What changed in this filing

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Item 1. Financial Statements

2021-08-09 compared with 2021-05-10 · 269 added, 158 removed, 592 unchanged (42% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

As of March 31, 2021 and December 31, 2020

As of June 30, 2021 and December 31, 2020

(in thousands)

2 unchanged sentences

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

March 31, 2021:

June 30, 2021:

December 31, 2020:

1 unchanged sentence

Equity securities, at fair value (cost:

March 31, 2021:

June 30, 2021:

December 31, 2020:

13 unchanged sentences

Other assets 1,767 1,560

Current income taxes receivable 804 —

$ 316,939 $ 282,925

14 unchanged sentences

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

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)

1,894 and 1,892 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively, excluding in each period 292 shares of common stock held by the Company)

Retained earnings

5 unchanged sentences

$ 316,939 $ 282,925

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

Refer to notes to the Consolidated Financial Statements.

Investors Title Company and Subsidiaries

Consolidated Statements of Operations

For the Three Months Ended March 31, 2021 and 2020

For the Three and Six Months Ended June 30, 2021 and 2020

(in thousands, except per share amounts)

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Net premiums written $ 67,527 $ 47,479 $ 129,004 $ 86,106

3 unchanged sentences

Other investment income 1,483 526 2,424 966

Net realized investment gains (losses) 321 ( 412 )

Net realized investment gains 182 553 503 141

Changes in the estimated fair value of equity security investments 4,829 7,972 8,068 ( 6,486 )

8 unchanged sentences

Total Operating Expenses 59,673 43,826 114,436 82,256

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 )

Income before Income Taxes 25,288 17,922 42,603 9,393

Provision for Income Taxes 5,506 3,427 8,998 1,909

Net Income $ 19,782 $ 14,495 $ 33,605 $ 7,484

Basic Earnings per Common Share $ 10.44 $ 7.66 $ 17.74 $ 3.96

Weighted Average Shares Outstanding – Basic 1,894 1,892 1,894 1,891

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

Diluted Earnings per Common Share $ 10.42 $ 7.65 $ 17.70 $ 3.95

Weighted Average Shares Outstanding – Diluted 1,899 1,895 1,898 1,895

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

Refer to notes to the Consolidated Financial Statements.

Investors Title Company and Subsidiaries

Consolidated Statements of Comprehensive Income

For the Three Months Ended March 31, 2021 and 2020

For the Three and Six Months Ended June 30, 2021 and 2020

(in thousands)

Three Months Ended

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

Other comprehensive (loss) income, before tax:

June 30, Six Months Ended

2021 2020 2021 2020

Net income $ 19,782 $ 14,495 $ 33,605 $ 7,484

Other comprehensive income (loss), before tax:

Accumulated postretirement benefit obligation adjustment

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

Net unrealized gain (loss) on investments arising during the period 59 1,423 ( 691 ) 1,032

Reclassification adjustment for sale of securities included in net income 53 — 30 ( 30 )

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

Other comprehensive income (loss), before tax 112 1,423 ( 661 ) 1,443

Income tax benefit related to postretirement health benefits

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).

Income tax expense (benefit) related to net unrealized gain (loss) on investments arising during the period 12 305 ( 146 ) 218

Income tax expense (benefit) related to reclassification adjustment for sale of securities included in net income 11 — 6 ( 6 )

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

Net income tax expense (benefit) on other comprehensive income (loss) 23 305 ( 140 ) 313

Other comprehensive income (loss) 89 1,118 ( 521 ) 1,130

Comprehensive Income $ 19,871 $ 15,613 $ 33,084 $ 8,614

Refer to notes to the Consolidated Financial Statements.

Investors Title Company and Subsidiaries

Consolidated Statements of Stockholders’ Equity

For the Three Months Ended March 31, 2021 and 2020

For the Three and Six Months Ended June 30, 2021 and 2020

(in thousands, except per share amounts)

3 unchanged sentences

Shares Amount

Balance, January 1, 2020

Balance, March 31, 2020

1,891 $ — $ 180,535 $ 3,112 $ 183,647

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

14,495 14,495

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 1,118 1,118

Balance, June 30, 2020

1,892 $ — $ 194,235 $ 4,230 $ 198,465

Balance, March 31, 2021

1,894 $ — $ 209,157 $ 3,716 $ 212,873

19,782 19,782

Dividends paid ($ 0.46 per share)

( 873 ) ( 873 )

Share-based compensation expense related to stock appreciation rights

Net unrealized gain on investments 89 89

Balance, June 30, 2021

1,894 $ — $ 228,133 $ 3,805 $ 231,938

Common Stock Retained Earnings Accumulated

Comprehensive

Stockholders’

Shares Amount

Balance, December 31, 2019

1,889 $ — $ 188,262 $ 3,100 $ 191,362

Dividends paid ($ 0.88 per share)

( 1,664 ) ( 1,664 )

Exercise of stock appreciation rights

3 ( 1 ) ( 1 )

Share-based compensation expense related to stock appreciation rights

Accumulated postretirement benefit obligation adjustment ( 32 ) ( 32 )

Net unrealized gain on investments 1,162 1,162

Balance, March 31, 2020

Balance, June 30, 2020

1,892 $ — $ 194,235 $ 4,230 $ 198,465

Balance, January 1, 2021

Balance, December 31, 2020

1,892 $ — $ 196,096 $ 4,326 $ 200,422

6 unchanged sentences

Net unrealized loss on investments ( 521 ) ( 521 )

Balance, March 31, 2021

Balance, June 30, 2021

1,894 $ — $ 228,133 $ 3,805 $ 231,938

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

Refer to notes to the Consolidated Financial Statements.

Investors Title Company and Subsidiaries

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2021 and 2020

For the Six Months Ended June 30, 2021 and 2020

(in thousands)

Three Months Ended

Six Months Ended

Operating Activities

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

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

Net income $ 33,605 $ 7,484

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

Depreciation 880 933

3 unchanged sentences

Net gain on disposals of property ( 3,991 ) ( 17 )

Net realized investment (gains) losses ( 321 ) 412

Net realized investment gains ( 503 ) ( 141 )

Net change in estimated fair value of equity security investments ( 8,068 ) 6,486

3 unchanged sentences

Changes in assets and liabilities:

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

Increase in premium and fees receivable ( 1,961 ) ( 2,735 )

Increase in other assets ( 4,883 ) ( 5,013 )

Decrease in operating lease right-of-use assets 150 414

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

Increase in current income taxes receivable ( 804 ) —

(Decrease) increase in accounts payable and accrued liabilities ( 1,296 ) 9,110

Decrease in operating lease liabilities ( 159 ) ( 409 )

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

Decrease in current income taxes payable ( 638 ) ( 219 )

Payments of claims, net of recoveries ( 1,308 ) ( 1,539 )

16 unchanged sentences

Net cash used in financing activities ( 1,706 ) ( 1,665 )

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

Net Increase in Cash and Cash Equivalents 17,860 3,760

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

1 unchanged sentence

Consolidated Statements of Cash Flows, continued

Three Months Ended

Six Months Ended

Supplemental Disclosures:

2 unchanged sentences

Non-Cash Investing and Financing Activities:

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

Non-cash net unrealized loss (gain) on investments, net of deferred tax benefit (provision) of $ 140 and $( 322 ) for June 30, 2021 and 2020, respectively

$ 521 $ ( 1,162 )

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).

Adjustments to postretirement benefits obligation, net of deferred tax benefit of $ — and $ 9 for June 30, 2021 and 2020, respectively

Refer to notes to the Consolidated Financial Statements.

INVESTORS TITLE COMPANY

1 unchanged sentence

Notes to Consolidated Financial Statements

March 31, 2021

June 30, 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-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.

Operating results for the three- and six-month periods ended June 30, 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.

12 unchanged sentences

Note 2 – Reserve for Claims

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

Activity in the reserve for claims for the six-month period ended June 30, 2021 and the year ended December 31, 2020 are summarized as follows:

(in thousands) June 30, 2021 December 31, 2020

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

3 unchanged sentences

$ 35,303 $ 33,584

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 total reserve for all reported and unreported losses the Company incurred through June 30, 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 March 31, 2021.

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

1 unchanged sentence

A summary of the Company’s reserve for claims, broken down into its components of known title claims and IBNR, follows:

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

(in thousands, except percentages) June 30, 2021 % December 31, 2020 %

Known title claims $ 3,222 9.1 $ 3,585 10.7

6 unchanged sentences

Note 3 – Earnings Per Common Share and Share Awards

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.

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

Diluted earnings per common share is computed by dividing net income by the combination of dilutive potential common stock, comprised of shares issuable under the Company’s share-based compensation plans, and the weighted average number of common shares outstanding during the reporting period.

Dilutive common share equivalents include the dilutive effect of in-the-money share-based awards, which are calculated based on the average share price for each period using the treasury stock method.

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

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

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 six-month periods ended June 30:

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share amounts)

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

2021 2020 2021 2020

Net income $ 19,782 $ 14,495 $ 33,605 $ 7,484

Weighted average common shares outstanding – Basic 1,894 1,892 1,894 1,891

1 unchanged sentence

Weighted average common shares outstanding – Diluted

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.

1,899 1,895 1,898 1,895

Basic earnings per common share $ 10.44 $ 7.66 $ 17.74 $ 3.96

Diluted earnings per common share $ 10.42 $ 7.65 $ 17.70 $ 3.95

There were 14 thousand and 20 thousand potential shares excluded from the computation of diluted earnings per share for the three-month periods ended June 30, 2021 and 2020, respectively, due to the out-of-the-money status of the related share-based awards.

There were 14 thousand and 15 thousand potential shares excluded from the computation of diluted earnings per share for the six-month periods ended June 30, 2021 and 2020, 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.

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.

As of June 30, 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.

11 unchanged sentences

SARs exercised ( 3 ) 68.70

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.

Outstanding as of June 30, 2021 38 $ 150.06 4.56 $ 1,122

Exercisable as of June 30, 2021 28 $ 148.09 3.91 $ 889

Unvested as of June 30, 2021 10 $ 155.32 6.28 $ 233

During the second quarters of 2021 and 2020, the Company issued 5 thousand and 4 thousand share-settled SARs, respectively, 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 2021, as all 2021 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 common stock.

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.

2 unchanged sentences

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

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

The weighted average fair values for the SARs issued during 2021 and 2020 were $ 59.83 and $ 34.45 , respectively, and were estimated using the weighted average assumptions shown in the table below.

Expected Life in Years 7.0 - 7.0 6.2 - 7.0

2 unchanged sentences

Yield Rate 1.1 % 1.2 %

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.

There was approximately $ 139 thousand and $ 154 thousand of compensation expense relating to SARs vesting on or before June 30, 2021 and 2020, respectively, included in personnel expenses in the unaudited Consolidated Statements of Operations.

As of June 30, 2021, there was $ 468 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 March 31, 2021 and 2020:

Provided below is selected financial information about the Company's operations by segment for the periods ended June 30, 2021 and 2020:

Three Months Ended

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

June 30, 2021 (in thousands)

Insurance All

Other Intersegment

Eliminations Total

Insurance and other services revenues $ 74,599 $ 6,655 $ ( 3,685 ) $ 77,569

6 unchanged sentences

$ 20,743 $ 4,696 $ ( 151 ) $ 25,288

$ 239,572 $ 77,367 $ — $ 316,939

Three Months Ended

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

June 30, 2020 (in thousands)

Insurance All

Other Intersegment

Eliminations Total

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

Investment income 8,358 1,245 — 9,603

Net realized gain on investments 527 26 — 553

Total revenues

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

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

Income before income taxes

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

$ 204,523 $ 75,385 $ — $ 279,908

Six Months Ended

June 30, 2021 (in thousands) Title

Insurance All Other Intersegment Eliminations Total

Insurance and other services revenues $ 141,120 $ 8,993 $ ( 5,983 ) $ 144,130

Investment income 10,900 1,506 — 12,406

Net realized gain on investments 393 110 — 503

Total revenues

$ 152,413 $ 10,609 $ ( 5,983 ) $ 157,039

Operating expenses 115,051 5,071 ( 5,686 ) 114,436

Income before income taxes $ 37,362 $ 5,538 $ ( 297 ) $ 42,603

$ 239,572 $ 77,367 $ — $ 316,939

Six Months Ended

June 30, 2020 (in thousands) Title

Insurance All Other Intersegment Eliminations Total

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

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

3 unchanged sentences

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

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

Income (loss) before income taxes $ 9,982 $ ( 297 ) $ ( 292 ) $ 9,393

$ 204,523 $ 75,385 $ — $ 279,908

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 $ 13.3 million and $ 12.5 million as of March 31, 2021 and December 31, 2020, 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 $ 13.4 million and $ 12.5 million as of June 30, 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 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:

The following sets forth the net periodic benefit cost for the executive benefits for the periods ended June 30, 2021 and 2020:

Three Months Ended

June 30, Six Months Ended

(in thousands) 2021 2020 2021 2020

3 unchanged sentences

Net periodic benefit cost

$ 7 $ 8 $ 14 $ 16

Note 6 – Investments and Estimated Fair Value

1 unchanged sentence

The estimated fair value, gross unrealized holding gains, gross unrealized holding losses and amortized cost for fixed maturity securities by major classification are as follows:

As of March 31, 2021 (in thousands) Amortized

As of June 30, 2021 (in thousands) Amortized

Losses Estimated Fair

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

Government obligations

$ 12,003 $ 7 $ — $ 12,010

General obligations of U.S.

20 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 March 31, 2021 are as follows:

The scheduled maturities of fixed maturity securities at June 30, 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 March 31, 2021 and December 31, 2020:

Less than 12 Months 12 Months or Longer Total

As of March 31, 2021 (in thousands) Estimated

As of June 30, 2021 (in thousands) Estimated

Value Unrealized

28 unchanged sentences

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.

A total of 10 and 6 fixed maturity securities had unrealized losses at June 30, 2021 and December 31, 2020, respectively.

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

2 unchanged sentences

Reviews of the values of fixed maturity securities are inherently uncertain and the value of the investment may not fully recover, or may decline in future periods, resulting in a realized loss.

The Company recorded $ 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.

The Company recorded $ 0 and $ 482 thousand of other-than-temporary impairment charges related to fixed maturity securities for the six-month periods ended June 30, 2021 and 2020, respectively.

Expenses related to other-than-temporary impairments are recorded in net realized investment gains 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 March 31, 2021 (in thousands)

As of June 30, 2021 (in thousands)

Cost Estimated Fair

8 unchanged sentences

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:

Net Realized Investment Gains

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

(in thousands) 2021 2020

2 unchanged sentences

Common stocks

$ 1,132 $ 1,604

Gross realized losses from securities:

4 unchanged sentences

$ ( 630 ) $ ( 1,490 )

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

Net realized gains from securities

Gross realized gains (losses) on other investments:

1 unchanged sentence

Losses on other investments — ( 5 )

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

Net realized investment gains

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

3 unchanged sentences

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

The following table sets forth details about the Company's variable interest investments in VIEs, which are structured either as limited partnerships ("LPs") or limited liability companies ("LLCs"), as of March 31, 2021:

(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 March 31, 2021 and December 31, 2020, the Company did not adjust any Level 2 fair values.

As of June 30, 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 March 31, 2021 and December 31, 2020:

As of March 31, 2021 (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 June 30, 2021 and December 31, 2020:

As of June 30, 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 March 31, 2021 and December 31, 2020:

As of March 31, 2021 (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 June 30, 2021 and December 31, 2020:

As of June 30, 2021 (in thousands) Level 1 Level 2 Level 3 Total

Financial assets:

2 unchanged sentences

Accrued interest and dividends

1,232 — — 1,232

Equity securities, at fair value:

26 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 March 31, 2021 or December 31, 2020.

