What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-10 compared with 2020-11-09 · 201 added, 340 removed, 549 unchanged (50% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

As of September 30, 2020 and December 31, 2019

As of March 31, 2021 and December 31, 2020

(in thousands)

September 30,

2021 December 31,

1 unchanged sentence

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

September 30, 2020:

March 31, 2021:

December 31, 2020:

1 unchanged sentence

Equity securities, at fair value (cost:

September 30, 2020:

March 31, 2021:

December 31, 2020:

29 unchanged sentences

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)

1,894 and 1,892 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively, excluding in each period 292 shares of common stock held by the Company)

Retained earnings

5 unchanged sentences

$ 295,540 $ 282,925

Refer to notes to the Consolidated Financial Statements.

Refer to notes to the Consolidated Financial Statements (unaudited).

Investors Title Company and Subsidiaries

Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2020 and 2019

For the Three Months Ended March 31, 2021 and 2020

(in thousands, except per share amounts)

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Net premiums written $ 61,477 $ 38,627

3 unchanged sentences

Other investment income 941 440

Net realized investment gains 186 423 327 1,199

Net realized investment gains (losses) 321 ( 412 )

Changes in the estimated fair value of equity security investments 3,239 ( 14,458 )

8 unchanged sentences

Total Operating Expenses 54,763 38,430

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

Income (Loss) before Income Taxes 17,315 ( 8,529 )

Provision (Benefit) for Income Taxes 3,492 ( 1,518 )

Net Income (Loss) $ 13,823 $ ( 7,011 )

Basic Earnings (Loss) per Common Share $ 7.30 $ ( 3.71 )

Weighted Average Shares Outstanding – Basic 1,894 1,890

Diluted Earnings per Common Share $ 8.07 $ 4.20 $ 12.02 $ 10.59

Diluted Earnings (Loss) per Common Share $ 7.29 $ ( 3.71 )

Weighted Average Shares Outstanding – Diluted 1,897 1,890

Refer to notes to the Consolidated Financial Statements.

Refer to notes to the Consolidated Financial Statements (unaudited).

Investors Title Company and Subsidiaries

Consolidated Statements of Comprehensive Income

For the Three and Nine Months Ended September 30, 2020 and 2019

For the Three Months Ended March 31, 2021 and 2020

(in thousands)

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:

Net income (loss) $ 13,823 $ ( 7,011 )

Other comprehensive (loss) income, before tax:

Accumulated postretirement benefit obligation adjustment

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

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

Other comprehensive income, before tax

61 431 1,504 2,847

Net unrealized loss on investments arising during the period ( 750 ) ( 391 )

Reclassification adjustment for sale of securities included in net income (loss) ( 23 ) ( 30 )

Reclassification adjustment for write-down of securities included in net income (loss) — 482

Other comprehensive (loss) income, before tax ( 773 ) 20

Income tax benefit related to postretirement health benefits

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

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

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.

Income tax benefit related to net unrealized loss on investments arising during the period ( 158 ) ( 87 )

Income tax benefit related to reclassification adjustment for sale of securities included in net income (loss) ( 5 ) ( 6 )

Income tax expense related to reclassification adjustment for write-down of securities included in net income (loss) — 110

Net income tax (benefit) expense on other comprehensive (loss) income ( 163 ) 8

Other comprehensive (loss) income ( 610 ) 12

Comprehensive Income (Loss) $ 13,213 $ ( 6,999 )

Refer to notes to the Consolidated Financial Statements (unaudited).

Investors Title Company and Subsidiaries

Consolidated Statements of Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2020 and 2019

For the Three Months Ended March 31, 2021 and 2020

(in thousands, except per share amounts)

3 unchanged sentences

Shares Amount

Balance, June 30, 2019

1,889 $ — $ 185,441 $ 2,854 $ 188,295

Dividends paid ($ 0.40 per share)

( 755 ) ( 755 )

Exercise of stock appreciation rights

Share-based compensation expense related to stock appreciation rights

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

Balance, January 1, 2020

1,889 $ — $ 188,262 $ 3,100 $ 191,362

Net loss ( 7,011 ) ( 7,011 )

Dividends paid ($ 0.44 per share)

1 unchanged sentence

Exercise of stock appreciation rights

Share-based compensation expense related to stock appreciation rights

Net unrealized gain on investments 50 50

Other ( 94 ) ( 94 )

Balance, September 30, 2020

2 ( 1 ) ( 1 )

Common Stock Retained Earnings Accumulated

Comprehensive

Stockholders’

Shares Amount

Balance, December 31, 2018

1,887 $ — $ 174,690 $ 949 $ 175,639

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

Share-based compensation expense related to stock appreciation rights

Accumulated postretirement benefit obligation adjustment ( 32 ) ( 32 )

Net unrealized gain on investments 44 44

Balance, September 30, 2019

Balance, March 31, 2020

1,891 $ — $ 180,535 $ 3,112 $ 183,647

Balance, December 31, 2019

Balance, January 1, 2021

1,892 $ — $ 196,096 $ 4,326 $ 200,422

5 unchanged sentences

Share-based compensation expense related to stock appreciation rights

Accumulated postretirement benefit obligation adjustment

( 32 ) ( 32 )

Net unrealized gain on investments 1,212 1,212

Other ( 94 ) ( 94 )

Balance, September 30, 2020

Net unrealized loss on investments ( 610 ) ( 610 )

Balance, March 31, 2021

1,894 $ — $ 209,157 $ 3,716 $ 212,873

Refer to notes to the Consolidated Financial Statements.

Refer to notes to the Consolidated Financial Statements (unaudited).

Investors Title Company and Subsidiaries

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2020 and 2019

For the Three Months Ended March 31, 2021 and 2020

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating Activities

Net income $ 22,785 $ 20,078

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

Net income (loss) $ 13,823 $ ( 7,011 )

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

Depreciation 430 457

3 unchanged sentences

Net gain on disposals of property ( 8 ) ( 2 )

Net realized investment gains ( 327 ) ( 1,199 )

Net realized investment (gains) losses ( 321 ) 412

Net change in estimated fair value of equity security investments ( 3,239 ) 14,458

1 unchanged sentence

Provision for claims 1,591 906

(Benefit) provision for deferred income taxes ( 391 ) 1,340

Provision (benefit) for deferred income taxes 753 ( 3,057 )

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 )

(Increase) decrease in premium and fees receivables ( 761 ) 193

Increase in other assets ( 2,064 ) ( 4,743 )

Decrease in operating lease right-of-use assets 154 169

Decrease in accounts payable and accrued liabilities ( 3,982 ) ( 543 )

Decrease in operating lease liabilities ( 160 ) ( 165 )

Increase in current income taxes payable 2,739 1,581

Payments of claims, net of recoveries ( 613 ) ( 832 )

1 unchanged sentence

Investing Activities

Purchases of fixed maturities ( 517 ) ( 1,235 )

Purchases of equity securities ( 976 ) ( 5,866 )

8 unchanged sentences

Proceeds from the sale of property 13 5

Net cash (used in) provided by investing activities ( 3,858 ) 17,622

Net cash provided by (used in) investing activities 1,836 ( 1,791 )

Financing Activities

Repurchases of common stock — ( 11 )

Exercise of stock appreciation rights ( 1 ) ( 1 )

1 unchanged sentence

Net cash used in financing activities ( 833 ) ( 833 )

Net Increase in Cash and Cash Equivalents 15,585 25,298

Net Increase (Decrease) in Cash and Cash Equivalents 9,241 ( 625 )

Cash and Cash Equivalents, Beginning of Period 13,723 25,949

1 unchanged sentence

Consolidated Statements of Cash Flows, continued

Nine Months Ended

September 30,

Three Months Ended

Supplemental Disclosures:

2 unchanged sentences

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

Non-cash net unrealized loss (gain) on investments, net of deferred tax benefit (provision) of $ 163 and $( 17 ) for March 31, 2021 and 2020, respectively

$ 610 $ ( 44 )

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

Adjustments to operating lease right-of-use assets for September 30, 2020 and 2019, respectively $ 94 $ —

Refer to notes to the Consolidated Financial Statements.

Adjustments to postretirement benefits obligation, net of deferred tax benefit of $ — and $ 9 for March 31, 2021 and 2020, respectively

Refer to notes to the Consolidated Financial Statements (unaudited).

INVESTORS TITLE COMPANY

1 unchanged sentence

Notes to Consolidated Financial Statements

September 30, 2020

March 31, 2021

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- 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.

Operating results for the three-month period ended March 31, 2021 are not necessarily indicative of the financial condition and results that may be expected for the year ending December 31, 2021 or any other interim period.

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

Actual results could differ from those estimates and assumptions used.

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

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

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.

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, Simplifying the Accounting for Income Taxes .

ASU 2019-12 was intended to reduce the complexity in accounting for income taxes during interim and annual periods and provided clarity on income tax situations where a diversity in practice had developed.

The update was effective for annual and interim periods in fiscal years beginning after December 15, 2020.

The Company adopted this update on January 1, 2021, 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.

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.

This update clarified 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 clarified 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 was effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

The Company adopted this update on January 1, 2021, with no material impact on the Company's financial position and results of operations.

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

Activity in the reserve for claims for the three-month period ended March 31, 2021 and the year ended December 31, 2020 are summarized as follows:

(in thousands) March 31, 2021 December 31, 2020

Balance, beginning of period $ 33,584 $ 31,333

3 unchanged sentences

$ 34,562 $ 33,584

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 total reserve for all reported and unreported losses the Company incurred through March 31, 2021 is represented by the reserve for claims on the unaudited Consolidated Balance Sheets.

The Company's reserves for unpaid losses and loss adjustment expenses are established using estimated amounts required to settle claims for which notice has been received (reported) and the amount estimated to be required to satisfy claims that have been incurred but not yet reported (“IBNR”).

Despite the variability of such estimates, management believes that the total reserve for claims is adequate to cover claim losses which might result from pending and future claims under title insurance policies issued through September 30, 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) September 30, 2020 % December 31, 2019 %

(in thousands, except percentages) March 31, 2021 % December 31, 2020 %

Known title claims $ 3,452 10.0 $ 3,585 10.7

6 unchanged sentences

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.

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

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

Under the treasury stock method, when share-based awards are assumed to be exercised, (a) the exercise price of a share-based award and (b) the amount of compensation cost, if any, for future services that the Company has not yet recognized, are assumed to be used to repurchase shares in the current period.

The following table sets forth the computation of basic and diluted earnings (loss) per share for the three-month periods ended March 31:

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

Net income (loss) $ 13,823 $ ( 7,011 )

Weighted average common shares outstanding – Basic 1,894 1,890

1 unchanged sentence

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.

Basic earnings (loss) per common share $ 7.30 $ ( 3.71 )

Diluted earnings (loss) per common share $ 7.29 $ ( 3.71 )

There were 15 thousand potential shares excluded from the computation of diluted earnings per share for the three-month period ended March 31, 2021, due to the out-of-the-money status of the related share-based awards.

Diluted loss per share is the same as basic loss per share for the three-month period ended March 31, 2020 because potential dilutive securities would have an antidilutive effect.

The Company historically has adopted employee stock award plans under which restricted stock, options or stock appreciation rights ("SARs") exercisable for the Company's common 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.

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.

As of March 31, 2021, the only outstanding awards under the plans were SARs, which expire within seven years or less from the date of grant.

All outstanding SARs vest and are exercisable within five years or less from the date of grant, and all SARs issued to date have been share-settled only.

There have been no stock options or SARs granted where the exercise price was less than the market price on the date of grant.

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:

9 unchanged sentences

SARs exercised ( 3 ) 68.70

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.

Outstanding as of March 31, 2021 33 $ 145.47 4.49 $ 910

Exercisable as of March 31, 2021 26 $ 146.55 4.03 $ 738

Unvested as of March 31, 2021 7 $ 141.37 6.24 $ 172

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 2021.

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.

Expected volatilities are based on both the implied and historical volatility of the Company’s common stock.

The Company uses historical data to project SAR exercises and pre-exercise forfeitures within the valuation model.

2 unchanged sentences

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.

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.

Expected Life in Years 6.2 - 7.0

2 unchanged sentences

Yield Rate 1.0 %

There was approximately $ 71 thousand and $ 118 thousand of compensation expense relating to SARs vesting on or before March 31, 2021 and 2020, respectively, included in personnel expenses in the unaudited Consolidated Statements of Operations.

As of March 31, 2021, there was $ 266 thousand of unrecognized compensation expense related to unvested share-based compensation arrangements granted under the Company’s stock award plans.

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 September 30, 2020 and 2019:

Three Months Ended

September 30, 2020 (in thousands)

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

$ 213,152 $ 76,593 $ — $ 289,745

Provided below is selected financial information about the Company's operations by segment for the periods ended March 31, 2021 and 2020:

Three Months Ended

September 30, 2019 (in thousands)

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

$ 191,436 $ 74,678 $ — $ 266,114

Nine Months Ended

September 30, 2020 (in thousands) Title Insurance All Other Intersegment Eliminations Total

March 31, 2021 (in thousands) Title Insurance All Other Intersegment Eliminations Total

Insurance and other services revenues $ 66,521 $ 2,338 $ ( 2,298 ) $ 66,561

6 unchanged sentences

$ 237,082 $ 58,458 $ — $ 295,540

Nine Months Ended

September 30, 2019 (in thousands) Title Insurance All Other Intersegment Eliminations Total

Three Months Ended

March 31, 2020 (in thousands) Title Insurance All Other Intersegment Eliminations Total

Insurance and other services revenues $ 41,853 $ 2,805 $ ( 1,504 ) $ 43,154

Investment income 9,780 2,087 — 11,867

Net realized gain on investments 1,102 97 — 1,199

Investment loss ( 11,460 ) ( 1,381 ) — ( 12,841 )

Net realized gain (loss) on investments 63 ( 475 ) — ( 412 )

Total revenues

1 unchanged sentence

Operating expenses 37,443 2,345 ( 1,358 ) 38,430

Income before income taxes

$ 22,089 $ 3,566 $ ( 403 ) $ 25,252

Loss before income taxes $ ( 6,987 ) $ ( 1,396 ) $ ( 146 ) $ ( 8,529 )

$ 187,236 $ 66,882 $ — $ 254,118

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 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 $ 13.3 million and $ 12.5 million as of March 31, 2021 and December 31, 2020, 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:

These amounts are classified as accounts payable and accrued liabilities in the unaudited Consolidated Balance Sheets.

The following sets forth the net periodic benefit cost for the executive benefits for the periods ended March 31, 2021 and 2020:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020

3 unchanged sentences

Net periodic benefit cost

$ 7 $ 8 $ 23 $ 25

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 September 30, 2020 (in thousands) Amortized

As of March 31, 2021 (in thousands) Amortized

Losses Estimated Fair

24 unchanged sentences

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 September 30, 2020 are as follows:

The scheduled maturities of fixed maturity securities at March 31, 2021 are as follows:

Available-for-Sale

7 unchanged sentences

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

As of March 31, 2021 (in thousands) Estimated

Value Unrealized

6 unchanged sentences

$ — $ — $ 1,102 $ ( 3 ) $ 1,102 $ ( 3 )

Corporate debt securities 20,005 ( 38 ) — — 20,005 ( 38 )

Total temporarily impaired securities

7 unchanged sentences

Value Unrealized

Government obligations

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

Special revenue issuer obligations of U.S.

6 unchanged sentences

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.

Because the Company does not intend 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.

Factors considered in determining whether a loss is temporary include the length of time and extent to which the estimated 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 12 fixed maturity securities had unrealized losses at March 31, 2021 and December 31, 2020.

The Company does not intend to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost.

The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.

The Company believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in interest rates and other market conditions, and therefore the unrealized loss is recorded in accumulated other comprehensive income.

The Company believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in market interest rates and other market conditions, and therefore the unrealized loss is recorded in accumulated other comprehensive income.

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.

The Company recorded $ 0 and $ 482 thousand of other-than-temporary impairment charges related to fixed maturity securities for the three-month periods ended March 31, 2021 and 2020, respectively.

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

Investments in Equity Securities

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

As of September 30, 2020 (in thousands)

As of March 31, 2021 (in thousands)

Cost Estimated Fair

7 unchanged sentences

$ 32,478 $ 64,919

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:

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

Net Realized Investment Gains (Losses)

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

(in thousands) 2021 2020

2 unchanged sentences

Common stocks

$ 2,550 $ 1,385

Gross realized losses from securities:

Corporate debt securities $ ( 23 ) $ —

Common stocks

2 unchanged sentences

$ ( 619 ) $ ( 1,204 )

Net realized gains from securities

$ 300 $ 1,197

Net realized gains (losses) from securities $ 321 $ ( 427 )

Gross realized gains (losses) on other investments:

1 unchanged sentence

Losses on other investments — ( 5 )

Net realized investment gains

$ 327 $ 1,199

Net realized investment gains (losses) $ 321 $ ( 412 )

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 September 30, 2020:

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

21 unchanged sentences

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.

As of March 31, 2021 and December 31, 2020, 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 September 30, 2020 and December 31, 2019:

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

The following table presents, by level, fixed maturity securities carried at estimated fair value as of March 31, 2021 and December 31, 2020:

As of March 31, 2021 (in thousands) Level 1 Level 2 * Level 3 Total

Fixed maturity securities:

10 unchanged sentences

*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

The following table presents, by level, estimated fair values of equity investments and other financial instruments as of March 31, 2021 and December 31, 2020:

As of March 31, 2021 (in thousands) Level 1 Level 2 Level 3 Total

Financial assets:

7 unchanged sentences

Short-term investments:

Money market funds, Treasury bills and certificates of deposit 22,516 — — 22,516

Money market funds and commercial paper 30,498 — — 30,498

Other investments:

14 unchanged sentences

Short-term investments:

Money market funds and certificates of deposit 13,134 — — 13,134

Money market funds, Treasury bills, commercial paper and certificates of deposit 15,170 — — 15,170

Other investments:

4 unchanged sentences

$ 94,850 $ — $ 15,493 $ 110,343

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

The Company did not hold any Level 3 category debt or marketable equity investment securities as of March 31, 2021 or December 31, 2020.

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

13 unchanged sentences

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:

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

There were no impairments of such investments made during the three-month period ended March 31, 2021 or the twelve-month period ended December 31, 2020.

The following table presents a rollforward of equity investments under the measurement alternative as of March 31, 2021 and December 31, 2020:

(in thousands) Balance,

December 31, 2019

Amounts Impaired Observable Changes Purchases and

January 1, 2021 Amounts Impaired Observable Changes Purchases and

Paid Sales, Returns of Capital and Other Reductions Balance,

September 30, 2020

March 31, 2021

Other investments:

3 unchanged sentences

(in thousands) Balance,

December 31, 2018

Amounts Impaired Observable Changes Purchases and

January 1, 2020 Amounts Impaired Observable Changes Purchases and

Paid Sales, Returns of Capital and Other Reductions Balance,

6 unchanged sentences

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;

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 unaudited consolidated financial condition or 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 unaudited 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.

Like-Kind Exchanges Proceeds – In administering tax-deferred like-kind exchanges pursuant to § 1031 of the Internal Revenue Code, the Company’s subsidiary, Investors Title Exchange Corporation (“ITEC”), serves as a qualified intermediary, 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.

Like-kind exchange deposits and reverse exchange property totaled approximately $ 247.9 million and $ 237.9 million as of March 31, 2021 and December 31, 2020, respectively.

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

however, the Company remains contingently liable for the disposition of the transfers of property, disbursements of proceeds and the return on the proceeds at the agreed upon rate.

Exchange services revenue includes earnings on these deposits;

therefore, investment income is shown as other revenue rather than investment income.

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

COVID-19 – While certain COVID-19 vaccines have been approved in recent months and are now available for use, the U.S.

and other countries continue to be affected by the COVID-19 pandemic.

Despite increasing availability of vaccines, COVID-19 has continued to spread across the globe, including in U.S.

states where the Company conducts business.

The COVID-19 pandemic has negatively impacted worldwide economic activity and created significant volatility and disruption of 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.

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, mortgage loan forbearance actions, 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 did not have any reductions in workforce during 2020 or the first quarter of 2021.

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.

The primary impact of the COVID-19 pandemic on the Company’s 2020 results of operations was a reduction in value of the investment portfolio during the first quarter of 2020.

Purchase volume, refinance activity and the overall stock market were strong in the latter half of 2020, which continued into the first quarter of 2021.

Lower average mortgage interest rates, a tight real estate supply and pent-up demand spurred real estate activity and prices.

It is unclear if real estate activity will remain as resilient in future periods.

It is possible that net premiums written could decline in the future due to the pandemic and the economic disruption it is causing.

The COVID-19 pandemic continues to evolve and any recovery could be slowed or reversed by a number of factors, including, but not limited to, a widespread resurgence in COVID-19 infections, whether due to spread of variants of the virus or otherwise and the availability and rate of vaccinations.

Because of the inherent uncertainty regarding the duration and severity of the COVID-19 pandemic and its effects on the economy, as well as uncertainty regarding the effects of government measures already taken, and which may be taken or continued in the future, to combat the spread of the virus, and/or provide additional economic stimulus, the Company is currently unable to predict what the ultimate impact of the pandemic on its business will be.

Note 8 – Related Party Transactions

3 unchanged sentences

Financial Statement Classification,

Consolidated Balance Sheets

(in thousands) As of

September 30, 2020 As of

Consolidated Balance Sheets (unaudited)

(in thousands)

March 31, 2021 As of

December 31, 2020

2 unchanged sentences

Financial Statement Classification,

Consolidated Statements of Operations

(in thousands) Three Months Ended

September 30,

Nine Months Ended

September 30,

2020 2019 2020 2019

Consolidated Statements of Operations (unaudited)

(in thousands)

Three Months Ended

Net premiums written $ 6,769 $ 4,057

1 unchanged sentence

Commissions to agents $ 4,474 $ 2,679

Note 9 – Intangible Assets, Goodwill and Title Plant

Note 9 – Intangible Assets, Goodwill and Title Plants

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.

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, 2021 and 2020 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

March 31, 2021 As of

December 31, 2020

1 unchanged sentence

Non-compete agreements 1,409 1,406

Tradename 560 560

Tradenames 747 560

Accumulated amortization ( 3,095 ) ( 2,961 )

4 unchanged sentences

Thereafter 2,999

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.

Goodwill and Title Plants

As of March 31, 2021, the Company recognized $ 4.4 million in goodwill and $ 690 thousand in title plants, net of impairments, as the result of title insurance agency acquisitions.

The title plants are included with other assets in the unaudited Consolidated Balance Sheets.

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

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

Beginning balance at June 30

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

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive income

Ending balance

$ 4,344 $ ( 64 ) $ 4,280

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, 2021 and 2020:

Three Months Ended

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

On Available-for-Sale

Securities Postretirement

Benefits Plans

Beginning balance at June 30

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

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive income

Ending balance $ 3,227 $ ( 32 ) $ 3,195

Nine Months Ended

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

March 31, 2021 (in thousands) Unrealized Gains and Losses

On Available-for-Sale

2 unchanged sentences

Beginning balance at January 1 $ 4,470 $ ( 144 ) $ 4,326

Other comprehensive income (loss) before reclassifications 864 ( 32 ) 832

Other comprehensive loss before reclassifications ( 592 ) — ( 592 )

Amounts reclassified from accumulated other comprehensive income ( 18 ) — ( 18 )

Net current-period other comprehensive income (loss) 1,212 ( 32 ) 1,180

Net current-period other comprehensive loss ( 610 ) — ( 610 )

Ending balance $ 3,860 $ ( 144 ) $ 3,716

Nine Months Ended

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

Three Months Ended

March 31, 2020 (in thousands) Unrealized Gains and Losses

On Available-for-Sale

2 unchanged sentences

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

Other comprehensive income before reclassifications

2,246 — 2,246

Other comprehensive loss before reclassifications ( 304 ) ( 32 ) ( 336 )

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive income

2,246 — 2,246

Net current-period other comprehensive income (loss) 44 ( 32 ) 12

Ending balance

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

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:

The following table provides significant amounts reclassified out of each component of accumulated other comprehensive income for the three-month periods ended March 31, 2021 and 2020:

Three Months Ended

September 30, 2020 (in thousands)

March 31, 2021 (in thousands)

Details about Accumulated Other

2 unchanged sentences

Comprehensive Income Affected Line Item in the Consolidated

Statements of Operations

Statements of Operations (unaudited)

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

1 unchanged sentence

Other-than-temporary impairments —

Total $ — Net realized investment gains

Tax — Provision for income taxes

Total $ 23 Net realized investment gains (losses)

Tax ( 5 ) Provision (benefit) for income taxes

Net of Tax $ 18

Reclassifications for the period $ 18

Nine Months Ended

September 30, 2020 (in thousands)

Three Months Ended

March 31, 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

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

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

1 unchanged sentence

Other-than-temporary impairments ( 482 )

Total $ ( 452 ) Net realized investment gains

Tax 104 Provision for income taxes

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

Tax 104 Provision (benefit) 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.

Note 11 – Revenue from Contracts with Customers

11 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020

14 unchanged sentences

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 operating lease liability recorded in the unaudited 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.

1 unchanged sentence

thus no incremental borrowing rate was available to the Company.

Lease expense is included in office and technology expenses in the Consolidated Statements of Operations.

Lease expense is included in office and technology expenses in the unaudited Consolidated Statements of Operations.

Information regarding the Company’s operating leases follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020

4 unchanged sentences

Lease cost $ 390 $ 350

(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:

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

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

(in thousands) As of

September 30, 2020 As of

March 31, 2021 As of

December 31, 2020

2 unchanged sentences

Total operating lease liabilities $ 3,509 $ 3,669

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:

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, 2021, are summarized as follows:

Year Ended (in thousands)

4 unchanged sentences

Supplemental lease information is as follows:

September 30, 2020 As of

March 31, 2021 As of

December 31, 2020

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