INVESTORS TITLE CO 10-Q

Item 1. Financial Statements Investors Title Company and Subsidiaries Consolidated Balance Sheets As of June 30, 2022 and December 31, 2021 (in thousands) (unaudited) June 30, 2022 December 31, 2021 Assets Cash and cash equivalents $ 35,486 $ 37,168 Investments: Fixed maturity securities, available-for-sale, at fair value (amortized cost: June 30, 2022: $ 60,874 ; December 31, 2021: $ 75,511 ) 61,385 79,791 Equity securities, at fair value (cost: June 30, 2022: $ 25,613 ; December 31, 2021: $ 29,478 ) 54,901 76,853 Short-term investments 71,319 45,930 Other investments 19,693 20,298 Total investments 207,298 222,872 Premiums and fees receivable 25,377 22,953 Accrued interest and dividends 733 817 Prepaid expenses and other receivables 13,002 11,721 Property, net 15,698 13,033 Goodwill and other intangible assets, net 18,325 15,951 Operating lease right-of-use assets 6,561 5,202 Other assets 2,322 1,771 Current income taxes receivable 390 — Total Assets $ 325,192 $ 331,488 Liabilities and Stockholders’ Equity Liabilities: Reserve for claims $ 36,603 $ 36,754 Accounts payable and accrued liabilities 40,044 43,868 Operating lease liabilities 6,704 5,329 Current income taxes payable — 3,329 Deferred income taxes, net 8,662 13,121 Total liabilities 92,013 102,401 Commitments and Contingencies — — Stockholders’ Equity: Preferred stock ( 1,000 authorized shares; no shares issued) — — Common stock – no par value ( 10,000 authorized shares; 1,897 and 1,895 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively, excluding in each period 292 shares of common stock held by the Company) — — Retained earnings 232,759 225,861 Accumulated other comprehensive income 420 3,226 Total stockholders' equity 233,179 229,087 Total Liabilities and Stockholders’ Equity $ 325,192 $ 331,488 Refer to notes to the Consolidated Financial Statements. 1 Investors Title Company and Subsidiaries Consolidated Statements of Operations For the Three and Six Months Ended June 30, 2022 and 2021 (in thousands, except per share amounts) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenues: Net premiums written $ 69,626 $ 67,527 $ 132,751 $ 129,004 Escrow and other title-related fees 6,209 3,487 11,273 6,285 Non-title services 2,836 2,408 5,262 4,486 Interest and dividends 911 898 1,826 1,914 Other investment income 1,106 1,483 2,443 2,424 Net realized investment gains 2,038 182 3,785 503 Changes in the estimated fair value of equity security investments ( 12,172 ) 4,829 ( 18,087 ) 8,068 Other 348 4,147 647 4,355 Total Revenues $ 70,902 $ 84,961 $ 139,900 $ 157,039 Operating Expenses: Commissions to agents 33,826 34,346 63,683 64,888 Provision for claims 1,310 1,436 1,486 3,027 Personnel expenses 20,898 15,914 42,152 32,067 Office and technology expenses 4,288 3,211 8,656 5,953 Other expenses 7,627 4,766 13,177 8,501 Total Operating Expenses 67,949 59,673 129,154 114,436 Income before Income Taxes 2,953 25,288 10,746 42,603 Provision for Income Taxes 674 5,506 2,282 8,998 Net Income $ 2,279 $ 19,782 $ 8,464 $ 33,605 Basic Earnings per Common Share $ 1.20 $ 10.44 $ 4.46 $ 17.74 Weighted Average Shares Outstanding – Basic 1,897 1,894 1,897 1,894 Diluted Earnings per Common Share $ 1.20 $ 10.42 $ 4.45 $ 17.70 Weighted Average Shares Outstanding – Diluted 1,899 1,899 1,900 1,898 Refer to notes to the Consolidated Financial Statements. 2 Investors Title Company and Subsidiaries Consolidated Statements of Comprehensive Income For the Three and Six Months Ended June 30, 2022 and 2021 (in thousands) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net income $ 2,279 $ 19,782 $ 8,464 $ 33,605 Other comprehensive (loss) income, before income tax: Accumulated postretirement benefit obligation adjustment ( 8 ) — 211 — Net unrealized (losses) gains on investments arising during the period ( 1,178 ) 59 ( 3,942 ) ( 691 ) Reclassification adjustment for sale of securities included in net income 46 53 46 30 Reclassification adjustment for write-down of securities included in net income 127 — 127 — Other comprehensive (loss) income, before income tax ( 1,013 ) 112 ( 3,558 ) ( 661 ) Income tax (benefit) expense related to postretirement health benefits ( 2 ) — 44 — Income tax (benefit) expense related to net unrealized (losses) gains on investments arising during the period ( 252 ) 12 ( 835 ) ( 146 ) Income tax expense related to reclassification adjustment for sale of securities included in net income 10 11 10 6 Income tax expense related to reclassification adjustment for write-down of securities included in net income 29 — 29 — Net income tax (benefit) expense on other comprehensive (loss) income ( 215 ) 23 ( 752 ) ( 140 ) Other comprehensive (loss) income ( 798 ) 89 ( 2,806 ) ( 521 ) Comprehensive Income $ 1,481 $ 19,871 $ 5,658 $ 33,084 Refer to notes to the Consolidated Financial Statements. 