more attractive commercial business and add scale in our non-title businesses.
For the fourth quarter 2019, we reported break-even results, compared to net income attributable to Stewart of $11.4 million ($0.48 per diluted share) for the fourth quarter 2018. Pretax income before noncontrolling interests for the fourth quarter 2019 was $3.8 million compared to a pretax income before noncontrolling interests of $19.7 million for the fourth quarter 2018.
$8.0 million of net realized and unrealized losses, which were primarily $11.7 million of impairment expenses relating to intangible assets, title plants and other assets, partially offset by $2.2 million of realized gains on sale of securities investments and $1.1 million of net unrealized gains on fair value changes of equity securities investments,
$2.2 million of executive insurance policy settlement expense recorded as part of other operating expenses within the ancillary services and corporate segment,
The segment’s net realized and unrealized losses during the fourth quarter 2019 included $7.1 million of impairment expenses relating to intangible assets, title plants and other assets, partially offset by $2.2 million of realized gains on sale of securities investments and $1.1 million of net unrealized gains on fair value changes of equity securities investments. In comparison, net realized and unrealized losses during the fourth quarter 2018 were primarily related to net unrealized losses on fair value changes of equity securities investments.
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 expense 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. For the years ended December 31, 2019, 2018 and 2017, we recorded approximately $4.5 million, $6.9 million and $5.0 million, respectively, for policy loss reserves relating to escrow losses arising principally from mortgage fraud.
We recognize revenues on title insurance policies written by independent agencies when the policies are reported to us. In addition, where reasonable estimates can be made, we accrue for revenues on policies issued but not reported until after period end. We believe that reasonable estimates can be made when recent and consistent policy issuance information is available. Our estimates are based on historical reporting patterns and other information about our independent agencies. We also consider current trends in our direct operations and in the title industry. In this accrual, we are not estimating future transactions; we are estimating revenues on policies that have already been issued by independent agencies but not yet reported to or received by us. We have consistently followed the same basic method of estimating unreported policy revenues for more than 10 years.
Our accruals for revenues on unreported policies from independent agencies were not material to our consolidated financial statements as of December 31, 2019 and 2018. The differences between the amounts our independent agencies have subsequently reported to us compared to our estimated accruals are substantially offset by any differences arising from prior years’ accruals and have been immaterial relative to consolidated assets and stockholders’ equity during each of the three prior years. We believe our process provides the most reliable estimate of the unreported revenues on policies and appropriately reflects the trends in agency policy activity.
number and value of commercial transactions, which typically yield higher premiums;
A comparison of our consolidated results of operations for 2019 to 2018 and 2018 to 2017 is discussed as follows. Factors contributing to fluctuations in our results of operations are presented in the order of their monetary significance, and we have quantified, when necessary, significant changes. Results from our ancillary services and corporate segment are included in year-to-year discussions and, when relevant, are discussed separately. Our employee costs and certain other operating expenses are sensitive to inflation.
Expense comparisons for the three years ended December 31, 2019 are influenced by the following non-operating charges:
Retention by independent agencies. Amounts retained by independent agencies are based on agreements between the agencies and our title underwriters. Amounts retained by independent agencies, as a percentage of revenues generated by them, averaged 82.3%, 82.4% and 82.4% in 2019, 2018 and 2017, respectively. The average retention percentage may vary from year-to-year 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 above 20%, 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 in 2019 increased $4.7 million, or 1%, compared to 2018, primarily due to increased incentive compensation resulting from higher direct title revenues and the executive severance charges related to the corporate reorganization, which was partially offset by reduced salaries expense driven by a 6% reduction in average employee counts. Consolidated employee costs in 2018 decreased $3.7 million, or approximately 1%, from 2017 primarily as a result of a reduction of 7% in average employee counts related to volume declines in our title and ancillary services operations, partially offset by additional employee costs from title office acquisitions in 2018. As a percentage of total operating revenues, employee costs were 30.2%, 29.8% and 29.3% in 2019, 2018 and 2017, respectively, and excluding the executive severance charges, were 29.9%, 29.7% and 29.2%, respectively.
