INVESTORS TITLE CO 10-Q

Item 1. Financial Statements Investors Title Company and Subsidiaries Consolidated Balance Sheets As of September 30, 2021 and December 31, 2020 (in thousands) (unaudited) September 30, 2021 December 31, 2020 Assets Cash and cash equivalents $ 48,510 $ 13,723 Investments: Fixed maturity securities, available-for-sale, at fair value (amortized cost: September 30, 2021: $ 77,714 ; December 31, 2020: $ 112,037 ) 82,306 117,713 Equity securities, at fair value (cost: September 30, 2021: $ 29,818 ; December 31, 2020: $ 32,478 ) 69,525 64,919 Short-term investments 51,231 15,170 Other investments 15,957 15,493 Total investments 219,019 213,295 Premiums and fees receivable 22,939 19,427 Accrued interest and dividends 990 1,038 Prepaid expenses and other receivables 13,745 9,418 Property, net 15,310 11,160 Goodwill and other intangible assets, net 9,841 9,771 Operating lease right-of-use assets 3,306 3,533 Other assets 1,770 1,560 Total Assets $ 335,430 $ 282,925 Liabilities and Stockholders’ Equity Liabilities: Reserve for claims $ 36,755 $ 33,584 Accounts payable and accrued liabilities 37,927 36,020 Operating lease liabilities 3,424 3,669 Current income taxes payable 704 638 Deferred income taxes, net 11,315 8,592 Total liabilities 90,125 82,503 Commitments and Contingencies — — Stockholders’ Equity: Preferred stock ( 1,000 authorized shares; no shares issued) — — Common stock – no par value ( 10,000 authorized shares; 1,894 and 1,892 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively, excluding in each period 292 shares of common stock held by the Company) — — Retained earnings 241,833 196,096 Accumulated other comprehensive income 3,472 4,326 Total stockholders' equity 245,305 200,422 Total Liabilities and Stockholders’ Equity $ 335,430 $ 282,925 Refer to notes to the Consolidated Financial Statements. 1 Investors Title Company and Subsidiaries Consolidated Statements of Operations For the Three and Nine Months Ended September 30, 2021 and 2020 (in thousands, except per share amounts) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenues: Net premiums written $ 72,345 $ 57,205 $ 201,349 $ 143,311 Escrow and other title-related fees 3,863 2,154 10,148 6,014 Non-title services 2,446 1,954 6,932 6,476 Interest and dividends 893 1,060 2,807 3,342 Other investment income 2,186 1,270 4,610 2,236 Net realized investment gains 268 186 771 327 Changes in the estimated fair value of equity security investments ( 802 ) 3,619 7,266 ( 2,867 ) Other 217 185 4,572 443 Total Revenues 81,416 67,633 238,455 159,282 Operating Expenses: Commissions to agents 37,570 29,068 102,458 73,344 Provision for claims 1,993 1,552 5,020 4,452 Personnel expenses 15,457 12,575 47,524 36,632 Office and technology expenses 3,175 2,456 9,128 7,328 Other expenses 4,784 3,125 13,285 9,276 Total Operating Expenses 62,979 48,776 177,415 131,032 Income before Income Taxes 18,437 18,857 61,040 28,250 Provision for Income Taxes 3,934 3,556 12,932 5,465 Net Income $ 14,503 $ 15,301 $ 48,108 $ 22,785 Basic Earnings per Common Share $ 7.66 $ 8.09 $ 25.40 $ 12.04 Weighted Average Shares Outstanding – Basic 1,894 1,892 1,894 1,892 Diluted Earnings per Common Share $ 7.63 $ 8.07 $ 25.34 $ 12.02 Weighted Average Shares Outstanding – Diluted 1,900 1,895 1,899 1,896 Refer to notes to the Consolidated Financial Statements. 2 Investors Title Company and Subsidiaries Consolidated Statements of Comprehensive Income For the Three and Nine Months Ended September 30, 2021 and 2020 (in thousands) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income $ 14,503 $ 15,301 $ 48,108 $ 22,785 Other comprehensive (loss) income, before tax: Accumulated postretirement benefit obligation adjustment — — — ( 41 ) Net unrealized (loss) gain on investments arising during the period ( 433 ) 61 ( 1,064 ) 1,093 Reclassification adjustment for sale of securities included in net income 11 — ( 19 ) ( 30 ) Reclassification adjustment for write-down of securities included in net income — — — 482 Other comprehensive (loss) gain, before tax ( 422 ) 61 ( 1,083 ) 1,504 Income tax benefit related to postretirement health benefits — — — ( 9 ) Income tax (benefit) expense related to net unrealized (gain) loss on investments arising during the period ( 91 ) 11 ( 225 ) 229 Income tax expense (benefit) related to reclassification adjustment for sale of securities included in net income 2 — ( 4 ) ( 6 ) Income tax expense related to reclassification adjustment for write-down of securities included in net income — — — 110 Net income tax (benefit) expense on other comprehensive (loss) income ( 89 ) 11 ( 229 ) 324 Other comprehensive (loss) income ( 333 ) 50 ( 854 ) 1,180 Comprehensive Income $ 14,170 $ 15,351 $ 47,254 $ 23,965 Refer to notes to the Consolidated Financial Statements. 3 Investors Title Company and Subsidiaries Consolidated Statements of Stockholders’ Equity For the Three and Nine Months Ended September 30, 2021 and 2020 (in thousands, except per share amounts) (unaudited) Common Stock Retained Earnings Accumulated Other Comprehensive Income Total Stockholders’ Equity Shares Amount Balance, June 30, 2020 1,892 $ — $ 194,235 $ 4,230 $ 198,465 Net income 15,301 15,301 Dividends paid ($ 0.44 per share) ( 833 ) ( 833 ) Exercise of stock appreciation rights — — — Share-based compensation expense related to stock appreciation rights 38 38 Net unrealized gain on investments 50 50 Other ( 94 ) ( 94 ) Balance, September 30, 2020 1,892 $ — $ 208,647 $ 4,280 $ 212,927 Balance, June 30, 2021 1,894 $ — $ 228,133 $ 3,805 $ 231,938 Net income 14,503 14,503 Dividends paid ($ 0.46 per share) ( 871 ) ( 871 ) Share-based compensation expense related to stock appreciation rights 68 68 Net unrealized loss on investments ( 333 ) ( 333 ) Balance, September 30, 2021 1,894 $ — $ 241,833 $ 3,472 $ 245,305 Common Stock Retained Earnings Accumulated Other Comprehensive Income Total Stockholders’ Equity Shares Amount Balance, December 31, 2019 1,889 $ — $ 188,262 $ 3,100 $ 191,362 Net income 22,785 22,785 Dividends paid ($ 1.32 per share) ( 2,497 ) ( 2,497 ) Exercise of stock appreciation rights 3 ( 1 ) ( 1 ) Share-based compensation expense related to stock appreciation rights 192 192 Accumulated postretirement benefit obligation adjustment ( 32 ) ( 32 ) Net unrealized gain on investments 1,212 1,212 Other ( 94 ) ( 94 ) Balance, September 30, 2020 1,892 $ — $ 208,647 $ 4,280 $ 212,927 Balance, December 31, 2020 1,892 $ — $ 196,096 $ 4,326 $ 200,422 Net income 48,108 48,108 Dividends paid ($ 1.36 per share) ( 2,576 ) ( 2,576 ) Exercise of stock appreciation rights 2 ( 1 ) ( 1 ) Share-based compensation expense related to stock appreciation rights 206 206 Net unrealized loss on investments ( 854 ) ( 854 ) Balance, September 30, 2021 1,894 $ — $ 241,833 $ 3,472 $ 245,305 Refer to notes to the Consolidated Financial Statements. 4 Investors Title Company and Subsidiaries Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2021 and 2020 (in thousands) (unaudited) Nine Months Ended September 30, 2021 2020 Operating Activities Net income $ 48,108 $ 22,785 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,298 1,320 Amortization of investments, net 776 678 Amortization of other intangible assets, net 412 378 Share-based compensation expense related to stock appreciation rights 206 192 Net gain on disposals of property ( 3,991 ) ( 26 ) Net realized investment gains ( 771 ) ( 327 ) Net change in estimated fair value of equity security investments ( 7,266 ) 2,867 Net earnings from other investments ( 2,678 ) ( 1,764 ) Provision for claims 5,020 4,452 Provision (benefit) for deferred income taxes 2,953 ( 391 ) Changes in assets and liabilities: Increase in premium and fees receivable ( 3,512 ) ( 4,768 ) Increase in other assets ( 4,971 ) ( 3,893 ) Decrease in operating lease right-of-use assets 227 577 Increase in accounts payable and accrued liabilities 1,907 3,206 Decrease in operating lease liabilities ( 245 ) ( 565 ) Increase (decrease) in current income taxes payable 66 ( 527 ) Payments of claims, net of recoveries ( 1,849 ) ( 2,253 ) Net cash provided by operating activities 35,690 21,941 Investing Activities Purchase of fixed maturities — ( 517 ) Purchases of equity securities ( 2,663 ) ( 9,270 ) Purchases of short-term investments ( 39,370 ) ( 13,668 ) Purchases of other investments ( 1,084 ) ( 1,090 ) Proceeds from sales and maturities of fixed maturity securities 33,565 7,139 Proceeds from sales of equity securities 6,073 9,412 Proceeds from sales and maturities of short-term investments 3,311 4,291 Proceeds from sales and distributions of other investments 3,298 2,010 Proceeds from sales of other assets 1 22 Purchases of property ( 6,778 ) ( 2,245 ) Proceeds from the sale of property 5,321 58 Net cash provided by (used in) investing activities 1,674 ( 3,858 ) Financing Activities Exercise of stock appreciation rights ( 1 ) ( 1 ) Dividends paid ( 2,576 ) ( 2,497 ) Net cash used in financing activities ( 2,577 ) ( 2,498 ) Net Increase in Cash and Cash Equivalents 34,787 15,585 Cash and Cash Equivalents, Beginning of Period 13,723 25,949 Cash and Cash Equivalents, End of Period $ 48,510 $ 41,534 5 Consolidated Statements of Cash Flows, continued Nine Months Ended September 30, 2021 2020 Supplemental Disclosures: Cash Paid During the Year for: Income tax payments, net $ 9,913 $ 6,889 Non-Cash Investing and Financing Activities: Non-cash net unrealized loss (gain) on investments, net of deferred tax benefit (provision) of $ 229 and $( 333 ) for September 30, 2021 and 2020, respectively $ 854 $ ( 1,212 ) Adjustments to postretirement benefits obligation, net of deferred tax benefit of $ — and $ 9 for September 30, 2021 and 2020, respectively $ — $ 32 Adjustments to operating lease right-of-use assets for September 30, 2021 and 2020, respectively $ — $ 94 Refer to notes to the Consolidated Financial Statements. 6 INVESTORS TITLE COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2021 (unaudited) Note 1 – Basis of Presentation and Significant Accounting Policies Reference should be made to the “Notes to Consolidated Financial Statements” appearing in the Annual Report on Form 10-K for the year ended December 31, 2020 of Investors Title Company (the “Company”) for a complete description of the Company’s significant accounting policies. Principles of Consolidation – The accompanying unaudited Consolidated Financial Statements include the accounts and operations of Investors Title Company and its subsidiaries, and have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information, with the instructions to Form 10-Q and with Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position, results of operations and cash flows of the Company in the accompanying unaudited Consolidated Financial Statements have been included. All such adjustments are of a normal recurring nature. Operating results for the three- and nine-month periods ended September 30, 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 unaudited Consolidated Financial Statements. Recently Adopted Accounting Standards 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 provide 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. 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 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. 7 Note 2 – Reserve for Claims Activity in the reserve for claims for the nine-month period ended September 30, 2021 and the year ended December 31, 2020 are summarized as follows: (in thousands) September 30, 2021 December 31, 2020 Balance, beginning of period $ 33,584 $ 31,333 Provision charged to operations 5,020 5,204 Payments of claims, net of recoveries ( 1,849 ) ( 2,953 ) Balance, end of period $ 36,755 $ 33,584 The total reserve for all reported and unreported losses the Company incurred through September 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 September 30, 2021. Management continually reviews and adjusts its reserve for claims estimates to reflect its loss experience and any new information that becomes available. Adjustments resulting from such reviews could be significant. A summary of the Company’s reserve for claims, broken down into its components of known title claims and IBNR, follows: (in thousands, except percentages) September 30, 2021 % December 31, 2020 % Known title claims $ 3,402 9.3 $ 3,585 10.7 IBNR 33,353 90.7 29,999 89.3 Total reserve for claims $ 36,755 100.0 $ 33,584 100.0 Claims and losses paid are charged to the reserve for claims. Although claims losses are typically paid in cash, occasionally claims are settled by purchasing the interest of the insured or the claimant in the real property. When this event occurs, the Company carries assets at the lower of cost or estimated fair value, net of any indebtedness on the property. Note 3 – Earnings Per Common Share and Share Awards Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income by the combination of dilutive potential common stock, comprised of shares issuable under the Company’s share-based compensation plans, and the weighted average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money share-based awards, which are calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, as share-based awards are exercised, (a) the exercise price of a share-based award and (b) the amount of compensation cost, if any, for future services that the Company has not yet recognized, are assumed to be used to repurchase shares in the current period. 8 The following table sets forth the computation of basic and diluted earnings per share for the three- and nine-month periods ended September 30: Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share amounts) 2021 2020 2021 2020 Net income $ 14,503 $ 15,301 $ 48,108 $ 22,785 Weighted average common shares outstanding – Basic 1,894 1,892 1,894 1,892 Incremental shares outstanding assuming the exercise of dilutive SARs (share-settled) 6 3 5 4 Weighted average common shares outstanding – Diluted 1,900 1,895 1,899 1,896 Basic earnings per common share $ 7.66 $ 8.09 $ 25.40 $ 12.04 Diluted earnings per common share $ 7.63 $ 8.07 $ 25.34 $ 12.02 There were 14 thousand and 20 thousand potential shares excluded from the computation of diluted earnings per share for the three-month periods ended September 30, 2021 and 2020, respectively, due to the out-of-the-money status of the related share-based awards. There were 14 thousand and 20 thousand potential shares excluded from the computation of diluted earnings per share for the nine-month periods ended September 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 September 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. There have been no stock options or SARs granted where the exercise price was less than the market price on the date of grant. A summary of share-based award transactions for all share-based award plans follows: (in thousands, except weighted average exercise price and average remaining contractual term) Number Of Shares Weighted Average Exercise Price Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding as of January 1, 2020 30 $ 124.13 3.53 $ 1,352 SARs granted 14 137.40 SARs exercised ( 8 ) 75.75 Outstanding as of December 31, 2020 36 $ 139.16 4.38 $ 903 SARs granted 5 184.26 SARs exercised ( 3 ) 68.70 Outstanding as of September 30, 2021 38 $ 150.06 4.31 $ 1,317 Exercisable as of September 30, 2021 29 $ 149.50 3.77 $ 1,028 Unvested as of September 30, 2021 9 $ 151.80 5.96 $ 289 9 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 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 stock. The Company uses historical data to project SAR exercises and pre-exercise forfeitures within the valuation model. The expected term of awards represents the period of time that SARs granted are expected to be outstanding. The interest rate assumed for the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of the grant. The weighted average fair values for the SARs issued during 2021 and 2020 were $ 59.83 and $ 34.45 , respectively, and were estimated using the weighted average assumptions shown in the table below. 2021 2020 Expected Life in Years 7.0 - 7.0 6.2 - 7.0 Volatility 33.9 % 28.5 % Interest Rate 1.3 % 0.7 % Yield Rate 1.1 % 1.2 % There was approximately $ 206 thousand and $ 192 thousand of compensation expense relating to SARs vesting on or before September 30, 2021 and 2020, respectively, included in personnel expenses in the unaudited Consolidated Statements of Operations. As of September 30, 2021, there was $ 401 thousand of unrecognized compensation expense related to unvested share-based compensation arrangements granted under the Company’s stock award plans. Note 4 – Segment Information The Company has one reportable segment, title insurance services. The remaining immaterial segments have been combined into a group called “All Other.” The title insurance segment primarily issues title insurance policies through approved attorneys from underwriting offices and through independent issuing agents. Title insurance policies insure titles to real estate. Provided below is selected financial information about the Company's operations by segment for the periods ended September 30, 2021 and 2020: Three Months Ended September 30, 2021 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 79,704 $ 2,776 $ ( 3,609 ) $ 78,871 Investment income 1,762 515 — 2,277 Net realized gain on investments 235 33 — 268 Total revenues $ 81,701 $ 3,324 $ ( 3,609 ) $ 81,416 Operating expenses 64,022 2,414 ( 3,457 ) 62,979 Income before income taxes $ 17,679 $ 910 $ ( 152 ) $ 18,437 Total assets $ 256,588 $ 78,842 $ — $ 335,430 Three Months Ended September 30, 2020 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 61,809 $ 2,176 $ ( 2,487 ) $ 61,498 Investment income 5,627 322 — 5,949 Net realized (loss) gain on investments ( 263 ) 449 — 186 Total revenues $ 67,173 $ 2,947 $ ( 2,487 ) $ 67,633 Operating expenses 49,260 1,858 ( 2,342 ) 48,776 Income before income taxes $ 17,913 $ 1,089 $ ( 145 ) $ 18,857 Total assets $ 213,152 $ 76,593 $ — $ 289,745 10 Nine Months Ended September 30, 2021 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 220,824 $ 11,769 $ ( 9,592 ) $ 223,001 Investment income 12,662 2,021 — 14,683 Net realized gain on investments 628 143 — 771 Total revenues $ 234,114 $ 13,933 $ ( 9,592 ) $ 238,455 Operating expenses 179,073 7,485 ( 9,143 ) 177,415 Income before income taxes $ 55,041 $ 6,448 $ ( 449 ) $ 61,040 Total assets $ 256,588 $ 78,842 $ — $ 335,430 Nine Months Ended September 30, 2020 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 154,820 $ 7,149 $ ( 5,725 ) $ 156,244 Investment income 2,525 186 — 2,711 Net realized gain on investments 327 — — 327 Total revenues $ 157,672 $ 7,335 $ ( 5,725 ) $ 159,282 Operating expenses 129,777 6,543 ( 5,288 ) 131,032 Income before income taxes $ 27,895 $ 792 $ ( 437 ) $ 28,250 Total assets $ 213,152 $ 76,593 $ — $ 289,745 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 $ 13.4 million and $ 12.5 million as of September 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 September 30, 2021 and 2020: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2021 2020 2021 2020 Service cost – benefits earned during the year $ — $ — $ — $ — Interest cost on the projected benefit obligation 8 7 22 23 Amortization of unrecognized losses — — — — Net periodic benefit cost $ 8 $ 7 $ 22 $ 23 Note 6 – Investments and Estimated Fair Value Investments in Fixed Maturity Securities The estimated fair value, gross unrealized holding gains, gross unrealized holding losses and amortized cost for fixed maturity securities by major classification are as follows: As of September 30, 2021 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturity securities, available-for-sale, at fair value: General obligations of U.S. states, territories and political subdivisions $ 17,214 $ 991 $ — $ 18,205 Special revenue issuer obligations of U.S. states, territories and political subdivisions 42,356 2,598 2 44,952 Corporate debt securities 18,144 1,017 12 19,149 Total $ 77,714 $ 4,606 $ 14 $ 82,306 11 As of December 31, 2020 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturity securities, available-for-sale, at fair value: Government obligations $ 24,026 $ 57 $ — $ 24,083 General obligations of U.S. states, territories and political subdivisions 17,391 1,262 — 18,653 Special revenue issuer obligations of U.S. states, territories and political subdivisions 44,939 3,270 3 48,206 Corporate debt securities 25,681 1,114 24 26,771 Total $ 112,037 $ 5,703 $ 27 $ 117,713 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, 2021 are as follows: Available-for-Sale (in thousands) Amortized Cost Estimated Fair Value Due in one year or less $ 18,477 $ 18,571 Due one year through five years 48,713 51,805 Due five years through ten years 9,704 10,542 Due after ten years 820 1,388 Total $ 77,714 $ 82,306 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, 2021 and December 31, 2020: Less than 12 Months 12 Months or Longer Total As of September 30, 2021 (in thousands) Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Special revenue issuer obligations of U.S. states, territories and political subdivisions $ 502 $ — $ 1,102 $ ( 2 ) $ 1,604 $ ( 2 ) Corporate debt securities 13,798 ( 12 ) — — 13,798 ( 12 ) Total temporarily impaired securities $ 14,300 $ ( 12 ) $ 1,102 $ ( 2 ) $ 15,402 $ ( 14 ) Less than 12 Months 12 Months or Longer Total As of December 31, 2020 (in thousands) Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Special revenue issuer obligations of U.S. states, territories and political subdivisions $ — $ — $ 1,103 $ ( 3 ) $ 1,103 $ ( 3 ) Corporate debt securities 20,630 ( 24 ) — — 20,630 ( 24 ) Total temporarily impaired securities $ 20,630 $ ( 24 ) $ 1,103 $ ( 3 ) $ 21,733 $ ( 27 ) 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 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. 12 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 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 nine and six fixed maturity securities had unrealized losses at September 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. The fair value is expected to recover as the securities approach their maturity date, or repricing date, or if market yields for such investments decline. The Company believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in market interest rates and other market conditions, and therefore the unrealized loss is recorded in accumulated other comprehensive income. 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 nine-month periods ended September 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 September 30, 2021 (in thousands) Cost Estimated Fair Value Equity securities, at fair value: Common stocks $ 29,818 $ 69,525 Total $ 29,818 $ 69,525 As of December 31, 2020 (in thousands) Cost Estimated Fair Value Equity securities, at fair value: Common stocks $ 32,478 $ 64,919 Total $ 32,478 $ 64,919 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. 13 Net Realized Investment Gains Gross realized gains and losses on sales of investments for the nine-month periods ended September 30 are summarized as follows: (in thousands) 2021 2020 Gross realized gains from securities: Corporate debt securities $ 53 $ 30 Common stocks 1,428 2,520 Total $ 1,481 $ 2,550 Gross realized losses from securities: Corporate debt securities $ ( 34 ) $ — Common stocks ( 677 ) ( 1,768 ) Other-than-temporary impairment of securities — ( 482 ) Total $ ( 711 ) $ ( 2,250 ) Net realized gains from securities $ 770 $ 300 Gross realized gains (losses) on other investments: Gains on other investments $ 1 $ 32 Losses on other investments — ( 5 ) Total $ 1 $ 27 Net realized investment gains $ 771 $ 327 Realized gains and losses are determined on the specific identification method. Variable Interest Entities The Company holds investments in variable interest entities ("VIEs") that are not consolidated in the Company's financial statements as the Company is not the primary beneficiary. These entities are considered VIEs as the equity investors at risk, including the Company, do not have the power over the activities that most significantly impact the economic performance of the entities; this power resides with a third-party general partner or managing member that cannot be removed except for cause. The following table sets forth details about the Company's variable interest investments in VIEs, which are structured either as limited partnerships ("LPs") or limited liability companies ("LLCs"), as of September 30, 2021: (in thousands) Balance Sheet Classification Carrying Value Estimated Fair Value Maximum Potential Loss (a) Tax credit LPs Other investments $ 276 $ 276 $ 1,768 Real estate LLCs or LPs Other investments 5,163 6,139 7,750 Small business investment LPs Other investments 8,051 7,780 13,295 Total $ 13,490 $ 14,195 $ 22,813 (a) Maximum potential loss is calculated as the total investment in the LLC or LP, including any capital commitments that may have not yet been called. The Company is not exposed to any loss beyond the total commitment of its investment. Valuation of Financial Assets The FASB has established a valuation hierarchy for disclosure of the inputs used to measure estimated fair value of financial assets and liabilities, such as securities. This hierarchy categorizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. 14 A financial instrument’s classification within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement – consequently, if there are multiple significant valuation inputs that are categorized in different levels of the hierarchy, the instrument’s hierarchy level is the lowest level (with Level 3 being the lowest level) within which any significant input falls. The Level 1 category includes equity securities and U.S. Treasury securities that are measured at estimated fair value using quoted active market prices. The Level 2 category includes fixed maturity securities such as corporate debt securities, U.S. government obligations, and obligations of U.S. states, territories, and political subdivisions. Estimated fair value is principally based on market values obtained from a third-party pricing service. Factors that are used in determining estimated fair market value include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. The Company receives one quote per security from a third-party pricing service, although as discussed below, the Company does consult other pricing resources when confirming that the prices it obtains reflect the fair values of the instruments in accordance with Accounting Standards Codification ("ASC") 820 , Fair Value Measurements and Disclosures . Generally, quotes obtained from the pricing service for instruments classified as Level 2 are not adjusted and are not binding. As of September 30, 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. However, these securities are classified as Level 2 because the pricing service from which the Company has obtained estimated fair values for these instruments uses valuation models that use observable market inputs in addition to trading prices. Substantially all of the input assumptions used in the service’s model are observable in the marketplace or can be derived or supported by observable market data. In the measurement of the estimated fair value of certain financial instruments, other valuation techniques were utilized if quoted market prices were not available. These derived fair value estimates are significantly affected by the assumptions used. Additionally, ASC 820 excludes from its scope certain financial instruments, including those related to insurance contracts, pension and other postretirement benefits, and equity method investments. In estimating the fair value of the financial instruments presented, the Company used the following methods and assumptions: Cash and cash equivalents The carrying amount for cash and cash equivalents is a reasonable estimate of fair value due to the short-term maturity of these investments. Measurement alternative equity investments The measurement alternative method requires investments without readily determinable fair values to be recorded at cost, less impairments, and plus or minus any changes resulting from observable price changes. The Company monitors any events or changes in circumstances that may have had a significant adverse effect on the fair value of these investments and makes any necessary adjustments. 15 Accrued interest and dividends The carrying amount for accrued interest and dividends is a reasonable estimate of fair value due to the short-term maturity of these assets. The following table presents, by level, fixed maturity securities carried at estimated fair value as of September 30, 2021 and December 31, 2020: As of September 30, 2021 (in thousands) Level 1 Level 2 * Level 3 Total Fixed maturity securities: Obligations of U.S. states, territories and political subdivisions $ — $ 63,157 $ — $ 63,157 Corporate debt securities — 19,149 — 19,149 Total $ — $ 82,306 $ — $ 82,306 As of December 31, 2020 (in thousands) Level 1 Level 2 * Level 3 Total Fixed maturity securities: Obligations of U.S. states, territories and political subdivisions $ 24,083 $ 66,859 $ — $ 90,942 Corporate debt securities — 26,771 — 26,771 Total $ 24,083 $ 93,630 $ — $ 117,713 *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, 2021 and December 31, 2020: As of September 30, 2021 (in thousands) Level 1 Level 2 Level 3 Total Financial assets: Cash and cash equivalents $ 48,510 $ — $ — $ 48,510 Accrued interest and dividends 990 — — 990 Equity securities, at fair value: Common stocks 69,525 — — 69,525 Short-term investments: Money market funds 51,231 — — 51,231 Other investments: Equity investments in unconsolidated affiliates, equity method — — 6,465 6,465 Equity investments in unconsolidated affiliates, measurement alternative — — 9,492 9,492 Total $ 170,256 $ — $ 15,957 $ 186,213 16 As of December 31, 2020 (in thousands) Level 1 Level 2 Level 3 Total Financial assets: Cash and cash equivalents $ 13,723 $ — $ — $ 13,723 Accrued interest and dividends 1,038 — — 1,038 Equity securities, at fair value: Common stocks 64,919 — — 64,919 Short-term investments: Money market funds, Treasury bills, commercial paper and certificates of deposit 15,170 — — 15,170 Other investments: Equity investments in unconsolidated affiliates, equity method — — 6,752 6,752 Equity investments in unconsolidated affiliates, measurement alternative — — 8,741 8,741 Total $ 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, 2021 or December 31, 2020. There were no transfers into or out of Levels 1, 2 or 3 during the periods presented. To help ensure that estimated fair value determinations are consistent with ASC 820, prices from our pricing services go through multiple review processes to ensure appropriate pricing. Pricing procedures and inputs used to price each security include, but are not limited to, the following: unadjusted quoted market prices for identical securities such as stock market closing prices; non-binding quoted prices for identical securities in markets that are not active; interest rates; yield curves observable at commonly quoted intervals; volatility; prepayment speeds; loss severity; credit risks; and default rates. The Company reviews the procedures and inputs used by its pricing services, and verifies a sample of the services’ quotes by comparing them to values obtained from other pricing resources. In the event the Company disagrees with a price provided by its pricing services, the respective service reevaluates the price to corroborate the market information and then reviews inputs to the evaluation in light of potentially new market data. 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 nine-month period ended September 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 September 30, 2021 and December 31, 2020: (in thousands) Balance, January 1, 2021 Amounts Impaired Observable Changes Purchases and Additional Commitments Paid Sales, Returns of Capital and Other Reductions Balance, September 30, 2021 Other investments: Equity investments in unconsolidated affiliates, measurement alternative $ 8,741 $ — $ — $ 1,015 $ ( 264 ) $ 9,492 Total $ 8,741 $ — $ — $ 1,015 $ ( 264 ) $ 9,492 17 (in thousands) Balance, January 1, 2020 Amounts Impaired Observable Changes Purchases and Additional Commitments Paid Sales, Returns of Capital and Other Reductions Balance, December 31, 2020 Other investments: Equity investments in unconsolidated affiliates, measurement alternative $ 7,899 $ — $ — $ 1,227 $ ( 385 ) $ 8,741 Total $ 7,899 $ — $ — $ 1,227 $ ( 385 ) $ 8,741 Note 7 – Commitments and Contingencies Legal Proceedings – The Company and its subsidiaries are involved in legal proceedings that are incidental to their business. In the Company’s opinion, based on the present status of these proceedings, any potential liability of the Company or its subsidiaries with respect to these legal proceedings, is not expected to be, in the aggregate, material to the Company’s consolidated financial condition or operations. Regulation – The Company’s title insurance and trust subsidiaries are regulated by various federal, state and local governmental agencies and are subject to various audits, examinations, and inquiries. It is the opinion of management based on its present expectations that findings from these audits, examinations, and inquiries will not have a material impact on the Company’s consolidated financial condition or 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 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 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 $ 525.2 million and $ 237.9 million as of September 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; 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 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, and when or if normal economic activity and business operations will resume. It is expected that progress on vaccination levels will continue to reduce the effects of the public health crisis on the economy and, in light of the increasing percentage of vaccinated individuals, many previously implemented restrictions have gradually been lifted. Despite the availability of vaccines, COVID-19 (including its variant strains) 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 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 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 three quarters 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. 18 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 gover nmental 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 LLCs that are primarily title insurance agencies. The Company utilizes the equity method to account for its investment in these LLCs. The following table sets forth the approximate values by year found within each financial statement classification: Financial Statement Classification, Consolidated Balance Sheets (unaudited) (in thousands) As of September 30, 2021 As of December 31, 2020 Other investments $ 6,465 $ 6,752 Premium and fees receivable $ 899 $ 753 Financial Statement Classification, Consolidated Statements of Operations (unaudited) (in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net premiums written $ 7,649 $ 6,615 $ 21,583 $ 16,725 Non-title services and other investment income $ 1,318 $ 1,104 $ 3,148 $ 2,241 Commissions to agents $ 5,507 $ 4,486 $ 14,770 $ 11,279 Note 9 – Business Combinations, 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, 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, 2021 As of December 31, 2020 Referral relationships $ 6,708 $ 6,416 Non-compete agreements 1,409 1,406 Tradename 747 560 Total 8,864 8,382 Accumulated amortization ( 3,373 ) ( 2,961 ) Identifiable intangible assets, net $ 5,491 $ 5,421 19 The following table provides the estimated aggregate amortization expense for each of the five succeeding fiscal years: Year Ended (in thousands) 2021 $ 131 2022 574 2023 574 2024 522 2025 504 Thereafter 2,999 Total $ 5,304 Goodwill and Title Plants As of September 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 nine-month periods ended September 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 table provides changes in the balances of each component of accumulated other comprehensive income, net of tax, for the periods ended September 30, 2021 and 2020: Three Months Ended September 30, 2021 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at June 30 $ 3,949 $ ( 144 ) $ 3,805 Other comprehensive loss before reclassifications ( 342 ) — ( 342 ) Amounts reclassified from accumulated other comprehensive income 9 — 9 Net current-period other comprehensive loss ( 333 ) — ( 333 ) Ending balance $ 3,616 $ ( 144 ) $ 3,472 Three Months Ended September 30, 2020 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at June 30 $ 4,294 $ ( 64 ) $ 4,230 Other comprehensive income before reclassifications 50 — 50 Amounts reclassified from accumulated other comprehensive income — — — Net current-period other comprehensive income 50 — 50 Ending balance $ 4,344 $ ( 64 ) $ 4,280 20 Nine Months Ended September 30, 2021 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at January 1 $ 4,470 $ ( 144 ) $ 4,326 Other comprehensive loss before reclassifications ( 839 ) — ( 839 ) Amounts reclassified from accumulated other comprehensive income ( 15 ) — ( 15 ) Net current-period other comprehensive loss ( 854 ) — ( 854 ) Ending balance $ 3,616 $ ( 144 ) $ 3,472 Nine Months Ended September 30, 2020 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at January 1 $ 3,132 $ ( 32 ) $ 3,100 Other comprehensive income (loss) before reclassifications 864 ( 32 ) 832 Amounts reclassified from accumulated other comprehensive income 348 — 348 Net current-period other comprehensive income (loss) 1,212 ( 32 ) 1,180 Ending balance $ 4,344 $ ( 64 ) $ 4,280 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, 2021 and 2020: Three Months Ended September 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 loss on investments $ ( 11 ) Other-than-temporary impairments — Total $ ( 11 ) Net realized investment gains Tax 2 Provision for income taxes Net of Tax $ ( 9 ) Reclassifications for the period $ ( 9 ) 21 Three Months Ended September 30, 2020 (in thousands) Details about Accumulated Other Comprehensive Income Components (in thousands) Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statements of Operations Unrealized gains and losses on available-for-sale securities: Net realized gain on investments $ — Other-than-temporary impairments — Total $ — Net realized investment gains Tax — Provision for income taxes Net of Tax $ — Reclassifications for the period $ — Nine Months Ended September 30, 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 $ 19 Other-than-temporary impairments — Total $ 19 Net realized investment gains Tax ( 4 ) Provision for income taxes Net of Tax $ 15 Reclassifications for the period $ 15 Nine Months Ended September 30, 2020 (in thousands) Details about Accumulated Other Comprehensive Income Components (in thousands) Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statements of Operations Unrealized gains and losses on available-for-sale securities: Net realized gain on investments $ 30 Other-than-temporary impairments ( 482 ) Total $ ( 452 ) Net realized investment gains Tax 104 Provision for income taxes Net of Tax $ ( 348 ) Reclassifications for the period $ ( 348 ) 22 Note 11 – Revenue from Contracts with Customers 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; and therefore is primarily applicable to the following Company revenue categories. Escrow and other title-related fees – The Company’s title segment recognizes commission revenue and fees related to items such as searches, settlements, commitments and other ancillary services. Escrow and other title-related fees are recognized as revenue at the time of the related transactions as the earnings process, or performance obligation, is then considered to be complete. Non-title services – Through various subsidiaries, the Company offers management services, tax-deferred real property exchange services, investment management and trust services. Nonrefundable exchange fees are recognized as revenue upon receipt of the funds, which is at the time of closing of the initial sale of property. All other non-title service fees are recognized as revenue as performance obligations are completed. Other – The Company occasionally recognizes revenue from other miscellaneous contracts which can include, but is not limited to, seminar and education registration fees and software licensing contracts. These revenue streams are deemed immaterial to the operations of the Company, and revenue is recognized when, or as, performance obligations are completed. The following table provides a breakdown of the Company’s revenue by major business activity: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2021 2020 2021 2020 Revenue from contracts with customers: Escrow and other title-related fees $ 3,863 $ 2,154 $ 10,148 $ 6,014 Non-title services 2,446 1,954 6,932 6,476 Total revenue from contracts with customers 6,309 4,108 17,080 12,490 Other sources of revenue: Net premiums written 72,345 57,205 201,349 143,311 Investment-related revenue 2,545 6,135 15,454 3,038 Other 217 185 4,572 443 Total revenues $ 81,416 $ 67,633 $ 238,455 $ 159,282 Note 12 – Leases The Company enters into lease agreements that are primarily used for office space. These leases are accounted for as operating leases, with lease expense recognized on a straight-line basis over the term of the lease. A portion of the Company's current leases include an option to extend or cancel the lease term. The exercise of such an option is solely at the Company's discretion. The operating lease liability recorded in the 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. The Company does not carry debt; thus no incremental borrowing rate was available to the Company. 23 Lease expense is included in office and technology expenses in the 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 2021 2020 Operating leases $ 350 $ 327 $ 1,002 $ 968 Short-term leases (b) 93 44 249 110 Lease expense $ 443 $ 371 $ 1,251 $ 1,078 Sub-lease income — — — — Lease cost $ 443 $ 371 $ 1,251 $ 1,078 (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, 2021 As of December 31, 2020 Current: Operating lease liabilities $ 1,032 $ 1,068 Non-current: Operating lease liabilities 2,392 2,601 Total operating lease liabilities $ 3,424 $ 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, 2021, are summarized as follows: Year Ended (in thousands) 2021 $ 315 2022 1,115 2023 799 2024 598 2025 410 Thereafter 504 Total undiscounted payments $ 3,741 Less: present value adjustment ( 317 ) Operating lease liabilities $ 3,424 Supplemental lease information is as follows: As of September 30, 2021 As of December 31, 2020 Weighted average remaining lease term (years) 4.16 4.24 Weighted average discount rate 4.4 % 4.6 % The Company does not have any material pending operating or financing lease agreements that become effective in future periods. 24