$1.7 million of executive severance and retention expenses recorded in employee costs in the title and ancillary services and corporate segments,
$5.4 million of net realized losses, primarily realized losses on the sale of assets related to certain ancillary services business lines, and
During November 2017, we announced that our Board formed a strategic committee to actively assess a full range of strategic alternatives available to Stewart. The strategic alternatives review continues and while there is no timeframe for its conclusion, its completion is of the highest priority. Given the ongoing review, there can be no assurance that this process will result in any particular outcome.
Total title segment revenues for the fourth quarter 2017 were slightly higher than the prior year quarter, while pretax income declined $11.1 million for the fourth quarter 2017 compared to the fourth quarter 2016. The lower pretax income was primarily due to increased employee costs related to our investment in stabilizing and growing target markets, a lower agency remittance rate and slightly higher title loss expense as a percent of title revenues. Also included in the segment’s results for the fourth quarter 2017, as mentioned above, are approximately $3.5 million of office closure costs and $1.0 million related to acquisition integration costs.
Non-commercial domestic revenues include revenues from purchase transactions and centralized title operations (processing primarily refinancing and default title orders), which decreased 7% and 33%, respectively, in the fourth quarter 2017 compared to the prior year. Total commercial revenues improved 23% from the prior year quarter, driven by domestic strength across multiple geographies and an increased contribution from our international operations. Total international title revenues increased 14% in the fourth quarter 2017 compared to the prior year quarter driven by higher commercial revenues and stronger foreign exchange rates against the U.S. dollar, partially offset by lower non-commercial transaction volume.
Gross revenues from independent agency operations in the fourth quarter 2017 increased 1% compared to the fourth quarter 2016. The independent agency remittance rate decreased to 17.2% in the fourth quarter 2017 from 18.2% in the prior year quarter as a result of the geographic mix of our agency business (decreased revenues in higher-remitting states and increased revenues in lower-remitting states); revenues, net of agency retention, decreased 4% in the fourth quarter 2017 compared to the prior year quarter.
Provisions for known claims relate primarily to prior policy years as claims are not typically reported until several years after policies are issued. Provisions - Incurred But Not Reported (IBNR) are estimates of claims expected to be incurred over the next 20 years; therefore, it is not unusual or unexpected to experience changes to those estimated provisions for both current and prior policy years as additional loss experience on policy years is obtained. This loss experience may result in changes to our estimate of total ultimate losses expected (i.e., the IBNR policy loss reserve). Current year provisions - IBNR are recorded on policies issued in the current year as a percentage of premiums realized (provisioning rate). As claims become known, provisions are reclassified from IBNR to known claims. Adjustments relating to large claims (those individually in excess of $1.0 million) may impact provisions either for known claims or for IBNR.
Operations. Our primary business is title insurance and settlement-related services. We close transactions and issue title policies on homes, commercial and other real properties located in all 50 states, the District of Columbia and international markets through policy-issuing offices, agencies and centralized title services centers. Our ancillary services and corporate segment includes our parent holding company expenses and certain enterprise-wide overhead costs, along with our remaining ancillary services operations, principally appraisal and valuation services.
government or regulatory initiatives, including tax incentives and the implementation of the new integrated disclosure requirements;
Premiums are determined in part by the values of the transactions we handle. To the extent inflation or market conditions cause increases in the prices of homes and other real estate, premium revenues are also increased. Conversely, falling home prices cause premium revenues to decline. As an overall guideline, a 5% increase in median home prices results in an approximate 3.7% increase in title premiums. Home price changes may override the seasonal nature of the title insurance business. Historically, our first quarter is the least active in terms of title insurance revenues as home buying is generally depressed during winter months. Our second and third quarters are the most active as the summer is the traditional home buying season, and while commercial transaction closings are skewed to the end of the year, individually large commercial transactions can occur any time of year.
Revenues from direct title operations in 2017 decreased $31.9 million, or 4%, compared to 2016 primarily as a result of overall declines in refinancing, commercial and purchase orders closed, partially offset by higher international revenues. Non-commercial domestic revenues include revenues from purchase transactions and centralized title operations (processing primarily refinancing and default title orders) which decreased 7% and 26%, respectively, in 2017 compared to the prior year, primarily as a result of reduced purchase and refinancing orders closed. Total commercial revenues improved $18.3 million, or 9%, in 2017 compared to 2016, primarily driven by a higher domestic commercial fee per file and increased input from our international operations. Total international revenues improved $12.6 million, or 11%, in 2017 compared to 2016 due to higher commercial revenues and transaction volume growth from our United Kingdom and Canada operations.
Revenues from direct title operations in 2016 decreased $2.8 million compared to 2015 primarily due to the 5% decline in closed orders, attributable to commercial and refinancing orders, partially offset by an improvement in international revenues. International revenues (including foreign-sourced commercial revenues of $19.0 million) increased $9.1 million, or 9%, in 2016 compared to 2015, primarily due to higher transaction volume from our Canadian operations, partially offset by the weakening of the British pound and Canadian dollar against the U.S. dollar. Total commercial revenues in 2016 decreased $2.4 million, or 1%, compared to 2015 consistent with the trend of our commercial orders closed.
Gross revenues from independent agency operations increased $6.6 million, or approximately 1%, in 2017 compared to 2016 and increased $18.5 million, or 2%, in 2016 compared to 2015. The 2017 gross revenue improvement was driven by increases, primarily from Michigan, California, Minnesota, Ohio, Colorado and Arizona, partially offset by declines in Massachusetts, Florida, Texas and New York. The 2016 gross revenues increase resulted from increased revenues, primarily from Texas, Michigan, Washington and Florida, partially offset by declines in New York, California and New Jersey. Compared to the prior year, the 2017 net agency revenues (net of agency retention) decreased $4.5 million, or 3%, primarily due to the lower average agency remittance rate; while the 2016 net agency revenues increased $2.0 million, or 1%, compared to 2015, driven by the increased gross revenues, partially offset by a slight decline in the average agency remittance rate in 2016. Refer further to the "Retention by agencies" discussion under Expenses below.
Ancillary services revenues. Ancillary services revenues decreased $28.4 million, or 34%, in 2017 compared to 2016 and also decreased $45.7 million, or 35%, in 2016 compared to 2015. The revenue decline in 2017 was primarily due to our divestitures of the loan file review, quality control services and government services lines of business at the end of 2016; while the revenue decline in 2016 was primarily due to decreased demand and lower pricing within our delinquent loan servicing activities, which was discontinued at the end of the first quarter 2016 as a result of the the industry-wide decline in inventory of defaulted and distressed loans following the housing market recovery. Beginning in 2017, the principal offerings of ancillary services are search and valuation services, total revenues of which were $50.8 million in 2017 compared to $52.5 million in 2016.
In 2016, realized investment and other losses - net included $3.4 million of realized losses related to the exit of a service offering, and $3.3 million of realized losses from sale of certain businesses within ancillary services operations, partially offset by $4.0 million of net realized gains from the sale of investments available-for-sale and $1.2 million of realized gain on a cost-basis investment transaction.
In 2015, realized investment and other losses - net included realized losses of $2.7 million relating to other-than-temporary impairment of investment in equity securities available-for-sale, $1.8 million impairment of other intangible assets and $1.4 million relating to office closure costs, partially offset by realized gains of $2.4 million from the sale of debt and equity investments available-for-sale and $1.5 million from the sale of office buildings.
Expense comparisons for the three years ended December 31, 2017 are influenced by the following net charges:
Employee costs in the title segment decreased $10.3 million, or 2%, in 2017 compared to 2016, due to reduced salaries and incentive compensation as a result of reductions in the average number of employees, primarily in direct operations as a result of the staff departures discussed above, and in centralized title operations as a result of volume declines. However, title segment employee costs in 2016 increased $9.7 million, or 2%, compared to the prior year as the result of increased salaries, commissions and incentive compensation on higher title operating revenues, which increased by approximately 1.0%.
The ancillary services and corporate segment's employee costs decreased $27.9 million, or 42%, and $63.6 million, or 49%, in 2017 and 2016, respectively, due to employee count reductions, primarily relating to the disposition of several lines of business within the ancillary services. Additionally, the Cost Management Program, which was completed at the end of 2015, contributed to the reduction of employee costs in 2016 compared to 2015.
