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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ___________________  to ___________________

Commission File Number:  0-11774
 
INVESTORS TITLE COMPANY
(Exact name of registrant as specified in its charter)
North Carolina56-1110199
(State of incorporation)(I.R.S. Employer Identification No.)
                                        
121 North Columbia Street, Chapel Hill, North Carolina 27514
(Address of principal executive offices)  (Zip Code)

(919) 968-2200
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, no par valueITICThe Nasdaq Stock Market LLC
Rights to Purchase Series A Junior Participating Preferred StockThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒ No ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filer☒
Non-accelerated filer☐Smaller reporting company☒
Emerging growth company☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 25, 2024, there were 1,884,097 common shares of the registrant outstanding.



INVESTORS TITLE COMPANY
AND SUBSIDIARIES

INDEX
 
PART I.FINANCIAL INFORMATION 
   
Item 1.Financial Statements (unaudited): 
   
 
Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023
 
 
Consolidated Statements of Operations For the Three and Nine Months Ended September 30, 2024 and 2023
 
 
Consolidated Statements of Comprehensive Income For the Three and Nine Months Ended September 30, 2024 and 2023
 
 
Consolidated Statements of Stockholders’ Equity For the Three and Nine Months Ended September 30, 2024 and 2023
 
 
Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2024 and 2023
 
 
  
  
  
  
PART II.OTHER INFORMATION
Legal Proceedings
Risk Factors
  
Item 3.Defaults Upon Senior Securities
Item 4.Mine Safety Disclosures
Item 5.Other Information
  
 



PART I.   FINANCIAL INFORMATION

Item 1.  Financial Statements

Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of September 30, 2024 and December 31, 2023
(in thousands)
(unaudited)
 September 30,
2024		December 31,
2023
Assets  
Cash and cash equivalents$25,464 $24,031 
Investments:  
Fixed maturity securities, available-for-sale, at fair value (amortized cost: September 30, 2024: $102,051; December 31, 2023: $63,106)
103,368 63,847 
Equity securities, at fair value (cost: September 30, 2024: $23,540; December 31, 2023: $22,981)
37,753 37,212 
Short-term investments
87,449 110,224 
Other investments
20,640 17,385 
Total investments
249,210 228,668 
Premiums and fees receivable 14,228 13,338 
Accrued interest and dividends1,468 978 
Prepaid expenses and other receivables9,585 13,525 
Property, net27,453 23,886 
Goodwill and other intangible assets, net15,349 16,249 
Lease assets5,883 6,303 
Other assets2,649 2,500 
Current income taxes recoverable697 1,081 
Total Assets
$351,986 $330,559 
Liabilities and Stockholders’ Equity  
Liabilities:  
Reserve for claims
$37,049 $37,147 
Accounts payable and accrued liabilities
33,911 31,864 
Lease liabilities6,088 6,449 
Deferred income taxes, net
3,625 3,546 
Total liabilities
80,673 79,006 
Commitments and Contingencies— — 
Stockholders’ Equity:  
Preferred stock (1,000 authorized shares; no shares issued)
— — 
Common stock – no par value (10,000 authorized shares; 1,884 and 1,891 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively, excluding in each period 292 shares of common stock held by the Company)
— — 
Retained earnings
270,225 250,915 
Accumulated other comprehensive income 1,088 638 
Total stockholders' equity
271,313 251,553 
Total Liabilities and Stockholders’ Equity
$351,986 $330,559 

Refer to notes to the Consolidated Financial Statements.
1

Investors Title Company and Subsidiaries
Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2024 and 2023
(in thousands, except per share amounts)
(unaudited)
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Revenues:
Net premiums written$54,855 $49,822 $146,451 $132,793 
Escrow and other title-related fees4,574 4,683 13,098 12,942 
Non-title services4,305 4,636 12,913 14,513 
Interest and dividends2,736 2,313 7,824 6,537 
Other investment income 995 514 1,996 2,915 
Net investment gains (losses)976 (815)4,640 720 
Other388 257 748 647 
Total Revenues68,829 61,410 187,670 171,067 
Operating Expenses:
Commissions to agents29,089 23,806 75,509 63,735 
Provision for claims1,668 1,838 3,483 3,897 
Personnel expenses18,057 19,083 54,793 58,451 
Office and technology expenses4,388 4,209 13,161 13,122 
Other expenses4,039 3,864 12,072 11,845 
Total Operating Expenses57,241 52,800 159,018 151,050 
Income before Income Taxes11,588 8,610 28,652 20,017 
Provision for Income Taxes2,273 1,526 5,941 4,167 
Net Income $9,315 $7,084 $22,711 $15,850 
Basic Earnings per Common Share$4.94 $3.75 $12.05 $8.37 
Weighted Average Shares Outstanding – Basic1,884 1,891 1,885 1,894 
Diluted Earnings per Common Share$4.92 $3.75 $12.02 $8.37 
Weighted Average Shares Outstanding – Diluted1,893 1,891 1,889 1,894 

Refer to notes to the Consolidated Financial Statements.
2

Investors Title Company and Subsidiaries
Consolidated Statements of Comprehensive Income
For the Three and Nine Months Ended September 30, 2024 and 2023
(in thousands)
(unaudited)
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Net income $9,315 $7,084 $22,711 $15,850 
Other comprehensive income (loss), before income tax:
Accumulated postretirement (benefit) expense obligation adjustment— (7)— 127 
Net unrealized gains (losses) on investments arising during the period1,171 (1,250)501 (1,547)
Reclassification adjustment for write-down of securities included in net income — 96 74 208 
Other comprehensive income (loss), before income tax1,171 (1,161)575 (1,212)
Income tax (benefit) expense related to postretirement health benefits— (1)— 27 
Income tax expense (benefit) related to net unrealized gains (losses) on investments arising during the period251 (266)107 (332)
Income tax expense related to reclassification adjustment for write-down of securities included in net income — 22 18 48 
Net income tax expense (benefit) on other comprehensive income (loss)251 (245)125 (257)
Other comprehensive income (loss)920 (916)450 (955)
Comprehensive Income $10,235 $6,168 $23,161 $14,895 

Refer to notes to the Consolidated Financial Statements.
3

Investors Title Company and Subsidiaries
Consolidated Statements of Stockholders’ Equity
For the Three and Nine Months Ended September 30, 2024 and 2023
(in thousands, except per share amounts)
(unaudited)
 Common StockRetained Earnings
Accumulated Other Comprehensive Income (Loss)
Total
Stockholders’
Equity
 SharesAmount
Balance, June 30, 2023
1,891 $— $247,092 $161 $247,253 
Net income  7,084  7,084 
Dividends paid ($0.46 per share)
  (870) (870)
Share-based compensation expense related to stock appreciation rights117 117 
Accumulated postretirement benefit obligation adjustment, net of tax(6)(6)
Net unrealized loss on investments   (910)(910)
Balance, September 30, 2023
1,891 $— $253,423 $(755)$252,668 
Balance, June 30, 2024
1,884 $— $261,648 $168 $261,816 
Net income  9,315  9,315 
Dividends paid ($0.46 per share)
  (867) (867)
Exercise of stock appreciation rights— 1 1 
Share-based compensation expense related to stock appreciation rights
  128  128 
Net unrealized gain on investments  920 920 
Balance, September 30, 2024
1,884 $— $270,225 $1,088 $271,313 
4


Consolidated Statements of Stockholders’ Equity, continued
Common StockRetained Earnings
Accumulated Other Comprehensive Income (Loss)
Total
Stockholders’
Equity
SharesAmount
Balance, December 31, 2022
1,897 $— $240,811 $200 $241,011 
Net income15,850 15,850 
Dividends paid ($1.38 per share)
(2,616)(2,616)
Repurchases of common stock(7)(959)(959)
Exercise of stock appreciation rights
1 — — 
Share-based compensation expense related to stock appreciation rights337 337 
Accumulated postretirement benefit obligation adjustment, net of tax100 100 
Net unrealized loss on investments(1,055)(1,055)
Balance, September 30, 2023
1,891 $— $253,423 $(755)$252,668 
Balance, December 31, 2023
1,891 $— $250,915 $638 $251,553 
Net income22,711 22,711 
Dividends paid ($1.38 per share)
(2,600)(2,600)
Repurchases of common stock(7)(1,098)(1,098)
Exercise of stock appreciation rights— 1 1 
Share-based compensation expense related to stock appreciation rights
296 296 
Net unrealized gain on investments450 450 
Balance, September 30, 2024
1,884 $— $270,225 $1,088 $271,313 

Refer to notes to the Consolidated Financial Statements.
5

Investors Title Company and Subsidiaries
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2024 and 2023
(in thousands)
(unaudited)
 Nine Months Ended
September 30,
 20242023
Operating Activities  
Net income$22,711 $15,850 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:  
Depreciation2,491 2,005 
Accretion of investments, net(3,070)(2,663)
Amortization of other intangible assets, net900 982 
Share-based compensation expense related to stock appreciation rights296 337 
Net gain on disposals of property(230)(99)
Net investment gains (4,640)(720)
Net earnings from other investments(1,326)(2,445)
Provision for claims3,483 3,897 
Benefit for deferred income taxes(45)(4,021)
Changes in assets and liabilities:  
(Increase) decrease in premium and fees receivable(890)1,725 
Decrease (increase) in other assets340 (4,029)
Decrease in lease assets420 275 
Decrease in current income taxes receivable384 1,174 
Increase (decrease) in accounts payable and accrued liabilities809 (16,204)
Decrease in lease liabilities(361)(200)
Increase in current income taxes payable— 1,008 
Payments of claims, net of recoveries(3,581)(3,595)
Net cash provided by (used in) operating activities17,691 (6,723)
Investing Activities  
Purchases of fixed maturity securities(47,296)(18,445)
Purchases of equity securities(6,979)(7,934)
Purchases of short-term investments(97,963)(113,548)
Purchases of other investments(5,628)(2,765)
Proceeds from sales and maturities of fixed maturity securities9,200 6,312 
Proceeds from sales of equity securities11,238 28,836 
Proceeds from sales and maturities of short-term investments124,494 115,829 
Proceeds from sales and distributions of other investments and assets6,201 3,327 
Purchases of property(6,075)(6,621)
Proceeds from the sale of property247 407 
Net cash (used in) provided by investing activities(12,561)5,398 
Financing Activities  
Repurchases of common stock(1,098)(959)
Exercise of stock appreciation rights1 — 
Dividends paid(2,600)(2,616)
Net cash used in financing activities(3,697)(3,575)
Net Increase (Decrease) in Cash and Cash Equivalents1,433 (4,900)
Cash and Cash Equivalents, Beginning of Period24,031 35,311 
Cash and Cash Equivalents, End of Period$25,464 $30,411 
6

Consolidated Statements of Cash Flows, continued 
 Nine Months Ended
September 30,
 20242023
Supplemental Disclosures:  
Cash Paid During the Year for:  
Income tax payments, net$5,644 $6,968 
Non-Cash Investing and Financing Activities:
Non-cash net unrealized (gain) loss on investments, net of deferred tax (provision) benefit of $(125) and $284 for September 30, 2024 and 2023, respectively
$(450)$1,055 
Adjustments to postretirement benefits obligation, net of deferred tax expense of $0 and $(27) for September 30, 2024 and 2023, respectively
$— $(100)
    

Refer to notes to the Consolidated Financial Statements.
7

INVESTORS TITLE COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2024
(unaudited)

Note 1 – Basis of Presentation and Significant Accounting Policies

Reference should be made to the “Notes to Consolidated Financial Statements” appearing in the Annual Report on Form 10-K for the year ended December 31, 2023 of Investors Title Company (the “Company”) for a complete description of the Company’s significant accounting policies.

Principles of Consolidation – The accompanying unaudited Consolidated Financial Statements include the accounts and operations of Investors Title Company and its subsidiaries, and have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information, with the instructions to Form 10-Q and with Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in annual consolidated financial statements have been condensed or omitted. All intercompany balances and transactions have been eliminated in consolidation.

In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position, results of operations and cash flows of the Company in the accompanying unaudited Consolidated Financial Statements have been included. All such adjustments are of a normal recurring nature. Operating results for the three- and nine-month periods ended September 30, 2024 are not necessarily indicative of the financial condition and results that may be expected for the year ending December 31, 2024 or any other interim period.

Use of Estimates and Assumptions – The preparation of the Company’s unaudited Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions used.

Subsequent Events – The Company has evaluated and concluded that there were no material subsequent events requiring adjustment or disclosure to its unaudited Consolidated Financial Statements.

Note 2 – Reserve for Claims

Activity in the reserve for claims for the nine-month period ended September 30, 2024 and the year ended December 31, 2023 is summarized as follows:
 (in thousands)September 30, 2024December 31, 2023
Balance, beginning of period$37,147 $37,192 
Provision charged to operations3,483 4,762 
Payments of claims, net of recoveries(3,581)(4,807)
Balance, end of period
$37,049 $37,147 

The total reserve for all reported and unreported losses the Company incurred through September 30, 2024 is represented by the reserve for claims on the unaudited Consolidated Balance Sheets. The Company's reserves for unpaid losses and loss adjustment expenses are established using estimated amounts required to settle claims for which notice has been received (reported) and the amount estimated to be required to satisfy claims that have been incurred but not yet reported (“IBNR”). Despite the variability of such estimates, management believes that the total reserve for claims is adequate to cover claim losses which might result from pending and future claims under title insurance policies issued through September 30, 2024. Management continually reviews and adjusts its reserve for claims estimates to reflect its loss experience and any new information that becomes available. Adjustments resulting from such reviews could be significant.

8

A summary of the Company’s reserve for claims, broken down into its components of known title claims and IBNR, follows:
 (in thousands, except percentages)September 30, 2024%December 31, 2023%
Known title claims$2,742 7.4 $2,855 7.7 
IBNR34,307 92.6 34,292 92.3 
Total reserve for claims
$37,049 100.0 $37,147 100.0 

Claims and losses paid are charged to the reserve for claims. Although claims losses are typically paid in cash, occasionally claims are settled by purchasing the interest of the insured or the claimant in the real property. When this event occurs, the Company carries assets at the lower of cost or estimated fair value, net of any indebtedness on the property.

Note 3 – Earnings Per Common Share and Share Awards

Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income by the combination of dilutive potential common stock, comprised of shares issuable under the Company’s share-based compensation plans, and the weighted average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money share-based awards, which are calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, when share-based awards are assumed to be exercised, (a) the exercise price of a share-based award and (b) the amount of compensation cost, if any, for future services that the Company has not yet recognized, are assumed to be used to repurchase shares in the current period.

The following table sets forth the computation of basic and diluted earnings per share for the three- and nine-month periods ended September 30:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(in thousands, except per share amounts)
2024202320242023
Net income $9,315 $7,084 $22,711 $15,850 
Weighted average common shares outstanding – Basic1,884 1,891 1,885 1,894 
Incremental shares outstanding assuming the exercise of dilutive SARs (share-settled)
9 — 4 — 
Weighted average common shares outstanding – Diluted
1,893 1,891 1,889 1,894 
Basic earnings per common share$4.94 $3.75 $12.05 $8.37 
Diluted earnings per common share$4.92 $3.75 $12.02 $8.37 

There were 0 and 24 thousand potential shares excluded from the computation of diluted earnings per share for the three-month periods ended September 30, 2024 and 2023, respectively, due to the out-of-the-money status of the related share-based awards. There were 4 thousand and 24 thousand potential shares excluded from the computation of diluted earnings per share for the nine-month periods ended September 30, 2024 and 2023, respectively, due to the out-of-the-money status of the related share-based awards.

The Company historically has adopted employee stock award plans under which restricted stock, options or stock appreciation rights ("SARs") exercisable for the Company's stock may be granted to key employees or directors of the Company. There is currently one active plan from which the Company may grant share-based awards. The awards eligible to be granted under the active plan are limited to SARs, and the maximum aggregate number of shares of common stock of the Company available pursuant to the plan for the grant of SARs is 250 thousand shares. SARs give the holder the right to receive stock equal to the appreciation in the value of shares of stock from the grant date for a specified period of time, and as a result, are accounted for as equity instruments.

As of September 30, 2024, the only outstanding awards under the plans were SARs, which expire within seven years or less from the date of grant. All outstanding SARs vest and are exercisable within five years or less from the date of grant, and all SARs issued to date have been share-settled only. There have been no stock options or SARs granted where the exercise price was less than the market price on the date of grant.

9

A summary of share-based award transactions for all share-based award plans follows:
(in thousands, except weighted average exercise price and average remaining contractual term)Number
Of Shares		Weighted
Average
Exercise Price		Average Remaining
Contractual
Term (Years)		Aggregate
Intrinsic
Value
Outstanding as of January 1, 2023
39 $159.39 4.10$243 
SARs granted5 142.88   
SARs exercised(2)93.87   
Outstanding as of December 31, 202342 $160.83 3.69$428 
SARs granted5 160.94   
SARs exercised(4)154.13 
SARs forfeited or expired(4)192.71   
Outstanding as of September 30, 202439 $157.74 3.85$2,783 
Exercisable as of September 30, 202431 $159.86 3.61$2,180 
Unvested as of September 30, 20248 $148.86 4.83$603 

During the second quarter of 2024, the Company issued 5 thousand share-settled SARs to directors of the Company. During the second quarter of 2023, the Company issued 4 thousand share-settled SARs to directors of the Company. During the first quarter of 2023, the Company issued 1 thousand share-settled SARs to a director of the Company. There was no such first quarter issuance of SARs during the first quarter of 2024. The fair value of each SAR is estimated on the date of grant using the Black-Scholes option valuation model. Expected volatilities are based on both the implied and historical volatility of the Company’s stock. The Company uses historical data to project SAR exercises and pre-exercise forfeitures within the valuation model. The expected term of awards represents the period of time that SARs granted are expected to be outstanding. The interest rate assumed for the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of the grant. The weighted average fair values for the SARs issued during 2024 and 2023 were $64.00 and $55.52, respectively, and were estimated using the weighted average assumptions shown in the table below:
20242023
Expected Life in Years7.06.2-7.0
Volatility35.0%36.6%
Interest Rate4.4%3.7%
Yield Rate1.1%1.2%

There was approximately $296 thousand and $128 thousand of compensation expense relating to SARs vesting on or before September 30, 2024 included in personnel expenses in the unaudited Consolidated Statements of Operations for the three- and nine-month periods ended September 30, 2024, respectively. There was approximately $337 thousand and $117 thousand of compensation expense relating to SARs vesting on or before September 30, 2023 included in personnel expenses in the unaudited Consolidated Statements of Operations for the three- and nine-month periods ended September 30, 2023, respectively. As of September 30, 2024, there was $399 thousand of unrecognized compensation expense related to unvested share-based compensation arrangements granted under the Company’s stock award plans.

Note 4 – Segment Information

The Company has two reportable segments, title insurance and exchange services. The remaining immaterial segments have been combined into a group called “All Other.”

The title insurance segment primarily issues title insurance policies through approved attorneys from underwriting offices and through independent issuing agents. Title insurance policies insure titles to real estate.

The tax-deferred exchange services segment acts as an intermediary in tax-deferred exchanges of property held for productive use in a trade or business or for investments and serves as exchange accommodation titleholder, holding property for exchangers in reverse exchange transactions.

10

Provided below is selected financial information about the Company's operations by segment for the periods ended September 30, 2024 and 2023:

Three Months Ended
September 30, 2024 (in thousands)		Title
Insurance		Exchange
Services		All
Other		Intersegment EliminationsTotal
Insurance and other services revenues$63,272 $2,634 $2,252 $(4,036)$64,122 
Net investment income3,681 115 911 — 4,707 
Total revenues
$66,953 $2,749 $3,163 $(4,036)$68,829 
Operating expenses58,211 668 2,244 (3,882)57,241 
Income before income taxes$8,742 $2,081 $919 $(154)$11,588 
Total assets$231,805 $10,446 $109,735 $— $351,986 
Three Months Ended
September 30, 2023 (in thousands)		Title
Insurance		Exchange
Services		All
Other		Intersegment EliminationsTotal
Insurance and other services revenues$59,182 $3,141 $1,916 $(4,841)$59,398 
Net investment income1,037 47 928 — 2,012 
Total revenues$60,219 $3,188 $2,844 $(4,841)$61,410 
Operating expenses54,809 603 2,057 (4,669)52,800 
Income before income taxes$5,410 $2,585 $787 $(172)$8,610 
Total assets$226,105 $5,399 $100,411 $— $331,915 
Nine Months Ended
September 30, 2024 (in thousands)		Title
Insurance		Exchange
Services		All
Other		Intersegment EliminationsTotal
Insurance and other services revenues$171,767 $8,120 $6,156 $(12,833)$173,210 
Net investment income10,675 280 3,505 — 14,460 
Total revenues
$182,442 $8,400 $9,661 $(12,833)$187,670 
Operating expenses162,566 2,030 6,775 (12,353)159,018 
Income before income taxes$19,876 $6,370 $2,886 $(480)$28,652 
Total assets$231,805 $10,446 $109,735 $— $351,986 
Nine Months Ended
September 30, 2023 (in thousands)		Title
Insurance		Exchange
Services		All
Other		Intersegment EliminationsTotal
Insurance and other services revenues$159,382 $10,066 $5,815 $(14,368)$160,895 
Net investment income7,616 133 2,423 — 10,172 
Total revenues$166,998 $10,199 $8,238 $(14,368)$171,067 
Operating expenses156,694 1,811 6,397 (13,852)151,050 
Income before income taxes$10,304 $8,388 $1,841 $(516)$20,017 
Total assets$226,105 $5,399 $100,411 $— $331,915 




11

Note 5 – Retirement Agreements and Other Postretirement Benefits

The Company’s subsidiary, Investors Title Insurance Company ("ITIC"), is a party to employment agreements with key executives that provide for the continuation of certain employee benefits and other payments due under the agreements upon retirement, estimated to total $15.3 million and $15.2 million as of September 30, 2024 and December 31, 2023, respectively. The executive employee benefits include health, dental, vision and life insurance and are unfunded. These amounts are classified as accounts payable and accrued liabilities in the unaudited Consolidated Balance Sheets. The following sets forth the net periodic benefit cost for the executive benefits for the periods ended September 30, 2024 and 2023:
Three Months Ended
September 30,		Nine Months Ended
September 30,
 (in thousands)2024202320242023
Service cost – benefits earned during the year$— $— $— $— 
Interest cost on the projected benefit obligation11 10 34 30 
Amortization of unrecognized gain— (7)— (21)
Net periodic benefit cost$11 $3 $34 $9 

Note 6 – Investments and Estimated Fair Value

Investments in Fixed Maturity Securities

The estimated fair value, gross unrealized holding gains, gross unrealized holding losses and amortized cost for fixed maturity securities by major classification are as follows:
As of September 30, 2024 (in thousands)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated Fair
Value
Fixed maturity securities, available-for-sale, at fair value:    
 Government obligations$549 $3 $— $552 
General obligations of U.S. states, territories and political subdivisions
9,330 48 (15)9,363 
Special revenue issuer obligations of U.S. states, territories and political subdivisions
21,821 97 (23)21,895 
Corporate debt securities70,351 1,210 (3)71,558 
Total
$102,051 $1,358 $(41)$103,368 
As of December 31, 2023 (in thousands)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated Fair
Value
Fixed maturity securities, available-for-sale, at fair value:    
 Government obligations$2,220 $2 $(2)$2,220 
General obligations of U.S. states, territories and political subdivisions
9,419 64 (24)9,459 
Special revenue issuer obligations of U.S. states, territories and political subdivisions
24,908 145 (66)24,987 
Corporate debt securities26,559 655 (33)27,181 
Total
$63,106 $866 $(125)$63,847 

The special revenue category for both periods presented includes approximately 30 individual fixed maturity securities with revenue sources from a variety of industry sectors.

12

The scheduled maturities of fixed maturity securities at September 30, 2024 are as follows:
 Available-for-Sale
(in thousands)Amortized
Cost		Estimated Fair
Value
Due in one year or less$40,626 $40,754 
Due one year through five years40,032 40,570 
Due five years through ten years16,105 16,455 
Due after ten years5,288 5,589 
Total
$102,051 $103,368 

Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties.

The following table presents the gross unrealized losses on fixed maturity securities and the estimated fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous loss position at September 30, 2024 and December 31, 2023:
 Less than 12 Months12 Months or LongerTotal
As of September 30, 2024 (in thousands)Estimated
Fair
Value		Unrealized
Losses		Estimated
Fair
Value		Unrealized
Losses		Estimated
Fair
Value		Unrealized
Losses
General obligations of U.S. states, territories and political subdivisions$3,147 $(3)$2,807 $(12)$5,954 $(15)
Special revenue issuer obligations of U.S. states, territories and political subdivisions
3,670 (1)2,845 (22)6,515 (23)
Corporate debt securities1,347 (1)2,187 (2)3,534 (3)
Total$8,164 $(5)$7,839 $(36)$16,003 $(41)
 Less than 12 Months12 Months or LongerTotal
As of December 31, 2023 (in thousands)Estimated
Fair
Value		Unrealized
Losses		Estimated
Fair
Value		Unrealized
Losses		Estimated
Fair
Value		Unrealized
Losses
Government obligations$1,488 $(2)$— $— $1,488 $(2)
General obligations of U.S. states, territories and political subdivisions5,925 (23)101 (1)6,026 (24)
Special revenue issuer obligations of U.S. states, territories and political subdivisions
7,124 (16)3,085 (50)10,209 (66)
Corporate debt securities
6,052 (29)296 (4)6,348 (33)
Total$20,589 $(70)$3,482 $(55)$24,071 $(125)

Management evaluates available-for-sale fixed maturity securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. The decline in estimated fair value of the fixed maturity securities can be attributed primarily to changes in market interest rates and changes in credit spreads over Treasury securities.

Factors considered in determining whether a loss is credit-related include the financial condition and prospects of the issuer (including credit ratings and analyst reports) and macro-economic changes. A total of 30 and 51 fixed maturity securities had unrealized losses at September 30, 2024 and December 31, 2023, respectively. The Company does not intend to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. The Company believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in market interest rates and other market conditions, and therefore the unrealized loss is recorded in accumulated other comprehensive income.

13

Reviews of the values of fixed maturity securities are inherently uncertain and the value of the investment may not fully recover, or may decline in future periods, resulting in a realized loss. The Company recorded impairment charges related to fixed maturity securities totaling $0 and $74 thousand for the three- and nine-month periods ended September 30, 2024, respectively, and $96 thousand and $208 thousand for the three- and nine-month periods ended September 30, 2023, respectively. Expenses related to impairments are recorded in net investment gains (losses) in the unaudited Consolidated Statements of Operations when recognized.

Investments in Equity Securities

The cost and estimated fair value of equity securities are as follows:
As of September 30, 2024 (in thousands)
CostEstimated Fair
Value
Equity securities, at fair value:  
Common stocks$23,540 $37,753 
Total
$23,540 $37,753 
As of December 31, 2023 (in thousands)
CostEstimated Fair
Value
Equity securities, at fair value:  
Common stocks$22,981 $37,212 
Total
$22,981 $37,212 

Unrealized holding gains and losses are reported in the unaudited Consolidated Financial Statements of Operations as net investment gains (losses).

Net Investment Gains (Losses)

Gross investment gains and losses for the three- and nine-month periods ended September 30, 2024 and 2023 are summarized as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(in thousands)2024202320242023
Gross realized gains from securities:  
Common stocks
$444 $1,749 $5,157 $15,449 
Total
$444 $1,749 $5,157 $15,449 
Gross realized losses from securities:  
Common stocks
$(122)$(77)$(339)$(400)
Write-down of securities — (96)(74)(208)
Total
$(122)$(173)$(413)$(608)
Net realized gains from securities$322 $1,576 $4,744 $14,841 
Gross realized gains (losses) on other investments:
 Gains on other investments$242 $5 $243 $5 
Losses on other investments(20)(4)(20)(120)
Write-down of other assets(309)— (309)— 
Total
$(87)$1 $(86)$(115)
Net realized investment gains $235 $1,577 $4,658 $14,726 
Changes in the estimated fair value of equity security investments$741 $(2,392)$(18)$(14,006)
Net investment gains (losses)$976 $(815)$4,640 $720 

Realized gains and losses are determined on the specific identification method.  

14

Variable Interest Entities

The Company holds investments in variable interest entities ("VIEs") that are not consolidated in the Company's financial statements as the Company is not the primary beneficiary. These entities are considered VIEs as the equity investors at risk, including the Company, do not have the power over the activities that most significantly impact the economic performance of the entities; this power resides with a third-party general partner or managing member that cannot be removed except for cause and no participation rights exist. The following table sets forth details about the Company's variable interest investments in VIEs, which are structured either as limited partnerships ("LPs") or limited liability companies ("LLCs"), as of September 30, 2024:
(in thousands)Balance Sheet ClassificationCarrying ValueEstimated Fair ValueMaximum Potential Loss (a)
Real estate LLCs or LPsOther investments$10,577 $12,761 $14,654 
Small business investment LPsOther investments1,168 1,242 1,403 
Total
$11,745 $14,003 $16,057 
(a)Maximum potential loss is calculated as the total investment in the LLC or LP, including any capital commitments that may have not yet been called. The Company is not exposed to any loss beyond the total commitment of its investment.

Valuation of Financial Assets
 
The Financial Accounting Standards Board ("FASB") has established a valuation hierarchy for disclosure of the inputs used to measure estimated fair value of financial assets and liabilities, such as securities. This hierarchy categorizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions intended to represent market participant assumptions used to measure assets and liabilities at fair value.

A financial instrument’s classification within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement – consequently, if there are multiple significant valuation inputs that are categorized in different levels of the hierarchy, the instrument’s hierarchy level is the lowest level (with Level 3 being the lowest level) within which any significant input falls.

The Level 1 category includes equity securities and U.S. Treasury securities that are measured at estimated fair value using quoted active market prices.

The Level 2 category includes fixed maturity securities such as corporate debt securities, U.S. government obligations, and obligations of U.S. states, territories, and political subdivisions. Estimated fair value is principally based on market values obtained from a third-party pricing service. Factors that are used in determining estimated fair market value include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. The Company receives one quote per security from a third-party pricing service, although as discussed below, the Company does consult other pricing resources when confirming that the prices it obtains reflect the fair values of the instruments in accordance with GAAP. Generally, quotes obtained from the pricing service for instruments classified as Level 2 are not adjusted and are not binding. As of September 30, 2024 and December 31, 2023, the Company did not adjust any Level 2 fair values.

A number of the Company’s investment grade corporate debt securities are frequently traded in active markets, and trading prices are consequently available for these securities. However, these securities are classified as Level 2 because the pricing service from which the Company has obtained estimated fair values for these instruments uses valuation models that use observable market inputs in addition to trading prices. Substantially all of the input assumptions used in the service’s model are observable in the marketplace or can be derived or supported by observable market data.

In the measurement of the estimated fair value of certain financial instruments, other valuation techniques were utilized if quoted market prices were not available. These derived fair value estimates are significantly affected by the assumptions used. Additionally, certain financial instruments, including those related to insurance contracts, pension and other postretirement benefits, and equity method investments are excluded from the scope of disclosures.
 
15

In estimating the fair value of the financial instruments presented, the Company used the following methods and assumptions:
 
Cash and cash equivalents
 
The carrying amount for cash and cash equivalents is a reasonable estimate of fair value due to the short-term maturity of these investments.
 
Measurement alternative equity investments
 
The measurement alternative method requires investments without readily determinable fair values to be recorded at cost, less impairments, and plus or minus any changes resulting from observable price changes.  The Company monitors any events or changes in circumstances that may have had a significant adverse effect on the fair value of these investments and makes any necessary adjustments.

Notes receivable
 
Notes receivable are recorded at amortized cost and are included in prepaid expenses and other receivables in the unaudited Consolidated Balance Sheets. The amortized cost is the amount at which a receivable is originated and adjusted for applicable accrued interest, accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash, writeoffs, foreign exchange, and fair value hedge accounting adjustments. The Company monitors any events or changes in circumstances that may have had a significant adverse effect on the fair value of these investments and makes any necessary adjustments.

Accrued interest and dividends
 
The carrying amount for accrued interest and dividends is a reasonable estimate of fair value due to the short-term maturity of these assets.

The following table presents, by level, fixed maturity securities carried at estimated fair value as of September 30, 2024 and December 31, 2023:
As of September 30, 2024 (in thousands)Level 1Level 2 *Level 3Total
Fixed maturity securities:    
Obligations of U.S. states, territories and political subdivisions$552 $31,258 $— $31,810 
Corporate debt securities— 71,558 — 71,558 
Total
$552 $102,816 $— $103,368 
As of December 31, 2023 (in thousands)Level 1Level 2 *Level 3Total
Fixed maturity securities:
Obligations of U.S. states, territories and political subdivisions$2,220 $34,446 $— $36,666 
Corporate debt securities— 27,181 — 27,181 
Total
$2,220 $61,627 $— $63,847 

*Denotes fair market value obtained from pricing services.
16


The following table presents, by level, estimated fair values of equity investments and other financial instruments as of September 30, 2024 and December 31, 2023:
As of September 30, 2024 (in thousands)Level 1Level 2Level 3Total
Financial assets:
Cash and cash equivalents
$25,464 $— $— $25,464 
Accrued interest and dividends
1,468 — — 1,468 
Equity securities, at fair value:
Common stocks
37,753 —