What changed in this filing

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Item 1. Financial Statements

2020-08-07 compared with 2020-05-08 · 377 added, 186 removed, 500 unchanged (53% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

As of March 31, 2020 and December 31, 2019

As of June 30, 2020 and December 31, 2019

(in thousands)

2020 December 31,

Cash and cash equivalents $ 29,709 $ 25,949

Fixed maturity securities, available-for-sale, at fair value (amortized cost:

March 31, 2020:

June 30, 2020:

December 31, 2019:

102,115 104,638

Equity securities, at fair value (cost:

March 31, 2020:

June 30, 2020:

December 31, 2019:

55,830 61,108

Short-term investments

24,723 13,134

Other investments

14,880 13,982

Total investments

197,548 192,862

Premium and fees receivable 15,258 12,523

4 unchanged sentences

Operating lease right-of-use assets 4,055 4,469

Other assets 1,561 1,487

$ 279,908 $ 263,893

Liabilities and Stockholders’ Equity

Reserve for claims

$ 32,694 $ 31,333

Accounts payable and accrued liabilities

37,469 28,318

Operating lease liabilities

2 unchanged sentences

Total liabilities

81,443 72,531

Commitments and Contingencies — —

3 unchanged sentences

Common stock – no par value ( 10,000 authorized shares;

1,891 and 1,889 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively, excluding in each period 292 shares of common stock held by the Company)

1,892 and 1,889 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively, excluding in each period 292 shares of common stock held by the Company)

Retained earnings

194,235 188,262

Accumulated other comprehensive income

Total stockholders' equity

198,465 191,362

Total Liabilities and Stockholders’ Equity

$ 279,908 $ 263,893

Refer to notes to the Consolidated Financial Statements.

1 unchanged sentence

Consolidated Statements of Operations

For the Three Months Ended March 31, 2020 and 2019

For the Three and Six Months Ended June 30, 2020 and 2019

(in thousands, except per share amounts)

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Net premiums written $ 47,479 $ 34,978 $ 86,106 $ 63,773

3 unchanged sentences

Other investment income 526 926 966 1,336

Net realized investment (losses) gains

Net realized investment gains (losses) 553 ( 14 ) 141 776

Changes in the estimated fair value of equity security investments 7,972 1,142 ( 6,486 ) 5,812

Other 120 90 258 405

Total Revenues 61,748 42,733 91,649 82,679

6 unchanged sentences

Total Operating Expenses 43,826 35,813 82,256 67,446

(Loss) Income before Income Taxes

(Benefit) Provision for Income Taxes

Net (Loss) Income

Basic (Loss) Earnings per Common Share

Income before Income Taxes 17,922 6,920 9,393 15,233

Provision for Income Taxes 3,427 1,420 1,909 3,107

Net Income $ 14,495 $ 5,500 $ 7,484 $ 12,126

Basic Earnings per Common Share $ 7.66 $ 2.91 $ 3.96 $ 6.42

Weighted Average Shares Outstanding – Basic 1,892 1,889 1,891 1,888

Diluted (Loss) Earnings per Common Share

Diluted Earnings per Common Share $ 7.65 $ 2.90 $ 3.95 $ 6.40

Weighted Average Shares Outstanding – Diluted 1,895 1,896 1,895 1,896

2 unchanged sentences

Consolidated Statements of Comprehensive Income

For the Three Months Ended March 31, 2020 and 2019

For the Three and Six Months Ended June 30, 2020 and 2019

(in thousands)

Three Months Ended

Net (loss) income

June 30, Six Months Ended

2020 2019 2020 2019

Net income $ 14,495 $ 5,500 $ 7,484 $ 12,126

Other comprehensive income, before tax:

Accumulated postretirement benefit obligation adjustment

Net unrealized (loss) gain on investments arising during the period

Reclassification adjustment for sale of securities included in net loss

Reclassification adjustment for write-down of securities included in net loss

Net unrealized gain on investments arising during the period

1,423 966 1,032 2,416

Reclassification adjustment for sale of securities included in net income

Reclassification adjustment for write-down of securities included in net income

Other comprehensive income, before tax

1,423 966 1,443 2,416

Income tax benefit related to postretirement health benefits

Income tax (benefit) expense related to net unrealized (loss) gain on investments arising during the period

Income tax benefit related to reclassification adjustment for sale of securities included in net loss

Income tax expense related to reclassification adjustment for write-down of securities included in net loss

Income tax expense related to net unrealized gain on investments arising during the period

305 204 218 511

Income tax benefit related to reclassification adjustment for sale of securities included in net income

Income tax expense related to reclassification adjustment for write-down of securities included in net income

Net income tax expense on other comprehensive income

305 204 313 511

Other comprehensive income 1,118 762 1,130 1,905

Comprehensive (Loss) Income

Comprehensive Income $ 15,613 $ 6,262 $ 8,614 $ 14,031

Refer to notes to the Consolidated Financial Statements.

1 unchanged sentence

Consolidated Statements of Stockholders’ Equity

For the Three Months Ended March 31, 2020 and 2019

For the Three and Six Months Ended June 30, 2020 and 2019

(in thousands, except per share amounts)

Retained Earnings

Common Stock Retained Earnings Accumulated

Comprehensive

Stockholders’

Balance, January 1, 2019

Shares Amount

Balance, March 31, 2019

1,889 $ — $ 180,637 $ 2,092 $ 182,729

Dividends paid ($ 0.40 per share)

Repurchases of common stock

( 756 ) ( 756 )

Exercise of stock appreciation rights

1 unchanged sentence

Net unrealized gain on investments 762 762

Balance, June 30, 2019

1,889 $ — $ 185,441 $ 2,854 $ 188,295

Balance, March 31, 2020

Balance, January 1, 2020

1,891 $ — $ 180,535 $ 3,112 $ 183,647

14,495 14,495

Dividends paid ($ 0.44 per share)

( 832 ) ( 832 )

Exercise of stock appreciation rights

Share-based compensation expense related to stock appreciation rights

Net unrealized gain on investments 1,118 1,118

Balance, June 30, 2020

1,892 $ — $ 194,235 $ 4,230 $ 198,465

Common Stock Retained Earnings Accumulated

Comprehensive

Stockholders’

Shares Amount

Balance, December 31, 2018

1,887 $ — $ 174,690 $ 949 $ 175,639

12,126 12,126

Dividends paid ($ 0.80 per share)

( 1,511 ) ( 1,511 )

Repurchases of common stock

— ( 11 ) ( 11 )

Exercise of stock appreciation rights

Share-based compensation expense related to stock appreciation rights

Net unrealized gain on investments 1,905 1,905

Balance, June 30, 2019

1,889 $ — $ 185,441 $ 2,854 $ 188,295

Balance, December 31, 2019

1,889 $ — $ 188,262 $ 3,100 $ 191,362

Dividends paid ($ 0.88 per share)

( 1,664 ) ( 1,664 )

Exercise of stock appreciation rights

3 ( 1 ) ( 1 )

Share-based compensation expense related to stock appreciation rights

Accumulated postretirement benefit obligation adjustment

( 32 ) ( 32 )

Net unrealized gain on investments 1,162 1,162

Balance, March 31, 2020

Balance, June 30, 2020

1,892 $ — $ 194,235 $ 4,230 $ 198,465

Refer to notes to the Consolidated Financial Statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2020 and 2019

For the Six Months Ended June 30, 2020 and 2019

(in thousands)

Three Months Ended

Six Months Ended

Operating Activities

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:

Net income $ 7,484 $ 12,126

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 933 877

Amortization of investments, net 475 285

2 unchanged sentences

Net gain on disposals of property ( 17 ) ( 22 )

Net realized investment losses (gains)

Net realized investment gains ( 141 ) ( 776 )

Net change in estimated fair value of equity security investments 6,486 ( 5,812 )

3 unchanged sentences

Changes in assets and liabilities:

Decrease in premium and fees receivables

Increase in other assets

(Increase) decrease in premium and fees receivables ( 2,735 ) 297

(Increase) decrease in other assets ( 5,013 ) 274

Decrease (increase) in operating lease right-of-use assets 414 ( 4,660 )

Decrease in accounts payable and accrued liabilities

Increase in current income taxes receivable — ( 613 )

Increase (decrease) in accounts payable and accrued liabilities 9,110 ( 2,656 )

(Decrease) increase in operating lease liabilities ( 409 ) 4,663

Increase in current income taxes payable

Decrease in current income taxes payable ( 219 ) ( 4,981 )

Payments of claims, net of recoveries ( 1,539 ) ( 1,314 )

Net cash provided by (used in) operating activities

Net cash provided by operating activities 16,044 761

Investing Activities

15 unchanged sentences

Net cash used in financing activities ( 1,665 ) ( 1,522 )

Net (Decrease) Increase in Cash and Cash Equivalents

Net Increase in Cash and Cash Equivalents 3,760 17,983

Cash and Cash Equivalents, Beginning of Period 25,949 18,694

1 unchanged sentence

Consolidated Statements of Cash Flows, continued

Three Months Ended

Six Months Ended

Supplemental Disclosures:

Cash (Received) Paid During the Year for:

Income tax refunds, net

Cash Paid During the Year for:

Income tax payments, net $ 3,413 $ 7,972

Non-Cash Investing and Financing Activities:

Non cash net unrealized gain on investments, net of deferred tax provision of $(17) and $(307) for March 31, 2020 and 2019, respectively

Adjustments to postretirement benefits obligation, net of deferred tax benefit of $9 and $0 for March 31, 2020 and 2019, respectively

Refer to notes to the Consolidated Financial Statements.

Non-cash net unrealized gain on investments, net of deferred tax provision of $( 322 ) and $( 511 ) for June 30, 2020 and 2019, respectively

$ ( 1,162 ) $ ( 1,905 )

Adjustments to postretirement benefits obligation, net of deferred tax benefit of $ 9 and $ 0 for June 30, 2020 and 2019, respectively

Refer to notes to the Consolidated Financial Statements.c

INVESTORS TITLE COMPANY

1 unchanged sentence

Notes to Consolidated Financial Statements

March 31, 2020

June 30, 2020

Note 1 – Basis of Presentation and Significant Accounting Policies

5 unchanged sentences

All such adjustments are of a normal recurring nature.

Operating results for the three-month period ended March 31, 2020 are not necessarily indicative of the financial condition and results that may be expected for the year ending December 31, 2020 or any other interim period.