Other operating expenses for the combined business segments decreased $12.5 million, or 3%, in 2017 compared to 2016 and also decreased $18.0 million, or 5%, in 2016 compared to 2015. As a percentage of total operating revenues, other operating costs were 18.2%, 18.3% and 18.9% in 2017, 2016 and 2015, respectively. In 2017, other operating expenses included $3.2 million of office closure costs, $2.9 million of third-party consulting fees related to the corporate strategic alternatives review and $2.4 million of Title365 acquisition integration expenses. In 2016, other operating expenses included approximately $3.6 million for litigation-related accruals, $1.2 million of shareholder activism costs and $2.2 million of costs associated with the Class B common stock exchange agreement. In 2015, other operating expenses included approximately $6.0 million for litigation-related accruals and $19.5 million of aggregate costs related to our Cost Management Program (consisting of consulting and third party service provider transition costs), costs associated with a shareholder settlement, and CFPB integrated disclosure preparations. Excluding the impact of these non-operating charges, other operating expenses as a percentage of total operating revenues would have been 17.7%, 18.0% and 17.7% in 2017, 2016 and 2015, respectively.
In 2017, excluding the costs listed above, costs fixed in nature decreased $4.8 million, or 3%, compared to 2016, primarily due to reduced professional and consulting fees and insurance expense, partially offset by higher technology costs. Costs that follow, to varying degrees, changes in transaction volumes and revenues also decreased $8.3 million, or 5%, mainly due to lower bad debt expense and decreased outside search fees and cost of sales expenses in ancillary services as a result of lower ancillary services revenues. Excluding the non-operating litigation-related expenses, costs that fluctuate independently of revenues decreased $0.7 million, or 2%, primarily due to lower general supplies expenses.
Title losses. Provisions for title losses, as a percentage of title operating revenues, were 5.1%, 4.8% and 5.6% in 2017, 2016 and 2015, respectively, including adjustments to certain large claims and escrow losses. The title loss ratio in any given year can be significantly influenced by new large claims incurred as well as adjustments to reserves for existing large claims. We continue to manage and resolve large claims prudently and in keeping with our commitments to our policyholders.
For the year ended December 31, 2016, we recorded a $3.1 million decrease to the reserve for existing large losses and a $5.4 million policy loss reserve reduction relating to non-large policy losses as a result of favorable loss development experience. Title losses decreased $15.1 million, or 14%, in 2016 compared to the same period in 2015.
For the year ended December 31, 2015, we recorded $22.1 million of increases to existing large loss reserves relating to prior policy years, partially offset by a $17.5 million policy loss reserve reduction relating to non-large policy losses as a result of favorable loss development experience.
Excluding the impact of the reserve reductions and large losses (net of recoveries), title losses as a percent of title operating revenues were 5.1%, 5.2% and 5.4% in 2017, 2016 and 2015, respectively. Title losses paid were $84.2 million, $92.0 million and $123.6 million in 2017, 2016 and 2015, respectively. The 8% decrease in cash claims paid in 2017 compared to 2016 was primarily due to lower payments on large claims relating to prior policy years; as compared to the 26% decrease in cash claim payments in 2016 compared to 2015, which was primarily influenced by the favorable loss experience during 2016 and a $22.5 million payment in 2015 on a large prior policy year claim.
Impairment of goodwill. During the year ended December 31, 2015, we recorded a non-cash $35.7 million impairment of goodwill relating to certain ancillary services and title businesses, primarily as a result of continued losses and reduced revenue and margin outlook, driven primarily by falling demand and contract pricing pressures. Refer also to Note 19 to our audited consolidated financial statements for details.
Depreciation and amortization. Depreciation and amortization expense decreased $4.2 million, or 14%, in 2017 compared to 2016, primarily due to lower amortization expense in 2017 as a result of the disposal of certain intangible assets in connection with the divestitures in ancillary services, as earlier discussed, and the higher depreciation expense recorded in 2016 resulting from accelerated depreciation charges relating to our exit from the delinquent loan servicing operations. Depreciation and amortization expense in 2016 was comparable to 2015.
Income taxes. Our effective tax rates for 2017, 2016 and 2015 were 23.5%, 26.1%, and (1,019.4)%, respectively, based on income (loss) before taxes, after deducting noncontrolling interests, of $63.6 million, $75.1 million and $(0.6) million, respectively. Our 2017 effective tax rate included $6.6 million of net income tax benefits relating to the effects of the recently-enacted Tax Cuts and Jobs Act (the 2017 Act) and $2.2 million of income tax benefits relating to previously unrecognized research and development tax credits. Our 2016 effective tax rate reflected a $4.1 million income tax benefit for the 2015 return-to-provision and true-up adjustments and $3.4 million of income tax benefit relating to previously unrecognized research and development tax credits. Our 2015 effective tax rate resulted principally from the $35.7 million goodwill impairment recorded during the year 2015, of which $20.3 million was not subject to tax benefits, combined with the effects of minimal pretax earnings for that year.
Refer to Note 7 to our audited consolidated financial statements for details on the impact of the 2017 Act.
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, 2017, our cash and investments, including amounts reserved pursuant to statutory requirements, aggregated $883.9 million ($378.8 million, net of statutory reserves on cash and investments). Of our total cash and investments at December 31, 2017, $603.2 million ($307.7 million, net of statutory reserves) was held in the United States and the rest internationally, principally in Canada.
A substantial majority of our consolidated cash and investments as of December 31, 2017 was held by Guaranty and its subsidiaries. The use and investment of these funds, dividends to the parent company, and cash transfers between Guaranty and its subsidiaries and the parent company are subject to certain legal and regulatory restrictions. In general, Guaranty may use its cash and investments in excess of its legally-mandated statutory premium reserve (established in accordance with requirements under Texas law) to fund its insurance operations, including claims payments. Guaranty may also, subject to certain limitations, provide funds to its subsidiaries (whose operations consist principally of field title offices and ancillary services operations) for their operating and debt service needs.
Cash provided by operations in 2017 decreased by approximately $14.9 million to $108.1 million, compared to 2016, primarily as a result of the lower 2017 net income and lower collections on accounts receivable, partially offset by lower payments on claims. Cash provided by operations in 2016 increased by approximately $42.5 million to $123.0 million compared to 2015. This increase was primarily the result of the higher net income and lower payment on claims in 2016.
Cash payments on title claims in 2017, 2016 and 2015 were $84.2 million, $92.0 million and $123.6 million, respectively. The decrease in cash claims payments in 2017, compared to the prior year, was primarily the result of reduced payments on large claims; while the decrease in cash claims payments in 2016, compared to 2015, was primarily due to the $22.5 million payment in 2015 to fully resolve a large prior policy year claim. Claim payments made on large title claims, net of insurance recoveries, during 2017, 2016 and 2015 were $7.3 million, $14.6 million and $48.4 million, respectively.
Financing activities and capital resources. Total debt and stockholders’ equity were $109.3 million and $678.8 million, respectively, as of December 31, 2017. Of the total notes payable activity during 2017, 2016 and 2015, proceeds of $40.4 million, $37.8 million and $7.7 million, respectively, and payments of $42.7 million, $31.2 million and $12.4 million, respectively, were related to short-term loan agreements in connection with our Section 1031 tax-deferred property exchange business. Also during 2017, 2016 and 2015, we drew $16.0 million, $20.0 million and $45.0 million, respectively, from our $125.0 million line of credit facility and repaid $10.0 million, $25.1 million and $7.0 million, respectively, on the line of credit facility. Refer to Note 10 to our audited consolidated financial statements for details on the line of credit facility. Our debt-to-equity ratio at December 31, 2017, excluding our Section 1031 notes, was approximately 15.5%, below the 20% we have set as our unofficial internal limit on leverage.
There were no stock repurchases during 2017 and 2016, except for repurchases of approximately 17,300 shares (aggregate purchase price of approximately $0.7 million) and 22,800 shares (aggregate purchase price of approximately $1.1 million), respectively, related to the statutory income tax withholding on the vesting of restricted share grants to executives and senior management. During 2015, we acquired approximately 762,000 shares of our Common Stock for an aggregate purchase price of approximately $28.0 million pursuant to a previous stock repurchase program.
Other comprehensive income (loss). Unrealized gains and losses on 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. In 2017, net unrealized investment losses of $0.3 million, net of taxes, which decreased our other comprehensive income, were primarily related to temporary decreases in fair values of foreign bond and equity securities investments, partially offset by the increase in fair values of municipal and corporate investments. Changes in foreign currency exchange rates, primarily related to our Canadian operations, increased other comprehensive income by $8.4 million, net of taxes, in 2017.
In 2015, net unrealized investment losses of $5.4 million, net of taxes, which increased our other comprehensive loss, were primarily related to temporary decreases in fair values of corporate and government bond investments and equity securities, partially offset by the increase in fair values of municipal bond investments. Changes in foreign currency exchange rates, primarily related to our Canadian operations, increased other comprehensive loss by $11.1 million, net of taxes, in 2015.