INVESTORS TITLE CO 10-Q

Item 1. Financial Statements Investors Title Company and Subsidiaries Consolidated Balance Sheets As of September 30, 2020 and December 31, 2019 (in thousands) (unaudited) September 30, 2020 December 31, 2019 Assets Cash and cash equivalents $ 41,534 $ 25,949 Investments: Fixed maturity securities, available-for-sale, at fair value (amortized cost: September 30, 2020: $ 92,912 ; December 31, 2019: $ 100,667 ) 98,428 104,638 Equity securities, at fair value (cost: September 30, 2020: $ 34,180 ; December 31, 2019: $ 33,570 ) 58,851 61,108 Short-term investments 22,516 13,134 Other investments 14,829 13,982 Total investments 194,624 192,862 Premium and fees receivable 17,291 12,523 Accrued interest and dividends 1,187 1,033 Prepaid expenses and other receivables 9,185 5,519 Property, net 10,669 9,776 Goodwill and other intangible assets, net 9,897 10,275 Operating lease right-of-use assets 3,798 4,469 Other assets 1,560 1,487 Total Assets $ 289,745 $ 263,893 Liabilities and Stockholders’ Equity Liabilities: Reserve for claims $ 33,532 $ 31,333 Accounts payable and accrued liabilities 31,565 28,318 Operating lease liabilities 3,937 4,502 Current income taxes payable 813 1,340 Deferred income taxes, net 6,971 7,038 Total liabilities 76,818 72,531 Commitments and Contingencies — — Stockholders’ Equity: Preferred stock ( 1,000 authorized shares; no shares issued) — — Common stock – no par value ( 10,000 authorized shares; 1,892 and 1,889 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively, excluding in each period 292 shares of common stock held by the Company) — — Retained earnings 208,647 188,262 Accumulated other comprehensive income 4,280 3,100 Total stockholders' equity 212,927 191,362 Total Liabilities and Stockholders’ Equity $ 289,745 $ 263,893 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, 2020 and 2019 (in thousands, except per share amounts) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Revenues: Net premiums written $ 57,205 $ 40,169 $ 143,311 $ 103,942 Escrow and other title-related fees 2,154 2,393 6,014 5,616 Non-title services 1,954 2,539 6,476 7,444 Interest and dividends 1,060 1,156 3,342 3,605 Other investment income 1,270 708 2,236 2,044 Net realized investment gains 186 423 327 1,199 Changes in the estimated fair value of equity security investments 3,619 406 ( 2,867 ) 6,218 Other 185 145 443 550 Total Revenues 67,633 47,939 159,282 130,618 Operating Expenses: Commissions to agents 29,068 19,928 73,344 51,261 Provision for claims 1,552 987 4,452 3,610 Personnel expenses 12,575 11,576 36,632 34,871 Office and technology expenses 2,456 2,350 7,328 6,803 Other expenses 3,125 3,079 9,276 8,821 Total Operating Expenses 48,776 37,920 131,032 105,366 Income before Income Taxes 18,857 10,019 28,250 25,252 Provision for Income Taxes 3,556 2,067 5,465 5,174 Net Income $ 15,301 $ 7,952 $ 22,785 $ 20,078 Basic Earnings per Common Share $ 8.09 $ 4.21 $ 12.04 $ 10.63 Weighted Average Shares Outstanding – Basic 1,892 1,889 1,892 1,888 Diluted Earnings per Common Share $ 8.07 $ 4.20 $ 12.02 $ 10.59 Weighted Average Shares Outstanding – Diluted 1,895 1,895 1,896 1,896 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, 2020 and 2019 (in thousands) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net income $ 15,301 $ 7,952 $ 22,785 $ 20,078 Other comprehensive income, before tax: Accumulated postretirement benefit obligation adjustment — — ( 41 ) — Net unrealized gain on investments arising during the period 61 431 1,093 2,847 Reclassification adjustment for sale of securities included in net income — — ( 30 ) — Reclassification adjustment for write-down of securities included in net income — — 482 — Other comprehensive income, before tax 61 431 1,504 2,847 Income tax benefit related to postretirement health benefits — — ( 9 ) — Income tax expense related to net unrealized gain on investments arising during the period 11 90 229 601 Income tax benefit related to reclassification adjustment for sale of securities included in net income — — ( 6 ) — Income tax expense related to reclassification adjustment for write-down of securities included in net income — — 110 — Net income tax expense on other comprehensive income 11 90 324 601 Other comprehensive income 50 341 1,180 2,246 Comprehensive Income $ 15,351 $ 8,293 $ 23,965 $ 22,324 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, 2020 and 2019 (in thousands, except per share amounts) (unaudited) Common Stock Retained Earnings Accumulated Other Comprehensive Income Total Stockholders’ Equity Shares Amount Balance, June 30, 2019 1,889 $ — $ 185,441 $ 2,854 $ 188,295 Net income 7,952 7,952 Dividends paid ($ 0.40 per share) ( 755 ) ( 755 ) Exercise of stock appreciation rights — — — Share-based compensation expense related to stock appreciation rights 57 57 Net unrealized gain on investments 341 341 Balance, September 30, 2019 1,889 $ — $ 192,695 $ 3,195 $ 195,890 Balance, June 30, 2020 1,892 $ — $ 194,235 $ 4,230 $ 198,465 Net income 15,301 15,301 Dividends paid ($ 0.44 per share) ( 833 ) ( 833 ) Exercise of stock appreciation rights — — — Share-based compensation expense related to stock appreciation rights 38 38 Net unrealized gain on investments 50 50 Other ( 94 ) ( 94 ) Balance, September 30, 2020 1,892 $ — $ 208,647 $ 4,280 $ 212,927 4 Common Stock Retained Earnings Accumulated Other Comprehensive Income Total Stockholders’ Equity Shares Amount Balance, December 31, 2018 1,887 $ — $ 174,690 $ 949 $ 175,639 Net income 20,078 20,078 Dividends paid ($ 1.20 per share) ( 2,266 ) ( 2,266 ) Repurchases of common stock — ( 11 ) ( 11 ) Exercise of stock appreciation rights 2 — — Share-based compensation expense related to stock appreciation rights 204 204 Net unrealized gain on investments 2,246 2,246 Balance, September 30, 2019 1,889 $ — $ 192,695 $ 3,195 $ 195,890 Balance, December 31, 2019 1,889 $ — $ 188,262 $ 3,100 $ 191,362 Net income 22,785 22,785 Dividends paid ($ 1.32 per share) ( 2,497 ) ( 2,497 ) Exercise of stock appreciation rights 3 ( 1 ) ( 1 ) Share-based compensation expense related to stock appreciation rights 192 192 Accumulated postretirement benefit obligation adjustment ( 32 ) ( 32 ) Net unrealized gain on investments 1,212 1,212 Other ( 94 ) ( 94 ) Balance, September 30, 2020 1,892 $ — $ 208,647 $ 4,280 $ 212,927 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, 2020 and 2019 (in thousands) (unaudited) Nine Months Ended September 30, 2020 2019 Operating Activities Net income $ 22,785 $ 20,078 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,320 1,298 Amortization of investments, net 678 492 Amortization of other intangible assets, net 378 379 Share-based compensation expense related to stock appreciation rights 192 204 Net gain on disposals of property ( 26 ) ( 28 ) Net realized investment gains ( 327 ) ( 1,199 ) Net change in estimated fair value of equity security investments 2,867 ( 6,218 ) Net earnings from other investments ( 1,764 ) ( 1,286 ) Provision for claims 4,452 3,610 (Benefit) provision for deferred income taxes ( 391 ) 1,340 Changes in assets and liabilities: Increase in premium and fees receivables ( 4,768 ) ( 502 ) (Increase) decrease in other assets ( 3,893 ) 360 Decrease (increase) in operating lease right-of-use assets 577 ( 4,619 ) Increase (decrease) in accounts payable and accrued liabilities 3,206 ( 205 ) (Decrease) increase in operating lease liabilities ( 565 ) 4,622 Decrease in current income taxes payable ( 527 ) ( 4,839 ) Payments of claims, net of recoveries ( 2,253 ) ( 3,534 ) Net cash provided by operating activities 21,941 9,953 Investing Activities Purchases of fixed maturities ( 517 ) ( 1,235 ) Purchases of equity securities ( 9,270 ) ( 3,921 ) Purchases of short-term investments ( 13,668 ) ( 89,519 ) Purchases of other investments ( 1,090 ) ( 1,456 ) Proceeds from sales and maturities of fixed maturity securities 7,139 7,280 Proceeds from sales of equity securities 9,412 4,040 Proceeds from sales and maturities of short-term investments 4,291 100,821 Proceeds from sales and distributions of other investments 2,010 2,490 Proceeds from sales of other assets 22 2 Purchases of property ( 2,245 ) ( 1,020 ) Proceeds from the sale of property 58 140 Net cash (used in) provided by investing activities ( 3,858 ) 17,622 Financing Activities Repurchases of common stock — ( 11 ) Exercise of stock appreciation rights ( 1 ) — Dividends paid ( 2,497 ) ( 2,266 ) Net cash used in financing activities ( 2,498 ) ( 2,277 ) Net Increase in Cash and Cash Equivalents 15,585 25,298 Cash and Cash Equivalents, Beginning of Period 25,949 18,694 Cash and Cash Equivalents, End of Period $ 41,534 $ 43,992 6 Consolidated Statements of Cash Flows, continued Nine Months Ended September 30, 2020 2019 Supplemental Disclosures: Cash Paid During the Year for: Income tax payments, net $ 6,889 $ 9,150 Non-Cash Investing and Financing Activities: Non-cash net unrealized gain on investments, net of deferred tax provision of $( 333 ) and $( 601 ) for September 30, 2020 and 2019, respectively $ ( 1,212 ) $ ( 2,246 ) Adjustments to postretirement benefits obligation, net of deferred tax benefit of $ 9 and $ 0 for September 30, 2020 and 2019, respectively $ 32 $ — Adjustments to operating lease right-of-use assets for September 30, 2020 and 2019, respectively $ 94 $ — Refer to notes to the Consolidated Financial Statements. 7 INVESTORS TITLE COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2020 (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, 2019 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 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, 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. 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 Consolidated Financial Statements. Recently Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326) . ASU 2016-13 updated guidance to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The update broadened the information that an entity must consider in developing its expected credit loss estimates, and was meant to better reflect an entity’s current estimate of all expected credit losses. In addition, this update amended the accounting for credit losses on available-for-sale fixed maturity securities and purchased financial assets with credit deterioration. The update was effective for the Company for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted this update on January 1, 2020 with no material impact on the Company's financial position and results of operations. Refer to Note 6 for further information about the Company's investments. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350). This update removed the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. As a result, under the ASU, an entity is required to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and must recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized must not exceed the total amount of goodwill allocated to that reporting unit. In addition, the ASU clarified that an entity is required to consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The update was effective for the Company for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company adopted this update on January 1, 2020 with no impact on the Company's financial position and results of operations. 8 Recently Issued Accounting Standards In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes . ASU 2019-12 is intended to reduce the complexity in accounting for income taxes during interim and annual periods and is expected to provide clarity on income tax situations where a diversity in practice has developed. The update is effective for annual and interim periods in fiscal years beginning after December 15, 2020. Early adoption is permitted for interim or annual periods for which financial statements have not yet been issued. None of these amendments are expected to have a material impact on the Company's financial position or results of operations. In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). This update clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative immediately before applying or upon discontinuing the equity method. In addition, this update clarifies that, when determining the accounting for certain forward contracts and purchased options, a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. The update is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted , including early adoption in an interim period, for periods for which financial statements have not yet been issued. The Company is currently evaluating the impact that the recently issued accounting standard will have on the Company's financial position and results of operations, and does not expect it to have a material impact. Significant Accounting Policies – The Company has updated the following accounting policies due to the adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) : Allowance for Credit Losses – Available-for-Sale Securities For available-for-sale fixed maturity securities in an unrealized loss position, the Company evaluates the securities to determine whether the decline in the estimated fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors. Any impairment that is not credit related is recognized in other comprehensive income, net of applicable taxes. Credit-related impairment is recognized as an allowance for credit losses (“ACL”) on the Consolidated Balance Sheets, limited to the amount by which the amortized cost basis exceeds the estimated fair value, with a corresponding adjustment to earnings. Both the ACL and the adjustment to the Consolidated Statements of Operations may be reversed if conditions change. However, if the Company intends to sell an impaired available-for-sale fixed maturity security or more likely than not will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount must be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis. Because the security’s amortized cost basis is adjusted to estimated fair value, there is no ACL in this situation. In evaluating available-for-sale fixed maturity securities in unrealized loss positions for impairment and the criteria regarding its intent or requirement to sell such securities, the Company considers the extent to which estimated fair value is less than amortized cost, whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuers’ financial condition, among other factors. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the ACL when management believes the uncollectability of an available-for-sale fixed maturity security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable is excluded from the estimate of credit losses. Note 2 – Reserve for Claims Activity in the reserve for claims for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 are summarized as follows: (in thousands) September 30, 2020 December 31, 2019 Balance, beginning of period $ 31,333 $ 31,729 Provision charged to operations 4,452 3,532 Payments of claims, net of recoveries ( 2,253 ) ( 3,928 ) Balance, end of period $ 33,532 $ 31,333 9 The total reserve for all reported and unreported losses the Company incurred through September 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 September 30, 2020. 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. 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, 2020 % December 31, 2019 % Known title claims $ 3,993 11.9 $ 3,799 12.1 IBNR 29,539 88.1 27,534 87.9 Total reserve for claims $ 33,532 100.0 $ 31,333 100.0 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, 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 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) 2020 2019 2020 2019 Net income $ 15,301 $ 7,952 $ 22,785 $ 20,078 Weighted average common shares outstanding – Basic 1,892 1,889 1,892 1,888 Incremental shares outstanding assuming the exercise of dilutive SARs (share-settled) 3 6 4 8 Weighted average common shares outstanding – Diluted 1,895 1,895 1,896 1,896 Basic earnings per common share $ 8.09 $ 4.21 $ 12.04 $ 10.63 Diluted earnings per common share $ 8.07 $ 4.20 $ 12.02 $ 10.59 There were 20 thousand and 14 thousand potential shares excluded from the computation of diluted earnings per share for the three-month periods ended September 30, 2020 and 2019, respectively, due to the out-of-the-money status of the related share-based awards. There were 20 thousand and 14 thousand potential shares excluded from the computation of diluted earnings per share for the nine-month periods ended September 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. 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. 10 As of September 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 $ 192 thousand and $ 205 thousand of compensation expense relating to SARs vesting on or before September 30, 2020 and 2019, respectively, included in personnel expenses in the Consolidated Statements of Operations. As of September 30, 2020, there was $ 246 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) Number Of Shares Weighted Average Exercise Price Average Remaining Contractual Term (Years) Aggregate Intrinsic Value 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 September 30, 2020 33 $ 138.55 4.41 $ 496 Exercisable as of September 30, 2020 26 $ 140.02 3.83 $ 480 Unvested as of September 30, 2020 7 $ 133.21 6.52 $ 16 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. The fair value of each award is estimated on the date of grant using the Black-Scholes option valuation model with the weighted average assumptions noted in the table shown below. 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 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. 2020 2019 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 % 11 Note 4 – Segment Information The Company has one reportable segment, title insurance 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. Provided below is selected financial information about the Company's operations by segment for the periods ended September 30, 2020 and 2019: Three Months Ended September 30, 2020 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 61,809 $ 2,176 $ ( 2,487 ) $ 61,498 Investment income 5,627 322 — 5,949 Net realized (loss) gain on investments ( 263 ) 449 — 186 Total revenues $ 67,173 $ 2,947 $ ( 2,487 ) $ 67,633 Operating expenses 49,260 1,858 ( 2,342 ) 48,776 Income before income taxes $ 17,913 $ 1,089 $ ( 145 ) $ 18,857 Total assets $ 213,152 $ 76,593 $ — $ 289,745 Three Months Ended September 30, 2019 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 44,079 $ 2,851 $ ( 1,684 ) $ 45,246 Investment income 1,879 391 — 2,270 Net realized gain on investments 346 77 — 423 Total revenues $ 46,304 $ 3,319 $ ( 1,684 ) $ 47,939 Operating expenses 37,201 2,269 ( 1,550 ) 37,920 Income before income taxes $ 9,103 $ 1,050 $ ( 134 ) $ 10,019 Total assets $ 191,436 $ 74,678 $ — $ 266,114 Nine Months Ended September 30, 2020 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 154,820 $ 7,149 $ ( 5,725 ) $ 156,244 Investment income 2,525 186 — 2,711 Net realized gain on investments 327 — — 327 Total revenues $ 157,672 $ 7,335 $ ( 5,725 ) $ 159,282 Operating expenses 129,777 6,543 ( 5,288 ) 131,032 Income before income taxes $ 27,895 $ 792 $ ( 437 ) $ 28,250 Total assets $ 213,152 $ 76,593 $ — $ 289,745 Nine Months Ended September 30, 2019 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 113,999 $ 8,373 $ ( 4,820 ) $ 117,552 Investment income 9,780 2,087 — 11,867 Net realized gain on investments 1,102 97 — 1,199 Total revenues $ 124,881 $ 10,557 $ ( 4,820 ) $ 130,618 Operating expenses 102,792 6,991 ( 4,417 ) 105,366 Income before income taxes $ 22,089 $ 3,566 $ ( 403 ) $ 25,252 Total assets $ 191,436 $ 74,678 $ — $ 266,114 12 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 $ 12.4 million and $ 12.2 million as of September 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 September 30, 2020 and 2019: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Service cost – benefits earned during the year $ — $ — $ — $ — Interest cost on the projected benefit obligation 7 8 23 25 Amortization of unrecognized losses — — — — Net periodic benefit cost $ 7 $ 8 $ 23 $ 25 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, 2020 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturity securities, available-for-sale, at fair value: Government obligations $ 24,060 $ 152 $ — $ 24,212 General obligations of U.S. states, territories and political subdivisions 17,569 1,245 — 18,814 Special revenue issuer obligations of U.S. states, territories and political subdivisions 47,305 3,098 3 50,400 Corporate debt securities 3,978 1,024 — 5,002 Total $ 92,912 $ 5,519 $ 3 $ 98,428 As of December 31, 2019 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value 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 Total $ 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. 13 The scheduled maturities of fixed maturity securities at September 30, 2020 are as follows: Available-for-Sale (in thousands) Amortized Cost Estimated Fair Value Due in one year or less $ 31,052 $ 31,253 Due one year through five years 42,795 46,050 Due five years through ten years 18,250 19,741 Due after ten years 815 1,384 Total $ 92,912 $ 98,428 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, 2020 and December 31, 2019: Less than 12 Months 12 Months or Longer Total As of September 30, 2020 (in thousands) Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Special revenue issuer obligations of U.S. states, territories and political subdivisions $ — $ — $ 1,103 $ ( 3 ) $ 1,103 $ ( 3 ) Total temporarily impaired securities $ — $ — $ 1,103 $ ( 3 ) $ 1,103 $ ( 3 ) Less than 12 Months 12 Months or Longer Total As of December 31, 2019 (in thousands) Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses 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. Because the Company does not have the intent to sell these securities and will likely not be compelled to sell them before it can recover its cost basis, the Company does not consider these investments to be other-than-temporarily impaired. 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. Consideration is given to (1) the extent to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value. 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 1 and 6 fixed maturity securities had unrealized losses without an allowance for credit losses at September 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. 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 interest rates and other market conditions, and therefore the unrealized loss is recorded in accumulated other comprehensive income. 14 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 of other-than-temporary impairment charges related to fixed maturity securities for the nine-month periods ended September 30, 2020 and 2019, respectively. Expenses related to other-than-temporary impairments are recorded in net realized investment gains 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 September 30, 2020 (in thousands) Cost Estimated Fair Value Equity securities, at fair value: Common stocks $ 34,180 $ 58,851 Total $ 34,180 $ 58,851 As of December 31, 2019 (in thousands) Cost Estimated Fair Value Equity securities, at fair value: Common stocks $ 33,570 $ 61,108 Total $ 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 Gains Gross realized gains and losses on sales of investments for the nine-month period ended September 30 are summarized as follows: (in thousands) 2020 2019 Gross realized gains from securities: Corporate debt securities $ 30 $ — Common stocks 2,520 1,385 Total $ 2,550 $ 1,385 Gross realized losses from securities: Common stocks $ ( 1,768 ) $ ( 188 ) Other-than-temporary impairment of securities ( 482 ) — Total $ ( 2,250 ) $ ( 188 ) Net realized gains from securities $ 300 $ 1,197 Gross realized gains (losses) on other investments: Gains on other investments $ 32 $ 2 Losses on other investments ( 5 ) — Total $ 27 $ 2 Net realized investment gains $ 327 $ 1,199 Realized gains and losses are determined on the specific identification method. 15 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. 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, 2020: (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 5,090 6,680 6,675 Small business investment LPs Other investments 7,125 6,667 12,955 Total $ 12,482 $ 13,614 $ 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. Valuation of Financial Assets The 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 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 Accounting Standards Codification ("ASC") 820 , Fair Value Measurements and Disclosures . Generally, quotes obtained from the pricing service for instruments classified as Level 2 are not adjusted and are not binding. As of September 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. 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, ASC 820 excludes from its scope certain financial instruments, including those related to insurance contracts, pension and other postretirement benefits, and equity method investments. 16 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. 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, 2020 and December 31, 2019: As of September 30, 2020 (in thousands) Level 1 Level 2 * Level 3 Total Fixed maturity securities: Obligations of U.S. states, territories and political subdivisions $ 24,212 $ 69,214 $ — $ 93,426 Corporate debt securities — 5,002 — 5,002 Total $ 24,212 $ 74,216 $ — $ 98,428 As of December 31, 2019 (in thousands) Level 1 Level 2 * Level 3 Total Fixed maturity securities: Obligations of U.S. states, territories and political subdivisions $ 24,160 $ 74,431 $ — $ 98,591 Corporate debt securities — 6,047 — 6,047 Total $ 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 September 30, 2020 and December 31, 2019: As of September 30, 2020 (in thousands) Level 1 Level 2 Level 3 Total Financial assets: Cash and cash equivalents $ 41,534 $ — $ — $ 41,534 Accrued interest and dividends 1,187 — — 1,187 Equity securities, at fair value: Common stocks 58,851 — — 58,851 Short-term investments: Money market funds, Treasury bills and certificates of deposit 22,516 — — 22,516 Other investments: Equity investments in unconsolidated affiliates, equity method — — 6,541 6,541 Equity investments in unconsolidated affiliates, measurement alternative — — 8,288 8,288 Total $ 124,088 $ — $ 14,829 $ 138,917 17 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: Money market funds and certificates of deposit 13,134 — — 13,134 Other investments: Equity investments in unconsolidated affiliates, equity method — — 6,083 6,083 Equity investments in unconsolidated affiliates, measurement alternative — — 7,899 7,899 Total $ 101,224 $ — $ 13,982 $ 115,206 The Company did not hold any Level 3 category debt or marketable equity investment securities as of September 30, 2020 or December 31, 2019. There were no transfers into or out of Levels 1, 2 or 3 during the periods presented. To help ensure that estimated fair value determinations are consistent with ASC 820, prices from our pricing services go through multiple review processes to ensure appropriate pricing. Pricing procedures and inputs used to price each security include, but are not limited to, the following: unadjusted quoted market prices for identical securities such as stock market closing prices; non-binding quoted prices for identical securities in markets that are not active; interest rates; yield curves observable at commonly quoted intervals; volatility; prepayment speeds; loss severity; credit risks; and default rates. The Company reviews the procedures and inputs used by its pricing services, and verifies a sample of the services’ quotes by comparing them to values obtained from other pricing resources. In the event the Company disagrees with a price provided by its pricing services, the respective service reevaluates the price to corroborate the market information and then reviews inputs to the evaluation in light of potentially new market data. The Company believes that these processes and inputs result in appropriate classifications and estimated fair values consistent with ASC 820. Certain equity investments under the measurement alternative are measured at estimated fair value on a non-recurring basis and are reviewed for impairment quarterly. 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 nine-month period ended September 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 September 30, 2020 and December 31, 2019: (in thousands) Balance, December 31, 2019 Amounts Impaired Observable Changes Purchases and Additional Commitments Paid Sales, Returns of Capital and Other Reductions Balance, September 30, 2020 Other investments: Equity investments in unconsolidated affiliates, measurement alternative $ 7,899 $ — $ — $ 642 $ ( 253 ) $ 8,288 Total $ 7,899 $ — $ — $ 642 $ ( 253 ) $ 8,288 18 (in thousands) Balance, December 31, 2018 Amounts Impaired Observable Changes Purchases and Additional Commitments 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 Total $ 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, 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. It is the opinion of management based on its present expectations that findings from these audits, examinations, and inquiries will not have a material impact on the Company’s consolidated financial condition or results of operations. Escrow and Trust Deposits – As a service to its customers, the Company, through ITIC, administers escrow and trust deposits representing earnest money received under real estate contracts, escrowed funds received under escrow agreements, undisbursed amounts received for settlement of mortgage loans and indemnities against specific title risks. These amounts are not considered assets of the Company and, therefore, are excluded from the accompanying Consolidated Balance Sheets; however, the Company remains contingently liable for the disposition of these deposits. Like-Kind Exchanges Proceeds – In administering tax-deferred property exchanges, the Company’s subsidiary, Investors Title Exchange Corporation (“ITEC”), serves as a qualified intermediary for exchanges, holding the net sales proceeds from relinquished property to be used for purchase of replacement property. 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 $ 179.5 million and $ 214.6 million as of September 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; however, the Company remains contingently liable for transfers of property, disbursements of proceeds and the return on the proceeds at the agreed upon interest rate. Exchange services revenues include earnings on these deposits; therefore, investment income is included as a component of non-title services on the Consolidated Statements of Operations rather than other investment income. Like-kind exchange funds are primarily invested in money market and other short-term investments. 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 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 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 incurred any other forms of debt. 19 Note 8 – Related Party Transactions The Company does business with, and has investments in, unconsolidated limited liability companies that are primarily title insurance agencies. The Company utilizes the equity method to account for its investment in these limited liability companies. The following tables set forth the approximate values by year found within each financial statement classification: Financial Statement Classification, Consolidated Balance Sheets (in thousands) As of September 30, 2020 As of December 31, 2019 Other investments $ 6,541 $ 6,083 Premium and fees receivable $ 635 $ 410 Financial Statement Classification, Consolidated Statements of Operations (in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net premiums written $ 6,615 $ 4,626 $ 16,725 $ 11,674 Non-title services and other investment income $ 1,104 $ 779 $ 2,241 $ 1,866 Commissions to agents $ 4,486 $ 3,056 $ 11,279 $ 7,702 Note 9 – Intangible Assets, Goodwill and Title Plant Intangible Assets 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 nine-month periods ended September 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) As of September 30, 2020 As of December 31, 2019 Referral relationships $ 6,416 $ 6,416 Non-compete agreements 1,406 1,406 Tradename 560 560 Total 8,382 8,382 Accumulated amortization ( 2,835 ) ( 2,456 ) Identifiable intangible assets, net $ 5,547 $ 5,926 The following table provides the estimated aggregate amortization expense for each of the five succeeding fiscal years: Year Ended (in thousands) 2020 $ 126 2021 562 2022 525 2023 525 2024 473 Thereafter 3,336 Total $ 5,547 20 Goodwill and Title Plant As of September 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 as of the date of acquisition, both Level 3 inputs, were 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 nine-month periods ended September 30, 2020 and 2019 that would indicate the carrying amounts may not be recoverable, and therefore determined that there were no goodwill or title plant impairments. 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 September 30, 2020 and 2019: Three Months Ended September 30, 2020 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at June 30 $ 4,294 $ ( 64 ) $ 4,230 Other comprehensive income before reclassifications 50 — 50 Amounts reclassified from accumulated other comprehensive income — — — Net current-period other comprehensive income 50 — 50 Ending balance $ 4,344 $ ( 64 ) $ 4,280 Three Months Ended September 30, 2019 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at June 30 $ 2,886 $ ( 32 ) $ 2,854 Other comprehensive income before reclassifications 341 — 341 Amounts reclassified from accumulated other comprehensive income — — — Net current-period other comprehensive income 341 — 341 Ending balance $ 3,227 $ ( 32 ) $ 3,195 Nine Months Ended September 30, 2020 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at January 1 $ 3,132 $ ( 32 ) $ 3,100 Other comprehensive income (loss) before reclassifications 864 ( 32 ) 832 Amounts reclassified from accumulated other comprehensive income 348 — 348 Net current-period other comprehensive income (loss) 1,212 ( 32 ) 1,180 Ending balance $ 4,344 $ ( 64 ) $ 4,280 21 Nine Months Ended September 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 2,246 — 2,246 Amounts reclassified from accumulated other comprehensive income — — — Net current-period other comprehensive income 2,246 — 2,246 Ending balance $ 3,227 $ ( 32 ) $ 3,195 The following table provides significant amounts reclassified out of each component of accumulated other comprehensive income for the three- and nine-month periods ended September 30, 2020: Three Months Ended September 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 $ — Other-than-temporary impairments — Total $ — Net realized investment gains Tax — Provision for income taxes Net of Tax $ — Reclassifications for the period $ — Nine Months Ended September 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 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 nine-month periods ended September 30, 20 19. 22 Note 11 – Revenue from Contracts with Customers ASU 2014-09, Revenue from Contracts with Customers (Topic 606) requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance does not apply to revenue associated with insurance contracts (including title insurance policies), financial instruments and lease contracts; and therefore is primarily applicable to the following Company revenue categories. Escrow and other title-related fees – The Company’s title segment recognizes commission revenue and fees related to items such as searches, settlements, commitments and other ancillary services. Escrow and other title-related fees are recognized as revenue at the time of the related transactions as the earnings process, or performance obligation, is then considered to be complete. Non-title services – Through various subsidiaries, the Company offers management services, tax-deferred real property exchange services, investment management and trust services. Nonrefundable exchange fees are recognized as revenue upon receipt of the funds, which is at the time of closing of the initial sale of property. All other non-title service fees are recognized as revenue as performance obligations are completed. Other – The Company occasionally recognizes revenue from other miscellaneous contracts which can include, but is not limited to seminar and education registration fees and software licensing contracts. These revenue streams are deemed immaterial to the operations of the Company, and revenue is recognized when, or as, performance obligations are completed. The following table provides a breakdown of the Company’s revenue by major business activity: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Revenue from contracts with customers: Escrow and other title-related fees $ 2,154 $ 2,393 $ 6,014 $ 5,616 Non-title services 1,954 2,539 6,476 7,444 Total revenue from contracts with customers 4,108 4,932 12,490 13,060 Other sources of revenue: Net premiums written 57,205 40,169 143,311 103,942 Investment-related revenue 6,135 2,693 3,038 13,066 Other 185 145 443 550 Total revenues $ 67,633 $ 47,939 $ 159,282 $ 130,618 Note 12 – Leases The Company enters into lease agreements that are primarily used for office space. These leases are accounted for as operating leases, with lease expense recognized on a straight-line basis over the term of the lease. A portion of the Company's current leases include an option to extend or cancel the lease term. The exercise of such an option is solely at the Company's discretion. The operating lease liability recorded in the Consolidated Balance Sheets includes lease payments related to options to extend or cancel the lease term if the Company determined at the date of adoption that the lease was expected to be renewed or extended. The Company, in determining the present value of lease payments, utilized the average rate over a 10-year term based upon the Moody's seasoned Aaa corporate bond yields, as explicit rates of interest were not readily determinable in the lease contracts. The Company does not carry debt; thus no incremental borrowing rate was available to the Company. 23 Lease expense is included in office and technology expenses in the Consolidated Statements of Operations. Information regarding the Company’s operating leases follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Operating leases $ 327 $ 312 $ 968 $ 944 Short-term leases (b) 44 30 110 103 Lease expense $ 371 $ 342 $ 1,078 $ 1,047 Sub-lease income — — — — Lease cost $ 371 $ 342 $ 1,078 $ 1,047 (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) As of September 30, 2020 As of December 31, 2019 Current: Operating lease liabilities $ 1,097 $ 1,048 Non-current: Operating lease liabilities 2,840 3,454 Total operating lease liabilities $ 3,937 $ 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 September 30, 2020, are summarized as follows: Year Ended (in thousands) 2020 $ 324 2021 1,195 2022 975 2023 685 2024 515 Thereafter 649 Total undiscounted payments $ 4,343 Less: present value adjustment ( 406 ) Operating lease liabilities $ 3,937 Supplemental lease information is as follows: As of September 30, 2020 As of December 31, 2019 Weighted average remaining lease term (years) 4.40 4.84 Weighted average discount rate 4.6 % 4.6 % The Company does not have any material pending operating or financing lease agreements that become effective in future periods. 24