Operating results for the three- and six-month periods ended June 30, 2020 are not necessarily indicative of the financial condition and results that may be expected for the year ending December 31, 2020 or any other interim period.

Use of Estimates and Assumptions – The preparation of the Company’s 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 Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period.

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Note 2 – Reserve for Claims

Activity in the reserve for claims for the three-month period ended March 31, 2020 and the year ended December 31, 2019 are summarized as follows:

(in thousands)

March 31, 2020

December 31, 2019

Activity in the reserve for claims for the six-month period ended June 30, 2020 and the year ended December 31, 2019 are summarized as follows:

(in thousands) June 30, 2020 December 31, 2019

Balance, beginning of period $ 31,333 $ 31,729

2 unchanged sentences

Balance, end of period

The total reserve for all reported and unreported losses the Company incurred through March 31, 2020 is represented by the reserve for claims on the Consolidated Balance Sheets.

$ 32,694 $ 31,333

The total reserve for all reported and unreported losses the Company incurred through June 30, 2020 is represented by the reserve for claims on the 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 March 31, 2020 .

Management continually reviews and adjusts its reserve for claims estimates to reflect its loss experience and any new information that becomes available.

1 unchanged sentence

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)

March 31, 2020

December 31, 2019

(in thousands, except percentages) June 30, 2020 % December 31, 2019 %

Known title claims $ 4,037 12.3 $ 3,799 12.1

IBNR 28,657 87.7 27,534 87.9

Total reserve for claims

$ 32,694 100.0 $ 31,333 100.0

Claims and losses paid are charged to the reserve for claims.

2 unchanged sentences

Note 3 – Earnings Per Common Share and Share Awards

Basic (loss) earnings per common share is computed by dividing net (loss) income by the weighted average number of common shares outstanding during the reporting period.

Diluted (loss) earnings per common share is computed by dividing net (loss) 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.

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, as share-based awards are 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 (loss) earnings per share for the three-month periods ended March 31 :

The following table sets forth the computation of basic and diluted earnings per share for the three- and six-month periods ended June 30:

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share amounts)

Net (loss) income

2020 2019 2020 2019

Net income $ 14,495 $ 5,500 $ 7,484 $ 12,126

Weighted average common shares outstanding – Basic 1,892 1,889 1,891 1,888

1 unchanged sentence

Weighted average common shares outstanding – Diluted

Basic (loss) earnings per common share

Diluted (loss) earnings per common share

There were 15 thousand and 9 thousand potential shares excluded from the computation of diluted (loss) earnings per share for the three-month periods ended March 31, 2020 and 2019 , respectively, due to the out-of-the-money status of the related share-based awards.

Diluted loss per share is comparable to basic loss per share when an organization is in a net loss situation, like the Company was for the three-month period ended March 31, 2020 , as the impact to loss per share from share awards is antidilutive.

1,895 1,896 1,895 1,896

Basic earnings per common share $ 7.66 $ 2.91 $ 3.96 $ 6.42

Diluted earnings per common share $ 7.65 $ 2.90 $ 3.95 $ 6.40

There were 20 thousand and 9 thousand potential shares excluded from the computation of diluted earnings per share for the three-month periods ended June 30, 2020 and 2019, respectively, due to the out-of-the-money status of the related share-based awards.

There were 15 thousand and 9 thousand potential shares excluded from the computation of diluted earnings per share for the six-month periods ended June 30, 2020 and 2019, respectively.

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.

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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.

As of March 31, 2020 , the only outstanding awards under the plans were SARs, which expire within seven years or less from the date of grant.

Most outstanding SARs vest and are exercisable within one year of the date of grant, with the exception of a one-time grant where the SARs vest over a five -year period.

As of June 30, 2020, the only outstanding awards under the plans were SARs, which expire within seven years or less from the date of grant.

Most outstanding SARs vest and are exercisable within one year of the date of grant, with the exception of one grant where the SARs vest over five years .

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.

There was approximately $118 thousand and $88 thousand of compensation expense relating to SARs vesting on or before March 31, 2020 and 2019 , respectively, included in personnel expenses in the Consolidated Statements of Operations.

As of March 31, 2020 , there was $171 thousand of unrecognized compensation expense related to unvested share-based compensation arrangements granted under the Company’s stock award plans.

There was approximately $ 154 thousand and $ 147 thousand of compensation expense relating to SARs vesting on or before June 30, 2020 and 2019, respectively, included in personnel expenses in the Consolidated Statements of Operations.

As of June 30, 2020, there was $ 283 thousand of unrecognized compensation expense related to unvested share-based compensation arrangements granted under the Company’s stock award plans.

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)

Exercise Price

Average Remaining

(in thousands, except weighted average exercise price and average remaining contractual term) Number

Of Shares Weighted

Exercise Price Average Remaining

Term (Years) Aggregate

Outstanding as of January 1, 2019 28 $ 110.27 3.64 $ 2,019

SARs granted 4 162.81

SARs exercised ( 2 ) 50.50

Outstanding as of December 31, 2019 30 $ 124.13 3.53 $ 1,352

SARs granted 11 135.05

SARs exercised ( 8 ) 75.75

Outstanding as of March 31, 2020

Exercisable as of March 31, 2020

Unvested as of March 31, 2020

During the first quarter of 2020 the Company issued 7 thousand share-settled SARs to directors and employees of the Company.

There were no such issuances in the first quarter of 2019, as all 2019 issuances of share-settled SARs were made in the second quarter.

Outstanding as of June 30, 2020 33 $ 138.55 4.66 $ 385

Exercisable as of June 30, 2020 25 $ 140.79 3.96 $ 385

Unvested as of June 30, 2020 8 $ 131.81 6.78 $ —

During the second quarters of both 2020 and 2019, the Company issued 4 thousand share-settled SARs to directors of the Company.

During the first quarter of 2020, the Company also issued 7 thousand share-settled SARs to directors and employees of the Company.

There were no such first quarter issuances in 2019, as all 2019 issuances of share-settled SARs were made in the second quarter.

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.

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Treasury yield curve in effect at the time of the grant.

The weighted average fair value for the SARs issued during first quarter 2020 was $ 35.49 and was estimated using the weighted average assumptions shown in the table below.

The weighted average fair value for the SARs issued during 2020 and 2019 were $ 34.45 and $ 51.88 , respectively, and were estimated using the weighted average assumptions shown in the table below.

Expected Life in Years 6.2 - 7.0 7.0 - 7.0

Volatility 28.5 % 30.2 %

Interest Rate 0.7 % 2.3 %

Yield Rate 1.2 % 1.0 %

Note 4 – Segment Information

3 unchanged sentences

Title insurance policies insure titles to real estate.

Provided below is selected financial information about the Company's operations by segment for the periods ended March 31, 2020 and 2019 :

Three Months Ended March 31, 2020 (in thousands)

Provided below is selected financial information about the Company's operations by segment for the periods ended June 30, 2020 and 2019:

Three Months Ended June 30, 2020 (in thousands)

Insurance All

Other Intersegment

Eliminations Total

Insurance and other services revenues $ 51,158 $ 2,168 $ ( 1,734 ) $ 51,592

Investment income 8,358 1,245 — 9,603

Net realized gain on investments 527 26 — 553

Total revenues

$ 60,043 $ 3,439 $ ( 1,734 ) $ 61,748

Operating expenses 43,074 2,340 ( 1,588 ) 43,826

Income before income taxes

$ 16,969 $ 1,099 $ ( 146 ) $ 17,922

$ 204,523 $ 75,385 $ — $ 279,908

Three Months Ended June 30, 2019 (in thousands)

Insurance All

Other Intersegment

Eliminations Total

Insurance and other services revenues $ 38,601 $ 2,831 $ ( 1,946 ) $ 39,486

Investment income 2,471 790 — 3,261

Net realized loss on investments ( 8 ) ( 6 ) — ( 14 )

Total revenues

$ 41,064 $ 3,615 $ ( 1,946 ) $ 42,733

Operating expenses 35,139 2,485 ( 1,811 ) 35,813

Income before income taxes

$ 5,925 $ 1,130 $ ( 135 ) $ 6,920

$ 187,754 $ 68,740 $ — $ 256,494

Six Months Ended June 30, 2020 (in thousands) Title Insurance All Other Intersegment Eliminations Total

Insurance and other services revenues $ 93,011 $ 4,973 $ ( 3,238 ) $ 94,746

Investment loss ( 3,102 ) ( 136 ) — ( 3,238 )

1 unchanged sentence

Total revenues

$ 90,499 $ 4,388 $ ( 3,238 ) $ 91,649

Operating expenses 80,517 4,685 ( 2,946 ) 82,256

Loss before income taxes

Three Months Ended March 31, 2019 (in thousands)

Income (loss) before income taxes

$ 9,982 $ ( 297 ) $ ( 292 ) $ 9,393

$ 204,523 $ 75,385 $ — $ 279,908

Six Months Ended June 30, 2019 (in thousands) Title Insurance All Other Intersegment Eliminations Total

Insurance and other services revenues $ 69,920 $ 5,522 $ ( 3,136 ) $ 72,306

2 unchanged sentences

Total revenues

$ 78,577 $ 7,238 $ ( 3,136 ) $ 82,679

Operating expenses 65,591 4,722 ( 2,867 ) 67,446

Income before income taxes

$ 12,986 $ 2,516 $ ( 269 ) $ 15,233

$ 187,754 $ 68,740 $ — $ 256,494

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 $12.3 million and $12.2 million as of March 31, 2020 and December 31, 2019 , respectively.

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 $ 12.4 million and $ 12.2 million as of June 30, 2020 and December 31, 2019, 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 Consolidated Balance Sheets.

The following sets forth the net periodic benefit cost for the executive benefits for the periods ended March 31, 2020 and 2019 :

The following sets forth the net periodic benefit cost for the executive benefits for the periods ended June 30, 2020 and 2019:

Three Months Ended

June 30, Six Months Ended

(in thousands) 2020 2019 2020 2019

3 unchanged sentences

Net periodic benefit cost

$ 8 $ 9 $ 16 $ 17

Note 6 – Investments and Estimated Fair Value

1 unchanged sentence

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 March 31, 2020 (in thousands)

Estimated Fair

As of June 30, 2020 (in thousands) Amortized

Losses Estimated Fair

Fixed maturity securities, available-for-sale, at fair value:

Government obligations

$ 24,093 $ 231 $ — $ 24,324

General obligations of U.S.

states, territories and political subdivisions

18,507 1,227 — 19,734

Special revenue issuer obligations of U.S.

states, territories and political subdivisions

50,102 3,001 4 53,099

Corporate debt securities 3,959 999 — 4,958

As of December 31, 2019 (in thousands)

Estimated Fair

$ 96,661 $ 5,458 $ 4 $ 102,115

As of December 31, 2019 (in thousands) Amortized

Losses Estimated Fair

Fixed maturity securities, available-for-sale, at fair value:

Government obligations

$ 25,161 $ 6 $ 4 $ 25,163

General obligations of U.S.

states, territories and political subdivisions

18,887 843 — 19,730

Special revenue issuer obligations of U.S.

states, territories and political subdivisions

51,188 2,530 20 53,698

Corporate debt securities 5,431 621 5 6,047

$ 100,667 $ 4,000 $ 29 $ 104,638

The special revenue category for both periods presented includes approximately 50 individual fixed maturity securities with revenue sources from a variety of industry sectors.

The scheduled maturities of fixed maturity securities at March 31, 2020 are as follows:

The scheduled maturities of fixed maturity securities at June 30, 2020 are as follows:

Available-for-Sale

(in thousands)

Estimated Fair

(in thousands) Amortized

Cost Estimated Fair

Due in one year or less $ 33,153 $ 33,434

2 unchanged sentences

Due after ten years 814 1,361

$ 96,661 $ 102,115

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 March 31, 2020 and December 31, 2019 :

Less than 12 Months

12 Months or Longer

As of March 31, 2020 (in thousands)

Less than 12 Months 12 Months or Longer Total

As of June 30, 2020 (in thousands) Estimated

Value Unrealized

Losses Estimated

Value Unrealized

Losses Estimated

Value Unrealized

Special revenue issuer obligations of U.S.

states, territories and political subdivisions

Corporate debt securities

$ — $ — $ 1,106 $ ( 4 ) $ 1,106 $ ( 4 )

Total temporarily impaired securities

Less than 12 Months

12 Months or Longer

As of December 31, 2019 (in thousands)

$ — $ — $ 1,106 $ ( 4 ) $ 1,106 $ ( 4 )

Less than 12 Months 12 Months or Longer Total

As of December 31, 2019 (in thousands) Estimated

Value Unrealized

Losses Estimated

Value Unrealized

Losses Estimated

Value Unrealized

Government obligations

$ 12,045 $ ( 4 ) $ — $ — $ 12,045 $ ( 4 )

Special revenue issuer obligations of U.S.

states, territories and political subdivisions

1,101 ( 17 ) 1,118 ( 3 ) 2,219 ( 20 )

Corporate debt securities

413 ( 5 ) — — 413 ( 5 )

Total temporarily impaired securities

$ 13,559 $ ( 26 ) $ 1,118 $ ( 3 ) $ 14,677 $ ( 29 )

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.

3 unchanged sentences

Factors considered in determining whether a loss is temporary include the length of time and extent to which fair value has been below cost, the financial condition and prospects of the issuer (including credit ratings and analyst reports) and macro-economic changes.

A total of 9 and 6 fixed maturity securities had unrealized losses without an allowance for credit losses at March 31, 2020 and December 31, 2019 , respectively.

A total of 1 and 6 fixed maturity securities had unrealized losses without an allowance for credit losses at June 30, 2020 and December 31, 2019, respectively.

The Company does not have the intent 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.

2 unchanged sentences

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 $482 thousand and $0 other-than-temporary impairment charges related to fixed maturity securities for the three-month periods ended March 31, 2020 and 2019, respectively.

Expenses related to other-than-temporary impairments are recorded in net realized investment (losses) gains in the Consolidated Statements of Operations when recognized.

The Company recorded $ 482 thousand and $ 0 of other-than-temporary impairment charges related to fixed maturity securities for the six-month periods ended June 30, 2020 and 2019, respectively.

Expenses related to other-than-temporary impairments are recorded in net realized investment gains (losses) in the Consolidated Statements of Operations when recognized.

Investments in Equity Securities

The cost and estimated fair value of equity securities are as follows:

As of March 31, 2020 (in thousands)

Estimated Fair

As of June 30, 2020 (in thousands)

Cost Estimated Fair

Equity securities, at fair value:

Common stocks $ 34,778 $ 55,830

$ 34,778 $ 55,830

As of December 31, 2019 (in thousands)

Estimated Fair

Cost Estimated Fair

Equity securities, at fair value:

Common stocks $ 33,570 $ 61,108

$ 33,570 $ 61,108

Unrealized holding gains and losses are reported in the Consolidated Statements of Operations as changes in the estimated fair value of equity security investments.

Net Realized Investment (Losses) Gains

Gross realized gains and losses on sales of investments for the three-month periods ended March 31 are summarized as follows:

Net Realized Investment Gains (Losses)

Gross realized gains and losses on sales of investments for the six-month periods ended June 30 are summarized as follows:

(in thousands) 2020 2019

2 unchanged sentences

Common stocks

$ 1,604 $ 952

Gross realized losses from securities:

Common stocks

$ ( 1,008 ) $ ( 177 )

Other-than-temporary impairment of securities

Net realized (losses) gains from securities

Net realized gains on other investments:

$ ( 1,490 ) $ ( 177 )

Net realized gains from securities

Net realized gains (losses) on other investments:

Gains on other investments

Net loss on other assets and investments

Net realized investment (losses) gains

Losses on other investments ( 5 ) —

Net realized investment gains

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

3 unchanged sentences

this power resides with a third-party general partner or managing member that cannot be removed except for cause.

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 March 31, 2020 :

(in thousands)

Balance Sheet Classification

Carrying Value

Estimated Fair Value

Maximum Potential Loss (a)

Tax credit LPs

Other investments

Real estate LLCs or LPs

Other investments

Small business investment LPs

Other investments

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.

(in thousands) Balance Sheet Classification Carrying Value Estimated Fair Value Maximum Potential Loss (a)

Tax credit LPs Other investments $ 267 $ 267 $ 1,768

Real estate LLCs or LPs Other investments 5,406 7,356 6,675

Small business investment LPs Other investments 6,648 6,257 12,955

$ 12,321 $ 13,880 $ 21,398

(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.

15 unchanged sentences

Generally, quotes obtained from the pricing service for instruments classified as Level 2 are not adjusted and are not binding.

As of March 31, 2020 and December 31, 2019 , the Company did not adjust any Level 2 fair values.

As of June 30, 2020 and December 31, 2019, 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.

12 unchanged sentences

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 March 31, 2020 and December 31, 2019 :

As of March 31, 2020 (in thousands)

The following table presents, by level, fixed maturity securities carried at estimated fair value as of June 30, 2020 and December 31, 2019:

As of June 30, 2020 (in thousands) Level 1 Level 2 Level 3 Total

Fixed maturity securities:

1 unchanged sentence

states, territories and political subdivisions*

$ 24,324 $ 72,834 $ — $ 97,158

Corporate debt securities*

As of December 31, 2019 (in thousands)

— 4,957 — 4,957

$ 24,324 $ 77,791 $ — $ 102,115

As of December 31, 2019 (in thousands) Level 1 Level 2 Level 3 Total

Fixed maturity securities:

1 unchanged sentence

states, territories and political subdivisions*

$ 24,160 $ 74,431 $ — $ 98,591

Corporate debt securities*

— 6,047 — 6,047

$ 24,160 $ 80,478 $ — $ 104,638

*Denotes fair market value obtained from pricing services.

The following table presents, by level, estimated fair values of equity investments and other financial instruments as of March 31, 2020 and December 31, 2019 :

As of March 31, 2020 (in thousands)

The following table presents, by level, estimated fair values of equity investments and other financial instruments as of June 30, 2020 and December 31, 2019:

As of June 30, 2020 (in thousands) Level 1 Level 2 Level 3 Total

Financial assets:

Cash and cash equivalents

$ 29,709 $ — $ — $ 29,709

Accrued interest and dividends

1,005 — — 1,005

Equity securities, at fair value:

Common stocks

55,830 — — 55,830

Short-term investments:

2 unchanged sentences

Equity investments in unconsolidated affiliates, equity method

— — 6,371 6,371

Equity investments in unconsolidated affiliates, measurement alternative

As of December 31, 2019 (in thousands)

— — 8,509 8,509

$ 111,267 $ — $ 14,880 $ 126,147

As of December 31, 2019 (in thousands) Level 1 Level 2 Level 3 Total

Financial assets:

Cash and cash equivalents

$ 25,949 $ — $ — $ 25,949

Accrued interest and dividends

1,033 — — 1,033

Equity securities, at fair value:

Common stocks

61,108 — — 61,108

Short-term investments:

2 unchanged sentences

Equity investments in unconsolidated affiliates, equity method

— — 6,083 6,083

Equity investments in unconsolidated affiliates, measurement alternative

The Company did not hold any Level 3 category debt or marketable equity investment securities as of March 31, 2020 or December 31, 2019.

— — 7,899 7,899

$ 101,224 $ — $ 13,982 $ 115,206

The Company did not hold any Level 3 category debt or marketable equity investment securities as of June 30, 2020 or December 31, 2019.

There were no transfers into or out of Levels 1, 2 or 3 during the periods presented.

14 unchanged sentences

If any such investment is determined to be other-than-temporarily impaired, an impairment charge is recorded against such investment and reflected in the Consolidated Statements of Operations.

There were no impairments of such investments made during the three-month period ended March 31, 2020 or the twelve-month period ended December 31, 2019 .

The following table presents a rollforward of equity investments under the measurement alternative as of March 31, 2020 and December 31, 2019 :

(in thousands)

January 1, 2020

Amounts Impaired

Observable Changes

Purchases and

Sales, Returns of Capital and Other Reductions

March 31, 2020

There were no impairments of such investments made during the six-month period ended June 30, 2020 or the twelve-month period ended December 31, 2019.

The following table presents a rollforward of equity investments under the measurement alternative as of June 30, 2020 and December 31, 2019:

(in thousands) Balance,

December 31, 2019

Amounts Impaired Observable Changes Purchases and

Paid Sales, Returns of Capital and Other Reductions Balance,

June 30, 2020

Other investments:

Equity investments in unconsolidated affiliates, measurement alternative

(in thousands)

January 1, 2019

Amounts Impaired

Observable Changes

Purchases and

Sales, Returns of Capital and Other Reductions

$ 7,899 $ — $ — $ 642 $ ( 32 ) $ 8,509

(in thousands) Balance,

December 31, 2018

Amounts Impaired Observable Changes Purchases and

Paid Sales, Returns of Capital and Other Reductions Balance,

December 31, 2019

Other investments:

Equity investments in unconsolidated affiliates, measurement alternative

$ 6,589 $ — $ — $ 2,241 $ ( 931 ) $ 7,899

Note 7 – Commitments and Contingencies

Legal Proceedings – The Company and its subsidiaries are involved in legal proceedings that are incidental to their business.

