[ X ]
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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North Carolina
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56-1110199
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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Large accelerated filer
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Accelerated filer
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X
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Non-accelerated filer
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Smaller reporting company
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(do not check if a smaller reporting company)
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PART I.
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FINANCIAL INFORMATION
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Item 1.
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Financial Statements:
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Consolidated Balance Sheets as of
September 30, 2015 and December 31, 2014
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Consolidated Statements of Income For the Three
and Nine Months Ended September 30, 2015 and 2014
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Consolidated Statements of Comprehensive Income For the Three
and Nine Months Ended September 30, 2015 and 2014
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Consolidated Statements of Stockholders’ Equity For the
Nine Months Ended September 30, 2015 and 2014
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Consolidated Statements of Cash Flows For the
Nine Months Ended September 30, 2015 and 2014
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PART II.
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OTHER INFORMATION
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Legal Proceeding
s
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Risk Factors
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Item 5.
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Other Information
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September 30,
2015 |
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December 31,
2014 |
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Assets:
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Investments in securities:
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Fixed maturities, available-for-sale, at fair value (amortized cost: 2015: $94,114,403; 2014: $104,421,050)
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$
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98,034,042
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$
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109,048,290
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Equity securities, available-for-sale, at fair value (cost: 2015: $24,247,215; 2014: $24,128,753)
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35,135,885
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39,254,981
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Short-term investments
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13,884,266
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2,576,993
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Other investments
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10,069,708
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8,530,929
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Total investments
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157,123,901
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159,411,193
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Cash and cash equivalents
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19,290,813
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15,826,515
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Premium and fees receivable
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9,067,775
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8,544,183
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Accrued interest and dividends
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1,286,710
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1,063,837
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Prepaid expenses and other assets
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8,599,846
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7,732,677
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Property, net
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7,176,557
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5,460,805
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Total Assets
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$
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202,545,602
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$
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198,039,210
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Liabilities and Stockholders’ Equity
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Liabilities:
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Reserves for claims
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$
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37,897,000
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$
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36,677,000
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Accounts payable and accrued liabilities
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19,441,453
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18,290,819
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Current income taxes payable
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248,679
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92,192
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Deferred income taxes, net
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5,635,321
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5,415,493
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Total liabilities
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63,222,453
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60,475,504
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Commitments and Contingencies
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—
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—
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Stockholders’ Equity:
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Preferred stock (1,000,000 authorized shares; no shares issued)
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—
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—
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Common stock - no par value (10,000,000 authorized shares; 1,953,418 and 2,023,270 shares issued and outstanding 2015 and 2014, respectively, excluding 291,676 shares for 2015 and 2014 of common stock held by the Company's subsidiary)
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1
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1
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Retained earnings
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129,585,111
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124,707,196
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Accumulated other comprehensive income
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9,606,451
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12,856,509
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Total stockholders’ equity attributable to the Company
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139,191,563
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137,563,706
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Noncontrolling interests
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131,586
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—
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Total stockholders' equity
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139,323,149
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137,563,706
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Total Liabilities and Stockholders’ Equity
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$
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202,545,602
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$
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198,039,210
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2015
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2014
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2015
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2014
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Revenues:
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Net premiums written
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$
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30,945,532
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$
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26,356,835
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$
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86,372,154
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$
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81,115,940
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Investment income - interest and dividends
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1,117,529
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1,064,995
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3,427,055
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3,130,846
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Net realized (loss) gain on investments
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(338,631
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)
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8,689
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601,336
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592,908
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Other
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2,816,828
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2,077,711
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7,924,329
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6,344,163
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Total Revenues
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34,541,258
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29,508,230
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98,324,874
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91,183,857
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Operating Expenses:
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Commissions to agents
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16,898,323
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14,440,264
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48,393,553
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48,242,923
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Provision for claims
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703,979
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1,507,814
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3,621,401
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4,177,478
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Salaries, employee benefits and payroll taxes
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6,957,874
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6,609,425
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21,101,955
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19,250,116
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Office occupancy and operations
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1,342,288
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1,257,009
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4,089,806
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3,683,980
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Business development
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568,189
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552,215
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1,633,358
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1,581,872
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Filing fees, franchise and local taxes
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134,880
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233,079
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572,621
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648,022
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Premium and retaliatory taxes
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573,336
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491,927
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1,684,674
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1,332,492
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Professional and contract labor fees
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661,879
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621,305
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1,926,469
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1,976,272
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Other
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264,012
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196,702
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708,918
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656,653
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Total Operating Expenses
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28,104,760
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25,909,740
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83,732,755
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81,549,808
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Income before Income Taxes
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6,436,498
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3,598,490
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14,592,119
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9,634,049
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Provision for Income Taxes
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1,941,000
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1,004,000
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4,250,000
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2,656,000
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Net Income
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4,495,498
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2,594,490
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10,342,119
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6,978,049
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Net Income Attributable to Noncontrolling Interests
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(4,536
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)
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—
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(4,536
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)
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(23,523
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)
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Net Income Attributable to the Company
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$
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4,490,962
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$
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2,594,490
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$
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10,337,583
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$
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6,954,526
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Basic Earnings per Common Share
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$
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2.28
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$
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1.28
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$
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5.18