3 Investors Title Company and Subsidiaries Consolidated Statements of Stockholders’ Equity For the Three and Six Months Ended June 30, 2022 and 2021 (in thousands, except per share amounts) (unaudited) Common Stock Retained Earnings Accumulated Other Comprehensive Income Total Stockholders’ Equity Shares Amount Balance, March 31, 2021 1,894 $ — $ 209,157 $ 3,716 $ 212,873 Net income 19,782 19,782 Dividends paid ($ 0.46 per share) ( 873 ) ( 873 ) Share-based compensation expense related to stock appreciation rights 67 67 Net unrealized gain on investments 89 89 Balance, June 30, 2021 1,894 $ — $ 228,133 $ 3,805 $ 231,938 Balance, March 31, 2022 1,897 $ — $ 231,274 $ 1,218 $ 232,492 Net income 2,279 2,279 Dividends paid ($ 0.46 per share) ( 872 ) ( 872 ) Share-based compensation expense related to stock appreciation rights 78 78 Accumulated postretirement benefit obligation adjustment ( 6 ) ( 6 ) Net unrealized loss on investments ( 792 ) ( 792 ) Balance, June 30, 2022 1,897 $ — $ 232,759 $ 420 $ 233,179 Common Stock Retained Earnings Accumulated Other Comprehensive Income Total Stockholders’ Equity Shares Amount Balance, December 31, 2020 1,892 $ — $ 196,096 $ 4,326 $ 200,422 Net income 33,605 33,605 Dividends paid ($ 0.90 per share) ( 1,705 ) ( 1,705 ) Exercise of stock appreciation rights 2 ( 1 ) ( 1 ) Share-based compensation expense related to stock appreciation rights 138 138 Net unrealized loss on investments ( 521 ) ( 521 ) Balance, June 30, 2021 1,894 $ — $ 228,133 $ 3,805 $ 231,938 Balance, December 31, 2021 1,895 $ — $ 225,861 $ 3,226 $ 229,087 Net income 8,464 8,464 Dividends paid ($ 0.92 per share) ( 1,745 ) ( 1,745 ) Exercise of stock appreciation rights 2 ( 1 ) ( 1 ) Share-based compensation expense related to stock appreciation rights 180 180 Accumulated postretirement benefit obligation adjustment 167 167 Net unrealized loss on investments ( 2,973 ) ( 2,973 ) Balance, June 30, 2022 1,897 $ — $ 232,759 $ 420 $ 233,179 Refer to notes to the Consolidated Financial Statements. 4 Investors Title Company and Subsidiaries Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2022 and 2021 (in thousands) (unaudited) Six Months Ended June 30, 2022 2021 Operating Activities Net income $ 8,464 $ 33,605 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,109 880 Amortization of investments, net 310 535 Amortization of other intangible assets, net 653 273 Share-based compensation expense related to stock appreciation rights 180 138 Net gain on disposals of property ( 36 ) ( 3,991 ) Net realized investment gains ( 3,785 ) ( 503 ) Net change in estimated fair value of equity security investments 18,087 ( 8,068 ) Net earnings from other investments ( 1,918 ) ( 1,522 ) Provision for claims 1,486 3,027 (Benefit) provision for deferred income taxes ( 3,708 ) 3,013 Changes in assets and liabilities: Increase in premium and fees receivable ( 2,424 ) ( 1,961 ) Increase in other assets ( 1,171 ) ( 4,883 ) (Increase) decrease in operating lease right-of-use assets ( 1,359 ) 150 Increase in current income taxes receivable ( 390 ) ( 804 ) Decrease in accounts payable and accrued liabilities ( 3,613 ) ( 1,296 ) Increase (decrease) in operating lease liabilities 1,375 ( 159 ) Decrease in current income taxes payable ( 3,329 ) ( 638 ) Payments of claims, net of recoveries ( 1,637 ) ( 1,308 ) Net cash provided by operating activities 8,294 16,488 Investing Activities Purchases of fixed maturities ( 350 ) — Purchases of equity securities ( 1,146 ) ( 1,468 ) Purchases of short-term investments ( 47,890 ) ( 31,612 ) Purchases of other investments ( 939 ) ( 414 ) Purchases of subsidiary, net of cash ( 4,927 ) — Proceeds from sales and maturities of fixed maturity securities 14,496 27,562 Proceeds from sales of equity securities 9,378 5,013 Proceeds from sales and maturities of short-term investments 22,509 2,338 Proceeds from sales and distributions of other investments 3,054 2,397 Proceeds from sales of other assets — 1 Purchases of property ( 2,452 ) ( 6,060 ) Proceeds from the sale of property 37 5,321 Net cash (used in) provided by investing activities ( 8,230 ) 3,078 Financing Activities Exercise of stock appreciation rights ( 1 ) ( 1 ) Dividends paid ( 1,745 ) ( 1,705 ) Net cash used in financing activities ( 1,746 ) ( 1,706 ) Net (Decrease) Increase in Cash and Cash Equivalents ( 1,682 ) 17,860 Cash and Cash Equivalents, Beginning of Period 37,168 13,723 Cash and Cash Equivalents, End of Period $ 35,486 $ 31,583 5 Consolidated Statements of Cash Flows, continued Six Months Ended June 30, 2022 2021 Supplemental Disclosures: Cash Paid During the Year for: Income tax payments, net $ 9,709 $ 7,423 Non-Cash Investing and Financing Activities: Non-cash net unrealized loss on investments, net of deferred tax benefit of $ 835 and $ 140 for June 30, 2022 and 2021, respectively $ 2,973 $ 521 Adjustments to postretirement benefits obligation, net of deferred tax expense of $( 44 ) and $ 0 for June 30, 2022 and 2021, respectively $ ( 167 ) $ — Changes in Financial Statement Amounts Related to Purchase of Subsidiaries, Net of Cash Received: Goodwill and other intangibles acquired $ ( 3,028 ) $ — Title plant acquired ( 500 ) — Prepaid and other assets acquired ( 77 ) — Fixed assets acquired ( 1,322 ) — Purchase of subsidiary, net of cash received $ ( 4,927 ) $ — Refer to notes to the Consolidated Financial Statements. 6 INVESTORS TITLE COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements June 30, 2022 (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, 2021 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 consolidated 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 six-month periods ended June 30, 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. 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. Note 2 – Reserve for Claims Activity in the reserve for claims for the six-month period ended June 30, 2022 and the year ended December 31, 2021 is summarized as follows: (in thousands) June 30, 2022 December 31, 2021 Balance, beginning of period $ 36,754 $ 33,584 Provision charged to operations 1,486 5,686 Payments of claims, net of recoveries ( 1,637 ) ( 2,516 ) Balance, end of period $ 36,603 $ 36,754 The total reserve for all reported and unreported losses the Company incurred through June 30, 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 June 30, 2022. 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. 7 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) June 30, 2022 % December 31, 2021 % Known title claims $ 3,380 9.2 $ 3,317 9.0 IBNR 33,223 90.8 33,437 91.0 Total reserve for claims $ 36,603 100.0 $ 36,754 100.0 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, 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- and six-month periods ended June 30: Three Months Ended June 30, Six Months Ended June 30, (in thousands, except per share amounts) 2022 2021 2022 2021 Net income $ 2,279 $ 19,782 $ 8,464 $ 33,605 Weighted average common shares outstanding – Basic 1,897 1,894 1,897 1,894 Incremental shares outstanding assuming the exercise of dilutive SARs (share-settled) 2 5 3 4 Weighted average common shares outstanding – Diluted 1,899 1,899 1,900 1,898 Basic earnings per common share $ 1.20 $ 10.44 $ 4.46 $ 17.74 Diluted earnings per common share $ 1.20 $ 10.42 $ 4.45 $ 17.70 There were 13 thousand and 14 thousand potential shares excluded from the computation of diluted earnings per share for the three-month periods ended June 30, 2022 and 2021, respectively, due to the out-of-the-money status of the related share-based awards. There were 13 thousand and 14 thousand potential shares excluded from the computation of diluted earnings per share for the six-month periods ended June 30, 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. 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. 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. As of June 30, 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. There have been no stock options or SARs granted where the exercise price was less than the market price on the date of grant. 8 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, 2021 36 $ 139.16 4.38 $ 903 SARs granted 5 184.26 SARs exercised ( 6 ) 106.71 Outstanding as of December 31, 2021 35 $ 150.36 3.96 $ 1,643 SARs granted 5 166.90 SARs exercised ( 4 ) 89.23 Outstanding as of June 30, 2022 36 $ 159.32 4.16 $ 407 Exercisable as of June 30, 2022 27 $ 161.95 3.65 $ 324 Unvested as of June 30, 2022 9 $ 151.27 5.73 $ 83 During the second quarters of both 2022 and 2021, the Company issued 5 thousand share-settled SARs to directors of the Company. The fair value of each award is estimated on the date of grant using the Black-Scholes option valuation model with the weighted average assumptions noted in the table shown below. Expected volatilities are based on both the implied and historical volatility of the Company’s stock. The Company uses historical data to project SAR exercises and pre-exercise forfeitures within the valuation model. The expected term of awards represents the period of time that SARs granted are expected to be outstanding. The interest rate assumed for the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of the grant. The weighted average fair value for the SARs issued during 2022 and 2021 were $ 69.64 and $ 59.83 , respectively, and were estimated using the weighted average assumptions shown in the table below: 2022 2021 Expected Life in Years 7.0 7.0 Volatility 35.0 % 33.9 % Interest Rate 2.9 % 1.3 % Yield Rate 0.1 % 1.1 % There was approximately $ 180 thousand and $ 139 thousand of compensation expense relating to SARs vesting on or before June 30, 2022 and 2021, respectively, included in personnel expenses in the unaudited Consolidated Statements of Operations. As of June 30, 2022, there was $ 441 thousand of unrecognized compensation expense related to unvested share-based compensation arrangements granted under the Company’s stock award plans. 9 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 June 30, 2022 and 2021: Three Months Ended June 30, 2022 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 83,478 $ 3,242 $ ( 7,701 ) $ 79,019 Investment loss ( 9,544 ) ( 611 ) — ( 10,155 ) Net realized gain (loss) on investments 2,460 ( 422 ) — 2,038 Total revenues $ 76,394 $ 2,209 $ ( 7,701 ) $ 70,902 Operating expenses 72,234 3,265 ( 7,550 ) 67,949 Income (loss) before income taxes $ 4,160 $ ( 1,056 ) $ ( 151 ) $ 2,953 Total assets $ 249,160 $ 76,032 $ — $ 325,192 Three Months Ended June 30, 2021 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 74,599 $ 6,655 $ ( 3,685 ) $ 77,569 Investment income 6,504 706 — 7,210 Net realized gain on investments 161 21 — 182 Total revenues $ 81,264 $ 7,382 $ ( 3,685 ) $ 84,961 Operating expenses 60,521 2,686 ( 3,534 ) 59,673 Income before income taxes $ 20,743 $ 4,696 $ ( 151 ) $ 25,288 Total assets $ 239,572 $ 77,367 $ — $ 316,939 Six Months Ended June 30, 2022 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 156,543 $ 5,979 $ ( 12,589 ) $ 149,933 Investment loss ( 11,172 ) ( 2,646 ) — ( 13,818 ) Net realized gain on investments 2,511 1,274 — 3,785 Total revenues $ 147,882 $ 4,607 $ ( 12,589 ) $ 139,900 Operating expenses 135,422 6,018 ( 12,286 ) 129,154 Income (loss) before income taxes $ 12,460 $ ( 1,411 ) $ ( 303 ) $ 10,746 Total assets $ 249,160 $ 76,032 $ — $ 325,192 Six Months Ended June 30, 2021 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 141,120 $ 8,993 $ ( 5,983 ) $ 144,130 Investment income 10,900 1,506 — 12,406 Net realized gain on investments 393 110 — 503 Total revenues $ 152,413 $ 10,609 $ ( 5,983 ) $ 157,039 Operating expenses 115,051 5,071 ( 5,686 ) 114,436 Income before income taxes $ 37,362 $ 5,538 $ ( 297 ) $ 42,603 Total assets $ 239,572 $ 77,367 $ — $ 316,939 10 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 $ 14.2 million and $ 13.4 million as of June 30, 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 June 30, 2022 and 2021: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Service cost – benefits earned during the year $ — $ — $ — $ — Interest cost on the projected benefit obligation 8 7 14 14 Amortization of unrecognized gain ( 4 ) — ( 4 ) — Net periodic benefit cost $ 4 $ 7 $ 10 $ 14 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 June 30, 2022 (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 $ 13,731 $ 97 $ 43 $ 13,785 Special revenue issuer obligations of U.S. states, territories and political subdivisions 38,164 305 325 38,144 Corporate debt securities 8,979 527 50 9,456 Total $ 60,874 $ 929 $ 418 $ 61,385 As of December 31, 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 $ 16,669 $ 922 $ — $ 17,591 Special revenue issuer obligations of U.S. states, territories and political subdivisions 41,753 2,453 2 44,204 Corporate debt securities 17,089 955 48 17,996 Total $ 75,511 $ 4,330 $ 50 $ 79,791 The special revenue category for both periods presented includes approximately 40 individual fixed maturity securities with revenue sources from a variety of industry sectors. 11 The scheduled maturities of fixed maturity securities at June 30, 2022 are as follows: Available-for-Sale (in thousands) Amortized Cost Estimated Fair Value Due in one year or less $ 13,766 $ 13,811 Due one year through five years 43,360 43,538 Due five years through ten years 1,304 1,343 Due after ten years 2,444 2,693 Total $ 60,874 $ 61,385 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 June 30, 2022 and December 31, 2021: Less than 12 Months 12 Months or Longer Total As of June 30, 2022 (in thousands) Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses General obligations of U.S. states, territories and political subdivisions $ 5,582 $ ( 43 ) $ — $ — $ 5,582 $ ( 43 ) Special revenue issuer obligations of U.S. states, territories and political subdivisions 14,083 ( 322 ) 1,101 ( 3 ) $ 15,184 $ ( 325 ) Corporate debt securities 650 ( 7 ) 2,746 ( 43 ) 3,396 ( 50 ) Total temporarily impaired securities $ 20,315 $ ( 372 ) $ 3,847 $ ( 46 ) $ 24,162 $ ( 418 ) Less than 12 Months 12 Months or Longer Total As of December 31, 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 $ — $ — $ 1,102 $ ( 2 ) $ 1,102 $ ( 2 ) Corporate debt securities 8,493 ( 13 ) 6,203 ( 35 ) 14,696 ( 48 ) Total temporarily impaired securities $ 8,493 $ ( 13 ) $ 7,305 $ ( 37 ) $ 15,798 $ ( 50 ) 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. 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. 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 41 and 9 fixed maturity securities had unrealized losses at June 30, 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. 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. 12 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 $ 127 thousand in other-than-temporary impairment charges related to fixed maturity securities for the six-month period ended June 30, 2022 and had no recorded other-than-temporary impairment charges for six-month period ended June 30, 2021. 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 June 30, 2022 (in thousands) Cost Estimated Fair Value Equity securities, at fair value: Common stocks $ 25,613 $ 54,901 Total $ 25,613 $ 54,901 As of December 31, 2021 (in thousands) Cost Estimated Fair Value Equity securities, at fair value: Common stocks $ 29,478 $ 76,853 Total $ 29,478 $ 76,853 Unrealized holding gains and losses are reported in the unaudited Consolidated Statements of Operations as changes in the estimated fair value of equity security investments. Net Realized Investment Gains Gross realized gains and losses on sales of investments for the six-month periods ended June 30, 2022 and 2021 are summarized as follows: (in thousands) 2022 2021 Gross realized gains from securities: Corporate debt securities $ — $ 53 Common stocks 4,556 1,079 Total $ 4,556 $ 1,132 Gross realized losses from securities: Corporate debt securities $ ( 46 ) $ ( 24 ) Common stocks ( 189 ) ( 606 ) Other-than-temporary impairment of securities ( 127 ) — Total $ ( 362 ) $ ( 630 ) Net realized gains from securities $ 4,194 $ 502 Gross realized gains (losses) on other investments: Gains on other investments $ — $ 1 Losses on other investments ( 409 ) — Total $ ( 409 ) $ 1 Net realized investment gains $ 3,785 $ 503 Realized gains and losses are determined on the specific identification method. 13 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 June 30, 2022: (in thousands) Balance Sheet Classification Carrying Value Estimated Fair Value Maximum Potential Loss (a) Real estate LLCs or LPs Other investments $ 3,528 $ 4,648 $ 5,408 Small business investment LPs Other investments 9,019 9,107 14,320 Total $ 12,547 $ 13,755 $ 19,728 (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 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. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial instrument’s classification within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement – consequently, if there are multiple significant valuation inputs that are categorized in different levels of the hierarchy, the instrument’s hierarchy level is the lowest level (with Level 3 being the lowest level) within which any significant input falls. The Level 1 category includes equity securities and U.S. Treasury securities that are measured at estimated fair value using quoted active market prices. The Level 2 category includes fixed maturity securities such as corporate debt securities, U.S. government obligations, and obligations of U.S. states, territories, and political subdivisions. Estimated fair value is principally based on market values obtained from a third-party pricing service. Factors that are used in determining estimated fair market value include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. The Company receives one quote per security from a third-party pricing service, although as discussed below, the Company does consult other pricing resources when confirming that the prices it obtains reflect the fair values of the instruments in accordance with GAAP. Generally, quotes obtained from the pricing service for instruments classified as Level 2 are not adjusted and are not binding. As of June 30, 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. 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, certain financial instruments, including those related to insurance contracts, pension and other postretirement benefits, and equity method investments are excluded from the scope of disclosures. 14 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. 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 The measurement alternative method requires investments without readily determinable fair values to be recorded at cost, less impairments, and plus or minus any changes resulting from observable price changes. The Company monitors any events or changes in circumstances that may have had a significant adverse effect on the fair value of these investments and makes any necessary adjustments. Accrued interest and dividends The carrying amount for accrued interest and dividends is a reasonable estimate of fair value due to the short-term maturity of these assets. The following table presents, by level, fixed maturity securities carried at estimated fair value as of June 30, 2022 and December 31, 2021: As of June 30, 2022 (in thousands) Level 1 Level 2 * Level 3 Total Fixed maturity securities: Obligations of U.S. states, territories and political subdivisions $ — $ 51,929 $ — $ 51,929 Corporate debt securities — 9,456 — 9,456 Total $ — $ 61,385 $ — $ 61,385 As of December 31, 2021 (in thousands) Level 1 Level 2 * Level 3 Total Fixed maturity securities: Obligations of U.S. states, territories and political subdivisions $ — $ 61,795 $ — $ 61,795 Corporate debt securities — 17,996 — 17,996 Total $ — $ 79,791 $ — $ 79,791 *Denotes fair market value obtained from pricing services. 15 The following table presents, by level, estimated fair values of equity investments and other financial instruments as of June 30, 2022 and December 31, 2021: As of June 30, 2022 (in thousands) Level 1 Level 2 Level 3 Total Financial assets: Cash and cash equivalents $ 35,486 $ — $ — $ 35,486 Accrued interest and dividends 733 — — 733 Equity securities, at fair value: Common stocks 54,901 — — 54,901 Short-term investments: Money market funds and US treasury bills 71,319 — — 71,319 Other investments: Equity investments in unconsolidated affiliates, measurement alternative — — 9,273 9,273 Total $ 162,439 $ — $ 9,273 $ 171,712 As of December 31, 2021 (in thousands) Level 1 Level 2 Level 3 Total Financial assets: Cash and cash equivalents $ 37,168 $ — $ — $ 37,168 Accrued interest and dividends 817 — — 817 Equity securities, at fair value: Common stocks 76,853 — — 76,853 Short-term investments: Money market funds 45,930 — — 45,930 Other investments: Equity investments in unconsolidated affiliates, measurement alternative — — 8,688 8,688 Total $ 160,768 $ — $ 8,688 $ 169,456 The Company did not hold any Level 3 category debt or marketable equity investment securities as of June 30, 2022 or December 31, 2021. 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 GAAP, 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. 16 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 six-month period ended June 30, 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 June 30, 2022 and December 31, 2021: (in thousands) Balance, January 1, 2022 Amounts Impaired Observable Changes Purchases and Additional Commitments Paid Sales, Returns of Capital and Other Reductions Balance, June 30, 2022 Other investments: Real Estate $ 4,987 $ — $ — $ — $ — $ 4,987 Equity investments in unconsolidated affiliates, measurement alternative 8,688 — — 722 ( 137 ) 9,273 Total $ 13,675 $ — $ — $ 722 $ ( 137 ) $ 14,260 (in thousands) Balance, January 1, 2021 Amounts Impaired Observable Changes Purchases and Additional Commitments Paid Sales, Returns of Capital and Other Reductions Balance, December 31, 2021 Other investments: Real Estate $ — $ — $ — $ 5,000 $ ( 13 ) $ 4,987 Equity investments in unconsolidated affiliates, measurement alternative 8,741 — — 1,543 ( 1,596 ) 8,688 Total $ 8,741 $ — $ — $ 6,543 $ ( 1,609 ) $ 13,675 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, 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. 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 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 $ 484.4 million and $ 763.9 million as of June 30, 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; 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 income rather than investment income. These like-kind exchange funds are primarily invested in money market and other short-term investments. 17 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. 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 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. 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. 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 June 30, 2022 As of December 31, 2021 Other investments $ 5,433 $ 6,623 Premium and fees receivable $ 860 $ 882 Financial Statement Classification, Consolidated Statements of Operations (unaudited) (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net premiums written $ 7,402 $ 7,165 $ 13,986 $ 13,934 Non-title services and other investment income $ 886 $ 1,078 $ 2,256 $ 1,830 Commissions to agents $ 5,067 $ 4,789 $ 9,532 $ 9,263 Note 9 – Intangible Assets, Goodwill and Title Plants The Company evaluates nonorganic growth opportunities, such as acquisitions of title insurance agencies, from time to time in the ordinary course of business. During the six-month period ended June 30, 2022, a subsidiary of the Company acquired a title insurance agency doing business in the state of Texas. 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 six-month periods ended June 30, 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 June 30, 2022 As of December 31, 2021 Referral relationships $ 8,898 $ 8,567 Non-compete agreements 3,155 2,938 Tradename 747 747 Total 12,800 12,252 Accumulated amortization ( 4,158 ) ( 3,505 ) Identifiable intangible assets, net $ 8,642 $ 8,747 18 The following table provides the estimated aggregate amortization expense for each of the five succeeding fiscal years: Year Ended (in thousands) 2022 $ 656 2023 1,345 2024 1,162 2025 1,079 2026 1,079 Thereafter 3,134 Total $ 8,455 Goodwill and Title Plants As of June 30, 2022, the Company recognized $ 9.7 million in goodwill and $ 1.4 million in title plants, net of impairments, as the result of title insurance agency acquisitions. The title plants are included with other assets in the unaudited Consolidated Balance Sheets. The fair values of goodwill and the title plants as of the date of acquisition, both Level 3 inputs, were principally based on values obtained from an independent third-party valuation service. In accordance with ASC 350, management determined that no events or changes in circumstances occurred during the six-month periods ended June 30, 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 three- and six-month periods ended June 30, 2022 and 2021: Three Months Ended June 30, 2022 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at March 31 $ 1,189 $ 29 $ 1,218 Other comprehensive loss before reclassifications ( 926 ) ( 6 ) ( 932 ) Amounts reclassified from accumulated other comprehensive income 134 — 134 Net current-period other comprehensive loss ( 792 ) ( 6 ) ( 798 ) Ending balance $ 397 $ 23 $ 420 Three Months Ended June 30, 2021 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at March 31 $ 3,860 $ ( 144 ) $ 3,716 Other comprehensive income before reclassifications 47 — 47 Amounts reclassified from accumulated other comprehensive income 42 — 42 Net current-period other comprehensive income 89 — 89 Ending balance $ 3,949 $ ( 144 ) $ 3,805 19 Six Months Ended June 30, 2022 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at January 1 $ 3,370 $ ( 144 ) $ 3,226 Other comprehensive (loss) income before reclassifications ( 3,107 ) 167 ( 2,940 ) Amounts reclassified from accumulated other comprehensive income 134 — 134 Net current-period other comprehensive (loss) income ( 2,973 ) 167 ( 2,806 ) Ending balance $ 397 $ 23 $ 420 Six Months Ended June 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 ( 545 ) — ( 545 ) Amounts reclassified from accumulated other comprehensive income 24 — 24 Net current-period other comprehensive loss ( 521 ) — ( 521 ) Ending balance $ 3,949 $ ( 144 ) $ 3,805 The following table provides significant amounts reclassified out of each component of accumulated other comprehensive income for the three- and six-month periods ended June 30, 2022 and 2021: Three Months Ended June 30, 2022 (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 $ ( 46 ) Other-than-temporary impairments ( 127 ) Total $ ( 173 ) Net realized investment gains Tax 39 Provision for income taxes Net of Tax $ ( 134 ) Reclassifications for the period $ ( 134 ) 20 Three Months Ended June 30, 2021 (in thousands) Details about Accumulated Other Comprehensive Income Components (in thousands) Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statements of Operations Unrealized gains and losses on available-for-sale securities: Net realized loss on investments $ ( 53 ) Other-than-temporary impairments — Total $ ( 53 ) Net realized investment gains Tax 11 Provision for income taxes Net of Tax $ ( 42 ) Reclassifications for the period $ ( 42 ) Six Months Ended June 30, 2022 (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 $ ( 46 ) Other-than-temporary impairments ( 127 ) Total $ ( 173 ) Net realized investment gains Tax 39 Provision for income taxes Net of Tax $ ( 134 ) Reclassifications for the period $ ( 134 ) Six Months Ended June 30, 2021 (in thousands) Details about Accumulated Other Comprehensive Income Components (in thousands) Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statements of Operations Unrealized gains and losses on available-for-sale securities: Net realized loss on investments $ ( 30 ) Other-than-temporary impairments — Total $ ( 30 ) Net realized investment gains Tax 6 Provision for income taxes Net of Tax $ ( 24 ) Reclassifications for the period $ ( 24 ) Note 11 – Revenue from Contracts with Customers GAAP 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. 21 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 June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Revenue from contracts with customers: Escrow and other title-related fees $ 6,209 $ 3,487 $ 11,273 $ 6,285 Non-title services 2,836 2,408 5,262 4,486 Total revenue from contracts with customers 9,045 5,895 16,535 10,771 Other sources of revenue: Net premiums written 69,626 67,527 132,751 129,004 Investment-related (loss) revenue ( 8,117 ) 7,392 ( 10,033 ) 12,909 Other 348 4,147 647 4,355 Total revenues $ 70,902 $ 84,961 $ 139,900 $ 157,039 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. 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 June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Operating leases $ 616 $ 326 $ 1,179 $ 652 Short-term leases (b) 46 92 113 156 Lease expense $ 662 $ 418 $ 1,292 $ 808 Sub-lease income — — — — Lease cost $ 662 $ 418 $ 1,292 $ 808 (b) Leases with an initial term of twelve months or less are not recorded on the unaudited Consolidated Balance Sheets. 22 Components of the operating lease liability presented on the unaudited Consolidated Balance Sheets are as follows: (in thousands) As of June 30, 2022 As of December 31, 2021 Current: Operating lease liabilities $ 1,182 $ 1,547 Non-current: Operating lease liabilities 5,522 3,782 Total operating lease liabilities $ 6,704 $ 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 June 30, 2022, are summarized as follows: Year Ended (in thousands) 2022 $ 1,305 2023 1,967 2024 1,582 2025 1,105 2026 933 Thereafter 316 Total undiscounted payments $ 7,208 Less: present value adjustment ( 504 ) Operating lease liabilities $ 6,704 Supplemental lease information is as follows: As of June 30, 2022 As of December 31, 2021 Weighted average remaining lease term (years) 3.87 4.13 Weighted average discount rate 3.9 % 4.2 % The Company does not have any material pending operating or financing lease agreements that become effective in future periods. 23