Other operating expenses. Other operating expenses include costs that follow, to varying degrees, changes in transaction volumes and revenues, costs that fluctuate independently of revenues, and costs that are fixed in nature. Costs that follow, to varying degrees, changes in transaction volumes and revenues include attorney fee splits, bad debt expenses, ancillary services cost of sales expenses, copy supplies, delivery fees, outside search fees, postage, premium taxes and title plant maintenance expenses. Costs that fluctuate independently of revenues include general supplies, litigation defense, business promotion and marketing and travel. Costs that are fixed in nature include attorney and professional fees, third-party outsourcing provider fees, equipment rental, insurance, rent and other occupancy expenses, repairs and maintenance, technology costs, telecommunications and title plant expenses.
In 2019, excluding the charges listed above, costs fixed in nature decreased $6.1 million, or 4%, compared to 2018, primarily due to reduced insurance expenses, professional and consulting fees and telecommunications expenses. Costs that follow, to varying degrees, changes in transaction volumes and revenues remained comparable to the prior year as the decreased outside search expenses resulting from lower ancillary services revenues were offset by increased bad debt expenses and higher premium taxes on higher title revenues. Excluding the charges listed above, costs that fluctuate independently of revenues increased $2.9 million, or 7%, primarily due to increased marketing expenses and litigation-related accruals.
For the year ended December 31, 2019, title losses increased $12.9 million, or 18%, compared to 2018, primarily due to unfavorable loss experience in 2019, resulting in a higher current year policy provisioning rate and increased loss provisions in portions of our non-Canadian international operations, and a $4.0 million prior policy year reserve reduction during 2018.
For the year ended December 31, 2018, title losses decreased $25.0 million, or 26%, compared to 2017, primarily due to favorable loss experience in 2018, which resulted in a lower current year policy provisioning rate and a $4.0 million prior policy year reserve reduction.
Title claims are generally reported within the first six years after policy issuance and the timing of payments on these claims can significantly impact the balance of known claims, since claims, in many cases, may be open for several years before resolution and payment occur. As a result, the estimate of ultimate amount to be paid on any claim may be modified over that time period. As of December 31, 2019 and 2018, our reserve balance was above the actuarial midpoint of total estimated policy loss reserves.
Depreciation and amortization. Depreciation and amortization expense in 2019 decreased $2.4 million, or 10%, compared to the prior year, primarily due to some assets being fully depreciated or amortized. Depreciation and amortization expense in 2018 decreased $0.9 million, or 4%, compared to 2017, primarily due to a lower depreciation expense resulting from reduced purchases of property and equipment, which was partially offset by increased amortization of intangible assets from our 2018 and mid-2017 acquisitions.
Contractual obligations. Our material contractual obligations at December 31, 2019 were:
Our liquidity and capital resources reflect our ability to generate cash flow to meet our obligations to shareholders, customers (payments to satisfy claims on title policies), vendors, employees, lenders and others. As of December 31, 2019, our cash and investments, including amounts reserved pursuant to statutory requirements, aggregated $999.2 million ($476.1 million, net of statutory reserves on cash and investments). Of our total cash and investments at December 31, 2019, $709.4 million ($404.4 million, net of statutory reserves) was held in the United States (U.S.) and the rest internationally, principally in Canada.
Cash held at the parent company totaled $36.8 million at December 31, 2019. As a holding company, the parent company is funded principally by cash from its subsidiaries in the form of dividends, operating and other administrative expense reimbursements and pursuant to intercompany tax sharing agreements. The expense reimbursements are paid in accordance with management agreements, approved by the Texas Department of Insurance (TDI), among us and our subsidiaries. In addition to funding operating expenses, cash held at the parent company is used for dividend payments to common stockholders. To the extent such uses exceed cash available, the parent company is dependent on distributions from Guaranty, its regulated title insurance underwriter. During the year ended December 31, 2019, the parent company received a $50.0 million merger termination fee in relation to the terminated merger agreement with FNF.