The Company did not hold any Level 3 category debt or marketable equity investment securities as of June 30, 2021 or December 31, 2020.

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

11 unchanged sentences

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 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:

There were no impairments of such investments made during the six-month period ended June 30, 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 June 30, 2021 and December 31, 2020:

(in thousands) Balance,

January 1, 2021 Amounts Impaired Observable Changes Purchases and

December 31, 2020

Amounts Impaired Observable Changes Purchases and

Paid Sales, Returns of Capital and Other Reductions Balance,

March 31, 2021

June 30, 2021

Other investments:

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(in thousands) Balance,

January 1, 2020 Amounts Impaired Observable Changes Purchases and

December 31, 2019 Amounts Impaired Observable Changes Purchases and

Paid Sales, Returns of Capital and Other Reductions Balance,

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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 unaudited 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 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.

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 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;

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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 $ 247.9 million and $ 237.9 million as of March 31, 2021 and December 31, 2020, respectively.

Another Company subsidiary, Investors Title Accommodation Corporation (“ITAC”), serves as exchange accommodation titleholder and, through LLCs 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 $ 370.5 million and $ 237.9 million as of June 30, 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;

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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.

COVID-19 – While certain COVID-19 vaccines have been approved and are now generally available for use in the United States and certain other countries, we are unable to predict how widely utilized the vaccines will be, whether they will be effective in preventing the spread of COVID-19 (including its variant strains), and when or if normal economic activity and business operations will resume.

In light of the increasing percentage of vaccinated individuals, many previously implemented restrictions have gradually been lifted.

While the number of new cases is significantly below the levels witnessed at the height of the pandemic, there has been a recent uptick in the number of new cases.

Despite the availability of vaccines, COVID-19 continues 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.

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

Such actions included 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 has remained fully operational throughout the pandemic and did not have any reductions in workforce during 2020 or the first half 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.

The COVID-19 pandemic has caused the Company to modify its business practices (including employee travel, employee work locations and cancellation of physical participation in meetings, events and conferences).

The COVID-19 pandemic and any of its variants could continue to affect the Company in a number of ways including, but not limited to, the impact on employees becoming ill, quarantined, or otherwise unable to work or travel due to illness or governmental restriction, potential decreases in net premiums written in the future, and future fluctuations in the Company's investment portfolio due to the pandemic and the economic disruption it is causing.

Because of the inherent uncertainty regarding the duration and severity of the COVID-19 pandemic (including any of its variants) 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 any of its variants, and/or provide additional economic stimulus, the Company is currently unable to predict the ultimate impact of the pandemic.

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 Company does business with, and has investments in, unconsolidated LLCs that are primarily title insurance agencies.

The Company utilizes the equity method to account for its investment in these LLCs.

The following tables set forth the approximate values by year found within each financial statement classification:

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Consolidated Balance Sheets (unaudited)

(in thousands)

March 31, 2021 As of

(in thousands) As of

June 30, 2021 As of

December 31, 2020

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Consolidated Statements of Operations (unaudited)

(in thousands)

Three Months Ended

(in thousands) Three Months Ended

Six Months Ended

2021 2020 2021 2020

Net premiums written $ 7,165 $ 6,053 $ 13,934 $ 10,110

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

In accordance with ASC 350, Intangibles – Goodwill and Other , management determined that no events or changes in circumstances occurred during the three-month periods ended March 31, 2021 and 2020 that would indicate the carrying amounts may not be recoverable, and therefore determined that no identifiable intangible assets were impaired.

In accordance with ASC 350, Intangibles – Goodwill and Other , management determined that no events or changes in circumstances occurred during the six-month periods ended June 30, 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

March 31, 2021 As of

June 30, 2021 As of

December 31, 2020

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Non-compete agreements 1,409 1,406

Tradenames 747 560

Tradename 747 560

Accumulated amortization ( 3,234 ) ( 2,961 )

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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.

As of June 30, 2021, the Company recognized $ 4.4 million in goodwill and $ 857 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.

In accordance with ASC 350, management determined that no events or changes in circumstances occurred during the six-month periods ended June 30, 2021 and 2020 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 March 31, 2021 and 2020:

The following tables provide changes in the balances of each component of accumulated other comprehensive income, net of tax, for the periods ended June 30, 2021 and 2020:

Three Months Ended

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

June 30, 2021 (in thousands) Unrealized Gains and Losses

On Available-for-Sale

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Benefits Plans

Beginning balance at March 31

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

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive income

Ending balance

$ 3,949 $ ( 144 ) $ 3,805

Three Months Ended

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

On Available-for-Sale

Securities Postretirement

Benefits Plans

Beginning balance at March 31

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

Other comprehensive income before reclassifications

1,118 — 1,118

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive income

1,118 — 1,118

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

Six Months Ended

June 30, 2021 (in thousands) Unrealized Gains and Losses

On Available-for-Sale

Securities Postretirement

Benefits Plans

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

3 unchanged sentences

Ending balance $ 3,949 $ ( 144 ) $ 3,805

Three Months Ended

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

Six Months Ended

June 30, 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 loss before reclassifications ( 304 ) ( 32 ) ( 336 )

Other comprehensive income (loss) before reclassifications 814 ( 32 ) 782

Amounts reclassified from accumulated other comprehensive income

2 unchanged sentences

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

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:

The following table provides significant amounts reclassified out of each component of accumulated other comprehensive income for the three- and six-month periods ended June 30, 2021 and 2020:

Three Months Ended

March 31, 2021 (in thousands)

June 30, 2021 (in thousands)

Details about Accumulated Other

2 unchanged sentences

Comprehensive Income Affected Line Item in the Consolidated

Statements of Operations (unaudited)

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

Statements of Operations

Unrealized gains and losses on available-for-sale securities:

Net realized gain on investments $ ( 53 )

Other-than-temporary impairments —

Total $ 23 Net realized investment gains (losses)

Tax ( 5 ) Provision (benefit) for income taxes

Total $ ( 53 ) Net realized investment gains

Tax 11 Provision for income taxes

Net of Tax $ ( 42 )

1 unchanged sentence

Three Months Ended

March 31, 2020 (in thousands)

June 30, 2020 (in thousands)

Details about Accumulated Other

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

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

Comprehensive Income Components (in thousands) Amount Reclassified from

Accumulated Other

Comprehensive Income Affected Line Item in the Consolidated

Statements of Operations

Unrealized gains and losses on available-for-sale securities:

Net realized gain on investments $ —

Other-than-temporary impairments —

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

Tax 104 Provision (benefit) for income taxes

Total $ — Net realized investment gains

Tax — Provision for income taxes

Net of Tax $ —

Reclassifications for the period $ —

Six Months Ended

June 30, 2021 (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 and losses on available-for-sale securities:

Net realized gain on investments $ ( 30 )

Other-than-temporary impairments —

Total $ ( 30 ) Net realized investment gains

Tax 6 Provision for income taxes

Net of Tax $ ( 24 )

Reclassifications for the period $ ( 24 )

Six Months Ended

June 30, 2020 (in thousands)

Details about Accumulated Other

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

Unrealized gains and losses on available-for-sale securities:

Net realized loss 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 )

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.

ASC 606, Revenue from Contracts with Customers 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;

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Three Months Ended

June 30, Six Months Ended

(in thousands) 2021 2020 2021 2020

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Three Months Ended

June 30, Six Months Ended

(in thousands) 2021 2020 2021 2020

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(in thousands) As of

March 31, 2021 As of

June 30, 2021 As of

December 31, 2020

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Total operating lease liabilities $ 3,510 $ 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 March 31, 2021, are summarized as follows:

The future minimum lease payments under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of June 30, 2021, are summarized as follows:

Year Ended (in thousands)

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Supplemental lease information is as follows:

March 31, 2021 As of

June 30, 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