What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-07 compared with 2025-08-08 · 96 added, 77 removed, 295 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 90.5% of the Company's revenues for the six-month period ended June 30, 2025.

Total revenues from the title segment accounted for 90.1% of the Company's revenues for the nine-month period ended September 30, 2025.

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

40 unchanged sentences

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 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.

Inflationary pressures, the federal government shutdown, 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 from 2022 to 2024.

The Federal Open Market Committee (“FOMC”) of the Federal Reserve has closely monitored the risks associated with these developments and responded by increasing the target federal funds rate across several meetings from 2022 through 2023, followed by a gradual reduction beginning in 2024 and continuing into 2025.

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.

Higher mortgage interest rates have impacted the demand and pricing of real estate.

The current period of elevated mortgage interest rates has impacted the demand and pricing of real estate.

Regulatory Environment

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

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.

Starting at the March 2022 meeting of the FOMC through July 2023, the FOMC repeatedly increased the target range, reaching a high of between 5.25% and 5.50%.

During several meetings in 2024 and 2025, the FOMC has lowered the federal funds rate.

The most recent adjustment, in October 2025, reduced the target range to 3.75% and 4.00%.

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") July 17, 2025 Mortgage Finance Forecast (“MBA Forecast”) projects 2025 purchase activity to increase 5.4% to $1,357 billion and mortgage refinance activity to increase 35.2% to $664 billion, resulting in a net increase in total mortgage originations of 13.6% to $2,021 billion, all from 2024 levels.

The Mortgage Bankers Association's ("MBA") October 19, 2025 Mortgage Finance Forecast (“MBA Forecast”) projects 2025 purchase activity to increase 1.3% to $1,356 billion and mortgage refinance activity to increase 94.0% to $675 billion, resulting in a net increase in total mortgage originations of 20.5% to $2,031 billion, all from 2024 levels.

In 2024, purchase activity accounted for 79.4% of all mortgage originations and is projected in the MBA Forecast to represent 66.8% 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 6.9% for the six-month periods ended June 30, 2025 and 2024, respectively.

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

Per the MBA Forecast, mortgage interest rates are projected to decrease in subsequent periods, declining to 6.3% in 2027.

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.

Due to the rapidly changing environment brought on by inflationary pressures, the federal government shutdown, 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 estat e markets has varied over the course of market cycles by geographic region and in response to evolving economic factors.

3 unchanged sentences

Actual results could differ from these estimates.

During the six-month period ended June 30, 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.

During the nine-month period ended September 30, 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 six-month periods ended June 30, 2025 and 2024:

The following table presents certain unaudited Consolidated Statements of Operations data for the three- and nine-month periods ended September 30, 2025 and 2024:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2025 2024 2025 2024

23 unchanged sentences

Net Premiums Written

Net premiums written increased 6.0% and 10.1% for the three- and six-month periods ended June 30, 2025 to $54.5 million and $100.8 million, respectively, compared with $51.4 million and $91.6 million for the same prior year periods.

The increases for the three- and six-month periods ended June 30, 2025 were primarily due to higher levels of real estate activity.

Net premiums written increased 2.8% and 7.4% for the three- and nine-month periods ended September 30, 2025 to $56.4 million and $157.2 million, respectively, compared with $54.9 million and $146.5 million for the same prior year periods.

The increases for the three- and nine-month periods ended September 30, 2025 were primarily due to higher levels of real estate activity.

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.

4 unchanged sentences

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 six-month periods ended June 30, 2025 and 2024:

Following is a breakdown of premiums generated by direct and agency operations for the three- and nine-month periods ended September 30, 2025 and 2024:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except percentages) 2025 % 2024 % 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 increased 1.9% and 1.8% for the three- and six-month periods ended June 30, 2025, respectively, compared with the same prior year periods.

The increases for the three- and six-month periods ended June 30, 2025 were primarily the result of higher levels of real estate activity.

Net premiums written from direct operations increased 0.4% and 1.3% for the three- and nine-month periods ended September 30, 2025, respectively, compared with the same prior year periods.

The increases for the three- and nine-month periods ended September 30, 2025 were primarily the result of higher levels of real estate activity.

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.

1 unchanged sentence

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

Agency net premiums written increased 7.8% and 13.9% for the three- and six-month periods ended June 30, 2025, compared with the same prior year periods.

The increases for the three- and six-month periods ended June 30, 2025 were primarily due to higher levels of real estate activity.

Following is a schedule of net premiums written for the three- and six-month periods ended June 30, 2025 and 2024 in select states in which the Company's two insurance subsidiaries, ITIC and NITIC, currently underwrite title insurance:

Agency net premiums written increased 3.8% and 10.1% for the three- and nine-month periods ended September 30, 2025, respectively, compared with the same prior year periods.

The increases for the three- and nine-month periods ended September 30, 2025 were primarily due to higher levels of real estate activity.

Following is a schedule of net premiums written for the three- and nine-month periods ended September 30, 2025 and 2024 in select states in which the Company's two insurance subsidiaries, ITIC and NITIC, currently underwrite title insurance:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

State (in thousands) 2025 2024 2025 2024

2 unchanged sentences

Georgia 4,253 3,857 13,928 10,620

Florida 4,640 3,974 7,377 6,111

South Carolina 5,235 4,371 12,332 12,314

Florida 3,235 4,714 10,612 10,825

All Others 8,572 8,052 21,980 20,658

3 unchanged sentences

Net Premiums Written $ 56,402 $ 54,855 $ 157,243 $ 146,451

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

In certain jurisdictions, insurers are required to adhere to rates established by state regulatory authorities and are not permitted to modify such rates independently.

Regulatory authorities may approve rate adjustments to reflect current market conditions and cost factors affecting the title insurance industry.

The Texas Commissioner of Insurance is evaluating a proposed 6.2% reduction in title insurance rates, which, if approved, would become effective March 1, 2026 and supersede the previously mandated 10% rate decrease originally scheduled to become effective on July 1, 2025.

The Georgia Insurance and Safety Fire Commissioner approved a rate increase that became effective on July 1, 2024, which the Company estimates increased its revenues by approximately 17%.

The North Carolina Department of Insurance recently approved a 9.4% rate increase effective October 1, 2025, and the Ohio Department of Insurance recently approved a 9.0% rate increase effective January 1, 2026.

Overall, the Company anticipates that these rate adjustments, along with other approved rate changes, will have a favorable net impact on premium revenues in future reporting periods.

Escrow and Other Titl e-Related Fees

Escrow and other title-related fees consist 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 were $5.7 million and $9.6 million for the three- and six-month periods ended June 30, 2025, respectively, compared with $4.8 million and $8.5 million for the same prior year periods.

The increases for the three- and six-month periods ended June 30, 2025 were primarily due to higher levels of real estate activity.

Escrow and other title-related fee revenues were $4.8 million and $14.4 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $4.6 million and $13.1 million for the same prior year periods.

The increases for the three- and nine-month periods ended September 30, 2025 were primarily due to higher levels of real estate activity.

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 $5.5 million and $10.1 million for the three- and six-month periods ended June 30, 2025, respectively, compared with $4.3 million and $8.6 million for the same prior year periods.

The increases for the three- and six-month periods ended June 30, 2025 were primarily related to increases in like-kind exchange revenues and management services revenue.

Non-title service revenues were $6.3 million and $16.3 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $4.3 million and $12.9 million for the same prior year periods.

The increases for the three- and nine-month periods ended September 30, 2025 were primarily related to increases in revenue from like-kind exchanges and management services.

Investment-Related Revenues

6 unchanged sentences

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 June 30, 2025 is less than 10 years.

The average effective maturity of the majority of the fixed maturity securities at September 30, 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.

5 unchanged sentences

The Company strives to maintain a high quality investment portfolio.

Interest and dividends were $2.4 million and $4.7 million for the three- and six-month periods ended June 30, 2025, respectively, compared with $2.6 million and $5.1 million for the same prior year periods.

Interest and dividends were $2.4 million and $7.1 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $2.7 million and $7.8 million for the same prior year periods.

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 decreases for the three- and six-month periods ended June 30, 2025 were primarily impacted by prevailing interest rates and the composition of investment holdings.

The decreases for the three- and nine-month periods ended September 30, 2025 were primarily impacted by prevailing interest rates and the composition of investment holdings.

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 $609 thousand and $1.0 million for the three- and six-month periods ended June 30, 2025, respectively, compared with $890 thousand and $1.0 million for the same prior year periods.

Other investment income was $985 thousand and $2.0 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $995 thousand and $2.0 million for the same prior year periods.

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

4 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 $1.1 million and $3.1 million for the three- and six-month periods ended June 30, 2025, respectively, compared with $1.8 million and $4.4 million for the same prior year periods.

The Company recorded impairment charges of $144 thousand and $419 thousand on other investments in the three- and six-month periods ended June 30, 2025, respectively, compared with $21 thousand and $74 thousand on fixed maturity securities for the same prior year periods.

Management believes unrealized losses on the remaining fixed maturity securities at June 30, 2025 are temporary in nature.

The net realized investment gains were $856 thousand and $4.0 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $235 thousand and $4.7 million for the same prior year periods.

The Company recorded impairment charges of $50 thousand and $469 thousand on other investments in the three- and nine-month periods ended September 30, 2025, respectively, compared with $309 thousand and $383 thousand on fixed maturity securities and other investments for the same prior year periods.

Management believes unrealized losses on the remaining fixed maturity securities at September 30, 2025 are temporary in nature.

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

6 unchanged sentences

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 $973 thousand and $(2.2) million for the three- and six-month periods ended June 30, 2025, respectively, compared with $(589) thousand and $(759) thousand 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 $1.2 million and $(1.0) million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $741 thousand and $(18) thousand for the same prior year periods.

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, 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 were $2.9 million and $3.1 million for the three- and six-month periods ended June 30, 2025, respectively, compared with $161 thousand and $360 thousand for the same prior year periods.

The increases for the three- and six-month periods ended June 30, 2025 were related to a gain on the disposition of assets transferred to a joint venture.

Other revenues were $106 thousand and $3.2 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $388 thousand and $748 thousand for the same prior year periods.

The increase for the nine-month period ended September 30, 2025 was related to a gain on the disposition of assets transferred to a joint venture.

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 6.9% and 8.4% for the three- and six-month periods ended June 30, 2025, compared with the same prior year periods.

The increases for the three- and six-month periods ended June 30, 2025 were primarily due to increases in commissions to agents, the provision for claims, and other expenses, partially offset by decreases in personnel expenses.

Following is a summary of the Company's operating expenses for the three- and six-month periods ended June 30, 2025 and 2024.

Operating expenses increased 1.2% and 5.8% for the three- and nine-month periods ended September 30, 2025, compared with the same prior year periods.

The increases for the three- and nine-month periods ended September 30, 2025 were primarily due to increases in commissions to agents and other expenses, 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, 2025 and 2024.

Inter-segment eliminations have been netted;

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except percentages) 2025 % 2024 % 2025 % 2024 %

3 unchanged sentences

Total $ 57,932 100.0 $ 57,241 100.0 $ 168,295 100.0 $ 159,018 100.0

On a combined basis, the after-tax profit margins were 16.7% and 11.9% for the three- and six-month periods ended June 30, 2025, respectively, compared with 13.6% and 11.3% for the same prior year periods.

The increases for the three- and six-month periods ended June 30, 2025 were primarily due to growth in net premiums written, non-title service revenues, and other revenues, partially offset by increases in commissions to agents, the provision for claims, and other expenses.

On a combined basis, the after-tax profit margins were 16.7% and 13.6% for the three- and nine-month periods ended September 30, 2025, respectively, compared with 13.5% and 12.1% for the same prior year periods.

The increases for the three- and nine-month periods ended September 30, 2025 were primarily due to growth in net premiums written and non-title service revenues, lower personnel expenses, and, for the three-month period, net investment gains.

These increases were partially offset by increases in commissions to agents and other expenses.

The nine-month period was also impacted by an increase in other revenues.

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 $17.5 million and $35.8 million for the three- and six-month periods ended June 30, 2025, respectively, compared with $18.2 million and $36.7 million for the same prior year periods.

On a consolidated basis, personnel expenses as a percentage of total revenues were 23.7% and 27.5% for the three- and six-month periods ended June 30, 2025, respectively, compared with 27.8% and 30.9% for the same prior year periods.

The decreases in personnel expenses for the three- and six-month periods ended June 30, 2025 were primarily due to lower staffing levels, reduced health insurance costs, and decreased contractors expenditures.

Personnel expenses were $17.4 million and $53.2 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $18.1 million and $54.8 million for the same prior year periods.

On a consolidated basis, personnel expenses as a percentage of total revenues were 23.9% and 26.2% for the three- and nine-month periods ended September 30, 2025, respectively, compared with 26.2% and 29.2% for the same prior year periods.

The decreases in personnel expenses for the three- and nine-month periods ended September 30, 2025 were primarily due to lower staffing levels, reduced health insurance costs, and decreased contractors 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 $4.3 million and $8.9 million for the three- and six-month periods ended June 30, 2025, respectively, compared with $4.3 million and $8.8 million for the same prior year periods.

Office and technology expenses remained relatively consistent with the prior year periods at $4.2 million and $13.0 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $4.4 million and $13.2 million for the same prior year periods.

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 were $4.9 million and $9.4 million for the three- and six-month periods ended June 30, 2025, respectively, compared with $4.2 million and $8.0 million for the same prior year periods.

The increases for the three- and six-month periods ended June 30, 2025 were primarily due to increases in professional services, miscellaneous expenditures, and expenses associated with higher title insurance revenues.

Other expenses were $4.9 million and $14.3 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $4.0 million and $12.1 million for the same prior year periods.

The increases for the three- and nine-month periods ended September 30, 2025 were primarily due to increases in professional services, miscellaneous expenditures, and expenses associated with higher title insurance revenues.

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 9.5% and 16.2% for the three- and six-month periods ended June 30, 2025, respectively, compared with the same prior year periods.

Commission expense as a percentage of net premiums written by agents was 75.2% and 75.4% for the three- and six-month periods ended June 30, 2025, respectively, compared with 74.0% for both corresponding periods in the prior year.

Commissions to agents increased 3.9% and 11.5% for the three- and nine-month periods ended September 30, 2025, respectively, compared with the same prior year periods.

Commission expense as a percentage of net premiums written by agents was 75.4% for the three- and nine-month periods ended September 30, 2025, respectively, compared with 75.4% and 74.5% 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 increased 129.8% and 32.4% for the three- and six-month periods ended June 30, 2025, respectively, compared with the same prior year periods.

The provision for claims as a percentage of net premiums written was 3.8% and 2.4% for the three- and six-month periods ended June 30, 2025, respectively, compared with 1.8% and 2.0% for the same prior year periods.

The increases in the provision for claims as a percentage of net premiums written for the three- and six-month periods ended June 30, 2025 were primarily due to higher reserves on reported claims and a reduction in favorable loss development during the current year periods.

Provision for Claims – The provision for claims decreased 27.5% and increased 3.7% for the three- and nine-month periods ended September 30, 2025, respectively, compared with the same prior year periods.

The provision for claims as a percentage of net premiums written was 2.1% and 2.3% for the three- and nine-month periods ended September 30, 2025, respectively, compared with 3.0% and 2.4% 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, 2025 were primarily due to higher levels of favorable loss development during the current year periods.

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 $1.4 million and $1.8 million for the six-month periods ended June 30, 2025 and 2024, respectively.

At June 30, 2025, the total reserve for claims was $38.1 million.

Actual payments of claims, net of recoveries, were $2.5 million and $3.6 million for the nine-month periods ended September 30, 2025 and 2024, respectively.

At September 30, 2025, the total reserve for claims was $38.2 million.

Of that total, approximately $3.3 million was reserved for specific claims, and approximately $34.9 million was reserved for claims for which the Company had no notice.

4 unchanged sentences

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

The provision for income taxes was $3.5 million and $4.4 million for the three- and six-month periods ended June 30, 2025, respectively, compared with $2.4 million and $3.7 million for the same prior year periods.

Income tax expense, including federal and state taxes, as a percentage of income before income taxes was 22.3% and 22.2% for the three- and six-month periods ended June 30, 2025, respectively, compared with 21.3% and 21.5% for the same prior year periods.

The provision for income taxes was $2.9 million and $7.3 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $2.3 million and $5.9 million for the same prior year periods.

Income tax expense, including federal and state taxes, as a percentage of income before income taxes was 19.1% and 20.8% for the three- and nine-month periods ended September 30, 2025, respectively, compared with 19.6% and 20.7% for the same prior year periods.

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

1 unchanged sentence

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 June 30, 2025 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 September 30, 2025 will be realized.

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

2 unchanged sentences

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

We are currently assessing its impact on our consolidated financial statements.

The Company recognized the impact of the now-effective provisions of this legislative change in the third quarter of 2025 in accordance with ASC 740, Income Taxes .

The restoration of immediate expensing for research and experimentation (“R&E”) expenditures resulted in a favorable item in the quarter, reducing current tax expense and increasing deferred tax expense.

Additionally, deferred tax assets previously recorded for the amortization of capitalized R&E costs were reversed, resulting in a corresponding increase in deferred tax expense.

The Company is currently assessing the impact of the OBBBA on its consolidated financial statements.

Liquidity and Capital Resources

3 unchanged sentences

The Company believes its balances of cash, short-term investments and other readily marketable securities, along with cash flows generated by ongoing operations, will be sufficient to satisfy its cash requirements over the next 12 months and thereafter, including the funding of operating activities and commitments for investing and financing activities.

The Company is currently evaluating the potential impact of the OBBBA, which includes certain corporate tax provisions that are expected to affect cash flows in future reporting periods by accelerating certain tax deductions.

The Company's cash flows for the three- and nine-month periods ended September 30, 2025, reflect the third-quarter 2025 recognition of the now-effective OBBBA provisions, which primarily accelerated certain tax deductions.

The Company is currently evaluating the effects of provisions that have not yet become effective.

At this time, the Company is not aware of any other known trends likely to materially affect its capital resources, nor does it anticipate any additional material changes in the composition or relative cost of those resources, except as otherwise disclosed in the Business Trends and Recent Conditions section of this Management’s Discussion and Analysis.

5 unchanged sentences

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 operating activities were $8.8 million and $9.9 million for the six-month periods ended June 30, 2025 and 2024, respectively.

Cash Flows – Net cash flows provided by operating activities were $25.9 million and $17.7 million for the nine-month periods ended September 30, 2025 and 2024, respectively.

Cash flows 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 and financing activities for the six-month periods ended June 30, 2025 and 2024.

Cash flows related to 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 and financing activities for the nine-month periods ended September 30, 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 June 30, 2025, the Company held cash and cash equivalents of $29.7 million, short-term investments of $60.4 million, available-for-sale fixed maturity securities of $118.5 million and equity securities of $34.8 million.

The net effect of all activities on total cash and cash equivalents was an increase of $5.0 million in 2025.

As of September 30, 2025, the Company held cash and cash equivalents of $22.8 million, short-term investments of $88.1 million, available-for-sale fixed maturity securities of $111.1 million and equity securities of $39.7 million.

The net effect of all activities on total cash and cash equivalents was a decrease of $1.9 million in 2025.

Capital Resources – The amount of capital resources the Company maintains is influenced by state regulation, the need to maintain superior financial ratings from third-party rating agencies and other marketing and operational considerations.

6 unchanged sentences

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 June 30, 2025, both ITIC and NITIC met the minimum capital, surplus and reserve requirements for each state in which they are licensed.

As of September 30, 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 and geopolitical and military tensions and 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.

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 the U.S.

political environment (including the federal government shutdown), inflation, geopolitical and military tensions and 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.

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 no shares in the six-month period ended June 30, 2025 and 7,039 shares in the corresponding period in 2024.

Pursuant to the Company’s ongoing purchase program, the Company purchased no shares in the nine-month period ended September 30, 2025 and 7,039 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 $2.9 million for the six-month period ended June 30, 2025 .

Capital Expenditures – Capital expenditures were approximately $4.2 million for the nine-month period ended September 30, 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 June 30, 2025, the Company had a claims reserve totaling $38.1 million.

Contractual Obligations - As of September 30, 2025, the Company had a claims reserve totaling $38.2 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 June 30, 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.

The amounts accrued for these agreements at September 30, 2025 and December 31, 2024, were $15.6 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 $347.4 million and $323.5 million as of June 30, 2025 and December 31, 2024, respectively.

Like-kind exchange deposits and reverse exchange property held by the Company for the purpose of completing such transactions totaled approximately $427.1 million and $323.5 million as of September 30, 2025 and December 31, 2024, respectively.

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

21 unchanged sentences

• the impact of inflation;

• the impact of ongoing geopolitical and military conflicts;

• the impact of the federal government shutdown;

• the impact of ongoing geopolitical tensions and military conflicts;

• potential reform of government sponsored entities;

6 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, Georgia, Florida, and South Carolina 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;

15 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis