[ 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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(Do not check if a smaller reporting company)
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Smaller reporting company
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Emerging growth company
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, no par value
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ITIC
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The NASDAQ Stock Market LLC
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Rights to Purchase Series A Junior Participating Preferred Stock
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The NASDAQ Stock Market LLC
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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
March 31, 2019 and December 31, 2018
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Consolidated Statements of Income For the Three
Months Ended March 31, 2019 and 2018
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Consolidated Statements of Comprehensive Income For the Three
Months Ended March 31, 2019 and 2018
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Consolidated Statements of Stockholders’ Equity For the
Three Months Ended March 31, 2019 and 2018
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Consolidated Statements of Cash Flows For the
Three Months Ended March 31, 2019 and 2018
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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 3.
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Defaults Upon Senior Securities
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Other Information
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March 31,
2019 |
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December 31,
2018 |
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Assets
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Cash and cash equivalents
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$
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22,052
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$
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18,694
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Investments:
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Fixed maturity securities, available-for-sale, at fair value (amortized cost: March 31, 2019: $86,539; December 31, 2018: $87,714)
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89,232
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88,957
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Equity securities, at fair value (cost: March 31, 2019: $32,055; December 31, 2018: $31,255)
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53,959
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48,489
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Short-term investments
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29,696
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32,787
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Other investments
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11,577
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12,436
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Total investments
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184,464
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182,669
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Premium and fees receivable
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10,744
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12,128
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Accrued interest and dividends
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1,368
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946
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Prepaid expenses and other receivables
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7,216
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7,288
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Property, net
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10,092
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10,304
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Goodwill and other intangible assets, net
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10,654
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10,780
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Operating lease right-of-use assets
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4,925
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—
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Other assets
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1,475
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1,459
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Total Assets
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$
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252,990
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$
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244,268
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Liabilities and Stockholders’ Equity
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Liabilities:
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Reserve for claims
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$
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31,384
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$
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31,729
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Accounts payable and accrued liabilities
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22,791
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27,735
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Operating lease liabilities
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4,927
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—
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Current income taxes payable
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5,840
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4,981
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Deferred income taxes, net
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5,319
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4,184
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Total liabilities
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70,261
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68,629
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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 authorized shares; no shares issued)
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—
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—
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Common stock – no par value (10,000 authorized shares; 1,889 and 1,887 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively, excluding in each period 292 shares of common stock held by the Company)
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—
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—
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Retained earnings
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180,637
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174,690
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Accumulated other comprehensive income
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2,092
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949
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Total stockholders' equity
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182,729
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175,639
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Total Liabilities and Stockholders’ Equity
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$
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252,990
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$
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244,268
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Three Months Ended
March 31,
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2019
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2018
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Revenues:
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Net premiums written
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$
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28,795
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$
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29,559
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Escrow and other title-related fees
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1,322
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1,504
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Non-title services
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2,388
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1,592
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Interest and dividends
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1,256
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1,118
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Other investment income
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410
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269
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Net realized investment gains
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790
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153
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Net unrealized gain (loss) on equity investments
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4,670
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(642
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Other
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315
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223
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Total Revenues
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39,946
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33,776
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Operating Expenses:
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Commissions to agents
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15,058
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14,025
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Provision (benefit) for claims
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226
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(1,406
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Personnel expenses
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11,612
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11,340
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Office and technology expenses
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2,223
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2,069
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Other expenses
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2,514
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2,523
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Total Operating Expenses
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31,633
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28,551
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Income before Income Taxes
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8,313
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5,225
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Provision for Income Taxes
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1,687
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1,052
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Net Income
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6,626
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4,173
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Net Loss Attributable to Noncontrolling Interests
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—
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3
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Net Income Attributable to the Company
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$
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6,626
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$
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4,176
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Basic Earnings per Common Share
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$
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3.51
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$
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2.21
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Weighted Average Shares Outstanding – Basic
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1,887
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1,886
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Diluted Earnings per Common Share
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$
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3.49
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$
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2.20
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Weighted Average Shares Outstanding – Diluted
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1,896
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1,897
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Three Months Ended
March 31,
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2019
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2018
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Net income
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$
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6,626
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$
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4,173
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Other comprehensive income (loss), before tax:
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Net unrealized gain (loss) on investments arising during the period*
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1,450
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(1,660
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Other comprehensive income (loss), before tax
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1,450
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(1,660
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)
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Income tax expense (benefit) related to net unrealized gain (loss) on investments arising during the period*
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307
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(351
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)
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Net income tax expense (benefit) on other comprehensive income (loss)
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307
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(351
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)
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Other comprehensive income (loss)
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1,143
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(1,309
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)
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Comprehensive Income
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$
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7,769
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$
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2,864
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Comprehensive loss attributable to noncontrolling interests
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—
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3
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Comprehensive Income Attributable to the Company
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$
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7,769
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$
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2,867
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Common Stock
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Retained Earnings
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Accumulated
Other
Comprehensive
Income
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Noncontrolling
Interests
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Total
Stockholders’
Equity
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Shares
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Amount
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Balance, January 1, 2018
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1,886
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$
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—
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$
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161,891
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$
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15,945
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$
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85
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$
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177,921
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Net income attributable to the Company
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4,176
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4,176
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Dividends paid ($0.40 per share)
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(755
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)
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(755
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Repurchases of common stock
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—
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(29
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)
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(29
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Exercise of stock appreciation rights
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1
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(1
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)
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(1
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)
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Share-based compensation expense related to stock appreciation rights
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62
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62
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Cumulative effect adjustment for adoption of new accounting standards
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13,627
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(13,627
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)
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—
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Net unrealized loss on investments
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(1,309
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)
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(1,309
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)
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Net loss attributable to noncontrolling interests
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(3
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)
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(3
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)
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Balance, March 31, 2018
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1,887
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$
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—
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$
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178,971
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$
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1,009
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$
|
82
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$
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180,062
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Balance, January 1, 2019
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1,887
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$
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—
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$
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174,690
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$
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949
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$
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—
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$
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175,639
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Net income attributable to the Company
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6,626
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6,626
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Dividends paid ($0.40 per share)
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(755
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)
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(755
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)
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Repurchases of common stock
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—
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(11
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(11
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Exercise of stock appreciation rights
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2
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(1
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)
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(1
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Share-based compensation expense related to stock appreciation rights
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88
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88
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Net unrealized gain on investments
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1,143
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1,143
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Balance, March 31, 2019
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1,889
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$
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—
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$
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180,637
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$
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2,092
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$
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—
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$
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182,729
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Three Months Ended
March 31, |
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2019
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|
2018
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Operating Activities
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Net income
|
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$
|
6,626
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$
|
4,173
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Adjustments to reconcile net income to net cash used in by operating activities:
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|
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Depreciation
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433
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400
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Amortization of investments, net
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133
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235
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Amortization of other intangible assets, net
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126
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181
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Share-based compensation expense related to stock appreciation rights
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88
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62
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Net gain on disposals of property
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(3
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)
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(9
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)
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Net realized investment gains
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(790
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)
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(153
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)
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Net unrealized (gain) loss on equity investments
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(4,670
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)
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642
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Net earnings from other investments
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(208
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)
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(109
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)
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Provision (benefit) for claims
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226
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|
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(1,406
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)
|
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Provision for deferred income taxes
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|
828
|
|
|
484
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|
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Changes in assets and liabilities:
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|
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Decrease in premium and fees receivables
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1,384
|
|
|
142
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Increase in other assets
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(366
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)
|
|
(447
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)
|
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Increase in operating lease right-of-use assets
|
|
(4,925
|
)
|
|
—
|
|
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Decrease in current income taxes receivable
|
|
—
|
|
|
385
|
|
||
Decrease in accounts payable and accrued liabilities
|
|
(4,944
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)
|
|
(4,689
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)
|
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Increase in operating lease liabilities
|
|
4,927
|
|
|
—
|
|
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Increase in current income taxes payable
|
|
859
|
|
|
215
|
|
||
Payments of claims, net of recoveries
|
|
(571
|
)
|
|
(625
|
)
|
||
Net cash used in operating activities
|
|
(847
|
)
|
|
(519
|
)
|
||
|
|
|
|
|
||||
Investing Activities
|
|
|
|
|
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|
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Purchases of equity securities
|
|
(1,572
|
)
|
|
(815
|
)
|
||
Purchases of short-term investments
|
|
(50,015
|
)
|
|
(2,457
|
)
|
||
Purchases of other investments
|
|
(776
|
)
|
|
(145
|
)
|
||
Proceeds from sales and maturities of fixed maturity securities
|
|
925
|
|
|
1,005
|
|
||
Proceeds from sales of equity securities
|
|
1,561
|
|
|
441
|
|
||
Proceeds from sales and maturities of short-term investments
|
|
53,224
|
|
|
5,143
|
|
||
Proceeds from sales and distributions of other investments
|
|
1,843
|
|
|
686
|
|
||
Purchases of property
|
|
(225
|
)
|
|
(609
|
)
|
||
Proceeds from the sale of property
|
|
7
|
|
|
15
|
|
||
Net cash provided by investing activities
|
|
4,972
|
|
|
3,264
|
|
||
|
|
|
|
|
||||
Financing Activities
|
|
|
|
|
|
|
||
Repurchases of common stock
|
|
(11
|
)
|
|
(29
|
)
|
||
Exercise of stock appreciation rights
|
|
(1
|
)
|
|
(1
|
)
|
||
Dividends paid
|
|
(755
|
)
|
|
(755
|
)
|
||
Net cash used in financing activities
|
|
(767
|
)
|
|
(785
|
)
|
||
|
|
|
|
|
||||
Net Increase in Cash and Cash Equivalents
|
|
3,358
|
|
|
1,960
|
|
||
Cash and Cash Equivalents, Beginning of Period
|
|
18,694
|
|
|
20,214
|
|
||
Cash and Cash Equivalents, End of Period
|
|
$
|
22,052
|
|
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$
|
22,174
|
|
Consolidated Statements of Cash Flows, continued
|
|
|
||||||
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Supplemental Disclosures:
|
|
|
|
|
||||
Cash Paid During the Year for:
|
|
|
|
|
||||
Income tax payments, net
|
|
$
|
—
|
|
|
$
|
(32
|
)
|
Non Cash Investing and Financing Activities:
|
|
|
|
|
||||
Non cash net unrealized (gain) loss on investments, net of deferred tax (provision) benefit
of $(307) and $351 for March 31, 2019 and 2018, respectively |
|
$
|
(1,143
|
)
|
|
$
|
1,309
|
|
(in thousands)
|
March 31, 2019
|
|
December 31, 2018
|
||||
Balance, beginning of period
|
$
|
31,729
|
|
|
$
|
34,801
|
|
Provision (benefit), charged to operations
|
226
|
|
|
(332
|
)
|
||
Payments of claims, net of recoveries
|
(571
|
)
|
|
(2,740
|
)
|
||
Balance, end of period
|
$
|
31,384
|
|
|
$
|
31,729
|
|
|
|
Three Months Ended
March 31, |
||||||
(in thousands, except per share amounts)
|
|
2019
|
|
2018
|
||||
Net income attributable to the Company
|
|
$
|
6,626
|
|
|
$
|
4,176
|
|
Weighted average common shares outstanding – Basic
|
|
1,887
|
|
|
1,886
|
|
||
Incremental shares outstanding assuming the exercise of dilutive SARs (share-settled)
|
|
9
|
|
|
11
|
|
||
Weighted average common shares outstanding – Diluted
|
|
1,896
|
|
|
1,897
|
|
||
Basic earnings per common share
|
|
$
|
3.51
|
|
|
$
|
2.21
|
|
Diluted earnings per common share
|
|
$
|
3.49
|
|
|
$
|
2.20
|
|
(in thousands, except weighted average exercise price and average remaining contractual term)
|
Number
Of Shares
|
|
Weighted
Average
Exercise Price
|
|
Average Remaining
Contractual
Term (Years)
|
|
Aggregate
Intrinsic
Value
|
||||
Outstanding as of January 1, 2018
|
25
|
|
|
$
|
93.40
|
|
|
3.98
|
|
2,624
|
|
SARs granted
|
4
|
|
|
188.71
|
|
|
|
|
|
|
|
SARs exercised
|
(1
|
)
|
|
41.50
|
|
|
|
|
|
|
|
Outstanding as of December 31, 2018
|
28
|
|
|
$
|
110.27
|
|
|
3.64
|
|
2,019
|
|
SARs granted
|
—
|
|
|
—
|
|
|
|
|
|
|
|
SARs exercised
|
(3
|
)
|
|
50.50
|
|
|
|
|
|
|
|
Outstanding as of March 31, 2019
|
25
|
|
|
$
|
117.30
|
|
|
3.78
|
|
1,331
|
|
|
|
|
|
|
|
|
|
||||
Exercisable as of March 31, 2019
|
25
|
|
|
$
|
117.30
|
|
|
3.78
|
|
1,331
|
|
|
|
|
|
|
|
|
|
||||
Unvested as of March 31, 2019
|
—
|
|
|
$
|
—
|
|
|
0.00
|
|
—
|
|
Three Months Ended March 31, 2019 (in thousands)
|
Title
Insurance |
|
All
Other |
|
Intersegment
Eliminations |
|
Total
|
||||||||
Insurance and other services revenues
|
$
|
31,319
|
|
|
$
|
2,691
|
|
|
$
|
(1,190
|
)
|
|
$
|
32,820
|
|
Investment income
|
5,430
|
|
|
906
|
|
|
—
|
|
|
6,336
|
|
||||
Net realized gain on investments
|
764
|
|
|
26
|
|
|
—
|
|
|
790
|
|
||||
Total revenues
|
$
|
37,513
|
|
|
$
|
3,623
|
|
|
$
|
(1,190
|
)
|
|
$
|
39,946
|
|
Operating expenses
|
30,452
|
|
|
2,237
|
|
|
(1,056
|
)
|
|
31,633
|
|
||||
Income before income taxes
|
$
|
7,061
|
|
|
$
|
1,386
|
|
|
$
|
(134
|
)
|
|
$
|
8,313
|
|
Total assets
|
$
|
200,187
|
|
|
$
|
52,803
|
|
|
$
|
—
|
|
|
$
|
252,990
|
|
Three Months Ended March 31, 2018 (in thousands)
|
Title
Insurance |
|
All
Other |
|
Intersegment
Eliminations |
|
Total
|
||||||||
Insurance and other services revenues
|
$
|
32,421
|
|
|
$
|
1,890
|
|
|
$
|
(1,433
|
)
|
|
$
|
32,878
|
|
Investment income
|
614
|
|
|
131
|
|
|
—
|
|
|
745
|
|
||||
Net realized gain on investments
|
143
|
|
|
10
|
|
|
—
|
|
|
153
|
|
||||
Total revenues
|
$
|
33,178
|
|
|
$
|
2,031
|
|
|
$
|
(1,433
|
)
|
|
$
|
33,776
|
|
Operating expenses
|
27,792
|
|
|
2,058
|
|
|
(1,299
|
)
|
|
28,551
|
|
||||
Income (loss) before income taxes
|
$
|
5,386
|
|
|
$
|
(27
|
)
|
|
$
|
(134
|
)
|
|
$
|
5,225
|
|
Total assets
|
$
|
191,396
|
|
|
$
|
53,285
|
|
|
$
|
—
|
|
|
$
|
244,681
|
|
|
|
Three Months Ended
March 31, |
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Service cost – benefits earned during the year
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost on the projected benefit obligation
|
|
8
|
|
|
8
|
|
||
Amortization of unrecognized losses
|
|
—
|
|
|
—
|
|
||
Net periodic benefit cost
|
|
$
|
8
|
|
|
$
|
8
|
|
As of March 31, 2019 (in thousands)
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated Fair
Value |
||||||||
Fixed maturity securities, available-for-sale, at fair value:
|
|
|
|
|
|
|
|
||||||||
Government obligations
|
$
|
1,018
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
1,014
|
|
General obligations of U.S. states, territories and political subdivisions
|
21,627
|
|
|
527
|
|
|
11
|
|
|
22,143
|
|
||||
Special revenue issuer obligations of U.S. states, territories and political subdivisions
|
53,894
|
|
|
1,827
|
|
|
73
|
|
|
55,648
|
|
||||
Corporate debt securities
|
10,000
|
|
|
444
|
|
|
17
|
|
|
10,427
|
|
||||
Total
|
$
|
86,539
|
|
|
$
|
2,798
|
|
|
$
|
105
|
|
|
$
|
89,232
|
|
As of December 31, 2018 (in thousands)
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair
Value
|
||||||||
Fixed maturity securities, available-for-sale, at fair value:
|
|
|
|
|
|
|
|
||||||||
Government obligations
|
$
|
1,023
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
1,016
|
|
General obligations of U.S. states, territories and political subdivisions
|
19,518
|
|
|
229
|
|
|
143
|
|
|
19,604
|
|
||||
Special revenue issuer obligations of U.S. states, territories and political subdivisions
|
56,675
|
|
|
1,237
|
|
|
329
|
|
|
57,583
|
|
||||
Corporate debt securities
|
10,498
|
|
|
303
|
|
|
47
|
|
|
10,754
|
|
||||
Total
|
$
|
87,714
|
|
|
$
|
1,769
|
|
|
$
|
526
|
|
|
$
|
88,957
|
|
|
Available-for-Sale
|
||||||
(in thousands)
|
Amortized
Cost
|
|
Estimated Fair
Value |
||||
Due in one year or less
|
$
|
13,200
|
|
|
$
|
13,216
|
|
Due one year through five years
|
31,881
|
|
|
32,984
|
|
||
Due five years through ten years
|
40,650
|
|
|
41,872
|
|
||
Due after ten years
|
808
|
|
|
1,160
|
|
||
Total
|
$
|
86,539
|
|
|
$
|
89,232
|
|
|
Less than 12 Months
|
|
12 Months or Longer
|
|
Total
|
||||||||||||||||||
As of March 31, 2019 (in thousands)
|
Estimated
Fair
Value
|
|
Unrealized
Losses
|
|
Estimated
Fair
Value |
|
Unrealized
Losses
|
|
Estimated
Fair
Value |
|
Unrealized
Losses
|
||||||||||||
Government obligations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,014
|
|
|
$
|
(4
|
)
|
|
$
|
1,014
|
|
|
$
|
(4
|
)
|
General obligations of U.S. states, territories and political subdivisions
|
1,559
|
|
|
(2
|
)
|
|
1,076
|
|
|
(9
|
)
|
|
2,635
|
|
|
(11
|
)
|
||||||
Special revenue issuer obligations of U.S. states, territories and political subdivisions
|
1,464
|
|
|
(1
|
)
|
|
5,828
|
|
|
(72
|
)
|
|
7,292
|
|
|
(73
|
)
|
||||||
Corporate debt securities
|
6,234
|
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
6,234
|
|
|
(17
|
)
|
||||||
Total temporarily impaired securities
|
$
|
9,257
|
|
|
$
|
(20
|
)
|
|
$
|
7,918
|
|
|
$
|
(85
|
)
|
|
$
|
17,175
|
|
|
$
|
(105
|
)
|
|
Less than 12 Months
|
|
12 Months or Longer
|
|
Total
|
||||||||||||||||||
As of December 31, 2018 (in thousands)
|
Estimated
Fair
Value
|
|
Unrealized
Losses
|
|
Estimated
Fair
Value |
|
Unrealized
Losses
|
|
Estimated
Fair
Value |
|
Unrealized
Losses
|
||||||||||||
Government obligations
|
$
|
1,016
|
|
|
$
|
(7
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,016
|
|
|
$
|
(7
|
)
|
General obligations of U.S. states, territories and political subdivisions
|
4,888
|
|
|
(32
|
)
|
|
6,469
|
|
|
(111
|
)
|
|
11,357
|
|
|
(143
|
)
|
||||||
Special revenue issuer obligations of U.S. states, territories and political subdivisions
|
12,326
|
|
|
(100
|
)
|
|
9,720
|
|
|
(229
|
)
|
|
22,046
|
|
|
(329
|
)
|
||||||
Corporate debt securities
|
4,490
|
|
|
(28
|
)
|
|
3,733
|
|
|
(19
|
)
|
|
8,223
|
|
|
(47
|
)
|
||||||
Total temporarily impaired securities
|
$
|
22,720
|
|
|
$
|
(167
|
)
|
|
$
|
19,922
|
|
|
$
|
(359
|
)
|
|
$
|
42,642
|
|
|
$
|
(526
|
)
|
As of March 31, 2019 (in thousands)
|
Cost
|
|
Estimated
Fair Value |
||||
Equity securities, at fair value:
|
|
|
|
|
|
||
Common stocks
|
$
|
32,055
|
|
|
$
|
53,959
|
|
Total
|
$
|
32,055
|
|
|
$
|
53,959
|
|
As of December 31, 2018 (in thousands)
|
Cost
|
|
Estimated
Fair Value |
||||
Equity securities, at fair value:
|
|
|
|
|
|
||
Common stocks
|
$
|
31,255
|
|
|
$
|
48,489
|
|
Total
|
$
|
31,255
|
|
|
$
|
48,489
|
|
(in thousands)
|
2019
|
|
2018
|
||||
Gross realized gains from securities:
|
|
|
|
|
|
||
Special revenue issuer obligations of U.S. states, territories and political subdivisions
|
$
|
—
|
|
|
$
|
—
|
|
Corporate debt securities
|
—
|
|
|
—
|
|
||
Common stocks
|
831
|
|
|
164
|
|
||
Total
|
$
|
831
|
|
|
$
|
164
|
|
Gross realized losses from securities:
|
|
|
|
|
|
||
General obligations of U.S. states, territories and political subdivisions
|
$
|
—
|
|
|
$
|
—
|
|
Special revenue issuer obligations of U.S. states, territories and political subdivisions
|
—
|
|
|
—
|
|
||
Common stocks
|
(41
|
)
|
|
(11
|
)
|
||
Other-than-temporary impairment of securities
|
—
|
|
|
—
|
|
||
Total
|
$
|
(41
|
)
|
|
$
|
(11
|
)
|
Net realized gains from securities
|
$
|
790
|
|
|
$
|
153
|
|
Net realized gains on other investments:
|
|
|
|
||||
Gains on other investments
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
Net realized investment gains
|
$
|
790
|
|
|
$
|
153
|
|
Type of Investment (in thousands)
|
|
Balance Sheet Classification
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Maximum Potential Loss (a)
|
||||||
Tax credit LPs
|
|
Other investments
|
|
$
|
1,162
|
|
|
$
|
1,129
|
|
|
$
|
2,010
|
|
Real estate LLCs or LPs
|
|
Other investments
|
|
4,739
|
|
|
6,319
|
|
|
9,250
|
|
|||
Small business investment LPs
|
|
Other investments
|
|
3,732
|
|
|
6,500
|
|
|
7,225
|
|
|||
Total
|
|
|
|
$
|
9,633
|
|
|
$
|
13,948
|
|
|
$
|
18,485
|
|
(a)
|
|
Maximum potential loss is calculated as the total investment in the LLC or LP, including any capital commitments that may have not yet been called. The Company is not exposed to any loss beyond the total commitment of its investment.
|
As of March 31, 2019 (in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Obligations of U.S. states, territories and political subdivisions*
|
$
|
—
|
|
|
$
|
78,805
|
|
|
$
|
—
|
|
|
$
|
78,805
|
|
Corporate debt securities*
|
—
|
|
|
10,427
|
|
|
—
|
|
|
10,427
|
|
||||
Total
|
$
|
—
|
|
|
$
|
89,232
|
|
|
$
|
—
|
|
|
$
|
89,232
|
|
As of December 31, 2018 (in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Obligations of U.S. states, territories and political subdivisions*
|
$
|
—
|
|
|
$
|
78,203
|
|
|
$
|
—
|
|
|
$
|
78,203
|
|
Corporate debt securities*
|
—
|
|
|
10,754
|
|
|
—
|
|
|
10,754
|
|
||||
Total
|
$
|
—
|
|
|
$
|
88,957
|
|
|
$
|
—
|
|
|
$
|
88,957
|
|
As of March 31, 2019 (in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
22,052
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,052
|
|
Accrued interest and dividends
|
1,368
|
|
|
—
|
|
|
—
|
|
|
1,368
|
|
||||
Equity securities, at fair value:
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
53,959
|
|
|
—
|
|
|
—
|
|
|
53,959
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|||||||
Commercial paper and money market funds
|
29,696
|
|
|
—
|
|
|
—
|
|
|
29,696
|
|
||||
Other investments:
|
|
|
|
|
|
|
|
||||||||
Equity investments in unconsolidated affiliates, equity method
|
—
|
|
|
—
|
|
|
5,393
|
|
|
5,393
|
|
||||
Equity investments in unconsolidated affiliates, measurement alternative
|
—
|
|
|
—
|
|
|
6,184
|
|
|
6,184
|
|
||||
Total
|
$
|
107,075
|
|
|
$
|
—
|
|
|
$
|
11,577
|
|
|
$
|
118,652
|
|
As of December 31, 2018 (in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
18,694
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,694
|
|
Accrued interest and dividends
|
946
|
|
|
—
|
|
|
—
|
|
|
946
|
|
||||
Equity securities, at fair value:
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
48,489
|
|
|
—
|
|
|
—
|
|
|
48,489
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Commercial paper and money market funds
|
32,787
|
|
|
—
|
|
|
—
|
|
|
32,787
|
|
||||
Other investments:
|
|
|
|
|
|
|
|
||||||||
Equity investments in unconsolidated affiliates, equity method
|
—
|
|
|
—
|
|
|
5,847
|
|
|
5,847
|
|
||||
Equity investments in unconsolidated affiliates, measurement alternative
|
—
|
|
|
—
|
|
|
6,589
|
|
|
6,589
|
|
||||
Total
|
$
|
100,916
|
|
|
$
|
—
|
|
|
$
|
12,436
|
|
|
$
|
113,352
|
|
(in thousands)
|
Balance,
January 1, 2019
|
|
Amounts Impaired
|
|
Observable Changes
|
|
Purchases and Additional Commitments Paid
|
|
Sales, Returns of Capital and Other Reductions
|
|
Balance,
March 31, 2019
|
||||||||||||
Other investments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity investments in unconsolidated affiliates, measurement alternative
|
$
|
6,589
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
613
|
|
|
$
|
(1,018
|
)
|
|
$
|
6,184
|
|
Total
|
$
|
6,589
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
613
|
|
|
$
|
(1,018
|
)
|
|
$
|
6,184
|
|
(in thousands)
|
Balance,
January 1, 2018
|
|
Amounts Impaired
|
|
Observable Changes
|
|
Purchases and Additional Commitments Paid
|
|
Sales, Returns of Capital and Other Reductions
|
|
Balance,
December 31, 2018
|
||||||||||||
Other investments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity investments in unconsolidated affiliates, measurement alternative
|
$
|
5,439
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,486
|
|
|
$
|
(336
|
)
|
|
$
|
6,589
|
|
Total
|
$
|
5,439
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,486
|
|
|
$
|
(336
|
)
|
|
$
|
6,589
|
|
Financial Statement Classification,
Consolidated Balance Sheets
(in thousands)
|
As of
March 31, 2019 |
As of
December 31, 2018 |
||||
Other investments
|
$
|
5,393
|
|
$
|
5,847
|
|
Premium and fees receivable
|
$
|
422
|
|
$
|
409
|
|
Financial Statement Classification,
Consolidated Statements of Income
(in thousands)
|
Three Months Ended
March 31, |
||||||
2019
|
2018
|
||||||
Net premiums written
|
$
|
3,119
|
|
$
|
3,191
|
|
|
Non-title services and other investment income
|
$
|
473
|
|
$
|
243
|
|
|
Commissions to agents
|
$
|
2,073
|
|
$
|
2,115
|
|
(in thousands)
|
As of
March 31, 2019 |
As of
December 31, 2018 |
||||
Referral relationships
|
$
|
6,416
|
|
$
|
6,416
|
|
Non-compete agreements
|
1,406
|
|
1,406
|
|
||
Tradename
|
560
|
|
560
|
|
||
Total
|
8,382
|
|
8,382
|
|
||
Accumulated amortization
|
(2,078
|
)
|
(1,952
|
)
|
||
Identifiable intangible assets, net
|
$
|
6,304
|
|
$
|
6,430
|
|
Three Months Ended March 31, 2019 (in thousands)
|
Unrealized Gains and Losses
On Available-for-Sale Securities |
|
Postretirement
Benefits Plans |
|
Total
|
||||||
Beginning balance at January 1
|
$
|
981
|
|
|
$
|
(32
|
)
|
|
$
|
949
|
|
Cumulative effect adjustment for adoption of new accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive gain before reclassifications
|
1,143
|
|
|
—
|
|
|
1,143
|
|
|||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net current-period other comprehensive gain
|
1,143
|
|
|
—
|
|
|
1,143
|
|
|||
Ending balance
|
$
|
2,124
|
|
|
$
|
(32
|
)
|
|
$
|
2,092
|
|
Three Months Ended March 31, 2018 (in thousands)
|
Unrealized Gains and Losses
On Available-for-Sale
Securities
|
|
Postretirement
Benefits Plans
|
|
Total
|
||||||
Beginning balance at January 1
|
$
|
16,003
|
|
|
$
|
(58
|
)
|
|
$
|
15,945
|
|
Cumulative effect adjustment for adoption of new accounting standards
|
(13,616
|
)
|
|
(11
|
)
|
|
(13,627
|
)
|
|||
Other comprehensive loss before reclassifications
|
(1,309
|
)
|
|
—
|
|
|
(1,309
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net current-period other comprehensive loss
|
(1,309
|
)
|
|
—
|
|
|
(1,309
|
)
|
|||
Ending balance
|
$
|
1,078
|
|
|
$
|
(69
|
)
|
|
$
|
1,009
|
|
|
Three Months Ended
March 31, |
|||||
(in thousands)
|
2019
|
2018
|
||||
Revenue from contracts with customers:
|
|
|
||||
Escrow and other title-related fees
|
$
|
1,322
|
|
$
|
1,504
|
|
Non-title services
|
2,388
|
|
1,592
|
|
||
Total revenue from contracts with customers
|
3,710
|
|
3,096
|
|
||
Other sources of revenue:
|
|
|
||||
Net premiums written
|
28,795
|
|
29,559
|
|
||
Investment-related revenue
|
7,126
|
|
898
|
|
||
Other
|
315
|
|
223
|
|
||
Total revenues
|
$
|
39,946
|
|
$
|
33,776
|
|
(in thousands)
|
Three Months Ended
March 31, 2019 |
||
Operating leases
|
$
|
314
|
|
Short-term leases (b)
|
34
|
|
|
Lease expense
|
$
|
348
|
|
Sub-lease income
|
—
|
|
|
Lease cost
|
$
|
348
|
|
(b)
|
|
Leases with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheets.
|
(in thousands)
|
As of
March 31, 2019 |
||
Current:
|
|
||
Operating lease liabilities
|
$
|
1,056
|
|
Non-current:
|
|
||
Operating lease liabilities
|
3,871
|
|
|
Total operating lease liabilities
|
$
|
4,927
|
|
Year Ended (in thousands)
|
|
||
2019
|
$
|
936
|
|
2020
|
1,206
|
|
|
2021
|
1,100
|
|
|
2022
|
857
|
|
|
2023
|
549
|
|
|
Thereafter
|
851
|
|
|
Total undiscounted payments
|
$
|
5,499
|
|
Less: present value adjustment
|
(572
|
)
|
|
Operating lease liabilities
|
$
|
4,927
|
|
As of March 31, 2019
|
|
|
Weighted average remaining lease term (years)
|
5.20
|
|
Weighted average discount rate
|
4.2
|
%
|
|
|
Three Months Ended
March 31, |
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Revenues:
|
|
|
|
|
||||
Net premiums written
|
|
$
|
28,795
|
|
|
$
|
29,559
|
|
Escrow and other title-related fees
|
|
1,322
|
|
|
1,504
|
|
||
Non-title services
|
|
2,388
|
|
|
1,592
|
|
||
Interest and dividends
|
|
1,256
|
|
|
1,118
|
|
||
Other investment income
|
|
410
|
|
|
269
|
|
||
Net realized investment gains
|
|
790
|
|
|
153
|
|
||
Net unrealized gain (loss) on equity investments
|
|
4,670
|
|
|
(642
|
)
|
||
Other
|
|
315
|
|
|
223
|
|
||
Total Revenues
|
|
39,946
|
|
|
33,776
|
|
||
|
|
|
|
|
||||
Operating Expenses:
|
|
|
|
|
||||
Commissions to agents
|
|
15,058
|
|
|
14,025
|
|
||
Provision (benefit) for claims
|
|
226
|
|
|
(1,406
|
)
|
||
Personnel expenses
|
|
11,612
|
|
|
11,340
|
|
||
Office and technology expenses
|
|
2,223
|
|
|
2,069
|
|
||
Other expenses
|
|
2,514
|
|
|
2,523
|
|
||
Total Operating Expenses
|
|
31,633
|
|
|
28,551
|
|
||
|
|
|
|
|
||||
Income before Income Taxes
|
|
8,313
|
|
|
5,225
|
|
||
|
|
|
|
|
||||
Provision for Income Taxes
|
|
1,687
|
|
|
1,052
|
|
||
|
|
|
|
|
||||
Net Income Attributable to the Company
|
|
$
|
6,626
|
|
|
$
|
4,176
|
|
|
|
Three Months Ended
March 31, |
||||||||||
(in thousands, except percentages)
|
|
2019
|
|
%
|
|
2018
|
|
%
|
||||
Home and Branch
|
|
$
|
7,166
|
|
|
24.9
|
|
$
|
8,617
|
|
|
29.2
|
Agency
|
|
21,629
|
|
|
75.1
|
|
20,942
|
|
|
70.8
|
||
Total
|
|
$
|
28,795
|
|
|
100.0
|
|
$
|
29,559
|
|
|
100.0
|
|
|
Three Months Ended
March 31, |
||||||
State (in thousands)
|
|
2019
|
|
2018
|
||||
North Carolina
|
|
$
|
10,205
|
|
|
$
|
11,628
|
|
Texas
|
|
6,115
|
|
|
5,411
|
|
||
South Carolina
|
|
3,271
|
|
|
3,545
|
|
||
Georgia
|
|
3,199
|
|
|
2,481
|
|
||
Virginia
|
|
1,178
|
|
|
1,418
|
|
||
All Others
|
|
4,982
|
|
|
5,140
|
|
||
Premiums Written
|
|
28,950
|
|
|
29,623
|
|
||
Reinsurance Assumed
|
|
—
|
|
|
2
|
|
||
Reinsurance Ceded
|
|
(155
|
)
|
|
(66
|
)
|
||
Net Premiums Written
|
|
$
|
28,795
|
|
|
$
|
29,559
|
|
|
|
Three Months Ended
March 31, |
||||||||||
(in thousands, except percentages)
|
|
2019
|
|
%
|
|
2018
|
|
%
|
||||
Title Insurance
|
|
$
|
29,427
|
|
|
93.0
|
|
$
|
26,516
|
|
|
92.9
|
All Other
|
|
2,206
|
|
|
7.0
|
|
2,035
|
|
|
7.1
|
||
Total
|
|
$
|
31,633
|
|
|
100.0
|
|
$
|
28,551
|
|
|
100.0
|
•
|
changes in interest rates and real estate values;
|
•
|
changes in general economic, business, and political conditions, including the performance of the financial and real estate markets;
|
•
|
potential reform of government sponsored entities;
|
•
|
the level of real estate transaction volumes, the level of mortgage origination volumes (including refinancing), the mix of title insurance between markets with varying real estate values, 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;
|
•
|
the possible inadequacy of provisions for claims to cover actual claim losses;
|
•
|
the incidence of fraud-related losses;
|
•
|
unanticipated adverse changes in securities markets 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 North Carolina, Texas, South Carolina and Georgia 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;
|
•
|
the impact of governmental oversight of compliance of the Company's service providers, including the application of financial regulation designed to protect consumers;
|
•
|
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 that restrict the amount of dividends they may pay to the Company without prior regulatory approval;
|
•
|
the desire to maintain capital above statutory minimum requirements 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;
|
•
|
difficulty managing growth, whether organic or through acquisitions;
|
•
|
unfavorable economic or other conditions could cause the Company to record impairment charges for all or a portion of its goodwill and other intangible assets;
|
•
|
policies and procedures for the mitigation of risks may be insufficient to prevent losses;
|
•
|
the shareholder rights plan 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.
|
(a)
|
None
|
(b)
|
None
|
(c)
|
The following table provides information about purchases by the Company (and all affiliated purchasers), during the quarter ended
March 31, 2019
, of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act:
|
31(i)
|
|
|
|
31(ii)
|
|
|
|
32
|
|
|
|
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, Treasurer, Chief
|
|
|
Financial Officer, Chief Accounting Officer and
|
|
|
Director (
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:
|
May 8, 2019
|
/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
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d)
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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
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5.
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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):
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a)
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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
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b)
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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.
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Dated:
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May 8, 2019
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/s/ James A. Fine, Jr.
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|
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James A. Fine, Jr.
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|
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Chief Financial Officer
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(i)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and
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(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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|
|
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Dated:
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May 8, 2019
|
/s/ J. Allen Fine
|
|
|
J. Allen Fine
|
|
|
Chief Executive Officer
|
|
|
|
|
|
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Dated:
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May 8, 2019
|
/s/ James A. Fine, Jr.
|
|
|
James A. Fine, Jr.
|
|
|
Chief Financial Officer
|