INVESTORS TITLE CO 10-Q

Item 1. Financial Statements Investors Title Company and Subsidiaries Consolidated Balance Sheets As of September 30, 2023 and December 31, 2022 (in thousands) (unaudited) September 30, 2023 December 31, 2022 Assets Cash and cash equivalents $ 30,411 $ 35,311 Investments: Fixed maturity securities, available-for-sale, at fair value (amortized cost: September 30, 2023: $ 65,766 ; December 31, 2022: $ 53,775 ) 64,640 53,989 Equity securities, at fair value (cost: September 30, 2023: $ 19,424 ; December 31, 2022: $ 25,278 ) 31,831 51,691 Short-term investments 103,959 103,649 Other investments 20,144 18,368 Total investments 220,574 227,697 Premiums and fees receivable 17,322 19,047 Accrued interest and dividends 1,111 872 Prepaid expenses and other receivables 14,888 11,095 Property, net 22,093 17,785 Goodwill and other intangible assets, net 16,588 17,611 Lease assets 6,432 6,707 Other assets 2,496 2,458 Current income taxes recoverable — 1,174 Total Assets $ 331,915 $ 339,757 Liabilities and Stockholders’ Equity Liabilities: Reserve for claims $ 37,494 $ 37,192 Accounts payable and accrued liabilities 30,719 47,050 Lease liabilities 6,639 6,839 Current income taxes payable 1,008 — Deferred income taxes, net 3,387 7,665 Total liabilities 79,247 98,746 Commitments and Contingencies — — Stockholders’ Equity: Preferred stock ( 1,000 authorized shares; no shares issued) — — Common stock – no par value ( 10,000 authorized shares; 1,891 and 1,897 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively, excluding in each period 292 shares of common stock held by the Company) — — Retained earnings 253,423 240,811 Accumulated other comprehensive (loss) income ( 755 ) 200 Total stockholders' equity 252,668 241,011 Total Liabilities and Stockholders’ Equity $ 331,915 $ 339,757 Refer to notes to the Consolidated Financial Statements. 1 Investors Title Company and Subsidiaries Consolidated Statements of Operations For the Three and Nine Months Ended September 30, 2023 and 2022 (in thousands, except per share amounts) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues: Net premiums written $ 49,822 $ 66,658 $ 132,793 $ 199,409 Escrow and other title-related fees 4,683 6,136 12,942 17,461 Non-title services 4,636 3,679 14,513 8,889 Interest and dividends 2,313 1,229 6,537 3,055 Other investment income 514 2,173 2,915 4,616 Net investment (losses) gains ( 815 ) ( 2,154 ) 720 ( 16,456 ) Other 257 277 647 924 Total Revenues 61,410 77,998 171,067 217,898 Operating Expenses: Commissions to agents 23,806 33,478 63,735 97,161 Provision for claims 1,838 1,966 3,897 3,452 Personnel expenses 19,083 21,586 58,451 63,738 Office and technology expenses 4,209 4,274 13,122 12,930 Other expenses 3,864 6,606 11,845 19,783 Total Operating Expenses 52,800 67,910 151,050 197,064 Income before Income Taxes 8,610 10,088 20,017 20,834 Provision for Income Taxes 1,526 2,175 4,167 4,457 Net Income $ 7,084 $ 7,913 $ 15,850 $ 16,377 Basic Earnings per Common Share $ 3.75 $ 4.17 $ 8.37 $ 8.63 Weighted Average Shares Outstanding – Basic 1,891 1,897 1,894 1,897 Diluted Earnings per Common Share $ 3.75 $ 4.17 $ 8.37 $ 8.63 Weighted Average Shares Outstanding – Diluted 1,891 1,897 1,894 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 Nine Months Ended September 30, 2023 and 2022 (in thousands) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net income $ 7,084 $ 7,913 $ 15,850 $ 16,377 Other comprehensive loss, before income tax: Accumulated postretirement (benefit) expense obligation adjustment ( 7 ) 17 127 228 Net unrealized losses on investments arising during the period ( 1,250 ) ( 1,595 ) ( 1,547 ) ( 5,537 ) Reclassification adjustment for sale of securities included in net income — 58 — 104 Reclassification adjustment for write-down of securities included in net income 96 35 208 162 Other comprehensive loss, before income tax ( 1,161 ) ( 1,485 ) ( 1,212 ) ( 5,043 ) Income tax (benefit) expense related to postretirement health benefits ( 1 ) 4 27 48 Income tax benefit related to net unrealized losses on investments arising during the period ( 266 ) ( 338 ) ( 332 ) ( 1,173 ) Income tax expense related to reclassification adjustment for sale of securities included in net income — 12 — 22 Income tax expense related to reclassification adjustment for write-down of securities included in net income 22 8 48 37 Net income tax benefit on other comprehensive loss ( 245 ) ( 314 ) ( 257 ) ( 1,066 ) Other comprehensive loss ( 916 ) ( 1,171 ) ( 955 ) ( 3,977 ) Comprehensive Income $ 6,168 $ 6,742 $ 14,895 $ 12,400 Refer to notes to the Consolidated Financial Statements. 3 Investors Title Company and Subsidiaries Consolidated Statements of Stockholders’ Equity For the Three and Nine Months Ended September 30, 2023 and 2022 (in thousands, except per share amounts) (unaudited) Common Stock Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Stockholders’ Equity Shares Amount Balance, June 30, 2022 1,897 $ — $ 232,759 $ 420 $ 233,179 Net income 7,913 7,913 Dividends paid ($ 0.46 per share) ( 873 ) ( 873 ) Repurchases of common stock — ( 86 ) ( 86 ) Share-based compensation expense related to stock appreciation rights 79 79 Accumulated postretirement benefit obligation adjustment, net of tax 13 13 Net unrealized loss on investments ( 1,184 ) ( 1,184 ) Balance, September 30, 2022 1,897 $ — $ 239,792 $ ( 751 ) $ 239,041 Balance, June 30, 2023 1,891 $ — $ 247,092 $ 161 $ 247,253 Net income 7,084 7,084 Dividends paid ($ 0.46 per share) ( 870 ) ( 870 ) Share-based compensation expense related to stock appreciation rights 117 117 Accumulated postretirement benefit obligation adjustment, net of tax ( 6 ) ( 6 ) Net unrealized loss on investments ( 910 ) ( 910 ) Balance, September 30, 2023 1,891 $ — $ 253,423 $ ( 755 ) $ 252,668 4 Consolidated Statements of Stockholders’ Equity, continued Common Stock Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Stockholders’ Equity Shares Amount Balance, December 31, 2021 1,895 $ — $ 225,861 $ 3,226 $ 229,087 Net income 16,377 16,377 Dividends paid ($ 1.38 per share) ( 2,618 ) ( 2,618 ) Repurchases of common stock — ( 86 ) ( 86 ) Exercise of stock appreciation rights 2 ( 1 ) ( 1 ) Share-based compensation expense related to stock appreciation rights 259 259 Accumulated postretirement benefit obligation adjustment, net of tax 180 180 Net unrealized loss on investments ( 4,157 ) ( 4,157 ) Balance, September 30, 2022 1,897 $ — $ 239,792 $ ( 751 ) $ 239,041 Balance, December 31, 2022 1,897 $ — $ 240,811 $ 200 $ 241,011 Net income 15,850 15,850 Dividends paid ($ 1.38 per share) ( 2,616 ) ( 2,616 ) Repurchases of common stock ( 7 ) ( 959 ) ( 959 ) Exercise of stock appreciation rights 1 — — Share-based compensation expense related to stock appreciation rights 337 337 Accumulated postretirement benefit obligation adjustment, net of tax 100 100 Net unrealized loss on investments ( 1,055 ) ( 1,055 ) Balance, September 30, 2023 1,891 $ — $ 253,423 $ ( 755 ) $ 252,668 Refer to notes to the Consolidated Financial Statements. 5 Investors Title Company and Subsidiaries Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2023 and 2022 (in thousands) (unaudited) Nine Months Ended September 30, 2023 2022 Operating Activities Net income $ 15,850 $ 16,377 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation 2,005 1,679 (Accretion) Amortization of investments, net ( 2,663 ) 270 Amortization of other intangible assets, net 982 967 Share-based compensation expense related to stock appreciation rights 337 259 Net gain on disposals of property ( 99 ) ( 50 ) Net investment (gains) losses ( 720 ) 16,456 Net earnings from other investments ( 2,445 ) ( 2,976 ) Provision for claims 3,897 3,452 Benefit for deferred income taxes ( 4,021 ) ( 4,250 ) Changes in assets and liabilities: Decrease (increase) in premium and fees receivable 1,725 ( 241 ) Increase in other assets ( 4,029 ) ( 873 ) Decrease (increase) in lease assets 275 ( 1,056 ) Decrease (increase) in current income taxes receivable 1,174 ( 3,164 ) Decrease in accounts payable and accrued liabilities ( 16,204 ) ( 1,702 ) (Decrease) increase in lease liabilities ( 200 ) 1,060 Increase (decrease) in current income taxes payable 1,008 ( 3,329 ) Payments of claims, net of recoveries ( 3,595 ) ( 2,576 ) Net cash (used in) provided by operating activities ( 6,723 ) 20,303 Investing Activities Purchases of fixed maturities ( 18,445 ) ( 350 ) Purchases of equity securities ( 7,934 ) ( 5,585 ) Purchases of short-term investments ( 113,548 ) ( 59,072 ) Purchases of other investments ( 2,765 ) ( 1,300 ) Purchases of subsidiary, net of cash — ( 4,927 ) Proceeds from sales and maturities of fixed maturity securities 6,312 18,870 Proceeds from sales of equity securities 28,836 13,970 Proceeds from sales and maturities of short-term investments 115,829 24,372 Proceeds from sales and distributions of other investments and assets 3,327 4,523 Purchases of property ( 6,621 ) ( 3,980 ) Proceeds from the sale of property 407 93 Net cash provided by (used in) investing activities 5,398 ( 13,386 ) Financing Activities Repurchases of common stock ( 959 ) ( 86 ) Exercise of stock appreciation rights — ( 1 ) Dividends paid ( 2,616 ) ( 2,618 ) Net cash used in financing activities ( 3,575 ) ( 2,705 ) Net (Decrease) Increase in Cash and Cash Equivalents ( 4,900 ) 4,212 Cash and Cash Equivalents, Beginning of Period 35,311 37,168 Cash and Cash Equivalents, End of Period $ 30,411 $ 41,380 6 Consolidated Statements of Cash Flows, continued Nine Months Ended September 30, 2023 2022 Supplemental Disclosures: Cash Paid During the Year for: Income tax payments, net $ 6,968 $ 15,200 Non-Cash Investing and Financing Activities: Non-cash net unrealized loss on investments, net of deferred tax benefit of $ 284 and $ 1,114 for September 30, 2023 and 2022, respectively $ 1,055 $ 4,157 Adjustments to postretirement benefits obligation, net of deferred tax expense of $( 27 ) and $( 48 ) for September 30, 2023 and 2022, respectively $ ( 100 ) $ ( 180 ) 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. 7 INVESTORS TITLE COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2023 (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, 2022 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 nine-month periods ended September 30, 2023 are not necessarily indicative of the financial condition and results that may be expected for the year ending December 31, 2023 or any other interim period. Reclassifications – Certain amounts have been reclassified for consistency with the current period presentation. The reclassifications were between revenue lines of the unaudited Consolidated Statements of Operations. These reclassifications are not considered an accounting change and had no effect on the reported results of operations. 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 nine-month period ended September 30, 2023 and the year ended December 31, 2022 are summarized as follows: (in thousands) September 30, 2023 December 31, 2022 Balance, beginning of period $ 37,192 $ 36,754 Provision charged to operations 3,897 4,255 Payments of claims, net of recoveries ( 3,595 ) ( 3,817 ) Balance, end of period $ 37,494 $ 37,192 The total reserve for all reported and unreported losses the Company incurred through September 30, 2023 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, 2023. 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. 8 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, 2023 % December 31, 2022 % Known title claims $ 3,292 8.8 $ 3,250 8.7 IBNR 34,202 91.2 33,942 91.3 Total reserve for claims $ 37,494 100.0 $ 37,192 100.0 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 nine-month periods ended September 30: Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share amounts) 2023 2022 2023 2022 Net income $ 7,084 $ 7,913 $ 15,850 $ 16,377 Weighted average common shares outstanding – Basic 1,891 1,897 1,894 1,897 Incremental shares outstanding assuming the exercise of dilutive SARs (share-settled) — — — 1 Weighted average common shares outstanding – Diluted 1,891 1,897 1,894 1,898 Basic earnings per common share $ 3.75 $ 4.17 $ 8.37 $ 8.63 Diluted earnings per common share $ 3.75 $ 4.17 $ 8.37 $ 8.63 There were 24 thousand and 26 thousand potential shares excluded from the computation of diluted earnings per share for the three-month periods ended September 30, 2023 and 2022, respectively, due to the out-of-the-money status of the related share-based awards. There were 24 thousand and 13 thousand potential shares excluded from the computation of diluted earnings per share for the nine-month periods ended September 30, 2023 and 2022, 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 September 30, 2023, 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. 9 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, 2022 35 $ 150.36 3.96 $ 1,643 SARs granted 10 155.16 SARs exercised ( 6 ) 94.44 Outstanding as of December 31, 2022 39 $ 159.39 4.10 $ 243 SARs granted 5 142.88 SARs exercised ( 2 ) 93.87 Outstanding as of September 30, 2023 42 $ 160.83 3.94 $ 166 Exercisable as of September 30, 2023 32 $ 166.57 3.52 $ 110 Unvested as of September 30, 2023 10 $ 142.51 5.28 $ 56 During the third quarter of 2023, the Company did not issue share-settled SARs to either employees or directors of the Company. During the third quarter of 2022, the Company issued 5 thousand share-settled SARs to employees of the Company. During the first two quarters of 2023, the Company issued 5 thousand share-settled SARs to directors of the Company. During the first two quarters of 2022, 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. 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 2023 and 2022 were $ 55.52 and $ 62.60 , respectively, and were estimated using the weighted average assumptions shown in the table below: 2023 2022 Expected Life in Years 6.2 - 7.0 7.0 Volatility 36.6 % 35.6 % Interest Rate 3.7 % 3.2 % Yield Rate 1.2 % 0.6 % There was approximately $ 337 thousand and $ 259 thousand of compensation expense relating to SARs vesting on or before September 30, 2023 and 2022, respectively, included in personnel expenses in the unaudited Consolidated Statements of Operations. As of September 30, 2023, there was $ 494 thousand of unrecognized compensation expense related to unvested share-based compensation arrangements granted under the Company’s stock award plans. Note 4 – Segment Information The Company has one reportable segment, title insurance services. The remaining immaterial segments have been combined into a group called “All Other.” The title insurance segment primarily issues title insurance policies through approved attorneys from underwriting offices and through independent issuing agents. Title insurance policies insure titles to real estate. 10 Provided below is selected financial information about the Company's operations by segment for the periods ended September 30, 2023 and 2022: Three Months Ended September 30, 2023 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 59,182 $ 5,057 $ ( 4,841 ) $ 59,398 Net investment income 1,037 975 — 2,012 Total revenues $ 60,219 $ 6,032 $ ( 4,841 ) $ 61,410 Operating expenses 54,809 2,660 ( 4,669 ) 52,800 Income before income taxes $ 5,410 $ 3,372 $ ( 172 ) $ 8,610 Total assets $ 226,105 $ 105,810 $ — $ 331,915 Three Months Ended September 30, 2022 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 78,812 $ 4,102 $ ( 6,164 ) $ 76,750 Net investment income 600 648 — 1,248 Total revenues $ 79,412 $ 4,750 $ ( 6,164 ) $ 77,998 Operating expenses 71,516 2,406 ( 6,012 ) 67,910 Income before income taxes $ 7,896 $ 2,344 $ ( 152 ) $ 10,088 Total assets $ 250,116 $ 82,687 $ — $ 332,803 Nine Months Ended September 30, 2023 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 159,382 $ 15,881 $ ( 14,368 ) $ 160,895 Net investment income 7,616 2,556 — 10,172 Total revenues $ 166,998 $ 18,437 $ ( 14,368 ) $ 171,067 Operating expenses 156,694 8,208 ( 13,852 ) 151,050 Income before income taxes $ 10,304 $ 10,229 $ ( 516 ) $ 20,017 Total assets $ 226,105 $ 105,810 $ — $ 331,915 Nine Months Ended September 30, 2022 (in thousands) Title Insurance All Other Intersegment Eliminations Total Insurance and other services revenues $ 235,355 $ 10,081 $ ( 18,753 ) $ 226,683 Net investment loss ( 8,061 ) ( 724 ) — ( 8,785 ) Total revenues $ 227,294 $ 9,357 $ ( 18,753 ) $ 217,898 Operating expenses 206,938 8,424 ( 18,298 ) 197,064 Income before income taxes $ 20,356 $ 933 $ ( 455 ) $ 20,834 Total assets $ 250,116 $ 82,687 $ — $ 332,803 11 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 $ 15.1 million and $ 15.0 million as of September 30, 2023 and December 31, 2022, 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, 2023 and 2022: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Service cost – benefits earned during the year $ — $ — $ — $ — Interest cost on the projected benefit obligation 10 5 30 19 Amortization of unrecognized (gain) loss ( 7 ) 4 ( 21 ) — Net periodic benefit cost $ 3 $ 9 $ 9 $ 19 Note 6 – Investments and Estimated Fair Value Investments in Fixed Maturity Securities The estimated fair value, gross unrealized holding gains, gross unrealized holding losses and amortized cost for fixed maturity securities by major classification are as follows: As of September 30, 2023 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturity securities, available-for-sale, at fair value: Government obligations $ 2,199 $ — $ ( 6 ) $ 2,193 General obligations of U.S. states, territories and political subdivisions 9,452 — ( 260 ) 9,192 Special revenue issuer obligations of U.S. states, territories and political subdivisions 26,886 3 ( 527 ) 26,362 Corporate debt securities 27,229 250 ( 586 ) 26,893 Total $ 65,766 $ 253 $ ( 1,379 ) $ 64,640 As of December 31, 2022 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturity securities, available-for-sale, at fair value: Government obligations $ 4,329 $ — $ ( 7 ) $ 4,322 General obligations of U.S. states, territories and political subdivisions 8,561 21 ( 36 ) 8,546 Special revenue issuer obligations of U.S. states, territories and political subdivisions 30,123 106 ( 219 ) 30,010 Corporate debt securities 10,762 417 ( 68 ) 11,111 Total $ 53,775 $ 544 $ ( 330 ) $ 53,989 The special revenue category for both periods presented includes approximately 30 individual fixed maturity securities with revenue sources from a variety of industry sectors. 12 The scheduled maturities of fixed maturity securities at September 30, 2023 are as follows: Available-for-Sale (in thousands) Amortized Cost Estimated Fair Value Due in one year or less $ 16,207 $ 16,282 Due one year through five years 26,465 25,963 Due five years through ten years 15,473 15,022 Due after ten years 7,621 7,373 Total $ 65,766 $ 64,640 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, 2023 and December 31, 2022: Less than 12 Months 12 Months or Longer Total As of September 30, 2023 (in thousands) Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Government obligations $ 2 $ ( 6 ) $ — $ — $ 2 $ ( 6 ) General obligations of U.S. states, territories and political subdivisions 9,094 ( 256 ) 98 ( 4 ) 9,192 ( 260 ) Special revenue issuer obligations of U.S. states, territories and political subdivisions 15,800 ( 263 ) 4,385 ( 264 ) 20,185 ( 527 ) Corporate debt securities 18,677 ( 577 ) 491 ( 9 ) 19,168 ( 586 ) Total $ 43,573 $ ( 1,102 ) $ 4,974 $ ( 277 ) $ 48,547 $ ( 1,379 ) Less than 12 Months 12 Months or Longer Total As of December 31, 2022 (in thousands) Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Government obligations $ 4,322 $ ( 7 ) $ — $ — $ 4,322 $ ( 7 ) General obligations of U.S. states, territories and political subdivisions 3,221 ( 36 ) — — 3,221 ( 36 ) Special revenue issuer obligations of U.S. states, territories and political subdivisions 12,568 ( 216 ) 1,100 ( 3 ) 13,668 ( 219 ) Corporate debt securities 6,498 ( 68 ) — — 6,498 ( 68 ) Total $ 26,609 $ ( 327 ) $ 1,100 $ ( 3 ) $ 27,709 $ ( 330 ) 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. 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 credit-related include the financial condition and prospects of the issuer (including credit ratings and analyst reports) and macro-economic changes. A total of 98 and 51 fixed maturity securities had unrealized losses at September 30, 2023 and December 31, 2022, 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 (loss) income. 13 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 impairment charges related to fixed maturity securities totaling $ 96 thousand and $ 208 thousand for the three- and nine-month periods ended September 30, 2023, respectively, and $ 35 thousand and $ 162 thousand for the three- and nine-month periods ended September 30, 2022, respectively. Expenses related to impairments are recorded in net investment (losses) gains in the unaudited Consolidated Statements of Operations when recognized. Investments in Equity Securities The cost and estimated fair value of equity securities are as follows: As of September 30, 2023 (in thousands) Cost Estimated Fair Value Equity securities, at fair value: Common stocks $ 19,424 $ 31,831 Total $ 19,424 $ 31,831 As of December 31, 2022 (in thousands) Cost Estimated Fair Value Equity securities, at fair value: Common stocks $ 25,278 $ 51,691 Total $ 25,278 $ 51,691 Unrealized holding gains and losses are recorded net in net investment (losses) gains in the unaudited Consolidated Statements of Operations. Net Investment (Losses) Gains Gross realized gains and losses on sales of investments and unrealized holding gains and losses for the three and nine-months ended September 30, 2023 and 2022 are summarized as follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Gross realized gains from securities: Common stocks $ 1,749 $ 2,564 $ 15,449 $ 7,120 Total $ 1,749 $ 2,564 $ 15,449 $ 7,120 Gross realized losses from securities: Corporate debt securities $ — $ ( 58 ) $ — $ ( 104 ) Common stocks ( 77 ) ( 20 ) ( 400 ) ( 209 ) Write-down of securities ( 96 ) ( 35 ) ( 208 ) ( 162 ) Total $ ( 173 ) $ ( 113 ) $ ( 608 ) $ ( 475 ) Net realized gains from securities $ 1,576 $ 2,451 $ 14,841 $ 6,645 Gross realized gains (losses) on other investments: Gains on other investments $ 5 $ 30 $ 5 $ 30 Losses on other investments ( 4 ) — ( 120 ) ( 409 ) Total $ 1 $ 30 $ ( 115 ) $ ( 379 ) Net realized investment gains $ 1,577 $ 2,481 $ 14,726 $ 6,266 Changes in the estimated fair value of equity security investments $ ( 2,392 ) $ ( 4,635 ) $ ( 14,006 ) $ ( 22,722 ) Net investment (losses) gains $ ( 815 ) $ ( 2,154 ) $ 720 $ ( 16,456 ) Realized gains and losses are determined on the specific identification method. 14 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 and no participation rights exist. 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, 2023: (in thousands) Balance Sheet Classification Carrying Value Estimated Fair Value Maximum Potential Loss (a) Real estate LLCs or LPs Other investments $ 4,346 $ 4,762 $ 5,658 Small business investment LPs Other investments 9,298 10,914 13,080 Total $ 13,644 $ 15,676 $ 18,738 (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 ("FASB") has established a valuation hierarchy for disclosure of the inputs used to measure estimated fair value of financial assets and liabilities, such as securities. This hierarchy categorizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions intended to represent market participant 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 September 30, 2023 and December 31, 2022, 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. 15 In estimating the fair value of the financial instruments presented, the Company used the following methods and assumptions: Cash and cash equivalents The carrying amount for cash and cash equivalents is a reasonable estimate of fair value due to the short-term maturity of these investments. Measurement alternative equity investments The measurement alternative method requires investments without readily determinable fair values to be recorded at cost, less impairments, and plus or minus any changes resulting from observable price changes. The Company monitors any events or changes in circumstances that may have had a significant adverse effect on the fair value of these investments and makes any necessary adjustments. Notes Receivable Notes receivable are recorded at amortized cost and are included in prepaid expenses and other receivables in the unaudited Consolidated Balance Sheets. The amortized cost is the amount at which a receivable is originated and adjusted for applicable accrued interest, accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash, writeoffs, foreign exchange, and fair value hedge accounting adjustments. 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 September 30, 2023 and December 31, 2022: As of September 30, 2023 (in thousands) Level 1 Level 2 * Level 3 Total Fixed maturity securities: Obligations of U.S. states, territories and political subdivisions $ 2,193 $ 35,554 $ — $ 37,747 Corporate debt securities — 26,893 — 26,893 Total $ 2,193 $ 62,447 $ — $ 64,640 As of December 31, 2022 (in thousands) Level 1 Level 2 * Level 3 Total Fixed maturity securities: Obligations of U.S. states, territories and political subdivisions $ 4,322 $ 38,556 $ — $ 42,878 Corporate debt securities — 11,111 — 11,111 Total $ 4,322 $ 49,667 $ — $ 53,989 *Denotes fair market value obtained from pricing services. 16 The following table presents, by level, estimated fair values of equity investments and other financial instruments as of September 30, 2023 and December 31, 2022: As of September 30, 2023 (in thousands) Level 1 Level 2 Level 3 Total Financial assets: Cash and cash equivalents $ 30,411 $ — $ — $ 30,411 Accrued interest and dividends 1,111 — — 1,111 Equity securities, at fair value: Common stocks 31,831 — — 31,831 Short-term investments: Money market funds and U.S. Treasury bills 103,959 — — 103,959 Total $ 167,312 $ — $ — $ 167,312 As of December 31, 2022 (in thousands) Level 1 Level 2 Level 3 Total Financial assets: Cash and cash equivalents $ 35,311 $ — $ — $ 35,311 Accrued interest and dividends 872 — — 872 Equity securities, at fair value: Common stocks 51,691 — — 51,691 Short-term investments: Money market funds and U.S. Treasury bills 103,649 — — 103,649 Total $ 191,523 $ — $ — $ 191,523 The Company did not hold any Level 3 category debt or marketable equity investment securities as of September 30, 2023 or December 31, 2022. 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. Certain equity investments under the measurement alternative and notes receivable 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 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, 2023 or the twelve-month period ended December 31, 2022. The following table presents assets measured at fair value on a non-recurring basis as of September 30, 2023 and December 31, 2022: As of September 30, 2023 (in thousands) Level 1 Level 2 Level 3 Total Financial assets: Equity investments in unconsolidated affiliates, measurement alternative $ — $ — $ 9,478 $ 9,478 Notes receivable — — 2,339 2,339 Total $ — $ — $ 11,817 $ 11,817 17 As of December 31, 2022 (in thousands) Level 1 Level 2 Level 3 Total Financial assets: Equity investments in unconsolidated affiliates, measurement alternative $ — $ — $ 8,915 $ 8,915 Notes receivable — — 1,921 1,921 Total $ — $ — $ 10,836 $ 10,836 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, escrow 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 in reverse exchange transactions. Like-kind exchange deposits and reverse exchange property totaled approximately $ 263.6 million and $ 432.0 million as of September 30, 2023 and December 31, 2022, 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 funds and other short-term investments. Note 8 – Related Party Transactions The Company does business with, and has investments in, unconsolidated LLCs that are primarily title insurance agencies. The Company utilizes the equity method to account for its investment in these LLCs. The following table sets forth the approximate values by year found within each financial statement classification: Financial Statement Classification, Consolidated Balance Sheets (unaudited) (in thousands) As of September 30, 2023 As of December 31, 2022 Other investments $ 5,636 $ 4,420 Premium and fees receivable $ 881 $ 735 Financial Statement Classification, Consolidated Statements of Operations (unaudited) (in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net premiums written $ 6,285 $ 6,935 $ 16,692 $ 20,921 Non-title services and other investment income $ 598 $ 1,237 $ 3,095 $ 3,493 Commissions to agents $ 4,288 $ 4,969 $ 11,134 $ 14,501 18 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 are principally based on values obtained from an independent third-party valuation service and are all Level 3 inputs. Management determined that no events or changes in circumstances occurred during the three or nine-month periods ended September 30, 2023 and 2022 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, 2023 As of December 31, 2022 Referral relationships $ 8,898 $ 8,898 Non-compete agreements 3,155 3,155 Tradename 747 747 Total 12,800 12,800 Accumulated amortization ( 5,837 ) ( 4,814 ) Identifiable intangible assets, net $ 6,963 $ 7,986 The following table provides the estimated aggregate amortization expense, as of September 30, 2023, for each of the five succeeding fiscal years: Year Ended (in thousands) 2023 $ 338 2024 1,178 2025 1,095 2026 1,095 2027 679 Thereafter 2,391 Total $ 6,776 Goodwill and Title Plants As of September 30, 2023, the Company recognized $ 9.6 million in goodwill and $ 1.5 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 FASB's Accounting Standards Codification ("ASC") 350, the Company determined that no events or changes in circumstances occurred during the nine-month periods ended September 30, 2023 and 2022 that would indicate the carrying amounts may not be recoverable, and therefore, determined that there were no goodwill or title plant impairments. 19 Note 10 – Accumulated Other Comprehensive (Loss) Income The following table provides changes in the balances of each component of accumulated other comprehensive (loss) income, net of tax, for the three- and nine-month periods ended September 30, 2023 and 2022: Three Months Ended September 30, 2023 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at June 30, 2023 $ 19 $ 142 $ 161 Other comprehensive loss before calculations ( 984 ) ( 6 ) ( 990 ) Amounts reclassified from accumulated other comprehensive (loss) income 74 — 74 Net current-period other comprehensive loss ( 910 ) ( 6 ) ( 916 ) Ending balance $ ( 891 ) $ 136 $ ( 755 ) Three Months Ended September 30, 2022 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at June 30, 2022 $ 397 $ 23 $ 420 Other comprehensive (loss) income before calculations ( 1,257 ) 13 ( 1,244 ) Amounts reclassified from accumulated other comprehensive (loss) income 73 — 73 Net current-period other comprehensive (loss) income ( 1,184 ) 13 ( 1,171 ) Ending balance $ ( 787 ) $ 36 $ ( 751 ) Nine Months Ended September 30, 2023 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at January 1, 2023 $ 164 $ 36 $ 200 Other comprehensive (loss) income before calculations ( 1,215 ) 100 ( 1,115 ) Amounts reclassified from accumulated other comprehensive (loss) income 160 — 160 Net current-period other comprehensive (loss) income ( 1,055 ) 100 ( 955 ) Ending balance $ ( 891 ) $ 136 $ ( 755 ) Nine Months Ended September 30, 2022 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at January 1, 2022 $ 3,370 $ ( 144 ) $ 3,226 Other comprehensive (loss) income before calculations ( 4,364 ) 180 ( 4,184 ) Amounts reclassified from accumulated other comprehensive (loss) income 207 — 207 Net current-period other comprehensive (loss) income ( 4,157 ) 180 ( 3,977 ) Ending balance $ ( 787 ) $ 36 $ ( 751 ) 20 The following table provides significant amounts reclassified out of each component of accumulated other comprehensive (loss) income for the three- and nine-month periods ended September 30, 2023 and 2022: Three Months Ended September 30, 2023 (in thousands) Details about Accumulated Other Comprehensive (Loss) Income Components Amount Reclassified from Accumulated Other Comprehensive (Loss) Income Affected Line Item in the Consolidated Statements of Operations Unrealized gains and losses on available-for-sale securities: Net realized gain on investments $ — Write-down of securities ( 96 ) Total $ ( 96 ) Net investment (losses) gains Tax 22 Provision for income taxes Net of Tax $ ( 74 ) Reclassifications for the period $ ( 74 ) Three Months Ended September 30, 2022 (in thousands) Details about Accumulated Other Comprehensive (Loss) Income Components Amount Reclassified from Accumulated Other Comprehensive (Loss) Income Affected Line Item in the Consolidated Statements of Operations Unrealized gains and losses on available-for-sale securities: Net realized loss on investments $ ( 58 ) Write-down of securities ( 35 ) Total $ ( 93 ) Net investment (losses) gains Tax 20 Provision for income taxes Net of Tax $ ( 73 ) Reclassifications for the period $ ( 73 ) Nine Months Ended September 30, 2023 (in thousands) Details about Accumulated Other Comprehensive (Loss) Income Components Amount Reclassified from Accumulated Other Comprehensive (Loss) Income Affected Line Item in the Consolidated Statements of Operations Unrealized gains and losses on available-for-sale securities: Net realized gain on investments $ — Write-down of securities ( 208 ) Total $ ( 208 ) Net investment (losses) gains Tax 48 Provision for income taxes Net of Tax $ ( 160 ) Reclassifications for the period $ ( 160 ) 21 Nine Months Ended September 30, 2022 (in thousands) Details about Accumulated Other Comprehensive (Loss) Income Components Amount Reclassified from Accumulated Other Comprehensive (Loss) Income Affected Line Item in the Consolidated Statements of Operations Unrealized gains and losses on available-for-sale securities: Net realized loss on investments $ ( 104 ) Write-down of securities ( 162 ) Total $ ( 266 ) Net investment (losses) gains Tax 59 Provision for income taxes Net of Tax $ ( 207 ) Reclassifications for the period $ ( 207 ) Note 11 – Revenue from Contracts with Customers ASC 606, Revenue from Contracts with Customers , requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance does not apply to revenue associated with insurance contracts (including title insurance policies), financial instruments and lease contracts; and therefore is primarily applicable to the following Company revenue categories. Escrow and other title-related fees: The Company’s title segment recognizes commission revenue and fees related to items such as searches, settlements, commitments and other ancillary services. Escrow and other title-related fees are recognized as revenue at the time of the related transactions as the earnings process, or performance obligation, is then considered to be complete. Non-title services: Through various subsidiaries, the Company offers management services, tax-deferred real property exchange services, investment management and trust services. Nonrefundable exchange fees are recognized as revenue upon receipt of the funds, which is at the time of closing of the initial sale of property. All other non-title service fees are recognized as revenue as performance obligations are completed. Other: The Company occasionally recognizes revenue from other miscellaneous contracts which can include, but is not limited to, seminar and education registration fees and software licensing contracts. These revenue streams are deemed immaterial to the operations of the Company, and revenue is recognized when, or as, performance obligations are completed. The following table provides a breakdown of the Company’s revenue by major business activity: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Revenue from contracts with customers: Escrow and other title-related fees $ 4,683 $ 6,136 $ 12,942 $ 17,461 Non-title services 4,636 3,679 14,513 8,889 Total revenue from contracts with customers 9,319 9,815 27,455 26,350 Other sources of revenue: Net premiums written 49,822 66,658 132,793 199,409 Investment-related revenue (loss) 2,012 1,248 10,172 ( 8,785 ) Other 257 277 647 924 Total revenues $ 61,410 $ 77,998 $ 171,067 $ 217,898 22 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. The Company occasionally assumes equipment lease agreements through business acquisitions. These leases are accounted for as finance leases. Included in a portion of the Company's current leases is an option to extend or cancel the lease term. The exercise of such an option is solely at the Company's discretion. The 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 inception date 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 leases follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Operating leases $ 627 $ 697 $ 2,020 $ 1,876 Finance leases: Amortization of lease assets 74 — 182 — Interest on lease liabilities 5 — 18 — Short-term leases (b) 31 64 101 177 Lease expense $ 737 $ 761 $ 2,321 $ 2,053 Sub-lease income — — — — Lease cost $ 737 $ 761 $ 2,321 $ 2,053 (b) Leases with an initial term of twelve months or less are not recorded on the unaudited Consolidated Balance Sheets. Components of the operating lease liability presented on the unaudited Consolidated Balance Sheets are as follows: (in thousands) As of September 30, 2023 As of December 31, 2022 Current: Operating lease liabilities $ 466 $ 1,693 Finance lease liabilities 56 218 Non-current: Operating lease liabilities 5,661 4,401 Finance lease liabilities 456 527 Total lease liabilities $ 6,639 $ 6,839 23 The future minimum lease payments for leases that have initial or remaining noncancelable lease terms in excess of one year as of September 30, 2023, are summarized as follows: Year Ended (in thousands) Operating Leases Finance Leases Total 2023 $ 523 $ 60 $ 583 2024 2,373 183 2,556 2025 1,829 147 1,976 2026 1,139 108 1,247 2027 364 41 405 Thereafter 286 — 286 Total undiscounted payments $ 6,514 $ 539 $ 7,053 Less: present value adjustment ( 386 ) ( 28 ) ( 414 ) Lease liabilities $ 6,128 $ 511 $ 6,639 Supplemental lease information is as follows: As of September 30, 2023 As of December 31, 2022 Weighted average remaining lease term (years) Operating Leases 3.15 3.43 Finance Leases 3.07 3.80 Weighted average discount rate Operating Leases 3.8 % 3.9 % Finance Leases 3.7 % 3.7 % The Company does not have any material pending operating or financing lease agreements that become effective in future periods. 24