We maintain investments in accordance with certain statutory requirements for the funding of statutory premium reserves. Statutory premium reserves are required to be fully funded and invested in high-quality securities and short-term investments. Statutory reserve funds are not available for current claims payments, which must be funded from current operating cash flow. Included in investments in debt and equity securities are statutory reserve funds of approximately $483.4 million and $462.2 million at December 31, 2019 and 2018, respectively. In addition, included within cash and cash equivalents are statutory reserve funds of approximately $39.7 million and $37.7 million at December 31, 2019 and 2018, respectively. Although these cash statutory reserve funds are not restricted or segregated in depository accounts, they are required to be held pursuant to state statutes. If the Company fails to maintain minimum investments or cash and cash equivalents sufficient to meet statutory requirements, the Company may be subject to fines or other penalties, including potential revocation of its business license. As of December 31, 2019, our known claims reserve totaled $67.8 million and our estimate of claims that may be reported in the future, under generally accepted accounting principles, totaled $391.3 million. In addition to this, we had cash and investments (excluding equity method investments) of $324.5 million which are available for underwriter operations, including claims payments.
Net cash provided by operations in 2019 improved by approximately $82.2 million compared to 2018, primarily due to the higher net income, which included the merger termination fee from FNF, partially offset by higher payments on claims. Net cash provided by operations in 2018 decreased by approximately $23.9 million compared to 2017, primarily due to higher payments on accounts payable, lower collection on accounts receivable and lower 2018 net income, partially offset by lower payments on claims.
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, specifically focusing on lowering unit costs of production, which will result in improved margins. Our plans to improve margins also include expansion in certain key markets, increasing scale, additional automation of manual processes, and further consolidation of our various systems and production operations. We are currently investing in the technology necessary to accomplish these goals.
Investing activities. Cash provided or used by investing activities was primarily driven by purchases of investments, capital expenditures and acquisition of subsidiaries, offset by proceeds from matured and sold investments. During 2019, 2018 and 2017, total proceeds from securities investments sold and matured aggregated $99.3 million, $79.1 million and $110.9 million, respectively, while cash used for purchases of securities investments approximated $77.5 million, $43.1 million and $179.7 million, respectively. The higher proceeds in 2019, compared to 2018, were primarily due to increased maturities of securities investments in 2019; while the higher purchases in 2019 were primarily due to our investment of excess funds into government and corporate bonds as we resume our normal investing activity subsequent to the FNF merger termination. The lower purchases and sales of securities investments in 2018, compared to 2017, were primarily the result of the rising interest rate environment in 2018 in which we generally moved our investments to cash equivalents and short term investments, where interest rates are attractive in the current markets, on a risk-adjusted basis.
As of December 31, 2019, the outstanding balance on the line of credit facility was $98.9 million, while the remaining balance of the line of credit available for use was $48.6 million, net of an unused $2.5 million letter of credit. Our debt-to-equity ratio at December 31, 2019, excluding our Section 1031 notes, was approximately 13.6%, below the 20% we have set as our unofficial internal limit on leverage.
We believe we have sufficient liquidity and capital resources to meet the cash needs of our ongoing operations. 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.
Other comprehensive (loss) income. Unrealized gains and losses on available-for-sale securities investments and changes in foreign currency exchange rates are reported net of deferred taxes in accumulated other comprehensive (loss) income, a component of stockholders’ equity, until realized. Beginning in 2018, only fair value changes on available-for-sale debt securities investments are recorded as part of other comprehensive income; while fair value changes on equity securities investments are recognized in net income as part of net realized and unrealized gains (losses). Refer to Notes 1-H and 6 to our audited consolidated financial statements for details.
In 2019, net unrealized investment gains of $15.6 million, net of taxes, which increased our other comprehensive income, were primarily related to increases in the fair values of our overall bond securities portfolio driven by reduced interest rates and credit spreads. The five-year U.S. treasury yield and applicable credit spreads on our investments decreased approximately 80 and 20 basis points, respectively, in 2019 compared to the prior year. Also in 2019, we recorded foreign currency translation gains which increased our other comprehensive income by $6.5 million, net of taxes, which was primarily driven by the appreciation in value of the Canadian dollar and United Kingdom pound against the U.S. dollar in 2019.
The information required to be provided in this item is included in our audited consolidated financial statements, including the Notes thereto, beginning on page of this report, and such information is incorporated in this report by reference.