INVESTORS TITLE CO 10-K

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Item not required for smaller reporting companies. ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 1. Report of Independent Registered Public Accounting Firm (PCAOB ID: 686 ) 36 2. Management's Report on Internal Control Over Financial Reporting 38 3. Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting 39 4. Consolidated Balance Sheets 41 5. Consolidated Statements of Operations 42 6. Consolidated Statements of Comprehensive Income 43 7. Consolidated Statements of Shareholders' Equity 44 8. Consolidated Statements of Cash Flows 45 9. Notes to Consolidated Financial Statements 47 The financial statement schedules meeting the requirements of Regulation S-X are attached hereto as Schedules I, II, III, IV and V. 35 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors Investors Title Company and Subsidiaries Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Investors Title Company and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the years then ended December 31, 2024, and the related notes and schedules (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years then ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 17, 2025, expressed an unqualified opinion thereon. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. 36 Critical Audit Matters The critical audit matter communicated below is a matter arising from the current-period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate. Reserve for Claims As described in Notes 1 and 6 to the Company’s consolidated financial statements, the Company’s unpaid loss and losses 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 incurred claims of policyholders which may be reported in the future (incurred but not reported, or “IBNR”). As of December 31, 2024, the Company had approximately $37.1 million in reserve for claims. Management records a provision for future claim payments at the time the related premium revenue is recognized by applying a loss provision rate against net premiums written. Management determines its loss provision rate through the consideration of factors such as the Company’s historical claim experience, case reserve estimates on reported claims, large claims, actuarial projections, and other relevant factors. The Company’s specialist utilizes accepted actuarial methodologies when performing the actuarial projections. Management’s assumptions include assumed comparability to its historical claims experience unless factors, such as loss experience and charged premium rates, change significantly, as well as assumptions around large losses related to fraud and defalcation. We identified the reserve for claims as a critical audit matter. The principal considerations for our determination of the reserve for claims as a critical audit matter were management’s use of significant actuarial estimates and assumptions to estimate the reserve for claims, including the selection of actuarial methods, loss development factors, and expected loss ratios, as well as the high degree of auditor judgment, subjectivity, and effort in determining the reasonableness of the actuarial assumptions and methodologies utilized, and our use of an auditor’s specialist. Our audit procedures related to the reserve for claims included the following, among others: • We obtained an understanding, evaluated the design and implementation, and tested the operating effectiveness of the Company’s controls over the process for developing its reserve for claims. This included, among others, the controls over the determination of the actuarial methods and assumptions utilized to support the reserve for claims calculations and controls over the completeness and accuracy of historical loss data utilized in the reserve for claims calculations. • We engaged a third-party actuary with specialized skill and knowledge to assist in evaluating the reasonableness of the reserving methodologies utilized by the Company’s specialist and evaluating the reasonableness of the assumptions related to loss development factors and expected loss ratios. • We tested the inputs utilized by the Company’s specialist in developing the reserve for claims. This included testing the accuracy and completeness of the data provided to the Company’s specialist. • We evaluated the reasonableness of the significant assumptions utilized by the Company in developing the reserve for claims. /s/ Forvis Mazars, LLP We have served as the Company’s auditor since 2004. Charlotte, North Carolina March 17, 2025 37 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management of Investors Title Company and Subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act Rules 13a-15(f) and 15(d)-15(f). The Company’s internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of published financial statements in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorization of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s Consolidated Financial Statements. Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and concluded that the Company’s internal control over financial reporting was effective as of December 31, 2024. 38 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Investors Title Company and Subsidiaries Opinion on the Internal Control over Financial Reporting We have audited Investors Title Company and Subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of December 31, 2024 and 2023, and for each the years then ended, and our report dated March 17, 2025, expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 39 Definitions and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of reliable consolidated financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. We have served as the Company’s auditor since 2004. /s/ Forvis Mazars, LLP Charlotte, North Carolina March 17, 2025 40 Investors Title Company and Subsidiaries Consolidated Balance Sheets (in thousands) As of December 31, 2024 2023 Assets Cash and cash equivalents $ 24,654 $ 24,031 Investments: Fixed maturity securities, available-for-sale, at fair value (amortized cost: December 31, 2024: $ 112,588 ; December 31, 2023: $ 63,106 ) 112,972 63,847 Equity securities, at fair value (cost: December 31, 2024: $ 25,980 ; December 31, 2023: $ 22,981 ) 39,893 37,212 Short-term investments 59,101 110,224 Other investments 20,578 17,385 Total investments 232,544 228,668 Premium and fees receivable 16,054 13,338 Accrued interest and dividends 1,469 978 Prepaid expenses and other receivables 7,033 13,525 Property, net 27,935 23,886 Goodwill and other intangible assets, net 15,071 16,249 Lease assets 6,156 6,303 Other assets 2,655 2,500 Current income taxes recoverable — 1,081 Total Assets $ 333,571 $ 330,559 Liabilities and Shareholders’ Equity Liabilities: Reserve for claims $ 37,060 $ 37,147 Accounts payable and accrued liabilities 34,011 31,864 Lease liabilities 6,356 6,449 Current income taxes payable 276 — Deferred income taxes, net 4,095 3,546 Total liabilities 81,798 79,006 Commitments and Contingencies — — Shareholders’ Equity: Preferred stock ( 1,000 authorized shares; no shares issued) — — Common stock – no par value ( 10,000 authorized shares; 1,886 and 1,891 shares issued and outstanding as of December 31, 2024 and 2023, respectively, excluding in each period 292 shares of common stock held by the Company) — — Retained earnings 251,418 250,915 Accumulated other comprehensive income 355 638 Total shareholders’ equity 251,773 251,553 Total Liabilities and Shareholders’ Equity $ 333,571 $ 330,559 Refer to the Notes to the Consolidated Financial Statements. 41 Investors Title Company and Subsidiaries Consolidated Statements of Operations (in thousands, except per share amounts) For the Years Ended December 31, 2024 2023 Revenues: Net premiums written $ 204,264 $ 171,158 Escrow and other title-related fees 17,954 17,109 Non-title services 17,193 19,237 Interest and dividends 10,657 9,055 Other investment income 2,600 3,752 Net investment gains 4,683 3,448 Other 947 991 Total Revenues 258,298 224,750 Operating Expenses: Commissions to agents 107,343 83,374 Provision for claims 4,530 4,762 Personnel expenses 72,513 76,706 Office and technology expenses 17,505 17,359 Other expenses 16,944 16,319 Total Operating Expenses 218,835 198,520 Income before Income Taxes 39,463 26,230 Provision for Income Taxes 8,390 4,544 Net Income $ 31,073 $ 21,686 Basic Earnings per Common Share $ 16.48 $ 11.45 Weighted Average Shares Outstanding – Basic 1,885 1,893 Diluted Earnings per Common Share $ 16.43 $ 11.45 Weighted Average Shares Outstanding – Diluted 1,892 1,893 Refer to the Notes to the Consolidated Financial Statements. 42 Investors Title Company and Subsidiaries Consolidated Statements of Comprehensive Income (in thousands) For the Years Ended December 31, 2024 2023 Net income $ 31,073 $ 21,686 Other comprehensive (loss) income, before income tax: Accumulated postretirement benefit obligation adjustment — 24 Unrealized (losses) gains on investments arising during the period ( 431 ) 320 Reclassification adjustment for write-down of securities included in net income 74 208 Other comprehensive (loss) income, before income tax ( 357 ) 552 Income tax expense related to postretirement health benefits — 5 Income tax (benefit) expense related to net unrealized (losses) gains on investments arising during the year ( 92 ) 61 Income tax expense related to reclassification adjustment for write-down of securities included in net income 18 48 Net income tax (benefit) expense on other comprehensive (loss) income ( 74 ) 114 Other comprehensive (loss) income ( 283 ) 438 Comprehensive Income $ 30,790 $ 22,124 Refer to the Notes to the Consolidated Financial Statements. 43 Investors Title Company and Subsidiaries Consolidated Statements of Shareholders’ Equity (in thousands, except per share amounts) Common Stock Retained Earnings Accumulated Other Comprehensive Income Total Shareholders’ Equity Shares Amount Balance, January 1, 2023 1,897 $ — $ 240,811 $ 200 $ 241,011 Net income 21,686 21,686 Dividends paid ($ 5.84 per share) ( 11,048 ) ( 11,048 ) Repurchases of common stock ( 7 ) ( 959 ) ( 959 ) Exercise of stock appreciation rights 1 — — Share-based compensation expense related to stock appreciation rights 425 425 Accumulated postretirement benefit obligation adjustment 19 19 Net unrealized gain on investments 419 419 Balance, December 31, 2023 1,891 $ — $ 250,915 $ 638 $ 251,553 Net income 31,073 31,073 Dividends paid ($ 15.84 per share) ( 29,865 ) ( 29,865 ) Repurchases of common stock ( 7 ) ( 1,099 ) ( 1,099 ) Exercise of stock appreciation rights 2 — — Share-based compensation expense related to stock appreciation rights 394 394 Net unrealized loss on investments ( 283 ) ( 283 ) Balance, December 31, 2024 1,886 $ — $ 251,418 $ 355 $ 251,773 Refer to the Notes to the Consolidated Financial Statements. 44 Investors Title Company and Subsidiaries Consolidated Statements of Cash Flows (in thousands) For the Years Ended December 31, 2024 2023 Operating Activities Net income $ 31,073 $ 21,686 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,320 2,760 Accretion of investments, net ( 3,424 ) ( 3,698 ) Amortization of other intangible assets, net 1,178 1,361 Share-based compensation expense related to stock appreciation rights 394 425 Net gains on disposals of property ( 221 ) ( 204 ) Net investment gains ( 4,683 ) ( 3,448 ) Net earnings from other investments ( 1,811 ) ( 3,206 ) Provision for claims 4,530 4,762 Provision (benefit) for deferred income taxes 624 ( 4,234 ) Changes in assets and liabilities: (Increase) decrease in premium and fees receivable ( 2,716 ) 5,709 Decrease in other assets 2,635 621 Decrease in lease assets 147 404 Decrease in current income taxes recoverable 1,081 93 Decrease in lease liabilities ( 93 ) ( 390 ) Increase (decrease) in accounts payable and accrued liabilities 2,147 ( 10,408 ) Increase in current income taxes payable 276 — Payments of claims, net of recoveries ( 4,617 ) ( 4,807 ) Net cash provided by operating activities 29,840 7,426 Investing Activities Purchases of fixed maturity securities ( 66,726 ) ( 20,339 ) Purchases of equity securities ( 11,053 ) ( 11,969 ) Purchases of short-term investments ( 115,924 ) ( 174,742 ) Purchases of other investments ( 5,654 ) ( 3,006 ) Proceeds from sales and maturities of fixed maturity securities 17,855 10,937 Proceeds from sales of equity securities 13,215 30,216 Proceeds from sales and maturities of short-term investments 170,407 166,362 Proceeds from sales and distributions of other investments 6,775 4,499 Purchases of property, equipment and software ( 7,423 ) ( 9,186 ) Proceeds from disposals of property 275 529 Net cash provided by (used in) investing activities 1,747 ( 6,699 ) 45 Consolidated Statements of Cash Flows, continued For the Years Ended December 31, 2024 2023 Financing Activities Repurchases of common stock ( 1,099 ) ( 959 ) Exercise of stock appreciation rights — — Dividends paid ( 29,865 ) ( 11,048 ) Net cash used in financing activities ( 30,964 ) ( 12,007 ) Net Increase (Decrease) in Cash and Cash Equivalents 623 ( 11,280 ) Cash and Cash Equivalents, Beginning of Period 24,031 35,311 Cash and Cash Equivalents, End of Period $ 24,654 $ 24,031 Supplemental Disclosures: Cash Paid During the Year for: Income tax payments, net $ 6,620 $ 8,688 Non Cash Investing and Financing Activities: Non cash net unrealized loss (gain) on investments, net of deferred tax benefit (expense) of $ 74 and $( 109 ) for December 31, 2024 and 2023, respectively $ 283 $ ( 419 ) Adjustments to postretirement benefits obligation, net of deferred tax expense of $ 0 and $( 5 ) for December 31, 2024 and 2023, respectively $ — $ ( 19 ) Non cash 1031 exchange proceeds receivable $ — $ ( 2,589 ) Refer to the Notes to the Consolidated Financial Statements. 46 Investors Title Company and Subsidiaries Notes to Consolidated Financial Statements 1. Basis of Presentation and Summary of Significant Accounting Policies Description of Business: Investors Title Company’s (the “Company”) two primary business segments are title insurance and exchange services. The title insurance segment, through its two subsidiaries, Investors Title Insurance Company (“ITIC”) and National Investors Title Insurance Company (“NITIC”), is licensed to insure titles to residential, institutional, commercial and industrial properties. The Company issues title insurance policies directly and through a network of agents in 22 states and the District of Columbia, primarily in the eastern half of the United States. The majority of the Company’s title insurance business is concentrated in North Carolina, Texas, South Carolina, Georgia and Florida. Investors Title Exchange Corporation (“ITEC”) acts as an intermediary in tax-deferred exchanges of property held for productive use in a trade or business or for investments, while Investors Title Accommodation Corporation (“ITAC”) provides services for accomplishing reverse exchanges when taxpayers decide to acquire replacement property before selling the relinquished property. Principles of Consolidation and Basis of Presentation: The accompanying 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”). All intercompany balances and transactions have been eliminated in consolidation. Significant Accounting Policies: The significant accounting policies of the Company are summarized below. Cash and Cash Equivalents For the purpose of presentation in the Consolidated Balance Sheets and Consolidated Statements of Cash Flows, cash equivalents are highly liquid instruments with remaining original maturities of three months or less. The carrying amount of cash and cash equivalents is a reasonable estimate of fair value due to the short-term maturity at purchase of these instruments. Investments in Securities Investments in Fixed Maturity Securities : Fixed maturity securities are classified as available-for-sale and reported at estimated fair value with unrealized gains and losses, net of tax and adjusted for recognized impairment, and reported as accumulated other comprehensive income. Securities are regularly reviewed for differences between the cost and estimated fair value of each security for factors that may indicate that a decline in fair value is impaired. In evaluating available-for-sale fixed maturity securities in unrealized loss positions for impairment and the criteria regarding its intent or requirement to sell such securities, the Company considers the extent to which estimated fair value is less than amortized cost, whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuers’ financial condition, among other factors. If the Company intends to sell an available-for-sale security in an unrealized loss position, or determines that it is more likely than not that the Company will be required to sell the security before it recovers its amortized cost basis, the security is impaired and it is written down to estimated fair value with all losses recognized in earnings. For available-for-sale fixed maturity securities in an unrealized loss position for which the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security, the Company evaluates the securities to determine whether the decline in the estimated fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors. Any impairment that is not credit-related is recognized in other comprehensive (loss) income, net of applicable taxes. Credit-related impairment is recognized as an allowance for credit losses (“ACL”) in the Consolidated Balance Sheets, limited to the amount by which the amortized cost basis exceeds the estimated fair value, with a corresponding adjustment to earnings. The ACL may be reversed if conditions change through an adjustment to the Consolidated Statements of Operations. Changes in the ACL are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the ACL when management believes the uncollectability of an available-for-sale fixed maturity security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable is excluded from the estimate of credit losses. Impairment reviews are inherently uncertain and the value of the investment may not fully recover or may decline in future periods resulting in a realized loss. Realized gains and losses are determined on the specific identification method. Refer to Note 3 for further information about the Company’s investments in fixed maturity securities. 47 Investments in Equity Securities: Equity securities represent ownership interests held by the Company in entities for investment purposes. Realized gains and losses on the sale of investment securities and changes in the estimated fair value of equity security investments are reported in the Consolidated Statements of Operations as net investment gains. Realized investment gains and losses from sales are recorded on the trade date and are determined using the specific identification method. Refer to Note 3 for further information about the Company’s investments in equity securities. Other Investments Other investments consist of investments in real estate and unconsolidated affiliated entities, typically structured as limited liability companies ("LLCs"), without readily determinable fair values. As of December 31, 2024, the Company had investments in real estate of $ 7.5 million and investments in unconsolidated affiliated entities of $ 13.1 million. As of December 31, 2023, the Company had investments in real estate of $ 2.5 million and investments in unconsolidated affiliated entities of $ 14.9 million. Real estate investments are reported at amortized cost. Depreciation and other related expenses are recorded as an offset to the related rental 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 investment gains in the Consolidated Statement of Operations when recognized. Lease rental income earned by the Company, which does not have a material impact on the Company's results of operations, is included with other revenues in the Consolidated Statements of Operations. Investments in unconsolidated affiliated entities are accounted for under either the equity method or the measurement alternative method. The measurement alternative method is used when an investment does not qualify for either the equity method or an estimated fair value using the net asset value per share. Under the measurement alternative method, investments are recorded at cost, less any impairment and plus or minus any changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. 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. Short-Term Investments Short-term investments are comprised of money market accounts which are invested in short-term funds, U.S. Treasury bills, commercial paper, certificates of deposit, and other investments expected to have maturities or redemptions greater than three months and less than twelve months. Property Acquired in Settlement of Claims Property acquired in settlement of claims is held for sale and valued at the lower of cost or estimated realizable value, net of any indebtedness on the property. Adjustments to reported estimated realizable values and realized gains or losses on dispositions are recorded as increases or decreases in claim costs. Properties acquired in settlement of claims are included in other assets in the Consolidated Balance Sheets. Property and Equipment Property and equipment are recorded at cost and are depreciated principally under the straight-line method over the estimated useful lives ( 3 to 25 years) of the respective assets. Maintenance and repairs are charged to operating expenses and improvements are capitalized. Reserve for Claims The total reserve for all reported and unreported losses the Company incurred through December 31, 2024 is represented by the reserve for claims. The Company’s reserve for unpaid losses and loss adjustment expenses is established using estimated amounts required to settle claims for which notice has been received (reported) and the amount estimated to be required to satisfy incurred claims of policyholders which may be reported in the future (incurred but not reported, or “IBNR”). Despite the variability of such estimates, management believes that the reserve is adequate to cover claims losses resulting from pending and future claims for policies issued through December 31, 2024. The Company continually reviews and adjusts its reserve estimates as necessary to reflect its loss experience and any new information that becomes available. Adjustments resulting from such reviews may be significant. 48 Management records a provision for future claim payments at the time the related premium revenue is recognized by applying a loss provision rate against net premiums written. Management determines its loss provision rate through the consideration of factors such as the Company’s historical claim experience, case reserve estimates on reported claims, large claims, actuarial projections, and other relevant factors. The Company’s specialist utilizes accepted actuarial methodologies when performing the actuarial projections. Management’s assumptions include assumed comparability to its historical claims experience unless factors, such as loss experience and charged premium rates, change significantly, as well as assumptions around large losses related to fraud and defalcation. Claims 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 acquiring company carries the assets as property acquired in the settlement of claims. Income Taxes The Company makes certain estimates and judgments in determining income tax expense (benefit) for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. The Company provides for deferred income taxes (benefits) for the tax consequences in future years of temporary differences between the financial statements’ carrying values and the tax bases of assets and liabilities using currently enacted tax rates. The Company establishes a valuation allowance if it believes that it is more likely than not that some or all of its deferred tax assets will not be realized. Refer to Note 8 for further information regarding income taxes. Premiums Written and Commissions to Agents Generally, title insurance premiums are recognized at the time of settlement of the related real estate transaction, as the earnings process is then considered complete, irrespective of the timing of issuance of a title insurance policy or commitment. Expenses typically associated with premiums, including agent commissions, premium taxes, and a provision for future claims are recognized concurrent with recognition of related premium revenue. Allowance for Doubtful Accounts Company management continually evaluates the collectability of receivables and provides an allowance for doubtful accounts equal to estimated losses expected to be incurred in the collection of premiums and fees receivable over the term of the receivables. On a quarterly basis, the Company considers its historical loss experience as well as current conditions and reasonable and supportable forecasts to determine the allowance for doubtful accounts. Changes to the allowance for doubtful accounts are reflected within net premiums written in the Consolidated Statements of Operations. Receivables deemed uncollectible have not been material to the Company. Exchange Services Revenue Fees are recognized at the signing of a binding agreement, as the earnings process, or performance obligation, is then considered to be complete. Investment earnings are recognized as they are earned. Exchange services revenue is included in non-title services in the Consolidated Statements of Operations. Fair Values of Financial Instruments The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents, short-term investments, premium and fees receivable, accrued interest and dividends, accounts payable, commissions payable, reinsurance payable and current income taxes recoverable/payable approximate fair value due to the short-term nature of these assets and liabilities. Estimated fair values for the majority of investment securities are based on quoted market prices. Refer to Note 3 for further information regarding investments in securities and fair value. 49 Accumulated Other Comprehensive Income The Company’s accumulated other comprehensive income is comprised of unrealized holding gains or losses on available-for-sale securities, net of tax, and unrealized gains or losses associated with postretirement benefit liabilities, net of tax. Accumulated other comprehensive income as of December 31, 2024 consists of $ 300 thousand of unrealized holding gains on available-for-sale securities and $ 55 thousand of unrecognized actuarial gains associated with postretirement benefit liabilities. Accumulated other comprehensive income as of December 31, 2023 consists of $ 583 thousand of unrealized holding gains on available-for-sale securities and $ 55 thousand of unrecognized actuarial gains associated with postretirement benefit liabilities. Refer to Note 18 for further information regarding accumulated other comprehensive income. Share-Based Compensation Share-based compensation cost is generally measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense over the employee’s requisite service period. As the share-based compensation expense recognized in the Consolidated Statements of Operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Goodwill Goodwill represents the excess of cost over fair value of identifiable net assets acquired and assumed in a business combination. The fair value of the Company’s goodwill at acquisition is principally based on values obtained from an independent third-party valuation service. Goodwill was reviewed for impairment as of December 31, 2024, and is reviewed at least annually, or when events or changes in circumstances indicate the carrying value may not be recoverable. When evaluating whether goodwill is impaired, the Company determines through qualitative analysis whether relevant events and circumstances indicate that it is more likely than not that goodwill balances are impaired as of the testing date. If the qualitative analysis does not indicate that an impairment of goodwill is more likely than not, then no other specific quantitative impairment testing is required. If it is determined that it is more likely than not that an impairment exists, the Company performs a quantitative assessment whereby a discounted cash flow analysis is utilized to determine an estimated fair value. The estimated fair value is compared to the carrying value of goodwill as of the measurement date. The discounted cash flows used in estimating fair value are dependent on a number of significant assumptions, and therefore estimated fair value measurements are subject to change given the inherent uncertainty in predicting future results and cash flows. Other Intangible Assets The Company’s other intangible assets consist of non-compete agreements, referral relationships and a tradename resulting from agency acquisitions; all of which are recorded at the acquisition date fair value. The fair value of the Company’s other intangible assets is principally based on values obtained from an independent third-party valuation service. Assets with remaining useful lives will be amortized on a straight-line basis over those useful lives, which range from approximately 1 to 22 years as of December 31, 2024. Other intangible assets are reviewed for impairment at least annually or when events or changes in circumstances indicate the carrying value may not be recoverable. Title Plants Title plants represent a historical record of matters affecting title to parcels of land in a particular geographic area. Title plants are recorded at the cost incurred to construct or obtain and organize historical title information to the point it can be used to perform title searches. Costs incurred to maintain, update and operate title plants are expensed as incurred. Title plants are not amortized as they are considered to have an indefinite life with no diminishment of value if properly maintained; but are subject to impairment evaluation, which the Company performs on at least an annual basis. 50 Leases At inception, the Company determines if an arrangement is a lease. The Company enters into lease agreements that are primarily used for office space, and the majority of current leases are accounted for as operating leases. Amounts related to leases are included in lease assets and lease liabilities in the Consolidated Balance Sheets. Lease assets represent the Company’s right to use an underlying asset for the stated lease term. Lease liabilities represent the Company’s obligation to make lease payments arising from a lease. Lease assets and liabilities are recognized at the date of the lease commencement, and are based on the present value of lease payments over the lease term. The Company's current leases do not provide an implicit interest rate, thus the Company utilized the average rate over a 10-year term based upon the Moody's seasoned Aaa corporate bond yields in determining the present value of lease payments. A portion of the Company's current leases includes 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 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. A lease expense is recognized on a straight-line basis over the lease term. Adjustments for straight-line rental expense for the periods presented are not material and as such, the lease expense recognized was reflected in cash used in operating activities for the respective periods. Refer to Note 9 for further information about the Company's leases. Subsequent Events The Company has evaluated and concluded that there were no material subsequent events requiring adjustment or disclosure to its Consolidated Financial Statements. Use of Estimates and Assumptions The preparation of the 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 Consolidated Financial Statements, and the reported amounts of revenues and expenses during the reporting period and the accompanying Notes to Consolidated Financial Statements. Actual results could differ materially from those estimates and assumptions used. The more significant of these estimates and assumptions include the following: Claims: The Company’s reserve for claims is established using estimated amounts required to settle claims for which notice has been received (reported) and the amount estimated to be required to satisfy incurred claims of policyholders which have been incurred but not reported. A provision for estimated future claims payments is recorded at the time policy revenue is recorded as a percentage of net premiums written. By their nature, title claims can often be complex, vary greatly in dollar amounts, vary in number due to economic and market conditions such as an increase in mortgage foreclosures, and involve uncertainties as to ultimate exposure. In addition, some claims may require a number of years to settle and determine the final liability for indemnity and loss adjustment expense. The payment experience may extend for more than 20 years after the issuance of a policy. Events such as fraud, defalcation and multiple property defects can substantially and unexpectedly cause increases in estimates of losses. Due to the length of time over which claim payments are made and regularly occurring changes in underlying economic and market conditions, these estimates are subject to variability. Management considers factors such as the Company’s historical claims experience, case reserve estimates on reported claims, large claims, actuarial projections and other relevant factors in determining its loss provision rates and the aggregate recorded expected liability for claims. In establishing the reserve, actuarial projections are compared with recorded reserves to evaluate the adequacy of such recorded claims reserves and any necessary adjustments are then recorded in the current period’s statements of operations. As the most recent claims experience develops and new information becomes available, the loss reserve estimate related to prior periods will change to more accurately reflect updated and improved emerging data. The Company reflects any adjustments to the reserve in the results of operations in the period in which new information (principally claims experience) becomes available. Premiums written: Premium revenues issued directly and by agency operations include accruals for transactions which have settled but have not been reported as of the balance sheet date. These accruals are based on estimates of the typical lag time between settlement of real estate transactions and the reporting of these transactions to the Company. Reporting lag times vary by market. In certain markets, the lag time may be very short, but in others, can be as high as 3 months. The Company reviews and adjusts lag time estimates periodically, using historical experience and other factors, and reflects any adjustments in the result of operations in the period in which new information becomes available. 51 Impairments: Securities are regularly evaluated and reviewed for differences between the cost and estimated fair value of each security for factors that may indicate that a decline in estimated fair value is an impairment. When, in the opinion of management, a decline in the estimated fair value of an investment is considered to be an impairment, such investment is written down to its estimated fair value. Some factors considered in evaluating whether or not a decline in estimated fair value is an impairment include the duration and extent to which the estimated fair value has been less than cost; the probability that the Company will be unable to collect all amounts due under the contractual terms of the security; whether the Company has the intent to sell or will more likely than not be required to sell a particular security before recovery in value; and the financial condition and prospects of the issuer (including credit ratings). These factors are reviewed quarterly and any material degradation in the prospect for recovery will be considered in the impairment analysis. Such reviews 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 estimated fair values of the majority of the Company’s investments are based on quoted market prices from independent pricing services. 2. Statutory Accounting and Restrictions on Consolidated Shareholders’ Equity and Investments The Consolidated Financial Statements have been prepared in conformity with GAAP, which differ in some respects from statutory accounting practices prescribed or permitted in the preparation of financial statements for submission to insurance regulatory authorities. Combined capital and surplus on a statutory basis was $ 247.1 million and $ 243.3 million as of December 31, 2024 and 2023, respectively. Net income on a statutory basis was $ 30.8 million and $ 31.6 million and for the years ended December 31, 2024 and 2023, respectively. The Company has designated approximately $ 53.9 million and $ 52.1 million of retained earnings as of December 31, 2024 and 2023, respectively, as appropriated to reflect the required statutory premium and supplemental reserves. Refer to Note 8 for the tax treatment of the statutory premium reserve. As of December 31, 2024 and 2023, approximately $ 118.2 million and $ 113.0 million, respectively, of consolidated shareholders’ equity represents net assets of the Company’s subsidiaries that cannot be transferred in the form of dividends, loans or advances to the parent company under statutory regulations without prior insurance department approval. During 2025, the maximum distributions the insurance subsidiaries can make to the Company without prior approval from applicable regulators total approximately $ 24.8 million. Fixed maturity securities with fair market values totaling approximately $ 6.1 million and $ 6.7 million at December 31, 2024 and 2023, respectively, are deposited with the insurance departments of the states in which business is conducted. 3. 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 December 31, 2024 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturity securities, available-for-sale, at fair value: Government obligations $ 300 $ 2 $ — $ 302 General obligations of U.S. states, territories and political subdivisions 8,129 11 ( 31 ) 8,109 Special revenue issuer obligations of U.S. states, territories and political subdivisions 16,523 51 ( 73 ) 16,501 Corporate debt securities 87,636 556 ( 132 ) 88,060 Total $ 112,588 $ 620 $ ( 236 ) $ 112,972 52 As of December 31, 2023 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturity securities, available-for-sale, at fair value: Governmental obligations $ 2,220 $ 2 $ ( 2 ) $ 2,220 General obligations of U.S. states, territories and political subdivisions 9,419 64 ( 24 ) 9,459 Special revenue issuer obligations of U.S. states, territories and political subdivisions 24,908 145 ( 66 ) 24,987 Corporate debt securities 26,559 655 ( 33 ) 27,181 Total $ 63,106 $ 866 $ ( 125 ) $ 63,847 The special revenue category for both periods presented includes approximately 20 individual fixed maturity securities with revenue sources from a variety of industry sectors. The scheduled maturities of fixed maturity securities at December 31, 2024 are as follows: Available-for-Sale (in thousands) Amortized Cost Fair Value Due in one year or less $ 43,179 $ 43,253 Due after one year through five years 56,178 56,297 Due after five years through ten years 7,944 7,956 Due after ten years 5,287 5,466 Total $ 112,588 $ 112,972 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 December 31, 2024 and 2023, respectively: Less than 12 Months 12 Months or Longer Total As of December 31, 2024 (in thousands) Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Government obligations $ — $ — $ — $ — $ — $ — General obligations of U.S. states, territories and political subdivisions 1,960 ( 2 ) 2,780 ( 29 ) 4,740 ( 31 ) Special revenue issuer obligations of U.S. states, territories and political subdivisions 5,477 ( 45 ) 2,828 ( 28 ) 8,305 ( 73 ) Corporate debt securities 22,641 ( 131 ) 149 ( 1 ) 22,790 ( 132 ) Total $ 30,078 $ ( 178 ) $ 5,757 $ ( 58 ) $ 35,835 $ ( 236 ) Less than 12 Months 12 Months or Longer Total As of December 31, 2023 (in thousands) Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Government obligations $ 1,488 $ ( 2 ) $ — $ — $ 1,488 $ ( 2 ) General obligations of U.S. states, territories and political subdivisions 5,925 ( 23 ) 101 ( 1 ) 6,026 ( 24 ) Special revenue issuer obligations of U.S. states, territories and political subdivisions 7,124 ( 16 ) 3,085 ( 50 ) 10,209 ( 66 ) Corporate debt securities 6,052 ( 29 ) 296 ( 4 ) 6,348 ( 33 ) Total $ 20,589 $ ( 70 ) $ 3,482 $ ( 55 ) $ 24,071 $ ( 125 ) 53 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 60 and 52 fixed maturity securities had unrealized losses at December 31, 2024 and 2023, respectively. The Company does not intend to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. The Company believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in market interest rates and other market conditions, and therefore the unrealized loss is recorded in accumulated other comprehensive income. Reviews of the values of fixed maturity securities are inherently uncertain and the value of the investment may not fully recover, or may decline in future periods resulting in a realized loss. The Company recorded $ 74 thousand and $ 201 thousand of impairment charges related to fixed maturity securities for the twelve-month periods ended December 31, 2024 and 2023, respectively. Expenses related to impairments are recorded in net investment gains in the Consolidated Statements of Operations when recognized. Investments in Equity Securities The cost and estimated fair value of equity securities are as follows: As of December 31, 2024 (in thousands) Cost Estimated Fair Value Equity securities, at fair value: Common stocks $ 25,980 $ 39,893 Total $ 25,980 $ 39,893 As of December 31, 2023 (in thousands) Cost Estimated Fair Value Equity securities, at fair value: Common stocks $ 22,981 $ 37,212 Total $ 22,981 $ 37,212 Changes in the estimated fair value of equity security investments are recorded in net investment gains in the Consolidated Statements of Operations. Interest and Dividends Earnings on investments for the years ended December 31 are as follows: (in thousands) 2024 2023 Fixed maturity securities $ 3,832 $ 2,317 Equity securities 1,120 1,078 Invested cash and other short-term investments 5,703 5,659 Miscellaneous interest 2 1 Interest and dividends $ 10,657 $ 9,055 54 Net Investment Gains Gross realized gains and losses on sales of investments and changes in the estimated fair value of equity security investments for the years ended December 31 are summarized as follows: (in thousands) 2024 2023 Gross realized gains from securities: Common stocks $ 5,525 $ 16,350 Total $ 5,525 $ 16,350 Gross realized losses from securities: Common stocks $ ( 363 ) $ ( 400 ) Impairments of securities ( 74 ) ( 201 ) Total $ ( 437 ) $ ( 601 ) Net realized gains from securities $ 5,088 $ 15,749 Net realized other investment (losses) gains: Impairments of other assets and investments $ ( 309 ) $ — Gains on other investments 242 5 Losses on other investments ( 20 ) ( 123 ) Total $ ( 87 ) $ ( 118 ) Net realized investment gains $ 5,001 $ 15,631 Changes in the estimated fair value of equity security investments $ ( 318 ) $ ( 12,183 ) Net investment gains $ 4,683 $ 3,448 Realized gains and losses are determined on the specific identification method. Variable Interest Entities The Company holds investments in variable interest entities (“VIEs”) that are not consolidated in the Company's consolidated 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 LLCs, as of December 31, 2024: Type of Investment (in thousands) Balance Sheet Classification Carrying Value Estimated Fair Value Maximum Potential Loss * Real estate LLCs or LPs Other investments $ 10,514 $ 11,404 $ 14,653 Small business investment LLCs or LPs Other investments 1,184 1,184 1,403 Total $ 11,698 $ 12,588 $ 16,056 * 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. 55 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 December 31, 2024 and 2023, 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. 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 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. 56 The following table presents, by level, fixed maturity securities carried at estimated fair value as of December 31, 2024 and 2023: As of December 31, 2024 (in thousands) Level 1 Level 2 * Level 3 Total Fixed maturity securities: Obligations of U.S. states, territories and political subdivisions $ 302 $ 24,610 $ — $ 24,912 Corporate debt securities — 88,060 — 88,060 Total $ 302 $ 112,670 $ — $ 112,972 As of December 31, 2023 (in thousands) Level 1 Level 2 * Level 3 Total Fixed maturity securities: Obligations of U.S. states, territories and political subdivisions $ 2,220 $ 34,446 $ — $ 36,666 Corporate debt securities — 27,181 — 27,181 Total $ 2,220 $ 61,627 $ — $ 63,847 *Denotes fair market value obtained from pricing services. The following table presents, by level, estimated fair values of equity investments and other financial instruments as of December 31, 2024 and 2023: As of December 31, 2024 (in thousands) Level 1 Level 2 Level 3 Total Financial assets: Cash $ 24,654 $ — $ — $ 24,654 Accrued interest and dividends 1,469 — — 1,469 Equity securities, at fair value: Common stocks 39,893 — — 39,893 Short-term investments: Money market funds and U.S. Treasury bills 59,101 — — 59,101 Total $ 125,117 $ — $ — $ 125,117 As of December 31, 2023 (in thousands) Level 1 Level 2 Level 3 Total Financial assets: Cash $ 24,031 $ — $ — $ 24,031 Accrued interest and dividends 978 — — 978 Equity securities, at fair value: Common stocks 37,212 — — 37,212 Short-term investments: Money market funds and U.S. Treasury bills 110,224 — — 110,224 Total $ 172,445 $ — $ — $ 172,445 The Company did not hold any Level 3 category debt or marketable equity investment securities as of December 31, 2024 or 2023. 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. 57 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 Consolidated Statements of Operations. There were two impairments of such investments made during the twelve-month periods ended December 31, 2024 and no impairments during the twelve-month period ended December 31, 2023. The following table presents assets measured at fair value on a non-recurring basis as of December 31, 2024 and 2023: As of December 31, 2024 (in thousands) Level 1 Level 2 Level 3 Total Financial assets: Equity investments in unconsolidated affiliates, measurement alternative $ — $ — $ 8,166 $ 8,166 Notes receivable — — 641 641 Total $ — $ — $ 8,807 $ 8,807 As of December 31, 2023 (in thousands) Level 1 Level 2 Level 3 Total Financials assets: Equity investments in unconsolidated affiliates, measurement alternative $ — $ — $ 9,300 $ 9,300 Notes receivable — — 2,201 2,201 Total $ — $ — $ 11,501 $ 11,501 4. Property and Equipment Property and equipment and estimated useful lives at December 31 are summarized as follows: (in thousands) 2024 2023 Land $ 999 $ 805 Office buildings and improvements ( 25 years) 5,856 6,168 Furniture, fixtures and equipment ( 3 to 10 years) 39,972 33,966 Automobiles ( 3 years) 1,448 1,405 Total 48,275 42,344 Less accumulated depreciation ( 20,340 ) ( 18,458 ) Property and equipment, net $ 27,935 $ 23,886 Included within furniture, fixtures and equipment is software developed by the Company for internal use. Capitalized costs include both direct and indirect costs, such as payroll costs of employees associated with developing software, incurred during the software development stage. 5. Reinsurance The Company assumes and cedes reinsurance with other insurance companies in the normal course of business. There were no premiums assumed for 2024 and 2023. Ceded premiums were approximately $ 89 thousand and $ 354 thousand for 2024 and 2023, respectively. Ceded reinsurance is comprised of excess of loss treaties, which outline the conditions in which the reinsurance company will pay claims and protect against losses over certain agreed upon amounts. The Company remains liable to the insured for claims under ceded insurance policies in the event the assuming insurance companies are unable to meet their obligations under these contracts. The Company did not pay or recover any reinsured losses during 2024 and 2023. 58 6. Reserve for Claims Changes in the reserve for claims for the years ended December 31 are summarized as follows based on the year in which the policies were written: (in thousands) 2024 2023 Balance, beginning of period $ 37,147 $ 37,192 Provision related to: Current year 9,053 7,547 Prior years ( 4,523 ) ( 2,785 ) Total provision charged to operations 4,530 4,762 Claims paid, net of recoveries, related to: Current year ( 719 ) ( 428 ) Prior years ( 3,898 ) ( 4,379 ) Total claims paid, net of recoveries ( 4,617 ) ( 4,807 ) Balance, end of year $ 37,060 $ 37,147 The Company continually refines its reserve estimates as current loss experience develops and more credible data emerges. Movements in the reserve related to prior periods were primarily the result of changes to estimates to better reflect the latest reported loss data. The decrease in the provision for claims in 2024, compared to 2023, was primarily due to lower levels of favorable loss development in the current year period. Due to variances between actual and expected loss payments, loss development is subject to significant variability. The Company does not recognize claim recoveries until an actual payment has been received by the Company. The Company realized claim recoveries of approximately $ 332 thousand and $ 597 thousand during 2024 and 2023, respectively. The provision for claims as a percentage of net premiums written was 2.2 % and 2.8 % in 2024 and 2023, respectively. A large claim is defined as a claim with incurred losses exceeding $ 500 thousand. Due to the small volume of large claims, the long-tail nature of title insurance claims and the inherent uncertainty in loss emergence patterns, large claim activity can vary significantly between policy years. The estimated development of large claims by policy year is therefore subject to significant changes as experience develops. 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) 2024 % 2023 % Known title claims $ 2,650 7.2 $ 2,855 7.7 IBNR 34,410 92.8 34,292 92.3 Total reserve for claims $ 37,060 100.0 $ 37,147 100.0 In management’s opinion, the reserve for claims is adequate to cover claims losses which might result from pending and future claims. 59 7. 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 years ended December 31: (in thousands, except per share amounts) 2024 2023 Net income $ 31,073 $ 21,686 Weighted average common shares outstanding – Basic 1,885 1,893 Incremental shares outstanding assuming the exercise of dilutive SARs (share-settled) 7 — Weighted average common shares outstanding – Diluted 1,892 1,893 Basic earnings per common share $ 16.48 $ 11.45 Diluted earnings per common share $ 16.43 $ 11.45 There were 0 and 24 thousand potential shares excluded from the computation of diluted earnings per share in 2024 and 2023, respectively, due to the out-of-the-money status of the related share-based awards rendering them anti-dilutive. 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. As of December 31, 2024 there was one active plan from which the Company may grant share-based awards and one legacy plan under which equity awards remain outstanding. The awards eligible to be granted under the active plan are limited to SARs, and the maximum aggregate number of shares of common stock of the Company available pursuant to the plan for the grant of SARs is 250 thousand shares. As of December 31, 2024, 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. During both 2024 and 2023, the Company issued share-settled SARs to directors of the Company. 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. 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, 2023 39 $ 159.39 4.10 $ 243 SARs granted 5 142.88 SARs exercised ( 2 ) 93.87 Outstanding as of December 31, 2023 42 $ 160.83 3.69 $ 428 SARs granted 5 160.94 SARs exercised/forfeited/expired ( 19 ) 170.21 Outstanding as of December 31, 2024 28 $ 154.71 3.90 $ 2,312 Exercisable as of December 31, 2024 22 $ 156.73 3.78 $ 1,797 Unvested as of December 31, 2024 6 $ 146.79 4.40 $ 515 60 The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock at December 31. The intrinsic values of SARs exercised during 2024 and 2023 were approximately $ 595 thousand and $ 156 thousand, respectively. There were no options outstanding at December 31, 2024. The following table summarizes information about SARs outstanding at December 31, 2024: (in thousands, except exercise prices and average remaining contractual term) SARs Outstanding at Year-End SARs Exercisable at Year-End Range of Exercise Prices Number Outstanding Weighted Average Remaining Contractual Life Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $ 60.00 — $ 99.99 — 0.00 $ — — $ — 100.00 — 149.99 13 3.95 138.22 9 135.59 150.00 — 199.99 15 3.86 169.99 13 170.74 $ 60.00 — $ 199.99 28 3.90 $ 154.71 22 $ 156.73 In 2024, 7 thousand SARs vested with a fair value of approximately $ 394 thousand. The fair value of each SAR is estimated on the date of grant using the Black-Scholes option valuation model with the weighted average assumptions noted in the table shown below. Expected volatilities are based on both the implied and historical volatility of the Company’s stock. The Company uses historical data to project SAR exercises and pre-exercise forfeitures within the valuation model. The expected term of awards represents the period of time that SARs granted are expected to be outstanding. The interest rate assumed for the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of the grant. The weighted average fair values for the SARs issued during 2024 and 2023 were $ 64.00 and $ 55.52 , respectively, and were estimated using the weighted average assumptions shown in the table below: 2024 2023 Expected life in years 7.0 6.2 - 7.0 Volatility 35.0 % 36.6 % Interest rate 4.4 % 3.7 % Yield rate 1.1 % 1.2 % There was approximately $ 393 thousand and $ 425 thousand of compensation expense relating to SARs vesting on or before December 31, 2024 and 2023, respectively, included in personnel expenses in the Consolidated Statements of Operations. As of December 31, 2024, there was approximately $ 301 thousand of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Company’s stock award plans. That cost is expected to be recognized over a weighted average period of approximately one year. 8. Income Taxes The components of income tax expense for the years ended December 31 are summarized as follows: (in thousands) 2024 2023 Current: Federal $ 7,371 $ 8,389 State 395 389 Total current 7,766 8,778 Deferred: Federal 555 ( 4,150 ) State 69 ( 84 ) Total deferred 624 ( 4,234 ) Total $ 8,390 $ 4,544 61 For state income tax purposes, ITIC and NITIC generally pay only a gross premium tax found in other expenses in the Consolidated Statements of Operations. At December 31, the approximate tax effect of each component of deferred income tax assets and liabilities is summarized as follows: (in thousands) 2024 2023 Deferred income tax assets: Accrued benefits and retirement services $ 4,132 $ 3,990 Net operating loss carryforward 210 246 Impairment of assets 135 186 Reinsurance and commission payable 23 62 Allowance for doubtful accounts 6 29 Lease assets 1,335 1,354 Other 559 563 Total 6,400 6,430 Deferred income tax liabilities: Net unrealized gain on investments 3,015 3,157 Recorded statutory premium reserve, net of reserves for claims 2,508 2,223 Intangible assets 730 797 Excess of tax over book depreciation 721 657 Lease liabilities 1,293 1,324 1031 gain 933 935 Other 1,295 883 Total 10,495 9,976 Net deferred income tax liabilities $ ( 4,095 ) $ ( 3,546 ) At December 31, 2024 and 2023, there were no valuation allowances recorded. Based upon the Company’s historical results of operations, the existing financial condition of the Company and management’s assessment of all other available information, management believes that it is more likely than not that the benefit of these deferred income tax assets will be realized. A reconciliation of the U.S. federal statutory income tax rate of 21.0 % for the years ended December 31, 2024 and 2023, to income tax expense, is as follows: (in thousands) 2024 2023 Anticipated income tax expense $ 8,287 $ 5,508 Increase (decrease) related to: State income taxes, net of federal income tax benefit 312 307 Tax-exempt interest income, net of amortization ( 986 ) ( 525 ) Other, net 777 ( 746 ) Provision for income taxes $ 8,390 $ 4,544 In accounting for uncertainty in income taxes, the Company is required to recognize in its Consolidated Financial Statements the impact of a tax position if that position is more likely than not of being sustained on an audit, based on the technical merits of the position. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. There were no unrecognized tax benefits or liabilities as of December 31, 2024. The amount of unrecognized tax benefit or liability may increase or decrease in the future for various reasons, including adding amounts for current tax year positions, expiration of open income tax returns due to the expiration of the applicable statute of limitations, changes in management’s judgment about the level of uncertainty, status of examinations, litigation and legislative activity and the additions or eliminations of uncertain tax positions. 62 The Company’s policy is to report interest and penalties related to income taxes in the other expenses line item in the Consolidated Statements of Operations. The Company files income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U.S. federal or state and local examinations by taxing authorities for years before 2020. 9. Leases The Company enters into lease agreements that are primarily 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 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 is available to the Company. Lease expense is included in office and technology expenses in the Consolidated Statements of Operations. Information regarding the Company’s leases for the years ended December 31 is as follows: (in thousands) 2024 2023 Operating leases $ 2,672 $ 2,754 Finance leases: Amortization of lease assets 259 237 Lease expense $ 2,931 $ 2,991 Sub-lease income ( 222 ) ( 14 ) Lease cost $ 2,709 $ 2,977 (a) Leases with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheets. Components of the lease liability presented in the Consolidated Balance Sheets for the years ended December 31 are as follows: (in thousands) 2024 2023 Current: Operating lease liabilities $ 2,026 $ 2,201 Finance lease liabilities 226 170 Non-current: Operating lease liabilities 3,728 3,792 Finance lease liabilities 376 286 Total lease liabilities $ 6,356 $ 6,449 63 The future minimum payments for leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 2024, are summarized as follows: Year Ended (in thousands) Operating Leases Finance Leases Total 2025 $ 2,208 $ 247 $ 2,455 2026 1,690 203 1,893 2027 888 136 1,024 2028 449 55 504 2029 388 — 388 Thereafter 583 — 583 Total undiscounted payments $ 6,206 $ 641 $ 6,847 Less: present value adjustment ( 452 ) ( 39 ) ( 491 ) Lease liabilities $ 5,754 $ 602 $ 6,356 Supplemental lease information for the years ended December 31 is as follows: 2024 2023 Weighted average remaining lease term (years) Operating leases 3.88 3.07 Finance leases 2.84 2.93 Weighted average discount rate Operating leases 4.0 % 3.8 % Finance leases 4.4 % 3.7 % The Company does not have any material pending operating or financing lease agreements that become effective in future periods. 10. Retirement Agreements and Other Postretirement Benefit Plan The Company has a 401(k) savings plan. In order to participate in the plan, employees must be 21 years old. In order to be eligible for employer contributions, individuals must be employed for a period of one year and work at least 1,000 hours annually. The Company makes a 3 % Safe Harbor contribution and also has the option annually to make a discretionary profit share contribution. Individuals may elect to make contributions up to the maximum deductible amount as determined by the Internal Revenue Code of 1986, as amended (the “IRC”). Expenses related to the 401(k) plan were approximately $ 2.0 million and $ 1.6 million for 2024 and 2023, respectively. In November 2003, ITIC, a wholly owned subsidiary of the Company, entered into employment agreements with the Chief Executive Officer, Chief Financial Officer and Chief Operating Officer of ITIC. These individuals also serve as the Chairman, President and Executive Vice President, respectively, of the Company. The agreements provide compensation and life, health, dental and vision benefits upon the occurrence of specific events, including death, disability, retirement, termination without cause or upon a change in control. The employment agreements also prohibit each of these executives from competing with ITIC and its parent, subsidiaries and affiliates in North Carolina while employed by ITIC and for a period of two years following termination of their employment. In addition, during the second quarter of 2004, ITIC entered into nonqualified deferred compensation plan agreements with these executives. The amounts accrued for all agreements at December 31, 2024 and 2023 were approximately $ 15.4 million and $ 15.2 million, respectively, which includes postretirement compensation and health benefits, and was calculated based on the terms of the contract. Both the 2024 and 2023 accruals are included in the accounts payable and accrued liabilities line item of the Consolidated Balance Sheets. These executive contracts are accounted for on an individual contract basis. On December 24, 2008, the executive contracts were amended effective January 1, 2009 to bring them into compliance with Section 409A of the IRC, and were amended and restated to provide for an annual cash payment to the officers equal to the amounts the Company would have contributed to their accounts under its 401(k) plan if such contributions were not limited by the federal tax laws, less the amount of any contributions that the Company actually makes to their accounts under the Company’s 401(k) plan. 64 On November 17, 2003, ITIC entered into employment agreements with key executives that provide for the continuation of certain employee benefits upon retirement, which were most recently amended and restated on May 4, 2022. The executive employee benefits include health insurance, dental insurance, vision insurance and life insurance. The benefits are unfunded. Estimated future benefit payouts expected to be paid for each of the next five years are $ 36 thousand in 2025, $ 44 thousand in 2026, $ 57 thousand in 2027, $ 83 thousand in 2028, $ 73 thousand in 2029 and $ 293 thousand in the next five years thereafter. Cost of the Company’s postretirement benefits included the following components and is presented in the personnel expenses line of its Consolidated Statements of Operations: (in thousands) 2024 2023 Net periodic benefit cost Service cost – benefits earned during the year $ — $ — Interest cost on the projected benefit obligation — 65 Amortization of unrecognized prior service cost — — Amortization of unrecognized (gain) loss — ( 37 ) Net periodic benefits cost at end of year $ — $ 28 The Company is required to recognize the funded status (i.e., the difference between the fair value of the assets and the accumulated postretirement benefit obligations of its postretirement benefits) in its Consolidated Balance Sheets, with a corresponding adjustment to accumulated other comprehensive income, net of tax. The net amount in accumulated other comprehensive income is $ 68 thousand, $ 55 thousand net of tax, for December 31, 2024, and $ 68 thousand, $ 55 thousand net of tax, for December 31, 2023, and represents the net unrecognized actuarial gains and unrecognized prior service costs. The effects of the funded status on the Company’s Consolidated Balance Sheets at December 31, 2024 and 2023 are presented in the following table: (in thousands) 2024 2023 Funded status Actuarial present value of future benefits: Fully eligible active employees $ ( 951 ) $ ( 906 ) Non-eligible active employees — — Plan assets — — Funded status of accumulated postretirement benefit obligation, recognized in accounts payable and accrued liabilities $ ( 951 ) $ ( 906 ) Development of the accumulated postretirement benefit obligation for the years ended December 31, 2024 and 2023 includes the following: (in thousands) 2024 2023 Accrued postretirement benefit obligation at beginning of year $ ( 906 ) $ ( 928 ) Service cost – benefits earned during the year — — Interest cost on projected benefit obligation — ( 65 ) Actuarial (loss) gain ( 45 ) 87 Accrued postretirement benefit obligation at end of year $ ( 951 ) $ ( 906 ) The changes in amounts related to accumulated other comprehensive income, pre-tax, are as follows: (in thousands) 2024 2023 Balance at beginning of year $ 68 $ 44 Components of accumulated other comprehensive income: Unrecognized prior service cost — — Amortization of gain (loss), net — ( 37 ) Actuarial gain — 61 Balance at end of year $ 68 $ 68 65 11. 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. Cash administered by the Company for these purposes was approximately $ 55.0 million and $ 28.2 million as of December 31, 2024 and 2023, respectively. These amounts are not considered assets of the Company and, therefore, are excluded from the accompanying Consolidated Balance Sheets; however, the Company remains contingently liable for the disposition of these deposits. Like-Kind Exchange Proceeds: In administering tax-deferred like-kind exchanges pursuant to § 1031 of the IRC, the Company’s wholly owned subsidiary, 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, 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 $ 323.5 million and $ 263.7 million as of December 31, 2024 and 2023, respectively. These amounts are not considered assets of the Company and, therefore, are excluded from the accompanying 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 revenues rather than investment income. These like-kind exchange funds are primarily invested in money market funds and other short-term investments. 12. Segment Information The Company has two reportable segments, title insurance and exchange services. The remaining immaterial segments have been combined into a group called “All Other.” The Company’s chief operating decision makers (“CODMs”) are the Chief Executive Officer; President, Chief Financial Officer, Chief Accounting Officer, and Treasurer; and Executive Vice President and Secretary. The CODMs use financial metrics such as consolidated operating margin and net income to assess financial performance and to make key operating decisions, such as resource allocation and the rate at which the Company invests in growth opportunities. 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. The tax-deferred exchange services segment acts as an intermediary in tax-deferred exchanges of property held for productive use in a trade or business or for investments and serves as exchange accommodation titleholder, holding property for exchangers in reverse exchange transactions. 66 Provided below is selected financial information about the Company’s operations by segment for the periods ended December 31, 2024 and 2023: 2024 (in thousands) Title Insurance Exchange Services All Other Intersegment Eliminations Total Insurance and other services revenues $ 242,529 $ 10,746 $ 8,192 $ ( 21,109 ) $ 240,358 Net investment income 12,804 358 4,778 — 17,940 Total revenues 255,333 11,104 12,970 ( 21,109 ) 258,298 Commissions to agents 120,307 — — ( 12,964 ) 107,343 Provision for claims 4,530 — — — 4,530 Personnel expenses 64,138 2,425 5,950 — 72,513 Other 34,393 333 3,149 ( 3,426 ) 34,449 Total operating expenses 223,368 2,758 9,099 ( 16,390 ) 218,835 Income before income taxes $ 31,965 $ 8,346 $ 3,871 $ ( 4,719 ) $ 39,463 Total assets $ 232,932 $ 6,179 $ 94,460 $ — $ 333,571 2023 (in thousands) Title Insurance Exchange Services All Other Intersegment Eliminations Total Insurance and other services revenues $ 207,140 $ 13,270 $ 7,800 $ ( 19,715 ) $ 208,495 Net investment income 12,303 196 3,756 — 16,255 Total revenues 219,443 13,466 11,556 ( 19,715 ) 224,750 Commissions to agents 98,170 — — ( 14,796 ) 83,374 Provision for claims 4,762 — — — 4,762 Personnel expenses 68,851 2,236 5,619 — 76,706 Other 33,196 282 3,266 ( 3,066 ) 33,678 Total operating expenses 204,979 2,518 8,885 ( 17,862 ) 198,520 Income before income taxes $ 14,464 $ 10,948 $ 2,671 $ ( 1,853 ) $ 26,230 Total assets $ 216,622 $ 5,534 $ 108,403 $ — $ 330,559 13. Shareholders’ Equity On November 12, 2002, the Company’s Board of Directors amended the Company’s Articles of Incorporation, creating a series of preferred stock designated Series A Junior Participating Preferred Stock (the “Series A Preferred Stock”). The Series A Preferred Stock is senior to common stock in dividends or distributions of assets upon liquidation, dissolution or winding up of the Company. Dividends on the Series A Preferred Stock are cumulative and accrue from the quarterly dividend payment date. Each share of Series A Preferred Stock entitles the holder thereof to 100 votes on all matters submitted to a vote of shareholders of the Company. These shares were reserved for issuance under the Shareholder Rights Plan, which was originally adopted on November 21, 2002 by the Company’s Board of Directors and most recently amended and restated on September 30, 2022 (as amended and restated, the “Plan”). Under the terms of the Plan, the Company’s common stock acquired by a person or a group buying 15 % or more of the Company’s common stock would be diluted, except in transactions approved by the Board of Directors. The Plan expires on September 30, 2032. In connection with the adoption of the Plan, the Company’s Board of Directors declared a dividend distribution of one right (a “Right”) for each outstanding share of the Company’s common stock paid on December 16, 2002, to shareholders of record at the close of business on December 2, 2002. Each Right entitles the registered holder to purchase from the Company a unit (a “Unit”) consisting of one one-hundredth of a share of Series A Preferred Stock. Under the Plan, the Rights detach and become exercisable upon the earlier of (a) 10 days following public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 15 % or more of the outstanding shares of the Company’s common stock, or (b) 10 business days following the commencement of, or first public announcement of the intent of a person or group to commence, a tender offer or exchange offer that would result in a person or group beneficially owning 15 % or more of such outstanding shares of the Company’s common stock. The current price to exercise one Right is $ 525 per Unit. The exercise price, the kind and the number of shares covered by each Right are subject to adjustment upon the occurrence of certain events described in the Plan. 67 If any person or group of affiliated or associated persons acquires beneficial ownership of 15 % or more of the outstanding common stock, each holder of a Right (other than the acquiring person or group) will have the right to buy, at the exercise price, common stock of the Company having a market value of twice the exercise price. If the Company is acquired in a merger or consolidation in which the Company is not the surviving corporation, or the Company engages in a merger or consolidation in which the Company is the surviving corporation and the Company’s common stock is changed or exchanged, or more than 50 % of the Company’s assets or earning power is sold or transferred, the Rights entitle a holder (other than the acquiring person or group) to buy, at the exercise price, stock of the acquiring company having a market value equal to twice the exercise price. At any time after a person or group of affiliated or associated persons has acquired beneficial ownership of 15 % or more of the outstanding common stock and prior to the acquisition by such person or group of 50 % or more of the outstanding common stock, the Company’s Board of Directors may exchange the Rights (other than the Rights owned by such person or group), in whole or in part, at an exchange ratio of one share of the Company’s common stock, or one one-hundredth of a share of Series A Preferred Stock, per Right. The Rights are redeemable upon action by the Board of Directors at a price of $ 0.01 per Right at any time before they become exercisable. Until the Rights become exercisable, they are evidenced only by the common stock certificates and are transferred with and only with such certificates. There were 1.0 million shares of Preferred Stock authorized as of December 31, 2024 and 2023, with 200,000 being designated Series A Preferred Stock. 14. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company invests its cash and cash equivalents into high credit quality security instruments. Deposits which exceed $ 250 thousand at each institution are not insured by the Federal Deposit Insurance Corporation (“FDIC”). Of the $ 24.7 million in cash and cash equivalents at December 31, 2024, $ 22.4 million was not insured by the FDIC. Of the $ 24.0 million in cash and cash equivalents at December 31, 2023, $ 22.3 million was not insured by the FDIC. The Company mitigates the risk of having cash and cash equivalents not insured by the FDIC by monitoring the credit quality of the financial institutions in which the funds are held. 15. Business Concentration The Company generates a significant amount of title insurance premiums in North Carolina, Texas, South Carolina, Georgia and Florida. In 2024 and 2023, these states generated the following percentage of total premiums written: State 2024 2023 North Carolina 34.4 % 37.4 % Texas 27.9 % 27.0 % South Carolina 8.8 % 9.3 % Georgia 7.6 % 6.8 % Florida 7.2 % 4.0 % 16. 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 investments 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 (in thousands) 2024 2023 Other investments $ 4,950 $ 5,561 Premium and fees receivable $ 1,701 $ 627 Financial Statement Classification, Consolidated Statements of Operations (in thousands) 2024 2023 Net premiums written $ 29,272 $ 22,131 Non-title services and other investment income $ 2,637 $ 4,062 Commissions to agents $ 20,821 $ 15,115 68 17. 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 periods ended December 31, 2024 and 2023 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 as of December 31: Year Ended (in thousands) 2024 2023 Referral relationships $ 8,898 $ 8,898 Non-compete agreements 3,155 3,155 Tradename 747 747 Total 12,800 12,800 Accumulated amortization ( 7,354 ) ( 6,176 ) Identifiable intangible assets, net $ 5,446 $ 6,624 The following table provides the estimated aggregate amortization expense, as of December 31, 2024 for each of the five succeeding fiscal years: Year Ended (in thousands) 2025 $ 1,095 2026 1,095 2027 679 2028 650 2029 526 Thereafter 1,214 Total $ 5,259 Goodwill and Title Plants As of December 31, 2024, the Company recognized $ 9.6 million in goodwill and $ 1.6 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 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 periods ended December 31, 2024 and 2023 that would indicate the carrying amounts may not be recoverable, and therefore, determined that there were no goodwill or title plant impairments. 69 18. Accumulated Other Comprehensive Income The following table provides changes in the balances of each component of accumulated other comprehensive income, net of tax, for the periods ended December 31, 2024 and 2023: 2024 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at January 1 $ 583 $ 55 $ 638 Other comprehensive (loss) income before calculations ( 339 ) — ( 339 ) Amounts reclassified from accumulated other comprehensive income 56 — 56 Net current-period other comprehensive (loss) income ( 283 ) — ( 283 ) Ending balance $ 300 $ 55 $ 355 2023 (in thousands) Unrealized Gains and Losses On Available-for-Sale Securities Postretirement Benefits Plans Total Beginning balance at January 1 $ 164 $ 36 $ 200 Other comprehensive income before calculations 259 19 278 Amounts reclassified from accumulated other comprehensive income 160 — 160 Net current-period other comprehensive income 419 19 438 Ending balance $ 583 $ 55 $ 638 The following table provides significant amounts reclassified out of each component of accumulated other comprehensive income for the periods ended December 31, 2024 and 2023: 2024 (in thousands) Details about Accumulated Other Comprehensive Income Components 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 losses on investments $ — Impairments of securities ( 74 ) Total $ ( 74 ) Net investment gains Tax 18 Provision for Income Taxes Net of Tax $ ( 56 ) Reclassifications for the period $ ( 56 ) 70 2023 (in thousands) Details about Accumulated Other Comprehensive Income Components 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 losses on investments $ — Impairments of securities ( 208 ) Total $ ( 208 ) Net investment gains Tax 48 Provision for Income Taxes Net of Tax $ ( 160 ) Reclassifications for the period $ ( 160 ) 19. 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: (in thousands) 2024 2023 Revenue from contracts with customers: Escrow and other title-related fees $ 17,954 $ 17,109 Non-title services 17,193 19,237 Total revenue from contracts with customers 35,147 36,346 Other sources of revenue: Net premiums written 204,264 171,158 Investment-related revenue 17,940 16,255 Other 947 991 Total revenues $ 258,298 $ 224,750 71 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.