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$
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3.42
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Weighted Average Shares Outstanding – Basic
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1,967,923
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2,028,818
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1,995,120
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2,033,637
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Diluted Earnings per Common Share
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$
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2.28
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$
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1.28
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$
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5.17
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$
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3.41
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Weighted Average Shares Outstanding – Diluted
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1,972,233
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2,032,644
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2,000,043
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2,038,875
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Cash Dividends Paid per Common Share
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$
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0.08
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$
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0.08
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$
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0.24
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$
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0.24
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2015
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2014
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2015
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2014
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Net income
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$
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4,495,498
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$
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2,594,490
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$
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10,342,119
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$
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6,978,049
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Other comprehensive (loss) income, before tax:
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Amortization related to prior year service cost
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1,098
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554
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3,293
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1,663
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Amortization of unrecognized loss
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878
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—
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2,635
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—
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Unrealized (losses) gains on investments arising during the period
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(2,359,495
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)
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(960,948
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)
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(4,223,992
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)
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|
2,023,167
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Reclassification adjustment for sales of securities included in net income
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(458,058
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)
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(6,534
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)
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(1,390,070
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)
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(840,170
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)
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Reclassification adjustment for write-downs of securities included in net income
|
657,755
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—
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668,904
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—
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Other comprehensive (loss) income, before tax
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(2,157,822
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)
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(966,928
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)
|
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(4,939,230
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)
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|
1,184,660
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|
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Income tax expense related to postretirement health benefits
|
672
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|
188
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2,016
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|
565
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Income tax (benefit) expense related to unrealized (losses) gains on investments arising during the year
|
(809,994
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)
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(332,034
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)
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(1,446,083
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)
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|
699,001
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Income tax benefit related to reclassification adjustment for sales of securities included in net income
|
(156,447
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)
|
|
(2,328
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)
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(474,198
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)
|
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(288,078
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)
|
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Income tax expense related to reclassification adjustment for write-downs of securities included in net income
|
225,293
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|
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—
|
|
|
229,093
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—
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|
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Net income tax (benefit) expense on other comprehensive (loss) income
|
(740,476
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)
|
|
(334,174
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)
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(1,689,172
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)
|
|
411,488
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|
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Other comprehensive (loss) income
|
(1,417,346
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)
|
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(632,754
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)
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(3,250,058
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)
|
|
773,172
|
|
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Comprehensive Income
|
$
|
3,078,152
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|
|
$
|
1,961,736
|
|
|
$
|
7,092,061
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|
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$