In the Company’s opinion, based on the present status of these proceedings, any potential liability of the Company or its subsidiaries with respect to these legal proceedings, will not, in the aggregate, be material to the Company’s consolidated financial condition or operations.

In the Company’s opinion, based on the present status of these proceedings, any potential liability of the Company or its subsidiaries with respect to these legal proceedings, is not expected to be, in the aggregate, material to the Company’s consolidated financial condition or operations.

Regulation – The Company’s title insurance and trust subsidiaries are regulated by various federal, state and local governmental agencies and are subject to various audits, examinations, and inquiries.

5 unchanged sentences

Another Company subsidiary, Investors Title Accommodation Corporation (“ITAC”), serves as exchange accommodation titleholder and, through limited liability companies that are wholly owned subsidiaries of ITAC, holds property for exchangers in reverse exchange transactions.

Like-kind exchange deposits and reverse exchange property totaled approximately $223.6 million and $214.6 million as of March 31, 2020 and December 31, 2019 , respectively.

Like-kind exchange deposits and reverse exchange property totaled approximately $ 171.4 million and $ 214.6 million as of June 30, 2020 and December 31, 2019, respectively.

These amounts are not considered assets of the Company and, therefore, are excluded from the accompanying Consolidated Balance Sheets;

3 unchanged sentences

Like-kind exchange funds are primarily invested in money market and other short-term investments.

COVID-19 – An outbreak of a coronavirus ("COVID-19" or "the virus") has emerged and in March 2020 the World Health Organization declared it a pandemic.

This contagious disease outbreak has continued to spread across the globe and is impacting worldwide economic activity and financial markets.

The pandemic has had a negative impact on the real estate market and the value of marketable securities, including those held by the Company.

COVID-19 – The U.S.

and other countries are experiencing an outbreak of a novel coronavirus which causes a disease designated as COVID-19 and, in March 2020, the World Health Organization declared it a pandemic.

This contagious disease outbreak has continued to spread across the globe, including in U.S.

states where the Company conducts business, and is impacting worldwide economic activity and financial markets.

In response, the U.S.

government and its agencies have taken a number of significant measures to provide monetary stimulus.

government and its agencies have taken a number of significant measures to provide fiscal and monetary stimulus.

Such actions include an unscheduled cut to the federal funds rate, the introduction of new programs to preserve market liquidity, extended unemployment and sick leave benefits, low-interest loans for working capital access and payroll assistance, and other relief measures for both workers and businesses.

The Company is fully operational and has not had any reductions in workforce.

The Company is fully operational and has not had any reductions in workforce during 2020.

A large portion of the Company's workforce is performing their job functions remotely.

The Company has not taken stimulus relief funding or added any other forms of debt.

The Company has not taken stimulus relief funding or incurred any other forms of debt.

Note 8 – Related Party Transactions

4 unchanged sentences

Consolidated Balance Sheets

(in thousands)

March 31, 2020

(in thousands) As of

June 30, 2020 As of

December 31, 2019

3 unchanged sentences

Consolidated Statements of Operations

(in thousands)

Three Months Ended

(in thousands) Three Months Ended

Six Months Ended

2020 2019 2020 2019

Net premiums written $ 6,053 $ 3,929 $ 10,110 $ 7,048

4 unchanged sentences

The estimated fair values of intangible assets recognized as the result of title insurance agency acquisitions, all Level 3 inputs, are principally based on values obtained from an independent third-party valuation service.

In accordance with ASC 350, Intangibles – Goodwill and Other , management determined that no events or changes in circumstances occurred during the three-month periods ended March 31, 2020 and 2019 that would indicate the carrying amounts may not be recoverable, and therefore determined that no identifiable intangible assets were impaired.

In accordance with ASC 350, Intangibles – Goodwill and Other , management determined that no events or changes in circumstances occurred during the six-month periods ended June 30, 2020 and 2019 that would indicate the carrying amounts may not be recoverable, and therefore determined that no identifiable intangible assets were impaired.

Identifiable intangible assets consist of the following:

(in thousands)

March 31, 2020

(in thousands) As of

June 30, 2020 As of

December 31, 2019

1 unchanged sentence

Non-compete agreements 1,406 1,406

Tradename 560 560

Accumulated amortization ( 2,708 ) ( 2,456 )

Identifiable intangible assets, net

$ 5,674 $ 5,926

The following table provides the estimated aggregate amortization expense for each of the five succeeding fiscal years:

Year Ended (in thousands)

Thereafter 3,337

Goodwill and Title Plant

As of March 31, 2020 , the Company recognized $4.4 million in goodwill and $690 thousand in a title plant, net of impairments, as the result of title insurance agency acquisitions.

As of June 30, 2020, the Company recognized $ 4.4 million in goodwill and $ 690 thousand in a title plant, net of impairments, as the result of title insurance agency acquisitions.

The title plant is included with other assets in the Consolidated Balance Sheets.

The fair values of goodwill and the title plant, both Level 3 inputs, are principally based on values obtained from an independent third-party valuation service as of the date of acquisition.

Note 10 – Accumulated Other Comprehensive Income

The following tables provide changes in the balances of each component of accumulated other comprehensive income, net of tax, for the periods ended March 31, 2020 and 2019 :

The following tables provide changes in the balances of each component of accumulated other comprehensive income, net of tax, for the periods ended June 30, 2020 and 2019:

Three Months Ended

March 31, 2020 (in thousands)

Unrealized Gains and Losses

June 30, 2020 (in thousands) Unrealized Gains and Losses

On Available-for-Sale

Postretirement

Securities Postretirement

Benefits Plans

Beginning balance at January 1

Other comprehensive loss before reclassifications

Beginning balance at March 31

$ 3,176 $ ( 64 ) $ 3,112

Other comprehensive income before reclassifications

1,118 — 1,118

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive income (loss)

Net current-period other comprehensive income

1,118 — 1,118

Ending balance

$ 4,294 $ ( 64 ) $ 4,230

Three Months Ended

March 31, 2019 (in thousands)

Unrealized Gains and Losses

June 30, 2019 (in thousands) Unrealized Gains and Losses

On Available-for-Sale

Postretirement

Securities Postretirement

Benefits Plans

Beginning balance at March 31

$ 2,124 $ ( 32 ) $ 2,092

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive income

Ending balance $ 2,886 $ ( 32 ) $ 2,854

Six Months Ended June 30, 2020 (in thousands) Unrealized Gains and Losses

On Available-for-Sale

Securities Postretirement

Benefits Plans

Beginning balance at January 1 $ 3,132 $ ( 32 ) $ 3,100

Other comprehensive income (loss) before reclassifications

814 ( 32 ) 782

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive income (loss)

1,162 ( 32 ) 1,130

Ending balance $ 4,294 $ ( 64 ) $ 4,230

Six Months Ended June 30, 2019 (in thousands) Unrealized Gains and Losses

On Available-for-Sale

Securities Postretirement

Benefits Plans Total

Beginning balance at January 1 $ 981 $ ( 32 ) $ 949

Other comprehensive income before reclassifications

1,905 — 1,905

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive income

1,905 — 1,905

Ending balance

The following table provides significant amounts reclassified out of each component of accumulated other comprehensive income for the three-month period ended March 31, 2020 :

Three Months Ended March 31, 2020

$ 2,886 $ ( 32 ) $ 2,854

The following table provides significant amounts reclassified out of each component of accumulated other comprehensive income for the three- and six-month periods ended June 30, 2020:

Three Months Ended

June 30, 2020 (in thousands)

Details about Accumulated Other

Comprehensive Income Components (in thousands)

Amount Reclassified from

Comprehensive Income Components (in thousands) Amount Reclassified from

Accumulated Other

Comprehensive Income

Affected Line Item in the Consolidated

Comprehensive Income Affected Line Item in the Consolidated

Statements of Operations

2 unchanged sentences

Other-than-temporary impairments —

Net realized investment (losses) gains

(Benefit) provision for income taxes

Total $ — Net realized investment gains (losses)

Tax — Provision for income taxes

Net of Tax $ —

Reclassifications for the period $ —

There were no amounts reclassified out of each component of accumulated other comprehensive income for the three-month period ended March 31, 2019 .

Six Months Ended

June 30, 2020 (in thousands)

Details about Accumulated Other Comprehensive Income Components (in thousands) Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statements of Operations

Unrealized gains (losses) on available-for-sale securities:

Net realized gain on investments $ 30

Other-than-temporary impairments ( 482 )

Total $ ( 452 ) Net realized investment gains (losses)

Tax 104 Provision for income taxes

Net of Tax $ ( 348 )

Reclassifications for the period $ ( 348 )

There were no amounts reclassified out of each component of accumulated other comprehensive income for either the three- or six-month periods ended June 30, 2019.

Note 11 – Revenue from Contracts with Customers

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2020 2019 2020 2019

5 unchanged sentences

Net premiums written 47,479 34,978 86,106 63,773

Investment-related (loss) revenue

Investment-related revenue (loss)

10,156 3,247 ( 3,097 ) 10,373

Other 120 90 258 405

Total revenues

$ 61,748 $ 42,733 $ 91,649 $ 82,679

Note 12 – Leases

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2020 2019 2020 2019

2 unchanged sentences

Lease expense

$ 357 $ 357 $ 707 $ 705

Sub-lease income — — — —

Leases with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheets.

$ 357 $ 357 $ 707 $ 705

(b) Leases with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheets.

Components of the operating lease liability presented on the Consolidated Balance Sheets are as follows:

(in thousands)

March 31, 2020

(in thousands) As of

June 30, 2020 As of

December 31, 2019

Operating lease liabilities

$ 1,092 $ 1,048

Operating lease liabilities

Total operating lease liabilities $ 4,093 $ 4,502

The future minimum lease payments under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of March 31, 2020 , are summarized as follows:

The future minimum lease payments under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of June 30, 2020, are summarized as follows:

Year Ended (in thousands)

Thereafter 596

Total undiscounted payments $ 4,527

2 unchanged sentences

Supplemental lease information is as follows:

March 31, 2020

June 30, 2020 As of

December 31, 2019

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements