What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-12 compared with 2024-11-07 · 80 added, 89 removed, 283 unchanged (37% of the section changed)

8 unchanged sentences

Through ITIC and NITIC, the Company underwrites land title insurance for owners and mortgagees as a primary insurer.

Total revenues from the title segment accounted for 90.9% of the Company's revenues for the nine-month period ended September 30, 2024.

Title insurance protects against loss or damage resulting from title defects that affect real property.

Total revenues from the title segment accounted for 90.4% of the Company's revenues for the three-month period ended March 31, 2025.

Title insurance protects against loss or damage resulting from title defects that affect real property and typically arise prior to the policy date.

When real property is conveyed from one party to another, occasionally there is an undisclosed defect in the title or a mistake or omission in a prior deed, will or mortgage that may give a third party a legal claim against such property.

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These transactions include reverse exchanges when taxpayers decide to acquire replacement property before selling the relinquished property, or “build to suit” exchanges, when improvements must be made to the replacement property before the taxpayer acquires the improved replacement property.

The services provided by the Company’s exchange services division, ITEC and ITAC, are pursuant to provisions in the Internal Revenue Code.

The services provided by the Company’s exchange services division, ITEC and ITAC, are pursuant to provisions in the Internal Revenue Code of 1986.

From time to time, these laws are subject to review and changes, which may negatively affect the demand for tax-deferred exchanges in general, and consequently, the revenues and profitability of the Company’s exchange services division.

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Changes in either of these areas, in addition to any inventory constraints or volatility in the cost and availability of building materials, could impact the Company's results of operations in future periods.

A recent period of inflation, as well as ongoing geopolitical and military conflicts, have created additional volatile market conditions and uncertainties in the global economy.

A period of inflation, ongoing geopolitical and military conflicts, and changes in government regulations and policy, including as a result of policies implemented by the Trump administration such as the implementation of widespread tariff reform, have created additional volatile market conditions and uncertainties in the global economy.

These events have impacted and could continue to impact the Company in a number of ways including, but not limited to, future fluctuations in the Company's investment portfolio and potential decreases in net premiums written.

The Federal Open Market Committee (“FOMC”) of the Federal Reserve has been highly attentive to the risks that these events have created, and in response adjusted the target federal funds rate at several meetings held during 2022 through 2024.

Although the federal funds rate does not directly impact mortgage interest rates, it can have a significant influence as lenders pass on the costs of rate increases to consumers.

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The FOMC issues disclosures on a periodic basis that include projections of the federal funds rate and expected actions.

The FO MC maintained a target range between 0.00% and 0.25% from March 2020 until March 2022.

Starting at the March 2022 meeting of the FOMC, the FOMC consistently raised the target federal funds rate range through July 2023, when the FOMC increased the target range to between 5.25% and 5.50%.

At the September 2024 meeting of the FOMC, the FOMC lowered the target rate by 0.50% to a range between 4.75% and 5.00%.

At the November 2024 meeting of the FOMC, the FOMC lowered the target rate by 0.25% to a range between 4.50% and 4.75%.

Starting at the March 2022 meeting of the FOMC when the target range was 0.00% and 0.25%, the FOMC consistently raised the target federal funds rate range through July 2023, when the FOMC increased the target range to between 5.25% and 5.50%.

During several FOMC meetings throughout 2024, the target federal funds rate was reduced, with the most recent adjustment occurring in December 2024, lowering the rate to a range of 4.25% to 4.50%.

So far in 2025, the FOMC has opted to keep the target range for the federal funds rate unchanged, emphasizing the need to carefully assess incoming data, shifts in the economic outlook, and the balance of risks before deciding on the timing and magnitude of any future adjustments.

In normal economic situations, future adjustments to the FOMC’s stance of monetary policy are expected to be based on realized and expected economic developments to achieve maximum employment and inflation near the FOMC's symmetric long-term 2.0% objective.

Real Estate Environment

The Mortgage Bankers Association's ("MBA") September 23, 2024 Mortgage Finance Forecast (“MBA Forecast”) projects 2024 purchase activity to increase 5.6% to $1,309 billion and mortgage refinance activity to increase 134.2% to $513 billion, resulting in a net increase in total mortgage originations of 25.0% to $1,822 billion, all from 2023 levels.

T he Mortgage Bankers Association's ("MBA") April 11, 2025 Mortgage Finance Forecast (“MBA Forecast”) projects 2025 purchase activity to increase 7.4% to $1,383 billion and mortgage refinance activity to increase 41.1% to $693 billion, resulting in a net increase in total mortgage originations of 16.7% to $2,076 billion, all from 2024 levels.

In 2024, purchase activity accounted for 72.4% of all mortgage originations and is projected in the MBA Forecast to represent 66.6% of all mortgage originations in 2025.

According to data published by Freddie Mac, the average 30-year fixed mortgage interest rates in the United States were 6.8% and 6.6% for the nine-month periods ended September 30, 2024 and 2023, respectively.

Per the MBA Forecast, mortgage interest rates are projected to decrease in subsequent periods, declining to 5.8% in 2026.

Due to the rapidly changing environment brought on by inflationary pressures, inventory constraints, and geopolitical and military conflicts, these projections and the impact of actual future developments on the Company could be subject to material change.

Historically, activity in real estat e markets has varied over the course of market cycles by geographic region and in response to evolving economic factors.

According to data published by Freddie Mac, the average 30-year fixed mortgage interest rates in the United States were 6.8% and 6.7% for the three-month periods ended March 31, 2025 and 2024, respectively.

Per the MBA Forecast, mortgage interest rates are projected to decrease in subsequent periods, declining to 6.4% by 2026.

Due to the rapidly changing environment brought on by inflationary pressures, inventory constraints, geopolitical and military conflicts, and changes in government regulations and policy, including as a result of the policies implemented by the Trump administration, these projections and the impact of actual future developments on the Company could be subject to material change.

Historically, activity in real estate markets has varied over the course of market cycles by geographic region and in response to evolving economic factors.

Operating results can vary from year to year based on cyclical market conditions and do not necessarily indicate the Company's future operating results and cash flows.

2 unchanged sentences

Actual results could differ from these estimates.

During the nine-month period ended September 30, 2024, the Company did not make any material changes to its critical accounting policies as previously disclosed in Management's Discussion and Analysis in the 2023 Form 10-K.

During the three-month period ended March 31, 2025, the Company did not make any material changes to its critical accounting policies as previously disclosed in Management's Discussion and Analysis in the 2024 Form 10-K.

Results of Operations

The following table presents certain unaudited Consolidated Statements of Operations data for the three- and nine-month periods ended September 30, 2024 and 2023:

The following table presents certain unaudited Consolidated Statements of Operations data for the three-month periods ended March 31, 2025 and 2024:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2025 2024

4 unchanged sentences

Other investment income 410 111

Net investment gains (losses) 976 (815) 4,640 720

Net investment (losses) gains (1,179) 2,422

Other 149 199

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Net Premiums Written

Net premiums written increased 10.1% and 10.3% for the three- and nine-month periods ended September 30, 2024 to $54.9 million and $146.5 million, respectively, compared with $49.8 million and $132.8 million for the same prior year periods.

The increases for the three- and nine-month periods ended September 30, 2024 were primarily due to expansion efforts in the Company's Texas and Florida markets, in addition to appreciation in average home prices and higher activity levels for the three-month period ended September 30, 2024 related to lower average mortgage interest rates.

Net premiums written increased 15.3% for the three-month period ended March 31, 2025 to $46.3 million, compared with $40.2 million for the same prior year period.

The increase for the three-month period ended March 31, 2025 was primarily due to higher activity levels across key markets.

Total premiums include an estimate of premiums for policies that have been issued directly and by agents, but not reported to the Company as of the balance sheet date.

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Title insurance companies typically issue title insurance policies directly or through title agencies.

Following is a breakdown of premiums generated by direct and agency operations for the three- and nine-month periods ended September 30, 2024 and 2023:

Following is a breakdown of premiums generated by direct and agency operations for the three-month periods ended March 31, 2025 and 2024:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except percentages) 2025 % 2024 %

4 unchanged sentences

In the Company's direct operations, the Company issues a title insurance policy and retains the entire premium, as no commissions are recognized in connection with these policies.

Net premiums written from direct operations decreased 7.0% and 1.9% for the three- and nine-month periods ended September 30, 2024, respectively, compared with the same prior year periods.

The decreases for the three- and nine-month periods ended September 30, 2024 were primarily the result of the Company making the strategic decision to close less profitable offices of a wholly owned title insurance agency and lower activity levels in certain markets where the Company issues title insurance policies directly.

Net premiums written from direct operations increased 1.6% for the three-month period ended March 31, 2025, compared with the same prior year period.

Agency Net Premiums – When a policy is written through a non-wholly owned title agency, the premium is shared between the agency and the Company.

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Title insurance commissions earned by the Company’s agents are recognized as expenses concurrently with premium recognition.

Agency net premiums written increased 19.3% and 16.7% for the three- and nine-month periods ended September 30, 2024, compared with the same prior year periods.

Following is a schedule of net premiums written for the three- and nine-month periods ended September 30, 2024 and 2023 in select states in which the Company's two insurance subsidiaries, ITIC and NITIC, currently underwrite title insurance:

Agency net premiums written increased 22.2% for the three-month period ended March 31, 2025, compared with the same prior year period.

The increase for the three-month period ended March 31, 2025 was primarily due to higher activity levels across key markets.

Following is a schedule of net premiums written for the three-month periods ended March 31, 2025 and 2024 in select states in which the Company's two insurance subsidiaries, ITIC and NITIC, currently underwrite title insurance:

Three Months Ended

September 30, Nine Months Ended

September 30,

State (in thousands) 2025 2024

1 unchanged sentence

Texas 13,574 11,099

Georgia 5,526 2,459

South Carolina 3,705 3,351

Florida 2,737 2,137

Georgia 3,857 3,169 10,620 9,347

All Others 5,938 6,276

3 unchanged sentences

Net Premiums Written $ 46,345 $ 40,180

Title insurance rates vary by state and are subject to extensive regulation.

In some states, insurers must adhere to rates set by regulatory authorities and cannot adjust them independently.

The Commissioner of Insurance of Texas has recently mandated a 10% reduction in title insurance rates statewide that takes effect on July 1, 2025.

Escrow and Other Titl e-Related Fees

Escrow and other title-related fees consists primarily of commission income, escrow and other various fees associated with the issuance of title insurance policies including settlement, examination and closing fees.

Escrow and other title-related fee revenues remained relatively consistent with the prior year periods at $4.6 million and $13.1 million for the three- and nine-month periods ended September 30, 2024, respectively, compared with $4.7 million and $12.9 million for the same prior year periods.

Escrow and other title-related fee revenues remained relatively consistent with the prior year period at $3.9 million for the three-month period ended March 31, 2025, compared with $3.7 million for the same prior year period.

Revenue from Non-Title Services

Revenue from non-title services includes trust services, agency management services and exchange services income.

Non-title service revenues were $4.3 million and $12.9 million for the three- and nine-month periods ended September 30, 2024, respectively, compared with $4.6 million and $14.5 million for the same prior year periods.

The decreases for the three- and nine-month periods ended September 30, 2024 were primarily related to decreases in like-kind exchange revenues.

Non-title service revenues were $4.6 million for the three-month period ended March 31, 2025, compared with $4.3 million for the same prior year period.

The increase for the three-month period ended March 31, 2025 was primarily related to an increase in like-kind exchange revenues.

Investment-Related Revenues

Investment-related revenues include interest and dividends, other investment income, and net investment gains (losses).

Investment-related revenues include interest and dividends, other investment income, and net investment (losses) gains.

Interest and Dividends

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The Company’s investments are primarily in fixed maturity securities, short-term investments and equity securities.

The average effective maturity of the majority of the fixed maturity securities at September 30, 2024 is less than 10 years.

The average effective maturity of the majority of the fixed maturity securities at March 31, 2025 is less than 10 years.

The Company’s invested assets are managed to fund its obligations and evaluated to ensure long term stability of capital accounts.

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The Company strives to maintain a high quality investment portfolio.

Interest and dividends were $2.7 million and $7.8 million for the three- and nine-month periods ended September 30, 2024, respectively, compared with $2.3 million and $6.5 million for the same prior year periods.

Interest and dividends were $2.3 million for the three-month period ended March 31, 2025, compared with $2.5 million for the same prior year period.

Interest and dividend levels are primarily a function of general market performance, interest rates and the amount of cash available for investments that meet the Company's investment policy.

The increases for the three- and nine-month periods ended September 30, 2024 were primarily related to elevated levels of interest income, predominantly influenced by interest rates, general market performance, and the amount of investments and cash held.

The decrease for the three-month period ended March 31, 2025 was primarily related to lower levels of interest income, predominantly influenced by interest rates, general market performance, and the amount of investments and cash held.

Other Investment Income

2 unchanged sentences

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.

Other investment income was $995 thousand and $2.0 million for the three- and nine-month periods ended September 30, 2024, respectively, compared with $514 thousand and $2.9 million for the same prior year periods.

Other investment income was $410 thousand for the three-month period ended March 31, 2025, compared with $111 thousand for the same prior year period.

Changes in other investment income are impacted by fluctuations in the carrying value of the underlying investment and distributions received.

Net Investment Gains (Losses)

Net Investment (Losses) Gains

Net investment gains and losses include realized gains and losses on the sale of investment securities and changes in the estimated fair value of equity security investments.

2 unchanged sentences

As a result of the interaction of these factors and considerations, the net realized investment gain or loss can vary significantly from period to period.

The net realized investment gains were $235 thousand and $4.7 million for the three- and nine-month periods ended September 30, 2024, respectively, compared with $1.6 million and $14.7 million for the same prior year periods.

The Company recorded impairment charges of $309 thousand and $383 thousand on certain fixed maturity securities and other investments where the intent to hold has changed in the three- and nine-month periods ended September 30, 2024, respectively, compared with $96 thousand and $208 thousand for the same prior year periods.

Management believes unrealized losses on the remaining fixed maturity securities at September 30, 2024 are temporary in nature.

The net realized investment gains were $2.0 million for the three-month period ended March 31, 2025, compared with $2.6 million for the same prior year period.

The Company recorded impairment charges of $275 thousand on other investments in the three-month period ended March 31, 2025, compared with $53 thousand on fixed maturity securities for the same prior year period.

Management believes unrealized losses on the remaining fixed maturity securities at March 31, 2025 are temporary in nature.

The securities in the Company’s investment portfolio are subject to economic conditions and market risks.

4 unchanged sentences

the risk that the Company’s assessment of an issuer’s ability to meet all of its contractual obligations will change based on changes in the characteristics of that issuer;

the risk that information obtained by the Company or changes in other facts and circumstances leads management to change its intent to sell the fixed maturity security;

the risk that information obtained by the Company or changes in other facts and circumstances leads management to change its intent to sell the security;

and the risk that management is making decisions based on inaccurate information in the financial statements provided by the issuers.

Changes in the Estimated Fair Value of Equity Security Investments – Changes in the estimated fair value of equity security investments were $741 thousand and $(18) thousand for the three- and nine-month periods ended September 30, 2024, respectively, compared with $(2.4) million and $(14.0) million for the same prior year periods.

Changes in the Estimated Fair Value of Equity Security Investments – Changes in the estimated fair value of equity security investments were $(3.2) million for the three-month period ended March 31, 2025, compared with $(169) thousand for the same prior year period.

Such fluctuations are typically the result of changes in general market conditions during the respective periods, however, the sale of appreciated investment securities can result in a reduction in unrealized gains as they are reclassified to net realized investment gains (losses), which is not indicative of a decline in estimated fair value.

1 unchanged sentence

Other revenues primarily include miscellaneous income and gains and losses on the disposal of fixed assets and real estate.

Other revenues remained relatively consistent with the prior year periods at $388 thousand and $748 thousand for the three- and nine-month periods ended September 30, 2024, respectively, compared with $257 thousand and $647 thousand for the same prior year periods.

Other revenues remained relatively consistent with the prior year period at $149 thousand for the three-month period ended March 31, 2025, compared with $199 thousand for the same prior year period.

The Company's operating expenses consist primarily of commissions to agents, personnel expenses, office and technology expenses and the provision for claims.

Operating expenses increased 8.4% and 5.3% for the three- and nine-month periods ended September 30, 2024, compared with the same prior year periods.

The increases for the three- and nine-month periods ended September 30, 2024 were primarily due to increases in commissions to agents, partially offset by decreases in personnel expenses.

Following is a summary of the Company's operating expenses for the three- and nine-month periods ended September 30, 2024 and 2023.

Operating expenses increased 10.2% for the three-month period ended March 31, 2025, compared with the same prior year period.

The increase for the three-month period ended March 31, 2025 was primarily due to increases in commissions to agents and other expenses, partially offset by decreases in the provision for claims and personnel expenses.

Following is a summary of the Company's operating expenses for the three-month periods ended March 31, 2025 and 2024.

Inter-segment eliminations have been netted;

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except percentages) 2025 % 2024 %

3 unchanged sentences

Total $ 52,512 100.0 $ 47,662 100.0

On a combined basis, the after-tax profit margins were 13.5% and 12.1% for the three- and nine-month periods ended September 30, 2024, respectively, compared with 11.5% and 9.3% for the same prior year periods.

The increases for the three- and nine-month periods ended September 30, 2024 were primarily due to growth in net premiums written, decreases in personnel expenses and other Company expense reduction initiatives, and higher levels of earnings and gains on investments.

On a combined basis, the after-tax profit margin was 5.6% for the three-month period ended March 31, 2025, compared with 8.5% for the same prior year period.

The decrease for the three-month period ended March 31, 2025 was primarily due to an unfavorable change in net investment (losses) gains and increased commission expense, partially offset by an increase in net premiums written.

The Company continually strives to enhance its competitive strengths and market position, including ongoing initiatives to manage its operating expenses.

1 unchanged sentence

Personnel Expenses – Personnel expenses include base salaries, benefits and payroll taxes, bonuses paid to employees and contract labor expenses.

Personnel expenses were $18.1 million and $54.8 million for the three- and nine-month periods ended September 30, 2024, respectively, compared with $19.1 million and $58.5 million for the same prior year periods.

On a consolidated basis, personnel expenses as a percentage of total revenues were 26.2% and 29.2% for the three- and nine-month periods ended September 30, 2024, respectively, compared with 31.1% and 34.2% for the same prior year periods.

The decreases in personnel expenses for the three- and nine-month periods ended September 30, 2024 were primarily due to lower staffing levels and other impacts from Company expense reduction initiatives.

Personnel expenses were $18.3 million for the three-month period ended March 31, 2025, compared with $18.6 million for the same prior year period.

On a consolidated basis, personnel expenses as a percentage of total revenues were 32.4% for the three-month period ended March 31, 2025, compared with 34.8% for the same prior year period.

The decrease in personnel expenses for the three-month period ended March 31, 2025 was primarily due a reduction in health insurance costs and contractor expenditures.

Office and Technology Expenses – Office and technology expenses primarily include facilities expenses, software and hardware expenses, depreciation expense, telecommunications expenses, and business insurance.

Office and technology expenses remained relatively consistent with the prior year periods at $4.4 million and $13.2 million for the three- and nine-month periods ended September 30, 2024, respectively, compared with $4.2 million and $13.1 million for the same prior year periods.

Office and technology expenses remained consistent with the prior year period at $4.5 million for the three-month periods ended March 31, 2025 and 2024.

Other Expenses – Other expenses primarily include business development expenses, premium-related taxes and licensing, professional services, title and service fees, amortization of intangible assets and other general expenses.

Other expenses remained relatively consistent with the prior year periods at $4.0 million and $12.1 million for the three- and nine-month periods ended September 30, 2024, respectively, compared with $3.9 million and $11.8 million for the same prior year periods.

Other expenses increased to $4.5 million for the three-month period ended March 31, 2025, compared with $3.8 million for the same prior year period.

The increase in other expenses for the three-month period ended March 31, 2025 was primarily due to increases in professional services, miscellaneous expenditures, and premium-related taxes and licensing.

Title Insurance

Commissions to Agents – Agent commissions represent the portion of premiums retained by agents pursuant to the terms of their respective agency contracts.

Commissions to agents increased 22.2% and 18.5% for the three- and nine-month periods ended September 30, 2024, respectively, compared with the same prior year periods.

Commission expense as a percentage of net premiums written by agents was 75.4% and 74.5% for the three- and nine-month periods ended September 30, 2024, respectively, compared with 73.6% and 73.4% for the same prior year periods.

The changes in commission expense, and commission expense as a percentage of net premiums written, were commensurate with the increases in agent premium volume.

Commission rates vary by market due to local practice, competition and state regulations.

Provision for Claims – The provision for claims decreased 9.2% and 10.6% for the three- and nine-month periods ended September 30, 2024, respectively, compared with the same prior year periods.

The provision for claims as a percentage of net premiums written was 3.0% and 2.4% for the three- and nine-month periods ended September 30, 2024, respectively, compared with 3.7% and 2.9% for the same prior year periods.

The decreases in the provision for claims as a percentage of net premiums written for the three- and nine-month periods ended September 30, 2024 were primarily due to higher levels of favorable loss development and fewer incurred claims losses in the current year periods.

Commissions to agents increased 25.1% for the three-month period ended March 31, 2025, compared with the same prior year period.

Commission expense as a percentage of net premiums written by agents was 75.8% for the three-month period ended March 31, 2025, compared with 74.0% for the same prior year period.

The increase in commission expense was commensurate with the increase in agent premium volume.

The increase in commission expense as a percentage of net premiums written by agents was due to shifts in the geographical distribution of agent premium volume, as commission rates vary by market due to local practice, competition and state regulations.

Provision for Claims – The provision for claims decreased 64.5% for the three-month period ended March 31, 2025, compared with the same prior year period.

The provision for claims as a percentage of net premiums written was 0.7% for the three-month period ended March 31, 2025, compared with 2.3% for the same prior year period.

The decrease in the provision for claims as a percentage of net premiums written for the three-month period ended March 31, 2025 was primarily due to recognition of favorable development on known claims.

Title claims are typically reported and paid within the first several years of policy issuance.

The provision for claims reflects actual payments of claims, net of recovery amounts, plus adjustments to the specific and incurred but not reported claims reserves, the latter of which are actuarially determined based on historical claims experience.

Actual payments of claims, net of recoveries, were $3.6 million for both the nine-month periods ended September 30, 2024 and 2023.

At September 30, 2024, the total reserve for claims was $37.0 million.

Actual payments of claims, net of recoveries, were $386 thousand for the three-month period ended March 31, 2025, compared with $741 thousand for the same prior year period.

At March 31, 2025, the total reserve for claims was $37.0 million.

Of that total, approximately $2.5 million was reserved for specific claims, and approximately $34.5 million was reserved for claims for which the Company had no notice.

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Adjustments may be required as new information develops, which often varies from past experience.

The provision for income taxes was $2.3 million and $5.9 million for the three- and nine-month periods ended September 30, 2024, respectively, compared with $1.5 million and $4.2 million for the same prior year periods.

Income tax expense, including federal and state taxes, as a percentage of income before income taxes was 19.6% and 20.7% for the three- and nine-month periods ended September 30, 2024, respectively, compared with 17.7% and 20.8% for the same prior year periods.

The provision for income taxes was $882 thousand for the three-month period ended March 31, 2025, compared with $1.3 million for the same prior year period.

Income tax expense, including federal and state taxes, as a percentage of income before income taxes was 21.8% for the three-month period ended March 31, 2025, compared with 21.9% for the same prior year period.

The effective income tax rates for both 2025 and 2024 differ from the U.S.

federal statutory income tax rate of 21% primarily due to the effect of tax-exempt income and state taxes.

Tax-exempt income lowers the effective tax rate.

The Company believes it is more likely than not that the tax benefits associated with recognized impairments and unrecognized losses recorded through September 30, 2024 will be realized.

The Company believes it is more likely than not that the tax benefits associated with recognized impairments and unrecognized losses recorded through March 31, 2025 will be realized.

However, this judgment could be impacted by further market fluctuations.

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The Company believes that its significant working capital position and management of operating expenses will aid its ability to manage cash resources through fluctuations in the real estate market.

Cash Flows – Net cash flows provided by (used in) operating activities were $17.7 million and $(6.7) million for the nine-month periods ended September 30, 2024 and 2023, respectively.

Cash flows provided by (used in) operating activities differ from net income due to adjustments for non-cash items, such as gains and losses on investments and property, the timing of disbursements for taxes, claims and other accrued liabilities, and collections or changes in receivables and other assets.

Cash Flows – Net cash (used in) provided by operating activities was $(75) thousand and $1.4 million for the three-month periods ended March 31, 2025 and 2024, respectively.

Net cash (used in) provided by operating activities differ from net income due to adjustments for non-cash items, such as gains and losses on investments and property, the timing of disbursements for taxes, claims and other accrued liabilities, and collections or changes in receivables and other assets.

Cash flows from non-operating activities have historically consisted of purchases and proceeds from investing activities, the issuance of dividends and repurchases of common stock.

Net cash was used in investing activities for the nine-month period ended September 30, 2024, compared with net cash being provided by investing activities in the prior year period.

Net cash was used in financing activities for the nine-month periods ended September 30, 2024 and 2023.

Net cash was provided by investing activities for the three-month period ended March 31, 2025, compared with net cash being used in investing activities in the prior year period.

Net cash was used in financing activities for the three-month periods ended March 31, 2025 and 2024.

The Company maintains a high degree of liquidity within its investment portfolio in the form of cash, short-term investments and other readily marketable securities.

As of September 30, 2024, the Company held cash and cash equivalents of $25.5 million, short-term investments of $87.4 million, available-for-sale fixed maturity securities of $103.4 million and equity securities of $37.8 million.

As of March 31, 2025, the Company held cash and cash equivalents of $27.6 million, short-term investments of $54.1 million, available-for-sale fixed maturity securities of $118.3 million and equity securities of $34.6 million.

The net effect of all activities on total cash and cash equivalents was an increase of $2.9 million in 2025.

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Depending on regulatory conditions, the Company may in the future need to retain cash in its title insurance subsidiaries in order to maintain their statutory capital position.

As of September 30, 2024, both ITIC and NITIC met the minimum capital, surplus and reserve requirements for each state in which they are licensed.

As of March 31, 2025, both ITIC and NITIC met the minimum capital, surplus and reserve requirements for each state in which they are licensed.

While state regulations and the need to cover risks may set a minimum level for capital requirements, other factors necessitate maintaining capital resources in excess of the required minimum amounts.

4 unchanged sentences

Due to the Company’s historical ability to consistently generate positive cash flows from its consolidated operations and investment income, management believes that funds generated from operations will enable the Company to adequately meet its current operating needs for the foreseeable future.

However, given inflationary pressures and geopolitical and military conflicts, there can be no assurance that future experience will be similar to historical experience, since it is influenced by such factors as the interest rate environment, real estate activity, the Company’s claims-paying ability and its financial strength ratings.

However, given inflationary pressures, geopolitical and military conflicts, and changes in the regulatory environment resulting from the Trump administration, such as tariff reform, there can be no assurance that future experience will be similar to historical experience, since it is influenced by such factors as the interest rate environment, real estate activity, the Company’s claims-paying ability and its financial strength ratings.

In addition to operational and investment considerations, taking advantage of opportunistic external growth opportunities may necessitate obtaining additional capital resources.

The Company is carefully monitoring inflation, geopolitical and military conflicts, and other trends that could potentially result in material adverse liquidity changes, and will continually assess its capital allocation strategy, including decisions relating to payment of dividends, repurchasing the Company’s common stock and/or conserving cash.

The Company is carefully monitoring inflation and the macroeconomic environment, changes in market conditions and the regulatory environment, and other trends that could potentially result in material adverse liquidity changes, and will continually assess its capital allocation strategy, including decisions relating to payment of dividends, repurchasing the Company’s common stock and/or conserving cash.

Purchase of Company Stock – On November 9, 2015, the Board of Directors of the Company approved the purchase of an additional 163,335 shares pursuant to the Company’s repurchase plan, such that there was authority remaining under the plan to purchase up to an aggregate of 500,000 shares of the Company’s common stock pursuant to the plan immediately after this approval .

Unless terminated earlier by resolution of the Board of Directors, the plan will expire when all shares authorized for purchase under the plan have been purchased.

Pursuant to the Company’s ongoing purchase program, the Company purchased 7,039 shares in the nine-month period ended September 30, 2024 and 7,000 shares in the corresponding period in 2023.

Pursuant to the Company’s ongoing purchase program, the Company purchased no shares in the three-month period ended March 31, 2025 and 6,763 shares in the corresponding period in 2024.

The Company anticipates making further purchases under this plan from time to time in the future, depending on such factors as the prevailing market price of the Company’s common stock, the Company’s available cash and then existing alternative uses for such cash.

Capital Expenditures – Capital expenditures were approximately $6.1 million for the nine-month period ended September 30, 2024 .

Capital Expenditures – Capital expenditures were approximately $1.3 million for the three-month period ended March 31, 2025 .

In 2025, the Company has plans for various capital improvement projects, including investment in a number of technology and system development initiatives and hardware purchases which are anticipated to be funded via cash flows from operations.

All material anticipated capital expenditures are subject to periodic review and revision and may vary depending on a number of factors.

Contractual Obligations - As of September 30, 2024, the Company had a claims reserve totaling $37.0 million.

Contractual Obligations - As of March 31, 2025, the Company had a claims reserve totaling $37.0 million.

The amounts and timing of these obligations are estimated and not set contractually.

2 unchanged sentences

ITIC, a wholly owned subsidiary of the Company, has entered into employment agreements with certain executive officers.

The amounts accrued for these agreements at September 30, 2024 and December 31, 2023, were $15.3 million and $15.2 million, respectively, which includes postretirement compensation and health benefits, and were calculated based on the terms of the contracts.

The amounts accrued for these agreements at March 31, 2025 and December 31, 2024, were $15.5 million and $15.4 million, respectively, which includes postretirement compensation and health benefits, and were calculated based on the terms of the contracts.

These executive contracts are accounted for on an individual contract basis.

16 unchanged sentences

ITAC serves as exchange accommodation titleholder and, through LLCs that are wholly owned subsidiaries of ITAC, holds property for exchangers in reverse exchange transactions.

Like-kind exchange deposits and reverse exchange property held by the Company for the purpose of completing such transactions totaled approximately $264.2 million and $263.7 million as of September 30, 2024 and December 31, 2023, respectively.

Like-kind exchange deposits and reverse exchange property held by the Company for the purpose of completing such transactions totaled approximately $362.1 million and $323.5 million as of March 31, 2025 and December 31, 2024, respectively.

These exchange deposits are held at third-party financial institutions.

19 unchanged sentences

• changes in interest rates and real estate values;

• changes in general economic, business, and political conditions, including the performance of the financial and real estate markets;

• changes in general economic, business, and political conditions, including the performance of the financial and real estate markets, and changes in government regulations and policy, including as a result of the policies implemented by the Trump administration such as tariff reform;

• the impact of inflation;

8 unchanged sentences

• significant competition that the Company’s operating subsidiaries face, including the Company’s ability to develop and offer products and services that meet changing industry standards in a timely and cost-effective manner and expansion into new geographic locations;

• the Company’s reliance upon the North Carolina, Texas, South Carolina, Florida and Georgia markets for a significant portion of its premiums;

• the Company’s reliance upon the North Carolina, Texas, Georgia, South Carolina, and Florida markets for a significant portion of its premiums;

• compliance with government regulation, including pricing regulation, and significant changes to applicable regulations or in their application by regulators;

14 unchanged sentences

You should consider the possibility that actual results may differ materially from our forward-looking statements.

Quantitative and Qualitative Disclosures About Market Risk

Item not required for smaller reporting companies.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis