Investors Title Co 10-Q for FY2021 Q1

Investors Title Co (ITIC)

10-Q 2021-05-10 For: 2021-03-31

Added on April 07, 2026

About this 10-Q

Investors Title Co filed this 10-Q on May 10, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $72.08M; up 141.1% from $29.9M a year earlier
Net income: $13.82M; compared with a net loss of $7.01M a year earlier
Diluted EPS: $7.29; compared with -$3.71 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 (unaudited)	1

	Consolidated Statements of Operations For the Three Months Ended March 31, 2021 and 2020 (unaudited)	2

	Consolidated Statements of Comprehensive Income For the Three Months Ended March 31, 2021 and 2020 (unaudited)	3

	Consolidated Statements of Stockholders’ Equity For the Three Months Ended March 31, 2020 and 2021 (unaudited)	4

	Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2021 and 2020 (unaudited)	5

	Notes to Consolidated Financial Statements (unaudited)	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36

Item 4.	Controls and Procedures	36

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 3.	Defaults Upon Senior Securities	37

Item 4.	Mine Safety Disclosures	37

Item 5.	Other Information	37

Item 6.	Exhibits	38

SIGNATURE		39


	March 31, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	22,964	$	13,723
Investments:
Fixed maturity securities, available-for-sale, at fair value (amortized cost: March 31, 2021: $98,068; December 31, 2020: $112,037)	102,970		117,713
Equity securities, at fair value (cost: March 31, 2021: $28,967; December 31, 2020: $32,478)	64,646		64,919
Short-term investments	30,498		15,170
Other investments	14,840		15,493
Total investments	212,954		213,295

Premium and fees receivable	20,188		19,427
Accrued interest and dividends	1,232		1,038
Prepaid expenses and other receivables	10,622		9,418
Property, net	12,338		11,160
Goodwill and other intangible assets, net	10,119		9,771
Operating lease right-of-use assets	3,379		3,533
Other assets	1,744		1,560
Total Assets	$	295,540	$	282,925

Liabilities and Stockholders’ Equity
Liabilities:
Reserve for claims	$	34,562	$	33,584
Accounts payable and accrued liabilities	32,038		36,020
Operating lease liabilities	3,509		3,669
Current income taxes payable	3,377		638
Deferred income taxes, net	9,181		8,592
Total liabilities	82,667		82,503

Commitments and Contingencies	—		—

Stockholders’ Equity:
Preferred stock (1,000 authorized shares; no shares issued)	—		—
Common stock – no par value (10,000 authorized shares; 1,894 and 1,892 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively, excluding in each period 292 shares of common stock held by the Company)	—		—
Retained earnings	209,157		196,096
Accumulated other comprehensive income	3,716		4,326
Total stockholders' equity	212,873		200,422
Total Liabilities and Stockholders’ Equity	$	295,540	$	282,925


	Three Months Ended March 31,
	2021		2020
Revenues:
Net premiums written	$	61,477	$	38,627
Escrow and other title-related fees	2,798		1,842
Non-title services	2,078		2,547
Interest and dividends	1,016		1,177
Other investment income	941		440
Net realized investment gains (losses)	321		(412)
Changes in the estimated fair value of equity security investments	3,239		(14,458)
Other	208		138
Total Revenues	72,078		29,901

Operating Expenses:
Commissions to agents	30,542		20,187
Provision for claims	1,591		906
Personnel expenses	16,153		11,809
Office and technology expenses	2,742		2,415
Other expenses	3,735		3,113
Total Operating Expenses	54,763		38,430

Income (Loss) before Income Taxes	17,315		(8,529)

Provision (Benefit) for Income Taxes	3,492		(1,518)

Net Income (Loss)	$	13,823	$	(7,011)

Basic Earnings (Loss) per Common Share	$	7.30	$	(3.71)

Weighted Average Shares Outstanding – Basic	1,894		1,890

Diluted Earnings (Loss) per Common Share	$	7.29	$	(3.71)

Weighted Average Shares Outstanding – Diluted	1,897		1,890


	Three Months Ended March 31,
	2021		2020
Net income (loss)	$	13,823	$	(7,011)
Other comprehensive (loss) income, before tax:
Accumulated postretirement benefit obligation adjustment	—		(41)
Net unrealized loss on investments arising during the period	(750)		(391)
Reclassification adjustment for sale of securities included in net income (loss)	(23)		(30)
Reclassification adjustment for write-down of securities included in net income (loss)	—		482
Other comprehensive (loss) income, before tax	(773)		20
Income tax benefit related to postretirement health benefits	—		(9)
Income tax benefit related to net unrealized loss on investments arising during the period	(158)		(87)
Income tax benefit related to reclassification adjustment for sale of securities included in net income (loss)	(5)		(6)
Income tax expense related to reclassification adjustment for write-down of securities included in net income (loss)	—		110
Net income tax (benefit) expense on other comprehensive (loss) income	(163)		8
Other comprehensive (loss) income	(610)		12
Comprehensive Income (Loss)	$	13,213	$	(6,999)


	Common Stock			Retained Earnings		Accumulated Other Comprehensive Income		Total Stockholders’ Equity
	Shares	Amount
Balance, January 1, 2020	1,889	$	—	$	188,262	$	3,100	$	191,362
Net loss				(7,011)				(7,011)
Dividends paid ($0.44 per share)				(832)				(832)
Exercise of stock appreciation rights	2			(1)				(1)
Share-based compensation expense related to stock appreciation rights				117				117
Accumulated postretirement benefit obligation adjustment						(32)		(32)
Net unrealized gain on investments						44		44
Balance, March 31, 2020	1,891	$	—	$	180,535	$	3,112	$	183,647

Balance, January 1, 2021	1,892	$	—	$	196,096	$	4,326	$	200,422
Net income				13,823				13,823
Dividends paid ($0.44 per share)				(832)				(832)
Exercise of stock appreciation rights	2			(1)				(1)
Share-based compensation expense related to stock appreciation rights				71				71
Net unrealized loss on investments						(610)		(610)
Balance, March 31, 2021	1,894	$	—	$	209,157	$	3,716	$	212,873


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended March 31,
	2021		2019
Operating Activities
Net income (loss)	$	13,823	$	(7,011)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	430		457
Amortization of investments, net	285		248
Amortization of other intangible assets, net	134		126
Share-based compensation expense related to stock appreciation rights	71		117
Net gain on disposals of property	(8)		(2)
Net realized investment (gains) losses	(321)		412
Net change in estimated fair value of equity security investments	(3,239)		14,458
Net earnings from other investments	(594)		(315)
Provision for claims	1,591		906
Provision (benefit) for deferred income taxes	753		(3,057)
Changes in assets and liabilities:
(Increase) decrease in premium and fees receivables	(761)		193
Increase in other assets	(2,064)		(4,743)
Decrease in operating lease right-of-use assets	154		169
Decrease in accounts payable and accrued liabilities	(3,982)		(543)
Decrease in operating lease liabilities	(160)		(165)
Increase in current income taxes payable	2,739		1,581
Payments of claims, net of recoveries	(613)		(832)
Net cash provided by operating activities	8,238		1,999

Investing Activities
Purchases of equity securities	(976)		(5,866)
Purchases of short-term investments	(16,578)		(3,540)
Purchases of other investments	(286)		(328)
Proceeds from sales and maturities of fixed maturity securities	13,660		2,579
Proceeds from sales of equity securities	4,831		4,557
Proceeds from sales and maturities of short-term investments	1,251		1,034
Proceeds from sales and distributions of other investments	1,534		401
Proceeds from sales of other assets	—		10
Purchases of property	(1,613)		(643)
Proceeds from the sale of property	13		5
Net cash provided by (used in) investing activities	1,836		(1,791)

Financing Activities
Exercise of stock appreciation rights	(1)		(1)
Dividends paid	(832)		(832)
Net cash used in financing activities	(833)		(833)

Net Increase (Decrease) in Cash and Cash Equivalents	9,241		(625)
Cash and Cash Equivalents, Beginning of Period	13,723		25,949
Cash and Cash Equivalents, End of Period	$	22,964	$	25,324


Consolidated Statements of Cash Flows, continued
	Three Months Ended March 31,
	2021		2020
Supplemental Disclosures:
Cash Paid During the Year for:
Income tax payments, net	$	—	$	(42)
Non-Cash Investing and Financing Activities:
Non-cash net unrealized loss (gain) on investments, net of deferred tax benefit (provision) of $163 and $(17) for March 31, 2021 and 2020, respectively	$	610	$	(44)
Adjustments to postretirement benefits obligation, net of deferred tax benefit of $— and $9 for March 31, 2021 and 2020, respectively	$	—	$	32


(in thousands)	March 31, 2021		December 31, 2020
Balance, beginning of period	$	33,584	$	31,333
Provision charged to operations	1,591		5,204
Payments of claims, net of recoveries	(613)		(2,953)
Balance, end of period	$	34,562	$	33,584


(in thousands, except percentages)	March 31, 2021		%	December 31, 2020		%
Known title claims	$	3,452	10.0	$	3,585	10.7
IBNR	31,110		90.0	29,999		89.3
Total reserve for claims	$	34,562	100.0	$	33,584	100.0


	Three Months Ended March 31,
(in thousands, except per share amounts)	2021		2020
Net income (loss)	$	13,823	$	(7,011)
Weighted average common shares outstanding – Basic	1,894		1,890
Incremental shares outstanding assuming the exercise of dilutive SARs (share-settled)	3		—
Weighted average common shares outstanding – Diluted	1,897		1,890
Basic earnings (loss) per common share	$	7.30	$	(3.71)
Diluted earnings (loss) per common share	$	7.29	$	(3.71)


(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, 2020	30	$	124.13	3.53	$	1,352
SARs granted	14	137.40
SARs exercised	(8)	75.75
Outstanding as of December 31, 2020	36	$	139.16	4.38	$	903
SARs granted	—	—
SARs exercised	(3)	68.70
Outstanding as of March 31, 2021	33	$	145.47	4.49	$	910

Exercisable as of March 31, 2021	26	$	146.55	4.03	$	738

Unvested as of March 31, 2021	7	$	141.37	6.24	$	172


	2020
Expected Life in Years	6.2	-	7.0
Volatility	27.2%
Interest Rate	0.8%
Yield Rate	1.0%


Three Months Ended March 31, 2021 (in thousands)	Title Insurance		All Other		Intersegment Eliminations		Total
Insurance and other services revenues	$	66,521	$	2,338	$	(2,298)	$	66,561
Investment income	4,396		800		—		5,196
Net realized gain on investments	232		89		—		321
Total revenues	$	71,149	$	3,227	$	(2,298)	$	72,078
Operating expenses	54,530		2,385		(2,152)		54,763
Income before income taxes	$	16,619	$	842	$	(146)	$	17,315
Total assets	$	237,082	$	58,458	$	—	$	295,540


As of March 31, 2021 (in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Fixed maturity securities, available-for-sale, at fair value:
Government obligations	$	12,003	$	7	$	—	$	12,010
General obligations of U.S. states, territories and political subdivisions	17,333		1,053		—		18,386
Special revenue issuer obligations of U.S. states, territories and political subdivisions	44,671		2,816		3		47,484
Corporate debt securities	24,061		1,067		38		25,090
Total	$	98,068	$	4,943	$	41	$	102,970


As of December 31, 2020 (in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Fixed maturity securities, available-for-sale, at fair value:
Government obligations	$	24,026	$	57	$	—	$	24,083
General obligations of U.S. states, territories and political subdivisions	17,391		1,262		—		18,653
Special revenue issuer obligations of U.S. states, territories and political subdivisions	44,939		3,270		3		48,206
Corporate debt securities	25,681		1,114		24		26,771
Total	$	112,037	$	5,703	$	27	$	117,713


	Available-for-Sale
(in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	34,295	$	34,374
Due one year through five years	48,397		51,577
Due five years through ten years	14,558		15,674
Due after ten years	818		1,345
Total	$	98,068	$	102,970


	Less than 12 Months				12 Months or Longer				Total
As of March 31, 2021 (in thousands)	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
Special revenue issuer obligations of U.S. states, territories and political subdivisions	$	—	$	—	$	1,102	$	(3)	$	1,102	$	(3)
Corporate debt securities	20,005		(38)		—		—		20,005		(38)
Total temporarily impaired securities	$	20,005	$	(38)	$	1,102	$	(3)	$	21,107	$	(41)


Three Months Ended March 31, 2020 (in thousands)	Title Insurance		All Other		Intersegment Eliminations		Total
Insurance and other services revenues	$	41,853	$	2,805	$	(1,504)	$	43,154
Investment loss	(11,460)		(1,381)		—		(12,841)
Net realized gain (loss) on investments	63		(475)		—		(412)
Total revenues	$	30,456	$	949	$	(1,504)	$	29,901
Operating expenses	37,443		2,345		(1,358)		38,430
Loss before income taxes	$	(6,987)	$	(1,396)	$	(146)	$	(8,529)
Total assets	$	187,236	$	66,882	$	—	$	254,118


As of March 31, 2021 (in thousands)	Cost		Estimated Fair Value
Equity securities, at fair value:
Common stocks	$	28,967	$	64,646
Total	$	28,967	$	64,646


(in thousands)	Balance Sheet Classification	Carrying Value		Estimated Fair Value		Maximum Potential Loss (a)
Tax credit LPs	Other investments	$	267	$	267	$	1,768
Real estate LLCs or LPs	Other investments	5,091		5,310		7,750
Small business investment LPs	Other investments	7,269		7,458		13,295
Total		$	12,627	$	13,035	$	22,813


(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, 2021 (in thousands)	Level 1		Level 2 *		Level 3		Total
Fixed maturity securities:
Obligations of U.S. states, territories and political subdivisions	$	12,010	$	65,870	$	—	$	77,880
Corporate debt securities	—		25,090		—		25,090
Total	$	12,010	$	90,960	$	—	$	102,970


As of March 31, 2021 (in thousands)	Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	22,964	$	—	$	—	$	22,964
Accrued interest and dividends	1,232		—		—		1,232
Equity securities, at fair value:
Common stocks	64,646		—		—		64,646
Short-term investments:
Money market funds and commercial paper	30,498		—		—		30,498
Other investments:
Equity investments in unconsolidated affiliates, equity method	—		—		6,080		6,080
Equity investments in unconsolidated affiliates, measurement alternative	—		—		8,760		8,760
Total	$	119,340	$	—	$	14,840	$	134,180


(in thousands)	Balance, January 1, 2021		Amounts Impaired		Observable Changes		Purchases and Additional Commitments Paid		Sales, Returns of Capital and Other Reductions		Balance, March 31, 2021
Other investments:
Equity investments in unconsolidated affiliates, measurement alternative	$	8,741	$	—	$	—	$	211	$	(192)	$	8,760
Total	$	8,741	$	—	$	—	$	211	$	(192)	$	8,760


(in thousands)	Balance, January 1, 2020		Amounts Impaired		Observable Changes		Purchases and Additional Commitments Paid		Sales, Returns of Capital and Other Reductions		Balance, December 31, 2020
Other investments:
Equity investments in unconsolidated affiliates, measurement alternative	$	7,899	$	—	$	—	$	1,227	$	(385)	$	8,741
Total	$	7,899	$	—	$	—	$	1,227	$	(385)	$	8,741


Financial Statement Classification, Consolidated Balance Sheets (unaudited) (in thousands)	As of March 31, 2021		As of December 31, 2020
Other investments	$	6,080	$	6,752
Premium and fees receivable	$	776	$	753


Year Ended (in thousands)
2021	$	409
2022	574
2023	574
2024	522
2025	504
Thereafter	2,999
Total	$	5,582


Three Months Ended March 31, 2021 (in thousands)	Unrealized Gains and Losses On Available-for-Sale Securities		Postretirement Benefits Plans		Total
Beginning balance at January 1	$	4,470	$	(144)	$	4,326
Other comprehensive loss before reclassifications	(592)		—		(592)
Amounts reclassified from accumulated other comprehensive income	(18)		—		(18)
Net current-period other comprehensive loss	(610)		—		(610)
Ending balance	$	3,860	$	(144)	$	3,716


Three Months Ended March 31, 2021 (in thousands)
Details about Accumulated Other Comprehensive Income Components (in thousands)	Amount Reclassified from Accumulated Other Comprehensive Income		Affected Line Item in the Consolidated Statements of Operations (unaudited)
Unrealized gains (losses) on available-for-sale securities:
Net realized gain on investments	$	23
Other-than-temporary impairments	—
Total	$	23	Net realized investment gains (losses)
Tax	(5)		Provision (benefit) for income taxes
Net of Tax	$	18
Reclassifications for the period	$	18


Three Months Ended March 31, 2020 (in thousands)
Details about Accumulated Other Comprehensive Income Components (in thousands)	Amount Reclassified from Accumulated Other Comprehensive Income		Affected Line Item in the Consolidated Statements of Operations (unaudited)
Unrealized gains (losses) on available-for-sale securities:
Net realized gain on investments	$	30
Other-than-temporary impairments	(482)
Total	$	(452)	Net realized investment gains (losses)
Tax	104		Provision (benefit) for income taxes
Net of Tax	$	(348)
Reclassifications for the period	$	(348)


(b)						Leases with an initial term of twelve months or less are not recorded on the unaudited Consolidated Balance Sheets.


	As of March 31, 2021		As of December 31, 2020
Weighted average remaining lease term (years)	4.20		4.24
Weighted average discount rate	4.5	%	4.6	%


	Three Months Ended March 31,
State (in thousands)	2021		2020
North Carolina	$	25,247	$	13,943
Texas	11,352		7,517
Georgia	6,890		4,505
South Carolina	5,348		3,481
All Others	12,773		9,301
Premiums Written	61,610		38,747
Reinsurance Assumed	—		3
Reinsurance Ceded	(133)		(123)
Net Premiums Written	$	61,477	$	38,627


	Issuer Purchases of Equity Securities (unrounded)
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					428,161
January 1 through January 31, 2021	—	$	—	—	428,161
February 1 through February 28, 2021	—	—		—	428,161
March 1 through March 31, 2021	—	—		—	428,161
Total	—	$	—	—	428,161


Exhibit Number			Description

10.1			Amended and Restated Death Benefit Plan Agreement effective January 1, 2021 for J. Allen Fine (incorporated by reference to Exhibit 10.4 of the Company’s Form 10-K filed with the Securities and Exchange Commission on March 15, 2021)

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			Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS			Inline XBRL Instance Document*

101.SCH			Inline XBRL Taxonomy Extension Schema Document

101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document

104			Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

* - The instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL 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)


Dated:	May 10, 2021	/s/ J. Allen Fine
		J. Allen Fine
		Chief Executive Officer