What changed in this filing

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Item 1. Financial Statements

2022-05-10 compared with 2021-11-09 · 131 added, 291 removed, 583 unchanged (42% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

As of September 30, 2021 and December 31, 2020

As of March 31, 2022 and December 31, 2021

(in thousands)

September 30,

2022 December 31,

1 unchanged sentence

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

September 30, 2021:

March 31, 2022:

December 31, 2021:

1 unchanged sentence

Equity securities, at fair value (cost:

September 30, 2021:

March 31, 2022:

December 31, 2021:

22 unchanged sentences

Deferred income taxes, net

11,436 13,121

Total liabilities

5 unchanged sentences

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)

1,897 and 1,895 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively, excluding in each period 292 shares of common stock held by the Company)

Retained earnings

8 unchanged sentences

Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2021 and 2020

For the Three Months Ended March 31, 2022 and 2021

(in thousands, except per share amounts)

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net premiums written $ 63,125 $ 61,477

24 unchanged sentences

Consolidated Statements of Comprehensive Income

For the Three and Nine Months Ended September 30, 2021 and 2020

For the Three Months Ended March 31, 2022 and 2021

(in thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net income $ 6,185 $ 13,823

Other comprehensive (loss) income, before tax:

Other comprehensive loss, before tax:

Accumulated postretirement benefit obligation adjustment

Net unrealized (loss) gain on investments arising during the period ( 433 ) 61 ( 1,064 ) 1,093

Net unrealized losses on investments arising during the period ( 2,764 ) ( 750 )

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

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

Other comprehensive (loss) gain, before tax ( 422 ) 61 ( 1,083 ) 1,504

Income tax benefit related to postretirement health benefits

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

Net income tax (benefit) expense on other comprehensive (loss) income ( 89 ) 11 ( 229 ) 324

Other comprehensive (loss) income ( 333 ) 50 ( 854 ) 1,180

Other comprehensive loss, before tax ( 2,545 ) ( 773 )

Income tax expense related to postretirement health benefits 46 —

Income tax benefit related to net unrealized losses on investments arising during the period ( 583 ) ( 158 )

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

Net income tax benefit on other comprehensive loss ( 537 ) ( 163 )

Other comprehensive loss ( 2,008 ) ( 610 )

Comprehensive Income $ 4,177 $ 13,213

2 unchanged sentences

Consolidated Statements of Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2021 and 2020

For the Three Months Ended March 31, 2022 and 2021

(in thousands, except per share amounts)

3 unchanged sentences

Shares Amount

Balance, June 30, 2020

Balance, December 31, 2020

1,892 $ — $ 196,096 $ 4,326 $ 200,422

3 unchanged sentences

Exercise of stock appreciation rights

Share-based compensation expense related to stock appreciation rights

Net unrealized gain on investments 50 50

Other ( 94 ) ( 94 )

Balance, September 30, 2020

2 ( 1 ) ( 1 )

Balance, June 30, 2021

1,894 $ — $ 228,133 $ 3,805 $ 231,938

14,503 14,503

Dividends paid ($ 0.46 per share)

( 871 ) ( 871 )

Share-based compensation expense related to stock appreciation rights

Net unrealized loss on investments ( 610 ) ( 610 )

Balance, September 30, 2021

Balance, March 31, 2021

1,894 $ — $ 209,157 $ 3,716 $ 212,873

Common Stock Retained Earnings Accumulated

Comprehensive

Stockholders’

Shares Amount

Balance, December 31, 2021

1,895 $ — $ 225,861 $ 3,226 $ 229,087

22,785 22,785

Dividends paid ($ 0.46 per share)

4 unchanged sentences

Accumulated postretirement benefit obligation adjustment 173 173

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

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

Net unrealized loss on investments ( 2,181 ) ( 2,181 )

Balance, September 30, 2021

Balance, March 31, 2022

1,897 $ — $ 231,274 $ 1,218 $ 232,492

2 unchanged sentences

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2021 and 2020

For the Three Months Ended March 31, 2022 and 2021

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating Activities

10 unchanged sentences

Provision for claims 176 1,591

Provision (benefit) for deferred income taxes 2,953 ( 391 )