|
7,751,221
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|
Comprehensive income attributable to noncontrolling interests
|
(4,536
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)
|
|
—
|
|
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(4,536
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)
|
|
(23,523
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)
|
||||
Comprehensive Income Attributable to the Company
|
$
|
3,073,616
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$
|
1,961,736
|
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$
|
7,087,525
|
|
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$
|
7,727,698
|
|
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Common Stock
|
|
Retained Earnings
|
|
|
Accumulated
Other
Comprehensive
Income
|
|
|
Noncontrolling Interests
|
|
|
Total
Stockholders’
Equity
|
|
|||||||||
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Shares
|
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Amount
|
|
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Balance, January 1, 2014
|
2,037,135
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|
|
$
|
1
|
|
|
$
|
116,714,749
|
|
|
$
|
11,347,404
|
|
|
$
|
—
|
|
|
$
|
128,062,154
|
|
Net income attributable to the Company
|
|
|
|
|
|
|
6,954,526
|
|
|
|
|
|
|
|
6,954,526
|
|
||||||
Dividends ($0.24 per share)
|
|
|
|
|
|
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(488,127
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)
|
|
|
|
|
|
|
(488,127
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)
|
||||||
Shares of common stock repurchased and retired
|
(9,824
|
)
|
|
|
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(652,657
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)
|
|
|
|
|
|
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(652,657
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)
|
||||||
Stock options and stock appreciation rights exercised
|
1,507
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|
|
|
|
27,100
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|
|
|
|
|
|
|
27,100
|
|
||||||
Share-based compensation expense
|
|
|
|
|
|
|
88,291
|
|
|
|
|
|
|
|
88,291
|
|
||||||
Amortization related to postretirement health benefits
|
|
|
|
|
|
|
|
|
|
1,098
|
|
|
|
|
1,098
|
|
||||||
Net unrealized gain on investments
|
|
|
|
|
|
|
|
|
|
772,074
|
|
|
|
|
772,074
|
|
||||||
Purchase of redeemable noncontrolling interest of subsidiary
|
|
|
|
|
(114,320
|
)
|
|
|
|
|
|
(114,320
|
)
|
|||||||||
Income tax benefit from share-based compensation
|
|
|
|
|
15,999
|
|
|
|
|
|
|
15,999
|
|
|||||||||
Balance, September 30, 2014
|
2,028,818
|
|
|
$
|
1
|
|
|
$
|
122,545,561
|
|
|
$
|
12,120,576
|
|
|
$
|
—
|
|
|
$
|
134,666,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, January 1, 2015
|
2,023,270
|
|
|
$
|
1
|
|
|
$
|
124,707,196
|
|
|
$
|
12,856,509
|
|
|
$
|
—
|
|
|
$
|
137,563,706
|
|
Net income attributable to the Company
|
|
|
|
|
|
|
10,337,583
|
|
|
|
|
|
|
|
10,337,583
|
|
||||||
Dividends ($0.24 per share)
|
|
|
|
|
|
|
(477,392
|
)
|
|
|
|
|
|
|
(477,392
|
)
|
||||||
Shares of common stock repurchased and retired
|
(72,044
|
)
|
|
|
|
|
(5,166,846
|
)
|
|
|
|
|
|
|
(5,166,846
|
)
|
||||||
Stock options and stock appreciation rights exercised
|
2,192
|
|
|
|
|
|
54,988
|
|
|
|
|
|
|
|
54,988
|
|
||||||
Share-based compensation expense
|
|
|
|
|
|
|
102,707
|
|
|
|
|
|
|
|
102,707
|
|
||||||
Amortization related to postretirement health benefits
|
|
|
|
|
|
|
|
|
|
3,912
|
|
|
|
|
3,912
|
|
||||||
Net unrealized loss on investments
|
|
|
|
|
|
|
|
|
|
(3,253,970
|
)
|
|
|
|
(3,253,970
|
)
|
||||||
Net effect of changes in ownership
|
|
|
|
|
|
|
|
|
127,050
|
|
|
127,050
|
|
|||||||||
Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
4,536
|
|
|
4,536
|
|
|||||||||
Income tax benefit from share-based compensation
|
|
|
|
|
|
|
26,875
|
|
|
|
|
|
|
|
26,875
|
|
||||||
Balance, September 30, 2015
|
1,953,418
|
|
|
$
|
1
|
|
|
$
|
129,585,111
|
|
|
$
|
9,606,451
|
|
|
$
|
131,586
|
|
|
$
|
139,323,149
|
|
|
Nine Months Ended September 30,
|
||||||
|
2015
|
|
2014
|
||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
10,342,119
|
|
|
$
|
6,978,049
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation
|
654,838
|
|
|
583,979
|
|
||
Amortization, net
|
542,841
|
|
|
458,635
|
|
||
Amortization related to postretirement benefits obligation
|
5,928
|
|
|
1,663
|
|
||
Share-based compensation expense related to stock options
|
102,707
|
|
|
88,291
|
|
||
Net (gain) loss on the disposals of property
|
(30,374
|
)
|
|
6,487
|
|
||
Net realized gain on investments
|
(601,336
|
)
|
|
(592,908
|
)
|
||
Net earnings from other investments
|
(1,774,927
|
)
|
|
(990,657
|
)
|
||
Provision for claims
|
3,621,401
|
|
|
4,177,478
|
|
||
Provision for deferred income taxes
|
1,909,000
|
|
|
1,468,000
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
|
||
(Increase) decrease in receivables
|
(457,484
|
)
|
|
261,128
|
|
||
Increase in other assets
|
(1,110,322
|
)
|
|
(1,407,762
|
)
|
||
Increase in current income taxes recoverable
|
—
|
|
|
(1,257,252
|
)
|
||
Increase (decrease) in accounts payable and accrued liabilities
|
1,150,634
|
|
|
(1,640,499
|
)
|
||
Increase in current income taxes payable
|
156,487
|
|
|
—
|
|
||
Payments of claims, net of recoveries
|
(2,401,401
|
)
|
|
(3,285,478
|
)
|
||
Net cash provided by operating activities
|
12,110,111
|
|
|
4,849,154
|
|
||
|
|
|
|
||||
Investing Activities
|
|
|
|
|
|
||
Purchases of available-for-sale securities
|
(5,794,149
|
)
|
|
(13,572,217
|
)
|
||
Purchases of short-term investments
|
(11,642,357
|
)
|
|
(2,923,269
|
)
|
||
Purchases of other investments
|
(3,164,415
|
)
|
|
(1,036,110
|
)
|
||
Proceeds from sales and maturities of available-for-sale securities
|
16,212,924
|
|
|
10,321,679
|
|
||
Proceeds from sales and maturities of short-term investments
|
335,084
|
|
|
4,694,893
|
|
||
Proceeds from sales and distributions of other investments
|
3,167,494
|
|
|
1,050,427
|
|
||
Proceeds from sales of other assets
|
113,238
|
|
|
26,233
|
|
||
Purchase of subsidiary
|
(72,600
|
)
|
|
—
|
|
||
Purchase of redeemable noncontrolling interest of subsidiary
|
—
|
|
|
(515,275
|
)
|
||
Purchases of property
|
(2,313,052
|
)
|
|
(1,649,412
|
)
|
||
Proceeds from the sale of property
|
74,395
|
|
|
15,400
|
|
||
Net cash used in investing activities
|
(3,083,438
|
)
|
|
(3,587,651
|
)
|
||
|
|
|
|
||||
Financing Activities
|
|
|
|
|
|
||
Repurchases of common stock
|
(5,166,846
|
)
|
|
(652,657
|
)
|
||
Exercises of stock options and SARs
|
54,988
|
|
|
27,100
|
|
||
Distributions to noncontrolling interest
|
—
|
|
|
(168,057
|
)
|
||
Excess tax benefits related to exercise of stock options and SARs
|
26,875
|
|
|
15,999
|
|
||
Dividends paid
|
(477,392
|
)
|
|
(488,127
|
)
|
||
Net cash used in financing activities
|
(5,562,375
|
)
|
|
(1,265,742
|
)
|
||
|
|
|
|
||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
3,464,298
|
|
|
(4,239
|
)
|
||
Cash and Cash Equivalents, Beginning of Period
|
15,826,515
|
|
|
23,626,761
|
|
||
Cash and Cash Equivalents, End of Period
|
$
|
19,290,813
|
|
|
$
|
23,622,522
|
|
Consolidated Statements of Cash Flows, continued
|
|
||||||
|
Nine Months Ended September 30,
|
||||||
|
2015
|
|
2014
|
||||
Supplemental Disclosures:
|
|
|
|
||||
Cash Paid During the Year for:
|
|
|
|
||||
Income tax payments, net
|
$
|
2,727,700
|
|
|
$
|
2,443,000
|
|
Non Cash Investing and Financing Activities
|
|
|
|
||||
Non cash net unrealized loss (gain) on investments, net of deferred tax benefit (provision) of $1,691,188 and $(410,923) for 2015 and 2014, respectively
|
$
|
3,253,970
|
|
|
$
|
(772,074
|
)
|
|
September 30, 2015
|
|
December 31, 2014
|
||||
Balance, beginning of period
|
$
|
36,677,000
|
|
|
$
|
35,360,000
|
|
Provision, charged to operations
|
3,621,401
|
|
|
5,229,716
|
|
||
Payments of claims, net of recoveries
|
(2,401,401
|
)
|
|
(3,912,716
|
)
|
||
Ending balance
|
$
|
37,897,000
|
|
|
$
|
36,677,000
|
|
|
September 30, 2015
|
|
%
|
|
December 31, 2014
|
|
%
|
||||
Known title claims
|
$
|
5,276,778
|
|
|
13.9
|
|
$
|
5,364,645
|
|
|
14.6
|
IBNR
|
32,620,222
|
|
|
86.1
|
|
31,312,355
|
|
|
85.4
|
||
Total loss reserves
|
$
|
37,897,000
|
|
|
100.0
|
|
$
|
36,677,000
|
|
|
100.0
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net income attributable to the Company
|
$
|
4,490,962
|
|
|
$
|
2,594,490
|
|
|
$
|
10,337,583
|
|
|
$
|
6,954,526
|
|
Weighted average common shares outstanding – Basic
|
1,967,923
|
|
|
2,028,818
|
|
|
1,995,120
|
|
|
2,033,637
|
|
||||
Incremental shares outstanding assuming the exercise of dilutive stock options and SARs (share-settled)
|
4,310
|
|
|
3,826
|
|
|
4,923
|
|
|
5,238
|
|
||||
Weighted average common shares outstanding – Diluted
|
1,972,233
|
|
|
2,032,644
|
|
|
2,000,043
|
|
|
2,038,875
|
|
||||
Basic earnings per common share
|
$
|
2.28
|
|
|
$
|
1.28
|
|
|
$
|
5.18
|
|
|
$
|
3.42
|
|
Diluted earnings per common share
|
$
|
2.28
|
|
|
$
|
1.28
|
|
|
$
|
5.17
|
|
|
$
|
3.41
|
|
|
Number
Of Shares
|
|
Weighted
Average
Exercise Price
|
|
Average Remaining
Contractual
Term (Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding as of January 1, 2014
|
19,000
|
|
|
$
|
45.74
|
|
|
3.43
|
|
$
|
669,610
|
|
SARs granted
|
4,500
|
|
|
68.70
|
|
|
|
|
|
|
||
SARs exercised
|
(1,500
|
)
|
|
49.04
|
|
|
|
|
|
|
||
Options exercised
|
(1,000
|
)
|
|
27.21
|
|
|
|
|
|
|
||
Options/SARs canceled/forfeited/expired
|
—
|
|
|
—
|
|
|
|
|
|
|
||
Outstanding as of December 31, 2014
|
21,000
|
|
|
$
|
51.30
|
|
|
3.64
|
|
$
|
453,510
|
|
SARs granted
|
4,500
|
|
|
73.00
|
|
|
|
|
|
|
||
SARs exercised
|
(2,000
|
)
|
|
47.88
|
|
|
|
|
|
|
||
Options exercised
|
(1,500
|
)
|
|
36.79
|
|
|
|
|
|
|
||
Options/SARs canceled/forfeited/expired
|
—
|
|
|
—
|
|
|
|
|
|
|
||
Outstanding as of September 30, 2015
|
22,000
|
|
|
$
|
57.04
|
|
|
4.18
|
|
$
|
355,455
|
|
Exercisable as of September 30, 2015
|
19,750
|
|
|
$
|
55.23
|
|
|
3.90
|
|
$
|
355,005
|
|
Unvested as of September 30, 2015
|
2,250
|
|
|
$
|
73.00
|
|
|
6.64
|
|
$
|
450
|
|
|
2015
|
|
2014
|
||
Expected life in years
|
7.0
|
|
|
6.9
|
|
Volatility
|
40.7
|
%
|
|
39.9
|
%
|
Interest rate
|
2.0
|
%
|
|
2.1
|
%
|
Yield rate
|
0.4
|
%
|
|
0.4
|
%
|
Three Months Ended September 30, 2015
|
Title
Insurance
|
|
All
Other
|
|
Intersegment
Eliminations
|
|
Total
|
||||||||
Insurance and other services revenues
|
$
|
32,583,093
|
|
|
$
|
1,684,088
|
|
|
$
|
(504,821
|
)
|
|
$
|
33,762,360
|
|
Investment income
|
1,000,839
|
|
|
140,024
|
|
|
(23,334
|
)
|
|
1,117,529
|
|
||||
Net realized loss on investments
|
(309,874
|
)
|
|
(28,757
|
)
|
|
—
|
|
|
(338,631
|
)
|
||||
Total revenues
|
$
|
33,274,058
|
|
|
$
|
1,795,355
|
|
|
$
|
(528,155
|
)
|
|
$
|
34,541,258
|
|
Operating expenses
|
27,001,636
|
|
|
1,590,524
|
|
|
(487,400
|
)
|
|
28,104,760
|
|
||||
Income before income taxes
|
$
|
6,272,422
|
|
|
$
|
204,831
|
|
|
$
|
(40,755
|
)
|
|
$
|
6,436,498
|
|
Total assets
|
$
|
160,754,846
|
|
|
$
|
41,790,756
|
|
|
$
|
—
|
|
|
$
|
202,545,602
|
|
Three Months Ended September 30, 2014
|
Title
Insurance |
|
All
Other |
|
Intersegment
Eliminations |
|
Total
|
||||||||
Insurance and other services revenues
|
$
|
27,381,759
|
|
|
$
|
1,517,927
|
|
|
$
|
(465,140
|
)
|
|
$
|
28,434,546
|
|
Investment income
|
956,894
|
|
|
131,435
|
|
|
(23,334
|
)
|
|
1,064,995
|
|
||||
Net realized gain on investments
|
5,781
|
|
|
2,908
|
|
|
—
|
|
|
8,689
|
|
||||
Total revenues
|
$
|
28,344,434
|
|
|
$
|
1,652,270
|
|
|
$
|
(488,474
|
)
|
|
$
|
29,508,230
|
|
Operating expenses
|
24,940,774
|
|
|
1,416,685
|
|
|
(447,719
|
)
|
|
25,909,740
|
|
||||
Income before income taxes
|
$
|
3,403,660
|
|
|
$
|
235,585
|
|
|
$
|
(40,755
|
)
|
|
$
|
3,598,490
|
|
Total assets
|
$
|
152,813,417
|
|
|
$
|
42,681,883
|
|
|
$
|
—
|
|
|
$
|
195,495,300
|
|
Nine Months Ended September 30, 2015
|
Title
Insurance
|
|
All
Other
|
|
Intersegment
Eliminations
|
|
Total
|
||||||||
Insurance and other services revenues
|
$
|
90,824,523
|
|
|
$
|
4,803,604
|
|
|
$
|
(1,331,644
|
)
|
|
$
|
94,296,483
|
|
Investment income
|
3,061,857
|
|
|
435,200
|
|
|
(70,002
|
)
|
|
3,427,055
|
|
||||
Net realized gain (loss) on investments
|
604,093
|
|
|
(2,757
|
)
|
|
—
|
|
|
601,336
|
|
||||
Total revenues
|
$
|
94,490,473
|
|
|
$
|
5,236,047
|
|
|
$
|
(1,401,646
|
)
|
|
$
|
98,324,874
|
|
Operating expenses
|
80,214,039
|
|
|
4,798,097
|
|
|
(1,279,381
|
)
|
|
83,732,755
|
|
||||
Income before income taxes
|
$
|
14,276,434
|
|
|
$
|
437,950
|
|
|
$
|
(122,265
|
)
|
|
$
|
14,592,119
|
|
Total assets
|
$
|
160,754,846
|
|
|
$
|
41,790,756
|
|
|
$
|
—
|
|
|
$
|
202,545,602
|
|
Nine Months Ended September 30, 2014
|
Title
Insurance
|
|
All
Other
|
|
Intersegment
Eliminations
|
|
Total
|
||||||||
Insurance and other services revenues
|
$
|
84,257,427
|
|
|
$
|
4,418,659
|
|
|
$
|
(1,215,983
|
)
|
|
$
|
87,460,103
|
|
Investment income
|
2,823,098
|
|
|
377,750
|
|
|
(70,002
|
)
|
|
3,130,846
|
|
||||
Net realized gain on investments
|
536,309
|
|
|
56,599
|
|
|
—
|
|
|
592,908
|
|
||||
Total revenues
|
$
|
87,616,834
|
|
|
$
|
4,853,008
|
|
|
$
|
(1,285,985
|
)
|
|
$
|
91,183,857
|
|
Operating expenses
|
78,256,239
|
|
|
4,457,289
|
|
|
(1,163,720
|
)
|
|
81,549,808
|
|
||||
Income before income taxes
|
$
|
9,360,595
|
|
|
$
|
395,719
|
|
|
$
|
(122,265
|
)
|
|
$
|
9,634,049
|
|
Total assets
|
$
|
152,813,417
|
|
|
$
|
42,681,883
|
|
|
$
|
—
|
|
|
$
|
195,495,300
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Service cost – benefits earned during the year
|
$
|
4,187
|
|
|
$
|
3,666
|
|
|
$
|
12,561
|
|
|
$
|
11,000
|
|
Interest cost on the projected benefit obligation
|
7,693
|
|
|
7,618
|
|
|
23,079
|
|
|
22,854
|
|
||||
Amortization of unrecognized prior service cost
|
1,098
|
|
|
554
|
|
|
3,293
|
|
|
1,663
|
|
||||
Amortization of unrecognized losses
|
878
|
|
|
—
|
|
|
2,635
|
|
|
—
|
|
||||
Net periodic benefits costs
|
$
|
13,856
|
|
|
$
|
11,838
|
|
|
$
|
41,568
|
|
|
$
|
35,517
|
|
|
2015
|
|
2014
|
Cumulative probability of earning maximum rate until maturity
|
—%
|
|
—%
|
Cumulative probability of principal returned prior to maturity
|
95.2%
|
|
95.2%
|
Cumulative probability of default at some future point
|
4.8%
|
|
4.8%
|
As of September 30, 2015
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Short-term investments
|
$
|
13,884,266
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,884,266
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common stock
|
35,135,885
|
|
|
—
|
|
|
—
|
|
|
35,135,885
|
|
||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Obligations of U.S. states, territories and political subdivisions*
|
—
|
|
|
78,912,653
|
|
|
—
|
|
|
78,912,653
|
|
||||
Corporate debt securities*
|
—
|
|
|
18,182,389
|
|
|
939,000
|
|
|
19,121,389
|
|
||||
Total
|
$
|
49,020,151
|
|
|
$
|
97,095,042
|
|
|
$
|
939,000
|
|
|
$
|
147,054,193
|
|
As of December 31, 2014
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Short-term investments
|
$
|
2,576,993
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,576,993
|
|
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Common stock and nonredeemable preferred stock
|
39,254,981
|
|
|
—
|
|
|
—
|
|
|
39,254,981
|
|
||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
Obligations of U.S. states, territories and political subdivisions*
|
—
|
|
|
85,780,755
|
|
|
—
|
|
|
85,780,755
|
|
||||
Corporate debt securities*
|
—
|
|
|
22,328,435
|
|
|
939,100
|
|
|
23,267,535
|
|
||||
Total
|
$
|
41,831,974
|
|
|
$
|
108,109,190
|
|
|
$
|
939,100
|
|
|
$
|
150,880,264
|
|
As of September 30, 2015
|
Carrying Value
|
|
Estimated Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
$
|
19,290,813
|
|
|
$
|
19,290,813
|
|
|
$
|
19,290,813
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cost-basis investments
|
3,284,868
|
|
|
3,553,562
|
|
|
—
|
|
|
—
|
|
|
3,553,562
|
|
|||||
Accrued dividends and interest
|
1,286,710
|
|
|
1,286,710
|
|
|
1,286,710
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
23,862,391
|
|
|
$
|
24,131,085
|
|
|
$
|
20,577,523
|
|
|
$
|
—
|
|
|
$
|
3,553,562
|
|
As of December 31, 2014
|
Carrying Value
|
|
Estimated Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
$
|
15,826,515
|
|
|
$
|
15,826,515
|
|
|
$
|
15,826,515
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cost-basis investments
|
2,516,608
|
|
|
2,675,817
|
|
|
—
|
|
|
—
|
|
|
2,675,817
|
|
|||||
Accrued dividends and interest
|
1,063,837
|
|
|
1,063,837
|
|
|
1,063,837
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
19,406,960
|
|
|
$
|
19,566,169
|
|
|
$
|
16,890,352
|
|
|
$
|
—
|
|
|
$
|
2,675,817
|
|
Changes in fair value during the period ended:
|
2015
|
|
2014
|
||||
Beginning balance at January 1
|
$
|
939,100
|
|
|
$
|
935,700
|
|
Redemptions and sales
|
—
|
|
|
—
|
|
||
Realized gain – included in net realized (loss) gain on investments
|
—
|
|
|
—
|
|
||
Unrealized loss – included in other comprehensive (loss) income
|
(100
|
)
|
|
3,400
|
|
||
Ending balance, net
|
$
|
939,000
|
|
|
$
|
939,100
|
|
As of September 30, 2015
|
Valuation
Method
|
|
Impaired
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total at
Estimated
Fair
Value
|
|
Impairment
Losses
|
||||||||||
Cost-basis investments
|
Fair Value
|
|
Yes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
163,350
|
|
|
$
|
163,350
|
|
|
$
|
(233,069
|
)
|
Total cost-basis investments
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
163,350
|
|
|
$
|
163,350
|
|
|
$
|
(233,069
|
)
|
As of December 31, 2014
|
Valuation
Method
|
|
Impaired
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total at
Estimated
Fair
Value
|
|
Impairment
Losses
|
||||||||||
Cost-basis investments
|
Fair Value
|
|
Yes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,682
|
|
|
$
|
22,682
|
|
|
$
|
(10,062
|
)
|
Total cost-basis investments
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,682
|
|
|
$
|
22,682
|
|
|
$
|
(10,062
|
)
|
As of September 30, 2015
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
Fixed maturities, available-for-sale, at fair value:
|
|
|
|
|
|
|
|
||||||||
General obligations of U.S. states, territories and political subdivisions
|
$
|
27,857,108
|
|
|
$
|
1,064,674
|
|
|
$
|
35,992
|
|
|
$
|
28,885,790
|
|
Special revenue issuer obligations of U.S. states, territories and political subdivisions
|
47,745,393
|
|
|
2,365,492
|
|
|
84,022
|
|
|
50,026,863
|
|
||||
Corporate debt securities
|
17,587,935
|
|
|
619,909
|
|
|
25,455
|
|
|
18,182,389
|
|
||||
Auction rate securities
|
923,967
|
|
|
15,033
|
|
|
—
|
|
|
939,000
|
|
||||
Total
|
$
|
94,114,403
|
|
|
$
|
4,065,108
|
|
|
$
|
145,469
|
|
|
$
|
98,034,042
|
|
Equity securities, available-for-sale, at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common stocks
|
$
|
24,247,215
|
|
|
$
|
11,612,947
|
|
|
$
|
724,277
|
|
|
$
|
35,135,885
|
|
Total
|
$
|
24,247,215
|
|
|
$
|
11,612,947
|
|
|
$
|
724,277
|
|
|
$
|
35,135,885
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds and certificates of deposit
|
$
|
13,884,266
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,884,266
|
|
Total
|
$
|
13,884,266
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,884,266
|
|
As of December 31, 2014
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair
Value
|
||||||||
Fixed maturities, available-for-sale, at fair value:
|
|
|
|
|
|
|
|
||||||||
General obligations of U.S. states, territories and political subdivisions
|
$
|
35,215,247
|
|
|
$
|
1,527,794
|
|
|
$
|
19,542
|
|
|
$
|
36,723,499
|
|
Special revenue issuer obligations of U.S. states, territories and political subdivisions
|
46,707,033
|
|
|
2,405,725
|
|
|
55,502
|
|
|
49,057,256
|
|
||||
Corporate debt securities
|
21,576,641
|
|
|
823,133
|
|
|
71,339
|
|
|
22,328,435
|
|
||||
Auction rate securities
|
922,129
|
|
|
16,971
|
|
|
—
|
|
|
939,100
|
|
||||
Total
|
$
|
104,421,050
|
|
|
$
|
4,773,623
|
|
|
$
|
146,383
|
|
|
$
|
109,048,290
|
|
Equity securities, available-for-sale, at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common stocks and nonredeemable preferred stocks
|
$
|
24,128,753
|
|
|
$
|
15,225,459
|
|
|
$
|
99,231
|
|
|
$
|
39,254,981
|
|
Total
|
$
|
24,128,753
|
|
|
$
|
15,225,459
|
|
|
$
|
99,231
|
|
|
$
|
39,254,981
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds and certificates of deposit
|
$
|
2,576,993
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,576,993
|
|
Total
|
$
|
2,576,993
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,576,993
|
|
|
Available-for-Sale
|
||||||
|
Amortized
Cost
|
|
Fair
Value
|
||||
Due in one year or less
|
$
|
8,587,887
|
|
|
$
|
8,741,312
|
|
Due after one year through five years
|
47,565,502
|
|
|
49,628,257
|
|
||
Due five years through ten years
|
35,968,475
|
|
|
37,206,814
|
|
||
Due after ten years
|
1,992,539
|
|
|
2,457,659
|
|
||
Total
|
$
|
94,114,403
|
|
|
$
|
98,034,042
|
|
|
2015
|
|
2014
|
||||
Gross realized gains:
|
|
|
|
|
|
||
Corporate debt securities
|
$
|
5,417
|
|
|
$
|
4,286
|
|
Common stocks and nonredeemable preferred stocks
|
1,436,386
|
|
|
1,013,931
|
|
||
Total
|
$
|
1,441,803
|
|
|
$
|
1,018,217
|
|
Gross realized losses:
|
|
|
|
|
|
||
General obligations of U.S. states, territories and political subdivisions
|
$
|
(12,319
|
)
|
|
$
|
—
|
|
Special revenue issuer obligations of U.S. states, territories and political subdivisions
|
(397
|
)
|
|
—
|
|
||
Common stocks and nonredeemable preferred stocks
|
(39,017
|
)
|
|
(178,047
|
)
|
||
Impairments of bonds, debt and equity securities
|
(668,904
|
)
|
|
—
|
|
||
Total
|
$
|
(720,637
|
)
|
|
$
|
(178,047
|
)
|
Net realized gain from securities
|
$
|
721,166
|
|
|
$
|
840,170
|
|
Net realized (losses) gains on other investments:
|
|
|
|
||||
Impairments of other investments
|
$
|
(233,069
|
)
|
|
$
|
(10,062
|
)
|
Gains on other investments
|
113,239
|
|
|
26,234
|
|
||
Losses on other investments
|
—
|
|
|
(263,434
|
)
|
||
Total
|
$
|
(119,830
|
)
|
|
$
|
(247,262
|
)
|
Net realized gain on investments
|
$
|
601,336
|
|
|
$
|
592,908
|
|
|
Less than 12 Months
|
|
12 Months or Longer
|
|
Total
|
||||||||||||||||||
As of September 30, 2015
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
General obligations of U.S. states, territories and political subdivisions
|
$
|
2,387,882
|
|
|
$
|
(35,992
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,387,882
|
|
|
$
|
(35,992
|
)
|
Special revenue issuer obligations of U.S. states, territories and political subdivisions
|
6,995,291
|
|
|
(74,308
|
)
|
|
1,200,232
|
|
|
(9,714
|
)
|
|
8,195,523
|
|
|
(84,022
|
)
|
||||||
Corporate debt securities
|
1,472,615
|
|
|
(25,455
|
)
|
|
—
|
|
|
—
|
|
|
1,472,615
|
|
|
(25,455
|
)
|
||||||
Total fixed income securities
|
$
|
10,855,788
|
|
|
$
|
(135,755
|
)
|
|
$
|
1,200,232
|
|
|
$
|
(9,714
|
)
|
|
$
|
12,056,020
|
|
|
$
|
(145,469
|
)
|
Equity securities
|
$
|
4,336,722
|
|
|
$
|
(630,150
|
)
|
|
$
|
92,475
|
|
|
$
|
(94,127
|
)
|
|
$
|
4,429,197
|
|
|
$
|
(724,277
|
)
|
Total temporarily impaired securities
|
$
|
15,192,510
|
|
|
$
|
(765,905
|
)
|
|
$
|
1,292,707
|
|
|
$
|
(103,841
|
)
|
|
$
|
16,485,217
|
|
|
$
|
(869,746
|
)
|
|
Less than 12 Months
|
|
12 Months or Longer
|
|
Total
|
||||||||||||||||||
As of December 31, 2014
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
General obligations of U.S. states, territories and political subdivisions
|
$
|
2,113,194
|
|
|
$
|
(19,542
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,113,194
|
|
|
$
|
(19,542
|
)
|
Special revenue issuer obligations of U.S. states, territories and political subdivisions
|
3,946,977
|
|
|
(13,453
|
)
|
|
1,182,390
|
|
|
(42,049
|
)
|
|
5,129,367
|
|
|
(55,502
|
)
|
||||||
Corporate debt securities
|
6,924,430
|
|
|
(71,339
|
)
|
|
—
|
|
|
—
|
|
|
6,924,430
|
|
|
(71,339
|
)
|
||||||
Total fixed income securities
|
$
|
12,984,601
|
|
|
$
|
(104,334
|
)
|
|
$
|
1,182,390
|
|
|
$
|
(42,049
|
)
|
|
$
|
14,166,991
|
|
|
$
|
(146,383
|
)
|
Equity securities
|
$
|
930,208
|
|
|
$
|
(71,669
|
)
|
|
$
|
141,280
|
|
|
$
|
(27,562
|
)
|
|
$
|
1,071,488
|
|
|
$
|
(99,231
|
)
|
Total temporarily impaired securities
|
$
|
13,914,809
|
|
|
$
|
(176,003
|
)
|
|
$
|
1,323,670
|
|
|
$
|
(69,611
|
)
|
|
$
|
15,238,479
|
|
|
$
|
(245,614
|
)
|
Financial Statement Classification,
|
As of September 30, 2015
|
|
As of December 31, 2014
|
||||
Consolidated Balance Sheets
|
|
||||||
Other investments
|
$
|
6,785,000
|
|
|
$
|
6,014,000
|
|
Premiums and fees receivable
|
$
|
815,000
|
|
|
$
|
666,000
|
|
Financial Statement Classification, |
For the Three Months Ended
September 30, |
|
For the Nine Months Ended
September 30, |
||||||||||||
Consolidated Statements of Income
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net premiums written
|
$
|
3,451,000
|
|
|
$
|
3,116,000
|
|
|
$
|
10,436,000
|
|
|
$
|
8,677,000
|
|
Other income
|
$
|
716,000
|
|
|
$
|
447,000
|
|
|
$
|
2,230,000
|
|
|
$
|
1,423,000
|
|
Commissions to agents
|
$
|
2,326,000
|
|
|
$
|
2,109,000
|
|
|
$
|
7,176,000
|
|
|
$
|
5,880,000
|
|
Changes in carrying value during the period ended:
|
September 30, 2015
|
|
December 31, 2014
|
||||
Beginning balance at January 1
|
$
|
—
|
|
|
$
|
545,489
|
|
Net income attributable to redeemable noncontrolling interest
|
—
|
|
|
23,523
|
|
||
Distributions to noncontrolling interest
|
—
|
|
|
(168,057
|
)
|
||
Redeemable noncontrolling interest resulting from subsidiary purchase
|
—
|
|
|
(515,275
|
)
|
||
Adjustment to retained earnings for purchase of noncontrolling interest
|
—
|
|
|
114,320
|
|
||
Balance, net
|
$
|
—
|
|
|
$
|
—
|
|
Three Months Ended September 30, 2015
|
Unrealized Gains and Losses
On Available-for-Sale
Securities
|
|
Postretirement
Benefits Plans
|
|
Total
|
||||||
Beginning balance at July 1
|
$
|
11,099,177
|
|
|
$
|
(75,380
|
)
|
|
$
|
11,023,797
|
|
Other comprehensive loss before reclassifications
|
(1,549,501
|
)
|
|
—
|
|
|
(1,549,501
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income
|
130,851
|
|
|
1,304
|
|
|
132,155
|
|
|||
Net current-period other comprehensive (loss) income
|
(1,418,650
|
)
|
|
1,304
|
|
|
(1,417,346
|
)
|
|||
Ending balance
|
$
|
9,680,527
|
|
|
$
|
(74,076
|
)
|
|
$
|
9,606,451
|
|
Three Months Ended September 30, 2014
|
Unrealized Gains and Losses
On Available-for-Sale
Securities
|
|
Postretirement
Benefits Plans
|
|
Total
|
||||||
Beginning balance at July 1
|
$
|
12,800,951
|
|
|
$
|
(47,621
|
)
|
|
$
|
12,753,330
|
|
Other comprehensive loss before reclassifications
|
(628,914
|
)
|
|
—
|
|
|
(628,914
|
)
|
|||
Amounts reclassified from accumulated other comprehensive (loss) income
|
(4,206
|
)
|
|
366
|
|
|
(3,840
|
)
|
|||
Net current-period other comprehensive (loss) income
|
(633,120
|
)
|
|
366
|
|
|
(632,754
|
)
|
|||
Ending balance
|
$
|
12,167,831
|
|
|
$
|
(47,255
|
)
|
|
$
|
12,120,576
|
|
Nine Months Ended September 30, 2015
|
Unrealized Gains and Losses
On Available-for-Sale
Securities
|
|
Postretirement
Benefits Plans
|
|
Total
|
||||||
Beginning balance at January 1
|
$
|
12,934,497
|
|
|
$
|
(77,988
|
)
|
|
$
|
12,856,509
|
|
Other comprehensive loss before reclassifications
|
(2,777,909
|
)
|
|
—
|
|
|
(2,777,909
|
)
|
|||
Amounts reclassified from accumulated other comprehensive (loss) income
|
(476,061
|
)
|
|
3,912
|
|
|
(472,149
|
)
|
|||
Net current-period other comprehensive (loss) income
|
(3,253,970
|
)
|
|
3,912
|
|
|
(3,250,058
|
)
|
|||
Ending balance
|
$
|
9,680,527
|
|
|
$
|
(74,076
|
)
|
|
$
|
9,606,451
|
|
Nine Months Ended September 30, 2014
|
Unrealized Gains and Losses
On Available-for-Sale
Securities
|
|
Postretirement
Benefits Plans
|
|
Total
|
||||||
Beginning balance at January 1
|
$
|
11,395,757
|
|
|
$
|
(48,353
|
)
|
|
$
|
11,347,404
|
|
Other comprehensive income before reclassifications
|
1,324,166
|
|
|
—
|
|
|
1,324,166
|
|
|||
Amounts reclassified from accumulated other comprehensive (loss) income
|
(552,092
|
)
|
|
1,098
|
|
|
(550,994
|
)
|
|||
Net current-period other comprehensive income
|
772,074
|
|
|
1,098
|
|
|
773,172
|
|
|||
Ending balance
|
$
|
12,167,831
|
|
|
$
|
(47,255
|
)
|
|
$
|
12,120,576
|
|
Three Months Ended September 30, 2015
|
|
|
|
||
Details about Accumulated Other
Comprehensive Income Components
|
Amount Reclassified from
Accumulated Other
Comprehensive Income
|
|
Affected Line Item in the Consolidated
Statements of Income
|
||
Unrealized gains and losses on available-for-sale securities:
|
|
|
|
||
Net realized gain on investment
|
$
|
458,058
|
|
|
|
Other-than-temporary impairments
|
(657,755
|
)
|
|
|
|
Total
|
$
|
(199,697
|
)
|
|
Net realized (loss) gain on investment
|
Tax
|
68,846
|
|
|
Provision for Income Taxes
|
|
Net of Tax
|
$
|
(130,851
|
)
|
|
|
Amortization related to postretirement benefit plans:
|
|
|
|
|
|
Prior year service cost
|
$
|
(1,098
|
)
|
|
|
Unrecognized loss
|
(878
|
)
|
|
|
|
Total
|
$
|
(1,976
|
)
|
|
(a)
|
Tax
|
672
|
|
|
Provision for Income Taxes
|
|
Net of Tax
|
$
|
(1,304
|
)
|
|
|
Reclassifications for the period
|
$
|
(132,155
|
)
|
|
|
Three Months Ended September 30, 2014
|
|
|
|
||
Details about Accumulated Other
Comprehensive Income Components |
Amount Reclassified from
Accumulated Other Comprehensive Income |
|
Affected Line Item in the Consolidated
Statements of Income |
||
Unrealized gains and losses on available-for-sale securities:
|
|
|
|
||
Net realized gain on investment
|
$
|
6,534
|
|
|
|
Other-than-temporary impairments
|
—
|
|
|
|
|
Total
|
$
|
6,534
|
|
|
Net realized (loss) gain on investment
|
Tax
|
(2,328
|
)
|
|
Provision for Income Taxes
|
|
Net of Tax
|
$
|
4,206
|
|
|
|
Amortization related to postretirement benefit plans:
|
|
|
|
|
|
Prior year service cost
|
$
|
(554
|
)
|
|
|
Unrecognized gain (loss)
|
—
|
|
|
|
|
Total
|
$
|
(554
|
)
|
|
(a)
|
Tax
|
188
|
|
|
Provision for Income Taxes
|
|
Net of Tax
|
$
|
(366
|
)
|
|
|
Reclassifications for the period
|
$
|
3,840
|
|
|
|
Nine Months Ended September 30, 2015
|
|
|
|
||
Details about Accumulated Other
Comprehensive Income Components
|
Amount Reclassified from
Accumulated Other
Comprehensive Income
|
|
Affected Line Item in the Consolidated
Statements of Income
|
||
Unrealized gains and losses on available-for-sale securities:
|
|
|
|
||
Net realized gain on investment
|
$
|
1,390,070
|
|
|
|
Other-than-temporary impairments
|
(668,904
|
)
|
|
|
|
Total
|
$
|
721,166
|
|
|
Net realized (loss) gain on investment
|
Tax
|
(245,105
|
)
|
|
Provision for Income Taxes
|
|
Net of Tax
|
$
|
476,061
|
|
|
|
Amortization related to postretirement benefit plans:
|
|
|
|
|
|
Prior year service cost
|
$
|
(3,293
|
)
|
|
|
Unrecognized loss
|
(2,635
|
)
|
|
|
|
Total
|
$
|
(5,928
|
)
|
|
(a)
|
Tax
|
2,016
|
|
|
Provision for Income Taxes
|
|
Net of Tax
|
$
|
(3,912
|
)
|
|
|
Reclassifications for the period
|
$
|
472,149
|
|
|
|
Nine Months Ended September 30, 2014
|
|
|
|
||
Details about Accumulated Other
Comprehensive Income Components |
Amount Reclassified from
Accumulated Other Comprehensive Income |
|
Affected Line Item in the Consolidated
Statements of Income |
||
Unrealized gains and losses on available-for-sale securities:
|
|
|
|
||
Net realized gain on investment
|
$
|
840,170
|
|
|
|
Other-than-temporary impairments
|
—
|
|
|
|
|
Total
|
$
|
840,170
|
|
|
Net realized (loss) gain on investment
|
Tax
|
(288,078
|
)
|
|
Provision for Income Taxes
|
|
Net of Tax
|
$
|
552,092
|
|
|
|
Amortization related to postretirement benefit plans:
|
|
|
|
|
|
Prior year service cost
|
$
|
(1,663
|
)
|
|
|
Unrecognized gain (loss)
|
—
|
|
|
|
|
Total
|
$
|
(1,663
|
)
|
|
(a)
|
Tax
|
565
|
|
|
Provision for Income Taxes
|
|
Net of Tax
|
$
|
(1,098
|
)
|
|
|
Reclassifications for the period
|
$
|
550,994
|
|
|
|
(a)
|
These accumulated other comprehensive income components are not reclassified to net income in their entirety in the same reporting period. The amounts are presented within salaries, employee benefits and payroll taxes on the Consolidated Statements of Income as amortized. Amortization and accretion related to postretirement benefit plans is included in the computation of net periodic pension costs, as discussed in Note 5.
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Net premiums written
|
|
$
|
30,945,532
|
|
|
$
|
26,356,835
|
|
|
$
|
86,372,154
|
|
|
$
|
81,115,940
|
|
Investment income - interest and dividends
|
|
1,117,529
|
|
|
1,064,995
|
|
|
3,427,055
|
|
|
3,130,846
|
|
||||
Net realized (loss) gain on investments
|
|
(338,631
|
)
|
|
8,689
|
|
|
601,336
|
|
|
592,908
|
|
||||
Other
|
|
2,816,828
|
|
|
2,077,711
|
|
|
7,924,329
|
|
|
6,344,163
|
|
||||
Total Revenues
|
|
34,541,258
|
|
|
29,508,230
|
|
|
98,324,874
|
|
|
91,183,857
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
||||||||
Commissions to agents
|
|
16,898,323
|
|
|
14,440,264
|
|
|
48,393,553
|
|
|
48,242,923
|
|
||||
Provision for claims
|
|
703,979
|
|
|
1,507,814
|
|
|
3,621,401
|
|
|
4,177,478
|
|
||||
Salaries, employee benefits and payroll taxes
|
|
6,957,874
|
|
|
6,609,425
|
|
|
21,101,955
|
|
|
19,250,116
|
|
||||
Office occupancy and operations
|
|
1,342,288
|
|
|
1,257,009
|
|
|
4,089,806
|
|
|
3,683,980
|
|
||||
Business development
|
|
568,189
|
|
|
552,215
|
|
|
1,633,358
|
|
|
1,581,872
|
|
||||
Filing fees, franchise and local taxes
|
|
134,880
|
|
|
233,079
|
|
|
572,621
|
|
|
648,022
|
|
||||
Premium and retaliatory taxes
|
|
573,336
|
|
|
491,927
|
|
|
1,684,674
|
|
|
1,332,492
|
|
||||
Professional and contract labor fees
|
|
661,879
|
|
|
621,305
|
|
|
1,926,469
|
|
|
1,976,272
|
|
||||
Other
|
|
264,012
|
|
|
196,702
|
|
|
708,918
|
|
|
656,653
|
|
||||
Total Operating Expenses
|
|
28,104,760
|
|
|
25,909,740
|
|
|
83,732,755
|
|
|
81,549,808
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income before Income Taxes
|
|
6,436,498
|
|
|
3,598,490
|
|
|
14,592,119
|
|
|
9,634,049
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Provision for Income Taxes
|
|
1,941,000
|
|
|
1,004,000
|
|
|
4,250,000
|
|
|
2,656,000
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net Income Attributable to the Company
|
|
$
|
4,490,962
|
|
|
$
|
2,594,490
|
|
|
$
|
10,337,583
|
|
|
$
|
6,954,526
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2015
|
|
%
|
|
2014
|
|
%
|
|
2015
|
|
%
|
|
2014
|
|
%
|
||||||||||||
Home and Branch
|
$
|
7,967,826
|
|
|
25.7
|
%
|
|
$
|
6,815,125
|
|
|
25.9
|
%
|
|
$
|
21,281,363
|
|
|
24.6
|
%
|
|
$
|
17,922,166
|
|
|
22.1
|
%
|
Agency
|
22,977,706
|
|
|
74.3
|
%
|
|
19,541,710
|
|
|
74.1
|
%
|
|
65,090,791
|
|
|
75.4
|
%
|
|
63,193,774
|
|
|
77.9
|
%
|
||||
Total
|
$
|
30,945,532
|
|
|
100.0
|
%
|
|
$
|
26,356,835
|
|
|
100.0
|
%
|
|
$
|
86,372,154
|
|
|
100.0
|
%
|
|
$
|
81,115,940
|
|
|
100.0
|
%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
State
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
North Carolina
|
|
$
|
10,320,737
|
|
|
$
|
8,717,897
|
|
|
$
|
27,618,674
|
|
|
$
|
23,375,703
|
|
Texas
|
|
6,460,351
|
|
|
6,900,659
|
|
|
21,047,559
|
|
|
29,874,149
|
|
||||
South Carolina
|
|
3,280,208
|
|
|
2,620,089
|
|
|
8,344,775
|
|
|
5,774,293
|
|
||||
Georgia
|
|
2,479,942
|
|
|
1,293,562
|
|
|
5,551,143
|
|
|
3,218,600
|
|
||||
Virginia
|
|
1,558,932
|
|
|
1,361,935
|
|
|
4,235,041
|
|
|
3,570,595
|
|
||||
Michigan
|
|
1,182,747
|
|
|
885,508
|
|
|
3,500,426
|
|
|
2,831,820
|
|
||||
All Others
|
|
5,716,133
|
|
|
4,621,412
|
|
|
16,198,055
|
|
|
12,547,606
|
|
||||
Premiums
|
|
30,999,050
|
|
|
26,401,062
|
|
|
86,495,673
|
|
|
81,192,766
|
|
||||
Reinsurance Assumed
|
|
—
|
|
|
6,895
|
|
|
23,195
|
|
|
35,367
|
|
||||
Reinsurance Ceded
|
|
(53,518
|
)
|
|
(51,122
|
)
|
|
(146,714
|
)
|
|
(112,193
|
)
|
||||
Net Premiums Written
|
|
$
|
30,945,532
|
|
|
$
|
26,356,835
|
|
|
$
|
86,372,154
|
|
|
$
|
81,115,940
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2015
|
|
%
|
|
2014
|
|
%
|
|
2015
|
|
%
|
|
2014
|
|
%
|
||||||||||||
Title Insurance
|
$
|
26,529,660
|
|
|
94.4
|
%
|
|
$
|
24,513,591
|
|
|
94.6
|
%
|
|
$
|
78,992,688
|
|
|
94.3
|
%
|
|
$
|
77,153,327
|
|
|
94.6
|
%
|
All Other
|
1,575,100
|
|
|
5.6
|
%
|
|
1,396,149
|
|
|
5.4
|
%
|
|
4,740,067
|
|
|
5.7
|
%
|
|
4,396,481
|
|
|
5.4
|
%
|
||||
Total
|
$
|
28,104,760
|
|
|
100.0
|
%
|
|
$
|
25,909,740
|
|
|
100.0
|
%
|
|
$
|
83,732,755
|
|
|
100.0
|
%
|
|
$
|
81,549,808
|
|
|
100.0
|
%
|
•
|
the level of real estate transactions, the level of mortgage origination volumes (including refinancing) and changes to the insurance requirements of the participants in the secondary mortgage market, and the effect of these factors on the demand for title insurance;
|
•
|
changes in general economic, business, and political conditions, including the performance of the financial and real estate markets;
|
•
|
the possible inadequacy of provisions for claims to cover actual claim losses;
|
•
|
the incidence of fraud-related losses;
|
•
|
unanticipated adverse changes in securities markets, including interest rates, could result in material losses to the Company’s investments;
|
•
|
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 Texas and North Carolina markets for a significant portion of its premiums;
|
•
|
the Company's receipt of a significant percentage of its net premiums written from a single title agent, which was recently acquired by another title insurer;
|
•
|
compliance with government regulation, including pricing regulation, and significant changes to applicable regulations or in their application by regulators;
|
•
|
the impact of governmental oversight of service provider’s compliance with federal consumer financial laws, including title insurance agents;
|
•
|
possible downgrades from a rating agency, which could result in a loss of underwriting business;
|
•
|
the inability of the Company to manage, develop and implement technological advancements and prevent system interruptions or unauthorized system intrusions;
|
•
|
statutory requirements applicable to the Company’s insurance subsidiaries that require them to maintain minimum levels of capital, surplus and reserves and restrict the amount of dividends that they may pay to the Company without prior regulatory approval;
|
•
|
the desirability to maintain capital above statutory minimums for competitive, marketing and other reasons;
|
•
|
heightened regulatory scrutiny and investigations of the title insurance industry;
|
•
|
the Company’s dependence on key management and marketing personnel, the loss of whom could have a material adverse effect on the Company’s business;
|
•
|
reform of government-sponsored entities that could adversely impact the Company;
|
•
|
policies and procedures for the mitigation of risks that may be insufficient to prevent losses;
|
•
|
the shareholder rights plan which could discourage transactions involving actual or potential changes of control; and
|
•
|
other risks detailed elsewhere in this document and in the Company’s other filings with the SEC.
|
|
Issuer Purchases of Equity Securities
|
|
|
|||||||||
Period
|
Total Number of
Shares Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plan
|
|
Maximum
Number of Shares
that May Yet Be
Purchased Under
the Plan
|
|||||
Beginning of period
|
|
|
|
|
|
|
384,478
|
|
||||
July 2015
|
4,113
|
|
|
$
|
70.67
|
|
|
4,113
|
|
|
380,365
|
|
August 2015
|
43,482
|
|
|
$
|
71.93
|
|
|
43,482
|
|
|
336,883
|
|
September 2015
|
17
|
|
|
$
|
70.29
|
|
|
17
|
|
|
336,866
|
|
Total:
|
47,612
|
|
|
$
|
71.82
|
|
|
47,612
|
|
|
336,866
|
|
•
|
Providing for additional disclosure requirements for notices of director nominations and shareholder proposals.
|
•
|
Clarifying the procedures for postponement, rescheduling, recessing and adjournment of any meeting of shareholders.
|
•
|
Clarifying the powers of the presiding officer of a shareholder meeting.
|
•
|
Providing for an explicit confidentiality obligation for shareholder-nominated directors.
|
•
|
Clarifying the time period in which an annual meeting of shareholders may be held.
|
•
|
Conforming the Bylaws to Section 55-8-10 of the North Carolina Business Act by clarifying that, in addition to the shareholders, the Board has the power to fill any newly created directorship or any vacancy occurring in the Board.
|
•
|
Designating the state and federal courts located within the state of North Carolina as the sole and exclusive forum for certain legal actions, unless the Company consents in writing to the selection of an alternative forum.
|
3.1
|
Amended and Restated Bylaws of the Company dated November 9, 2015 (filed herewith)
|
|
|
31(i)
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
31(ii)
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
32
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
INVESTORS TITLE COMPANY
|
|
|
|
|
|
By:
|
/s/ James A. Fine, Jr.
|
|
|
James A. Fine, Jr.
|
|
|
President, Principal Financial Officer and
|
|
|
Principal Accounting Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Investors Title Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated:
|
November 9, 2015
|
/s/ J. Allen Fine
|
|
|
J.Allen Fine
|
|
|
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Investors Title Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated:
|
November 9, 2015
|
/s/ James A. Fine, Jr.
|
|
|
James A. Fine, Jr.
|
|
|
Chief Financial Officer
|
(i)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and
|
(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
Dated:
|
November 9, 2015
|
/s/ J. Allen Fine
|
|
|
J. Allen Fine
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
Dated:
|
November 9, 2015
|
/s/ James A. Fine, Jr.
|
|
|
James A. Fine, Jr.
|
|
|
Chief Financial Officer
|