(Benefit) provision for deferred income taxes ( 1,148 ) 753

Changes in assets and liabilities:

1 unchanged sentence

Increase in other assets ( 131 ) ( 2,064 )

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 )

(Increase) decrease in operating lease right-of-use assets ( 2,119 ) 154

Decrease in accounts payable and accrued liabilities ( 9,163 ) ( 3,982 )

Increase (decrease) in operating lease liabilities 2,124 ( 160 )

Increase in current income taxes payable 2,835 2,739

Payments of claims, net of recoveries ( 564 ) ( 613 )

1 unchanged sentence

Investing Activities

Purchase of fixed maturities — ( 517 )

Purchases of equity securities ( 102 ) ( 976 )

5 unchanged sentences

Proceeds from sales and distributions of other investments 1,562 1,534

Proceeds from sales of other assets 1 22

Purchases of property ( 908 ) ( 1,613 )

Proceeds from the sale of property 32 13

Net cash provided by (used in) investing activities 1,674 ( 3,858 )

Net (used in) provided by investing activities ( 333 ) 1,836

Financing Activities

6 unchanged sentences

Consolidated Statements of Cash Flows, continued

Nine Months Ended

September 30,

Three Months Ended

Supplemental Disclosures:

Cash Paid During the Year for:

Income tax payments, net $ 9,913 $ 6,889

Income tax refund, net $ ( 79 ) $ —

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

Non-cash net unrealized loss on investments, net of deferred tax benefit of $ 583 and $ 163 for March 31, 2022 and 2021, respectively

$ 2,181 $ 610

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

Adjustments to operating lease right-of-use assets for September 30, 2021 and 2020, respectively $ — $ 94

Adjustments to postretirement benefits obligation, net of deferred tax expense of $( 46 ) and $ 0 for March 31, 2022 and 2021, respectively

$ ( 173 ) $ —

Refer to notes to the Consolidated Financial Statements.

2 unchanged sentences

Notes to Consolidated Financial Statements

September 30, 2021

March 31, 2022

Note 1 – Basis of Presentation and Significant Accounting Policies

1 unchanged sentence

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.

Accordingly, certain information and footnote disclosures normally included in annual consolidated financial statements have been condensed or omitted.

All intercompany balances and transactions have been eliminated in consolidation.

1 unchanged sentence

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.

Operating results for the three-month period ended March 31, 2022 are not necessarily indicative of the financial condition and results that may be expected for the year ending December 31, 2022 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.

1 unchanged sentence

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.

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

Activity in the reserve for claims for the three-month period ended March 31, 2022 and the year ended December 31, 2021 are summarized as follows:

(in thousands) March 31, 2022 December 31, 2021

Balance, beginning of period $ 36,754 $ 33,584

3 unchanged sentences

$ 36,366 $ 36,754

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 total reserve for all reported and unreported losses the Company incurred through March 31, 2022 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.

1 unchanged sentence

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

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

(in thousands, except percentages) March 31, 2022 % December 31, 2021 %

Known title claims $ 3,910 10.8 $ 3,317 9.0

9 unchanged sentences

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

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

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

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except per share amounts)

2021 2020 2021 2020

Net income $ 6,185 $ 13,823

2 unchanged sentences

Weighted average common shares outstanding – Diluted

1,900 1,895 1,899 1,896

Basic earnings per common share $ 3.26 $ 7.30

Diluted earnings per common share $ 3.25 $ 7.29

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.

There were 0 and 15 thousand potential shares excluded from the computation of diluted earnings per share for the three-month periods ended March 31, 2022 and 2021, respectively, due to the out-of-the-money status of the related share-based awards.

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.

1 unchanged sentence

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.

As of March 31, 2022, 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 ( 4 ) 89.23

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

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.

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.

Outstanding as of March 31, 2022 31 $ 158.22 4.02 $ 1,400

Exercisable as of March 31, 2022 26 $ 161.73 3.76 $ 1,067

Unvested as of March 31, 2022 5 $ 141.50 5.25 $ 333

There was approximately $ 102 thousand and $ 71 thousand of compensation expense relating to SARs vesting on or before March 31, 2022 and 2021, respectively, included in personnel expenses in the unaudited Consolidated Statements of Operations.

As of March 31, 2022, there was $ 206 thousand of unrecognized compensation expense related to unvested share-based compensation arrangements granted under the Company’s stock award plans.

Note 4 – Segment Information

3 unchanged sentences

Title insurance policies insure titles to real estate.

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

Three Months Ended

September 30, 2021 (in thousands)

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

$ 256,588 $ 78,842 $ — $ 335,430

Provided below is selected financial information about the Company's operations by segment for the periods ended March 31, 2022 and 2021:

Three Months Ended

September 30, 2020 (in thousands)

Insurance All

Other Intersegment

Eliminations Total

Insurance and other services revenues $ 61,809 $ 2,176 $ ( 2,487 ) $ 61,498

Investment income 5,627 322 — 5,949

Net realized (loss) gain on investments ( 263 ) 449 — 186

Total revenues

$ 67,173 $ 2,947 $ ( 2,487 ) $ 67,633

Operating expenses 49,260 1,858 ( 2,342 ) 48,776

Income before income taxes

$ 17,913 $ 1,089 $ ( 145 ) $ 18,857

$ 213,152 $ 76,593 $ — $ 289,745

Nine Months Ended

September 30, 2021 (in thousands) Title

March 31, 2022 (in thousands) Title

Insurance All

1 unchanged sentence

Insurance and other services revenues $ 73,065 $ 2,737 $ ( 4,888 ) $ 70,914

Investment income 12,662 2,021 — 14,683

Investment loss ( 1,628 ) ( 2,035 ) — ( 3,663 )

Net realized gain on investments 51 1,696 — 1,747

2 unchanged sentences

Operating expenses 63,188 2,753 ( 4,736 ) 61,205

Income before income taxes $ 55,041 $ 6,448 $ ( 449 ) $ 61,040

Income (loss) before income taxes $ 8,300 $ ( 355 ) $ ( 152 ) $ 7,793

$ 275,729 $ 52,668 $ — $ 328,397

Nine Months Ended

September 30, 2020 (in thousands) Title

Three Months Ended

March 31, 2021 (in thousands) Title

Insurance All

9 unchanged sentences

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 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 $ 14.2 million and $ 13.4 million as of March 31, 2022 and December 31, 2021, 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:

The following sets forth the net periodic benefit cost for the executive benefits for the periods ended March 31, 2022 and 2021:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2022 2021

3 unchanged sentences

Net periodic benefit cost

$ 8 $ 7 $ 22 $ 23

Note 6 – Investments and Estimated Fair Value

1 unchanged sentence

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

As of September 30, 2021 (in thousands) Amortized

As of March 31, 2022 (in thousands) Amortized

Losses Estimated Fair

11 unchanged sentences

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

Government obligations

$ 24,026 $ 57 $ — $ 24,083

General obligations of U.S.

7 unchanged sentences

The special revenue category for both periods presented includes approximately 45 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:

The scheduled maturities of fixed maturity securities at March 31, 2022 are as follows:

Available-for-Sale

7 unchanged sentences

Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties.

The following table presents the gross unrealized losses on fixed maturity securities and the estimated fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous loss position at September 30, 2021 and December 31, 2020:

Less than 12 Months 12 Months or Longer Total

As of September 30, 2021 (in thousands) Estimated

As of March 31, 2022 (in thousands) Estimated

Value Unrealized

23 unchanged sentences

$ 8,493 $ ( 13 ) $ 7,305 $ ( 37 ) $ 15,798 $ ( 50 )

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.

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.

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.

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.

A total of 13 and 9 fixed maturity securities had unrealized losses at March 31, 2022 and December 31, 2021, 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 nine-month periods ended September 30, 2021 and 2020, respectively.

The Company has not recorded any other-than-temporary impairment charges related to fixed maturity securities for the three-month periods ended March 31, 2022 and 2021.

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

1 unchanged sentence

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

As of September 30, 2021 (in thousands)

As of March 31, 2022 (in thousands)

Cost Estimated Fair

9 unchanged sentences

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:

Gross realized gains and losses on sales of investments for the three-month periods ended March 31, 2022 and 2021 are summarized as follows:

(in thousands) 2022 2021

Gross realized gains from securities:

Corporate debt securities

Common stocks

$ 1,747 $ 940

Gross realized losses from securities:

2 unchanged sentences

$ — $ ( 619 )

Other-than-temporary impairment of securities

$ ( 711 ) $ ( 2,250 )

Net realized gains from securities

$ 1,747 $ 321

Gross realized gains (losses) on other investments:

2 unchanged sentences

Net realized investment gains

$ 1,747 $ 321

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

3 unchanged sentences

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

The following table sets forth details about the Company's variable interest investments in VIEs, which are structured either as limited partnerships ("LPs") or limited liability companies ("LLCs"), as of September 30, 2021:

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

6 unchanged sentences

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.

The Financial Accounting Standards Board 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.

10 unchanged sentences

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.

As of March 31, 2022 and December 31, 2021, 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.

3 unchanged sentences

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.

Additionally, ASC 825, Financial Instruments , 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:

1 unchanged sentence

The carrying amount for cash and cash equivalents is a reasonable estimate of fair value due to the short-term maturity of these investments.

Investments in real estate

Real estate investments are reported at amortized cost.

Depreciation and other related expenses are recorded as an offset to investment income.

The Company monitors any events or changes in circumstances that may have had a significant adverse effect on the fair value of real estate investments and makes any necessary adjustments, with any reductions in the carrying amount of these investments recorded in net realized investment gains in the unaudited Consolidated Statement of Operations when recognized.

Measurement alternative equity investments

3 unchanged sentences

The carrying amount for accrued interest and dividends is a reasonable estimate of fair value due to the short-term maturity of these assets.

The following table presents, by level, fixed maturity securities carried at estimated fair value as of September 30, 2021 and December 31, 2020:

As of September 30, 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 March 31, 2022 and December 31, 2021:

As of March 31, 2022 (in thousands) Level 1 Level 2 * Level 3 Total

Fixed maturity securities:

10 unchanged sentences

*Denotes fair market value obtained from pricing services.

The following table presents, by level, estimated fair values of equity investments and other financial instruments as of September 30, 2021 and December 31, 2020:

As of September 30, 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 March 31, 2022 and December 31, 2021:

As of March 31, 2022 (in thousands) Level 1 Level 2 Level 3 Total

Financial assets:

2 unchanged sentences

Accrued interest and dividends

1,000 — — 1,000

Equity securities, at fair value:

4 unchanged sentences

Other investments:

Equity investments in unconsolidated affiliates, equity method

— — 6,465 6,465

Equity investments in unconsolidated affiliates, measurement alternative

6 unchanged sentences

Accrued interest and dividends

1,038 — — 1,038

Equity securities, at fair value:

2 unchanged sentences

Short-term investments:

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

Money market funds 45,930 — — 45,930

Other investments:

Equity investments in unconsolidated affiliates, equity method

— — 6,752 6,752

Equity investments in unconsolidated affiliates, measurement alternative

1 unchanged sentence

$ 160,768 $ — $ 8,688 $ 169,456

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

The Company did not hold any Level 3 category debt or marketable equity investment securities as of March 31, 2022 or December 31, 2021.

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

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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.

Certain equity investments under the measurement alternative and real estate investments 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:

There were no impairments of such investments made during the three-month period ended March 31, 2022 or the twelve-month period ended December 31, 2021.

The following table presents a rollforward of equity investments under the measurement alternative and real estate investments as of March 31, 2022 and December 31, 2021:

(in thousands) Balance,

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Paid Sales, Returns of Capital and Other Reductions Balance,

September 30, 2021

March 31, 2022

Other investments:

Real Estate $ 4,987 $ — $ — $ — $ — $ 4,987

Equity investments in unconsolidated affiliates, measurement alternative

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Other investments:

Real Estate $ — $ — $ — $ 5,000 $ ( 13 ) $ 4,987

Equity investments in unconsolidated affiliates, measurement alternative

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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 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.

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, in the aggregate, be 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 and inquiries.

It is the opinion of management based on its present expectations that these audits 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.

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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.

Like-Kind Exchanges Proceeds – In administering tax-deferred like-kind exchanges pursuant to § 1031 of the Internal Revenue Code, the Company’s wholly owned 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 wholly owned 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 $ 571.4 million and $ 763.9 million as of March 31, 2022 and December 31, 2021, 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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Exchange services revenue includes earnings on these deposits;

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

therefore, investment income is shown as other income 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.

COVID-19 – Despite the widespread availability of vaccines, COVID-19 (including its variant strains) continues to impact U.S.

states where the Company conducts business.

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In response, the U.S.

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

government and its agencies took 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.

Many such actions have lapsed or otherwise been reduced as time has passed since the onset of the pandemic.

The Company has remained fully operational throughout the pandemic and did not have any reductions in workforce during 2022 or 2021.

A large number of the Company's employees are performing their job functions remotely.

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

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

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(in thousands) As of

September 30, 2021 As of

March 31, 2022 As of

December 31, 2021

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(in thousands) Three Months Ended

September 30,

Nine Months Ended

September 30,

2021 2020 2021 2020

Net premiums written $ 6,584 $ 6,769

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Commissions to agents $ 4,465 $ 4,474

Note 9 – Business Combinations, Intangible Assets, Goodwill and Title Plants

Note 9 – Intangible Assets, Goodwill and Title Plants

Intangible Assets

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

In accordance with ASC 350, Intangibles – Goodwill and Other , management determined that no events or changes in circumstances occurred during the nine-month periods ended September 30, 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 three-month periods ended March 31, 2022 and 2021 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

March 31, 2022 As of

December 31, 2021

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Tradename 747 747

12,252 12,252

Accumulated amortization ( 3,835 ) ( 3,505 )

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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.

As of March 31, 2022, the Company recognized $ 7.2 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.

In accordance with ASC 350, management determined that no events or changes in circumstances occurred during the three-month periods ended March 31, 2022 and 2021 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:

The following table provides changes in the balances of each component of accumulated other comprehensive income, net of tax, for the periods ended March 31, 2022 and 2021:

Three Months Ended

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

March 31, 2022 (in thousands) Unrealized Gains and Losses

On Available-for-Sale

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Benefits Plans

Beginning balance at June 30

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

Other comprehensive loss before reclassifications ( 342 ) — ( 342 )

Beginning balance at January 1 $ 3,370 $ ( 144 ) $ 3,226

Other comprehensive (loss) income before reclassifications ( 2,181 ) 173 ( 2,008 )

Amounts reclassified from accumulated other comprehensive income — — —

Net current-period other comprehensive loss ( 333 ) — ( 333 )

Net current-period other comprehensive loss (income) ( 2,181 ) 173 ( 2,008 )

Ending balance $ 1,189 $ 29 $ 1,218

$ 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

Beginning balance at June 30

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

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive income

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

Nine Months Ended

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

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

On Available-for-Sale

Securities Postretirement

Benefits Plans

Benefits Plans Total

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

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

( 15 ) — ( 15 )

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

Ending balance

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

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

Ending balance

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

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 )

The following table provides significant amounts reclassified out of each component of accumulated other comprehensive income for the three-month periods ended March 31, 2022 and 2021:

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)

March 31, 2022 (in thousands)

Details about Accumulated Other

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

Net realized gain on investments $ 19

Net realized gain (loss) on investments $ —

Other-than-temporary impairments —

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Reclassifications for the period $ —

Nine Months Ended

September 30, 2020 (in thousands)

Three Months Ended

March 31, 2021 (in thousands)

Details about Accumulated Other

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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:

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.

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.

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.

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Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2022 2021

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Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2022 2021

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(in thousands) As of

September 30, 2021 As of

March 31, 2022 As of

December 31, 2021

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Total operating lease liabilities $ 7,453 $ 5,329

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:

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, 2022, are summarized as follows:

Year Ended (in thousands)

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Supplemental lease information is as follows:

September 30, 2021 As of

March 31, 2022 As of

December 31, 2021

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