|
Investors
Title Company and Subsidiaries
|
|
|
|
For
the Nine Months Ended September 30, 2008 and 2007
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Retained
|
|
|
Other
Comprehensive
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Earnings
|
|
|
Income
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2006
|
|
|
2,507,325 |
|
|
$ |
1 |
|
|
$ |
92,134,608 |
|
|
$ |
3,141,054 |
|
|
$ |
95,275,663 |
|
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
7,334,255 |
|
|
|
|
|
|
|
7,334,255 |
|
|
Dividends
($.18 per share)
|
|
|
|
|
|
|
|
|
|
|
(447,447 |
) |
|
|
|
|
|
|
(447,447 |
) |
|
Shares
of common stock repurchased and retired
|
|
|
(39,428 |
) |
|
|
|
|
|
|
(1,909,879 |
) |
|
|
|
|
|
|
(1,909,879 |
) |
|
Issuance
of common stock in payment of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
bonuses
and fees
|
|
|
40 |
|
|
|
|
|
|
|
1,998 |
|
|
|
|
|
|
|
1,998 |
|
|
Stock
options exercised
|
|
|
14,535 |
|
|
|
|
|
|
|
351,062 |
|
|
|
|
|
|
|
351,062 |
|
|
Share-based
compensation expense
|
|
|
|
|
|
|
|
|
|
|
67,162 |
|
|
|
|
|
|
|
67,162 |
|
|
Amortization
related to FASB Statement No. 158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,802 |
|
|
|
8,802 |
|
|
Net
unrealized gain on investments
|
|
|
|
372,965 |
|
|
|
372,965 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
September 30, 2007
|
|
|
2,482,472 |
|
|
$ |
1 |
|
|
$ |
97,531,759 |
|
|
$ |
3,522,821 |
|
|
$ |
101,054,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2007
|
|
|
2,411,318 |
|
|
$ |
1 |
|
|
$ |
95,739,827 |
|
|
$ |
3,536,012 |
|
|
$ |
99,275,840 |
|
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
2,767,479 |
|
|
|
|
|
|
|
2,767,479 |
|
|
Dividends
($.21 per share)
|
|
|
|
|
|
|
|
|
|
|
(501,333 |
) |
|
|
|
|
|
|
(501,333 |
) |
|
Shares
of common stock repurchased and retired
|
|
|
(124,092 |
) |
|
|
|
|
|
|
(5,759,881 |
) |
|
|
|
|
|
|
(5,759,881 |
) |
|
Issuance
of common stock in payment of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
bonuses
and fees
|
|
|
40 |
|
|
|
|
|
|
|
1,946 |
|
|
|
|
|
|
|
1,946 |
|
|
Stock
options exercised
|
|
|
11,280 |
|
|
|
|
|
|
|
216,403 |
|
|
|
|
|
|
|
216,403 |
|
|
Share-based
compensation expense
|
|
|
|
|
|
|
|
|
|
|
69,889 |
|
|
|
|
|
|
|
69,889 |
|
|
Amortization
related to FASB Statement No. 158
|
|
|
|
|
|
|
|
|
|
|
|
10,092 |
|
|
|
10,092 |
|
|
Net
unrealized loss on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,857,991 |
) |
|
|
(2,857,991 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
September 30, 2008
|
|
|
2,298,546 |
|
|
$ |
1 |
|
|
$ |
92,534,330 |
|
|
$ |
688,113 |
|
|
$ |
93,222,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investors
Title Company and Subsidiaries
|
|
|
|
For
the Nine Months Ended September 30, 2008 and 2007
|
|
(Unaudited)
|
|
|
|
2008
|
|
|
2007
|
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
2,767,479 |
|
|
$ |
7,334,255 |
|
|
Adjustments
to reconcile net income to net cash
|
|
|
|
|
|
|
|
|
|
provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
770,901 |
|
|
|
907,791 |
|
|
Amortization
on investments, net
|
|
|
237,374 |
|
|
|
199,871 |
|
|
Amortization
of prior service cost
|
|
|
15,291 |
|
|
|
13,339 |
|
|
Issuance
of common stock in payment of bonuses and fees
|
|
|
1,946 |
|
|
|
1,998 |
|
|
Share-based
compensation expense related to stock options
|
|
|
69,889 |
|
|
|
67,162 |
|
|
Benefit
for losses on premiums receivable
|
|
|
(837,000 |
) |
|
|
(76,000 |
) |
|
Net
(gain) loss on disposals of property
|
|
|
10,684 |
|
|
|
(2,673 |
) |
|
Net
realized (gain) loss on investments
|
|
|
669,586 |
|
|
|
(887,211 |
) |
|
Provision
for claims
|
|
|
8,329,832 |
|
|
|
8,525,279 |
|
|
Provision
for deferred income taxes
|
|
|
962,000 |
|
|
|
456,000 |
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Decrease
(increase) in receivables and other assets
|
|
|
1,095,053 |
|
|
|
(1,402,977 |
) |
|
(Decrease)
increase in accounts payable and accrued liabilities
|
|
|
(437,924 |
) |
|
|
667,612 |
|
|
Decrease
in commissions and reinsurance payables
|
|
|
(104,493 |
) |
|
|
(197,281 |
) |
|
Decrease
in current income taxes payable
|
|
|
(1,747,877 |
) |
|
|
(326,255 |
) |
|
Payments
of claims, net of recoveries
|
|
|
(8,014,832 |
) |
|
|
(6,854,279 |
) |
|
Net
cash provided by operating activities
|
|
|
3,787,909 |
|
|
|
8,426,631 |
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
|
Purchases
of available-for-sale securities
|
|
|
(2,817,230 |
) |
|
|
(40,022,039 |
) |
|
Purchases
of short-term securities
|
|
|
(6,211,596 |
) |
|
|
(7,138,060 |
) |
|
Purchases
of and net earnings (losses) from other investments
|
|
|
(1,181,781 |
) |
|
|
(770,539 |
) |
|
Proceeds
from sales and maturities of available-for-sale securities
|
|
|
13,433,644 |
|
|
|
38,897,536 |
|
|
Proceeds
from maturities of held-to-maturity securities
|
|
|
505,000 |
|
|
|
149,000 |
|
|
Proceeds
from sales and maturities of short-term securities
|
|
|
1,165,189 |
|
|
|
2,124,264 |
|
|
Proceeds
from sales and distributions of other investments
|
|
|
768,013 |
|
|
|
995,924 |
|
|
Purchases
of property
|
|
|
(123,901 |
) |
|
|
(389,201 |
) |
|
Proceeds
from disposals of property
|
|
|
- |
|
|
|
127,936 |
|
|
Net
change in pending trades
|
|
|
21,739 |
|
|
|
(998,020 |
) |
|
Net
cash provided by (used) in investing activities
|
|
|
5,559,077 |
|
|
|
(7,023,199 |
) |
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
|
Repurchases
of common stock, net
|
|
|
(5,759,881 |
) |
|
|
(1,909,879 |
) |
|
Exercise
of options
|
|
|
216,403 |
|
|
|
351,062 |
|
|
Dividends
paid
|
|
|
(501,333 |
) |
|
|
(447,447 |
) |
|
Net
cash used in financing activities
|
|
|
(6,044,811 |
) |
|
|
(2,006,264 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
Increase (Decrease) in Cash and Cash Equivalents
|
|
|
3,302,175 |
|
|
|
(602,832 |
) |
|
Cash
and Cash Equivalents, Beginning of Period
|
|
|
3,000,762 |
|
|
|
3,458,432 |
|
|
Cash
and Cash Equivalents, End of Period
|
|
$ |
6,302,937 |
|
|
$ |
2,855,600 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures:
|
|
|
|
|
|
|
|
|
|
Cash
Paid During the Period for:
|
|
|
|
|
|
|
|
|
|
Income
Taxes, net of refunds
|
|
$ |
2,305,000 |
|
|
$ |
2,453,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Non
cash net unrealized gain (loss) on investments, net of deferred
tax
|
|
|
|
|
|
|
provision
(benefit) of ($1,478,492) and $194,517 for 2008 and
2007,
|
|
|
|
|
|
|
respectively
|
|
$ |
(2,857,991 |
) |
|
$ |
372,965 |
|
|
|
|
|
|
|
|
|
|
|
|
See
notes to Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
INVESTORS
TITLE COMPANY
AND
SUBSIDIARIES
September
30, 2008
(Unaudited)
Note 1 - Basis of
Presentation and Significant Accounting Policies
Reference
should be made to the “Notes to Consolidated Financial Statements” of Investors
Title Company’s (the “Company”) Annual Report on Form 10-K for the year ended
December 31, 2007 for a complete description of the Company’s significant
accounting policies.
Principles
of Consolidation – The accompanying
unaudited consolidated financial statements include the accounts and operations
of Investors Title Company and its subsidiaries (Investors Title Insurance
Company, Northeast Investors Title Insurance Company, Investors Title Exchange
Corporation, Investors Title Accommodation Corporation, Investors Title
Management Services, Inc., Investors Title Commercial Agency, LLC, Investors
Capital Management Company, and Investors Trust Company), and have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, certain information and footnote
disclosures normally included in annual financial statements have been condensed
or omitted. All intercompany balances and transactions have been
eliminated in consolidation.
In the
opinion of management, all adjustments considered necessary for a fair
presentation of the financial position, results of operations and cash flows in
the accompanying unaudited consolidated financial statements have been
included. All such adjustments are of a normal recurring
nature. Operating results for the three and nine months ended
September 30, 2008 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2008.
Use of Estimates and
Assumptions – The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
(“GAAP”) requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates and assumptions used.
Recently Issued Accounting Standards
– The Company adopted Statement of Financial Accounting Standards
(“SFAS”) No. 157, “Fair Value Measurements,” (“SFAS 157”) as of
January 1, 2008. Please refer to Note 7 for discussion of SFAS
157 and fair value measurements.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities – Including an amendment of FASB
Statement No. 115,” (“SFAS 159”), which is effective for fiscal years
beginning after November 15, 2007. This Statement, which is
expected to expand fair value measurement, permits entities to choose to measure
many financial instruments and certain other items at fair value, beyond those
that are required to be measured at fair value by SFAS 157. This Statement also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. Unrealized gains and losses on items
for which the fair value option is elected would be reported in
earnings. The Company adopted SFAS 159 and has elected not to measure
any additional financial instruments and other items at fair value, other than
those it measures at fair value pursuant to SFAS 157.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS
160”). SFAS 160 amends ARB No. 51 to establish accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. This Statement requires the
recognition of a noncontrolling interest (minority interest) as equity in the
consolidated financial statements and separate from the parent’s equity. The
amount of net income attributable to the noncontrolling interest will be
included in consolidated net income on the face of the income statement. It also
amends certain of ARB No. 51’s consolidation procedures for consistency
with the requirements of SFAS 141(R). SFAS 160 is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008, with earlier adoption prohibited. The
Company is currently evaluating the effect of adopting this new Statement and
anticipates that the Statement will not have a significant impact on the
reporting of the Company’s results of operations.
In April
2008, the FASB issued Financial Staff Position (“FSP”) No. FAS 142-3,
“Determination of the Useful Life of Intangible Assets.” This FSP amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under SFAS
No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). The objective
of this FSP is to improve the consistency between the useful life of a
recognized intangible asset under SFAS 142 and the period of expected cash flows
used to measure the fair value of the asset under SFAS 141(R), and other GAAP
principles. This FSP applies to all intangible assets, whether acquired in a
business combination or otherwise and shall be effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years and applied prospectively to
intangible assets acquired after the effective date. Early adoption is
prohibited. The Company is currently evaluating the effect of adopting this new
FSP and anticipates that it will not have a significant impact on the reporting
of the Company’s results of operations.
In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”). This Statement identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in accordance with GAAP. With the issuance of this Statement, the FASB
concluded that the GAAP hierarchy should be directed toward the entity and not
its auditor, and reside in the accounting literature established by the FASB as
opposed to the American Institute of Certified Public Accountants (“AICPA”)
Statement on Auditing Standards No. 69, “The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles.” This Statement is
effective 60 days following the SEC’s approval of the Public Company Accounting
Oversight Board amendments to Audit Standards AU Section 411, “The Meaning
of Present Fairly in Conformity With Generally Accepted Accounting Principles.”
The Company is currently evaluating the effect of adopting this new Statement
and anticipates that the Statement will not have a significant impact on the
reporting of the Company’s results of operations.
Note 2 - Reserves for
Claims
Transactions
in the reserves for claims for the nine months ended September 30, 2008 and the
year ended December 31, 2007 are summarized as follows:
|
|
|
September
30, 2008
|
|
|
December
31, 2007
|
|
|
Balance,
beginning of period
|
|
$ |
36,975,000 |
|
|
$ |
36,906,000 |
|
|
Provision,
charged to operations
|
|
|
8,329,832 |
|
|
|
10,134,719 |
|
|
Payments
of claims, net of recoveries
|
|
|
(8,014,832 |
) |
|
|
(10,065,719 |
) |
|
Ending
balance
|
|
$ |
37,290,000 |
|
|
$ |
36,975,000 |
|
The total
reserve for all reported and unreported losses the Company incurred through
September 30, 2008 is represented by the reserves for claims. The Company's
reserves for unpaid losses and loss adjustment expenses are established using
estimated amounts required to settle claims for which notice has been received
(reported) and the amount estimated to be required to satisfy incurred claims of
policyholders which may be reported in the future. Despite the variability of
such estimates, management believes that the reserves are adequate to cover
claim losses which might result from pending and future claims for policies
issued through September 30, 2008. The Company continually reviews
and adjusts its reserve estimates to reflect its loss experience and any new
information that becomes available. Adjustments resulting from such
reviews may be significant.
Claims and
losses paid are charged to the reserves for claims. Although claims losses are
typically paid in cash, occasionally claims are settled by purchasing the
interest of the insured or the claimant in the real property. When this event
occurs, the Company carries assets at the lower of cost or estimated realizable
value, net of any indebtedness on the property.
Note 3 - Comprehensive
Income (Loss)
Total
comprehensive income (loss) for the three months ended September 30, 2008 and
2007 was ($647,706) and $4,709,296, respectively. Comprehensive
income (loss) for the nine months ended September 30, 2008 and 2007 was
($80,420) and $7,716,022, respectively. Comprehensive income (loss)
is comprised of unrealized gains or losses on the Company’s available-for-sale
securities, net of tax and amortization of prior service cost and unrealized
gains and losses in net periodic benefit costs related to postretirement
liabilities, net of tax.
Note 4 - Earnings (Loss) Per
Common Share
Basic
earnings (loss) per common share is computed by dividing net income (loss) by
the weighted-average number of common shares outstanding during the reporting
period. Diluted earnings (loss) per common share is computed by
dividing net income (loss) by the combination of dilutive potential common
stock, comprised of shares issuable under the Company’s share-based compensation
plans and the weighted-average number of common shares outstanding during the
reporting period. Dilutive common share equivalents include the
dilutive effect of in-the-money stock options and share settled stock
appreciation rights (“SARS”), which is calculated based on the average share
price for each period using the treasury stock method. Under the
treasury stock method, the exercise price of the stock option or SAR, the amount
of compensation cost, if any, for future service that the Company has not yet
recognized, and the amount of estimated tax benefits that would be recorded in
additional paid-in capital, if any, when the stock option or SAR is exercised
are assumed to be used to repurchase shares in the current
period. There were awards for 8,000 SARS and 5,500 SARS excluded from
the computation of diluted earnings per share for the three and nine months
ended September 30, 2008, respectively, because these awards were
anti-dilutive. There were awards for 3,000 SARS and 6,000 SARS
excluded from the computation of diluted earnings per share for the three and
nine months ended September 30, 2007, respectively, because these awards were
anti-dilutive. The incremental dilutive common share equivalents,
calculated using the treasury stock method were 17,890 and 25,998 for the three
months ended September 30, 2008 and 2007, respectively, and 21,632 and 32,096
for the nine months ended September 30, 2008 and 2007,
respectively.
Note 5 – Segment
Information
Consistent
with SFAS No. 131, “Disclosures about Segments
of an Enterprise and Related Information,” the Company has aggregated
its operating segments into two reportable segments: 1) title insurance
services; and 2) tax-deferred exchange services. The remaining
immaterial segments have been combined into a group called All
Other.
|
Three
Months Ended
September 30,
2008
|
|
Title
Insurance
|
|
|
Exchange
Services
|
|
|
All
Other
|
|
|
Intersegment
Eliminations
|
|
|
Total
|
|
|
Operating
revenues
|
|
$ |
15,764,122 |
|
|
$ |
542,528 |
|
|
$ |
952,770 |
|
|
$ |
(196,734 |
) |
|
$ |
17,062,686 |
|
|
Investment
income
|
|
|
850,925 |
|
|
|
769 |
|
|
|
248,483 |
|
|
|
(20,417 |
) |
|
|
1,079,760 |
|
|
Net
realized loss on
investments
|
|
|
(542,392 |
) |
|
|
- |
|
|
|
(3,491 |
) |
|
|
- |
|
|
|
(545,883 |
) |
|
Total
revenues
|
|
$ |
16,072,655 |
|
|
$ |
543,297 |
|
|
$ |
1,197,762 |
|
|
$ |
(217,151 |
) |
|
$ |
17,596,563 |
|
|
Operating
expenses
|
|
|
15,523,544 |
|
|
|
310,452 |
|
|
|
954,268 |
|
|
|
(196,734 |
) |
|
|
16,591,530 |
|
|
Income
before
income
taxes
|
|
$ |
549,111 |
|
|
$ |
232,845 |
|
|
$ |
243,494 |
|
|
$ |
(20,417 |
) |
|
$ |
1,005,033 |
|
|
Assets,
net
|
|
$ |
108,574,776 |
|
|
$ |
219,132 |
|
|
$ |
32,767,501 |
|
|
$ |
- |
|
|
$ |
141,561,409 |
|
|
Three
Months Ended
September 30,
2007
|
|
Title
Insurance
|
|
|
Exchange
Services
|
|
|
All
Other
|
|
|
Intersegment
Eliminations
|
|
|
Total
|
|
|
Operating
revenues
|
|
$ |
19,550,166 |
|
|
$ |
1,042,311 |
|
|
$ |
862,639 |
|
|
$ |
(219,019 |
) |
|
$ |
21,236,097 |
|
|
Investment
income
|
|
|
999,815 |
|
|
|
6,559 |
|
|
|
313,004 |
|
|
|
(17,500 |
) |
|
|
1,301,878 |
|
|
Net
realized gain on
sales
of investments
|
|
|
148,818 |
|
|
|
- |
|
|
|
372,190 |
|
|
|
- |
|
|
|
521,008 |
|
|
Total
revenues
|
|
$ |
20,698,799 |
|
|
$ |
1,048,870 |
|
|
$ |
1,547,833 |
|
|
$ |
(236,519 |
) |
|
$ |
23,058,983 |
|
|
Operating
expenses
|
|
|
17,105,864 |
|
|
|
347,751 |
|
|
|
881,495 |
|
|
|
(219,019 |
) |
|
|
18,116,091 |
|
|
Income
before
income
taxes
|
|
$ |
3,592,935 |
|
|
$ |
701,119 |
|
|
$ |
666,338 |
|
|
$ |
(17,500 |
) |
|
$ |
4,942,892 |
|
|
Assets,
net
|
|
$ |
114,187,095 |
|
|
$ |
819,087 |
|
|
$ |
35,106,170 |
|
|
$ |
- |
|
|
$ |
150,112,352 |
|
|
Nine
Months Ended
September 30,
2008
|
|
Title
Insurance
|
|
|
Exchange
Services
|
|
|
All
Other
|
|
|
Intersegment
Eliminations
|
|
|
Total
|
|
|
Operating
revenues
|
|
$ |
52,846,663 |
|
|
$ |
1,013,940 |
|
|
$ |
2,734,729 |
|
|
$ |
(587,264 |
) |
|
$ |
56,008,068 |
|
|
Investment
income
|
|
|
2,703,141 |
|
|
|
36,147 |
|
|
|
793,764 |
|
|
|
(61,252 |
) |
|
|
3,471,800 |
|
|
Net
realized loss on
investments
|
|
|
(657,628 |
) |
|
|
- |
|
|
|
(11,958 |
) |
|
|
- |
|
|
|
(669,586 |
) |
|
Total
revenues
|
|
$ |
54,892,176 |
|
|
$ |
1,050,087 |
|
|
$ |
3,516,535 |
|
|
$ |
(648,516 |
) |
|
$ |
58,810,282 |
|
|
Operating
expenses
|
|
|
51,988,712 |
|
|
|
989,416 |
|
|
|
3,089,939 |
|
|
|
(587,264 |
) |
|
|
55,480,803 |
|
|
Income
before
income
taxes
|
|
$ |
2,903,464 |
|
|
$ |
60,671 |
|
|
$ |
426,596 |
|
|
$ |
(61,252 |
) |
|
$ |
3,329,479 |
|
|
Assets,
net
|
|
$ |
108,574,776 |
|
|
$ |
219,132 |
|
|
$ |
32,767,501 |
|
|
$ |
- |
|
|
$ |
141,561,409 |
|
|
Nine
Months Ended
|
|
Title
|
|
|
Exchange
|
|
|
All
|
|
|
Intersegment
|
|
|
|
|
|
September 30,
2007
|
|
Insurance
|
|
|
Services
|
|
|
Other
|
|
|
Eliminations
|
|
|
Total
|
|
|
Operating
revenues
|
|
$ |
55,830,044 |
|
|
$ |
3,157,873 |
|
|
$ |
2,465,588 |
|
|
$ |
(623,671 |
) |
|
$ |
60,829,834 |
|
|
Investment
income
|
|
|
3,024,534 |
|
|
|
22,273 |
|
|
|
788,935 |
|
|
|
(52,502 |
) |
|
|
3,783,240 |
|
|
Net
realized gain on
sales
of investments
|
|
|
480,587 |
|
|
|
- |
|
|
|
406,624 |
|
|
|
- |
|
|
|
887,211 |
|
|
Total
revenues
|
|
$ |
59,335,165 |
|
|
$ |
3,180,146 |
|
|
$ |
3,661,147 |
|
|
$ |
(676,173 |
) |
|
$ |
65,500,285 |
|
|
Operating
expenses
|
|
|
53,219,102 |
|
|
|
1,112,500 |
|
|
|
2,583,099 |
|
|
|
(623,671 |
) |
|
|
56,291,030 |
|
|
Income
before
income
taxes
|
|
$ |
6,116,063 |
|
|
$ |
2,067,646 |
|
|
$ |
1,078,048 |
|
|
$ |
(52,502 |
) |
|
$ |
9,209,255 |
|
|
Assets,
net
|
|
$ |
114,187,095 |
|
|
$ |
819,087 |
|
|
$ |
35,106,170 |
|
|
$ |
- |
|
|
$ |
150,112,352 |
|
Operating
revenues represent net premiums written and other revenues.
Note 6 – Retirement and
Other Postretirement Benefit Plans
On
November 17, 2003, the Company’s subsidiary, Investors Title Insurance Company,
entered into employment agreements with key executives that provide for the
continuation of certain employee benefits upon retirement. The
executive employee benefits include health insurance, dental, vision and life
insurance. The plan is unfunded. The following sets forth the net
periodic benefits cost for the executive benefits for the three and nine
months ended September 30, 2008 and 2007:
|
|
|
For
the Three
Months
Ended
September
30,
|
|
|
For
the Nine
Months
Ended
September
30,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost – benefits earned during the year
|
|
$ |
4,334 |
|
|
$ |
3,492 |
|
|
$ |
13,002 |
|
|
$ |
10,480 |
|
|
Interest
cost on the projected benefit obligation
|
|
|
4,761 |
|
|
|
3,661 |
|
|
|
14,283 |
|
|
|
10,985 |
|
|
Amortization
of unrecognized prior service cost
|
|
|
5,097 |
|
|
|
5,097 |
|
|
|
15,291 |
|
|
|
15,291 |
|
|
Amortization
of unrecognized gains
|
|
|
- |
|
|
|
(651 |
) |
|
|
- |
|
|
|
(1,953 |
) |
|
Net
periodic benefits costs
|
|
$ |
14,192 |
|
|
$ |
11,599 |
|
|
$ |
42,576 |
|
|
$ |
34,803 |
|
Note 7 - Fair Value
Measurement
In
September 2006, the FASB issued SFAS 157, which was effective for fiscal
years beginning after November 15, 2007 and for interim periods within
those years. This Statement defines fair value, establishes a framework for
measuring fair value and expands the related disclosure
requirements. Relative to SFAS 157, the FASB recently issued FSP
157-1, 157-2 and 157-3. FSP 157-1 amends SFAS 157 to exclude SFAS
No. 13, “Accounting for Leases,” and its related interpretive accounting
pronouncements that address leasing transactions, while FSP 157-2 delays the
effective date of the application of SFAS 157 to fiscal years beginning after
November 15, 2008 for all nonfinancial assets and nonfinancial liabilities,
except those that are recognized or disclosed at fair value in the financial
statements on a recurring basis. FSP 157-3 clarifies the application
of SFAS 157 as it relates to the valuation of financial assets in a market that
is not active for those financial assets. This FSP is effective
immediately and includes those periods for which financial statements have not
been issued. The Company adopted SFAS 157 as of January 1,
2008.
Valuation
Hierarchy. SFAS 157 establishes a valuation hierarchy for disclosure of the
inputs to valuation used to measure fair value. This hierarchy prioritizes the
inputs into three broad levels as follows. Level 1 inputs to the
valuation methodology are quoted prices (unadjusted) in active markets for
identical assets or liabilities. Level 2 inputs to the valuation
methodology are quoted prices for similar assets and liabilities in active
markets or inputs that are observable for the asset or liability, either
directly or indirectly through market corroboration, for substantially the full
term of the financial instrument. Level 3 inputs are unobservable
inputs based on the Company’s own assumptions used to measure assets and
liabilities at fair value.
The
following table presents, by level, the financial assets carried at fair value
measured on a recurring basis as of September 30, 2008. The
table does not include cash on hand and also does not include assets which are
measured at historical cost or any basis other than fair value.
|
Available-for-sale
securities
|
|
Carrying
Balance
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Fixed
maturities
|
|
$ |
77,021,610 |
|
|
$ |
- |
|
|
$ |
68,756,999 |
|
|
$ |
8,264,611 |
|
|
Equity
|
|
|
12,066,559 |
|
|
|
12,066,559 |
|
|
|
- |
|
|
|
- |
|
|
Total
|
|
$ |
89,088,169 |
|
|
$ |
12,066,559 |
|
|
$ |
68,756,999 |
|
|
$ |
8,264,611 |
|
The
following table presents the Company’s assets measured at fair value using
significant unobservable inputs (Level 3) as defined in SFAS 157 at September
30, 2008:
|
Changes in fair value
during the period ended September
30, 2008:
|
|
Level
3
|
|
|
Beginning
balance at June 30, 2008
|
|
$ |
10,087,630 |
|
|
Transfers
into Level 2 due to redemption after September 30, 2008
|
|
|
(2,000,000 |
) |
|
Unrealized
gain - included in other comprehensive income
|
|
|
176,981 |
|
|
Ending
balance at September 30, 2008
|
|
$ |
8,264,611 |
|
Valuation
Techniques. A financial instrument’s classification within the
valuation hierarchy is based upon the lowest level of input that is significant
to the fair value measurement.
Equity
securities are measured at fair value using quoted active market prices and are
classified within Level 1 of the valuation hierarchy. The fair value
of fixed maturity investments included in the Level 2 category was based on the
market values obtained from pricing services.
The
Level 2 category generally includes corporate bonds, agency bonds and municipal
bonds. A number of the Company’s investment grade corporate bonds are
frequently traded in active markets and traded market prices for these
securities existed at September 30, 2008. However, these securities
were classified as Level 2 at September 30, 2008, because third party pricing
services also use valuation models, which use observable market inputs, in
addition to traded prices. Substantially all of these assumptions are
observable in the marketplace or can be derived or supported by observable
market data.
The
Company’s investments in student loan auction rate securities (“ARS”) are its
only Level 3 assets, and were transferred from Level 2 because quoted prices
from broker-dealers were unavailable due to the failure of
auctions. Valuations using discounted cash flow models were used to
determine the estimated fair value of these investments as of September 30,
2008. Some of the inputs to this model are unobservable in the market
and are significant.
ARS were
structured to provide purchase and sale liquidity through a Dutch auction
process. Due to the increasingly stressed and liquidity-constrained
environment in money markets, the auction process for ARS began failing in
February 2008 as broker-dealers ceased supporting auctions with their own
capital. The credit quality of the ARS the Company holds is high, as
all are rated investment grade and are comprised entirely of student loan ARS,
substantially guaranteed by government-sponsored enterprises, and the Company
continues to receive interest income.
Note 8 – Investments in
Securities
The
following table presents the gross unrealized losses on investment securities
and the fair value of the securities, aggregated by investment category and
length of time that individual securities have been in a continuous loss
position at September 30, 2008.
|
|
|
Less
than 12 Months
|
|
|
12
Months or Longer
|
|
|
Total
|
|
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
|
|
|
Value
|
|
|
Losses
|
|
|
Value
|
|
|
Losses
|
|
|
Value
|
|
|
Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auction
rate securities
|
|
$ |
5,064,611 |
|
|
$ |
(185,389 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
5,064,611 |
|
|
$ |
(185,389 |
) |
|
Obligations
of states and political subdivisions
|
|
|
28,635,920 |
|
|
$ |
(879,985 |
) |
|
|
1,753,970 |
|
|
|
(40,745 |
) |
|
$ |
30,389,890 |
|
|
|
(920,730 |
) |
|
Total
Fixed Income Securities
|
|
$ |
33,700,531 |
|
|
$ |
(1,065,374 |
) |
|
$ |
1,753,970 |
|
|
$ |
(40,745 |
) |
|
$ |
35,454,501 |
|
|
$ |
(1,106,119 |
) |
|
Equity
Securities
|
|
|
3,754,135 |
|
|
|
(831,359 |
) |
|
|
562,916 |
|
|
|
(230,890 |
) |
|
|
4,317,051 |
|
|
|
(1,062,249 |
) |
|
Total
temporarily impaired securities
|
|
$ |
37,454,666 |
|
|
$ |
(1,896,733 |
) |
|
$ |
2,316,886 |
|
|
$ |
(271,635 |
) |
|
$ |
39,771,552 |
|
|
$ |
(2,168,368 |
) |
Unrealized
losses related to holdings of equity and fixed income securities were caused by
market changes that the Company considers to be temporary. Factors
considered in determining whether a loss is temporary include the length of time
and extent to which fair value has been below cost, the financial condition and
prospects of the issuer (including credit ratings) and macro-economic
changes. Since the decline in fair value was mostly attributable to
changes in interest rates and temporary market changes, and not credit quality,
and the Company has the intent and ability to hold these securities until a
recovery of fair value, the Company does not consider these investments
other-than-temporarily impaired. Reviews of the values of securities
are inherently uncertain, and the value of the investment may not fully recover,
or may decline in future periods resulting in a realized loss. During
the third quarter of 2008, the Company recorded an impairment charge in the
amount of approximately $478,000 related to several of its equity and fixed
income securities that were deemed other than temporarily impaired.
Note 9 – Commitments and
Contingencies
The
Company and its subsidiaries are involved in various legal proceedings that are
incidental to their business. In the Company’s opinion, based on the
present status of these proceedings, any potential liability of the Company or
its subsidiaries with respect to these legal proceedings will not, in the
aggregate, be material to the Company’s consolidated financial condition or
operations.
In
administering tax-deferred property exchanges, the Company’s subsidiary,
Investors Title Exchange Corporation (“ITEC”), serves as a qualified
intermediary for exchanges, holding the net proceeds from sales transactions
from relinquished property to be used for purchase of replacement
property. Another Company subsidiary, Investors Title Accommodation
Corporation (“ITAC”), serves as exchange accommodation titleholder and, through
limited liability companies that are wholly owned subsidiaries of ITAC, holds
property for exchangers in reverse exchange transactions. Like-kind
exchange deposits and reverse exchange property totaled approximately
$59,031,000 and $115,515,000 as of September 30, 2008 and December 31, 2007,
respectively. These amounts are not considered the Company’s assets
and, therefore, are excluded from the accompanying consolidated balance sheets;
however, the Company remains contingently liable for the disposition of these
deposits and for the transfers of property, disbursements of proceeds and the
return on the proceeds at the agreed upon rate. These like-kind
exchange funds are primarily invested in money market and other short-term
investments, including $7.0 million of auction rate securities (“ARS”), at
September 30, 2008. The Company does not believe the current
illiquidity of these securities will impact its operations, as it believes it
has sufficient capital to provide continuous and immediate liquidity as
necessary.
Note 10 – Related Party
Transactions
During the
third quarter of 2008, the Company repurchased 96,000 shares of common stock at
a value of approximately $4,452,000 from a non-employee director and family
member of that director. The shares were repurchased pursuant to the purchase
plan (the “Plan”) that was publicly announced on June 5,
2000. The shares were purchased at the current bid price on
the day of the transaction.
Note 11 – Subsequent
Event
Subsequent
to September 30, 2008, the Company was notified that it may have exposure to
title claims arising from unpaid mechanic and materialman subcontractors on
insured properties. The Company has been made aware that a
significant builder client is experiencing financial difficulties and is
delinquent in paying such subcontractors. Although the information
available at this time is uncertain, the value of the associated claims may
total as much as $5.3 million. To date, there have been three claims
submitted totaling approximately $47,000. It is difficult to predict
the ultimate exposure to the Company because additional information is required
and the future direction of the builder is currently
indeterminable.
The
Company’s 2007 Annual Report on Form 10-K should be read in conjunction with the
following discussion since it contains important information for evaluating the
Company’s operating results and financial condition.
Overview
Title
Insurance: Investors Title Company (the “Company”) is a
holding company that engages primarily in two segments of business: title
insurance and exchange services. Its primary business activity is the issuance
of title insurance through two subsidiaries, Investors Title Insurance Company
(“ITIC”) and Northeast Investors Title Insurance Company (“NE-ITIC”), which
accounted for 94.4% of the Company’s operating revenues in the nine months ended
September 30, 2008. Through ITIC and NE-ITIC, the Company underwrites land title
insurance for owners and mortgagees as a primary insurer. Title insurance
protects against loss or damage resulting from title defects that affect real
property.
There are
two basic types of title insurance policies: one for the mortgage lender and one
for the real estate owner. A lender often requires property owners to
purchase title insurance to protect its position as a holder of a mortgage loan,
but the lender’s title insurance policy does not protect the property
owner. The property owner has to purchase a separate owner’s title
insurance policy to protect their investment. When real property is
conveyed from one party to another, occasionally there is an undisclosed defect
in the title or a mistake or omission in a prior deed, will or mortgage that may
give a third party a legal claim against such property. If a claim is
made against real property, title insurance provides indemnification against
insured defects. The title insurer has the option to retain counsel
and pay the legal expenses to eliminate or defend against any title defects, pay
any third party claims arising from errors in title examination and recording or
pay the insured’s actual losses, up to policy limits, arising from defects in
title as defined in the policy.
ITIC
issues title insurance policies through issuing agencies and also directly
through home and branch offices. Issuing agents are typically real
estate attorneys or subsidiaries of community and regional mortgage lending
institutions, depending on local customs and regulations and the Company’s
marketing strategy in a particular territory. The ability to attract
and retain issuing agents is a key determinant of the Company’s growth in
premiums written.
Revenues
for this segment result from purchases of new and existing residential and
commercial real estate, refinance activity and certain other types of mortgage
lending such as home equity lines of credit.
Volume is
a factor in the Company's profitability due to the existence of fixed operating
costs. These expenses will be incurred by the Company regardless of
the level of premiums written. The resulting operating leverage has historically
tended to amplify the impact of changes in volume on the Company’s
profitability.
The
Company’s volume of title insurance premiums is affected by the overall level of
residential and commercial real estate activity. In turn, real estate
activity is generally affected by a number of factors, including the
availability of mortgage credit, the cost of real estate, consumer confidence,
employment and family income levels and general United States economic
conditions.
Another
important factor in the level of residential and commercial real estate activity
is the effect of changes in interest rates. According to data
published by Freddie Mac, the nine month average 30-year fixed mortgage interest
rates in the United States decreased to 6.09% for the nine months ended
September 30, 2008, compared with 6.38% for the nine months ended September 30,
2007.
The
cyclical nature of the residential and commercial real estate markets – and
consequently, the land title insurance industry - has historically caused
fluctuations in revenues and profitability, and it is expected to continue to do
so in the future.
In
addition to cyclicality, real estate transactions have produced seasonal
variations in revenue levels for title insurers, particularly with respect to
the residential real estate market where activity generally increases during the
spring.
The
Company anticipates that current market conditions, including the subprime
lending crisis, rising foreclosures, weakening home sales and falling home
prices, will be the primary influences on the Company’s operations until some
stabilization occurs. The Company continues to monitor and strives to
manage operating expenses, as well as to enhance efficiencies, to offset the
cyclical nature of the real estate market and the potential for further declines
in title insurance revenues if the economy continues to slow or interest rates
rise.
The United
States Department of Housing and Urban Development (“HUD”) published proposed
rules regarding the Real Estate Settlement Procedures Act (“RESPA”) for public
comment on March 14, 2008 with a comment period which expired on June 13,
2008. The proposed rules were submitted to the Office of Management
and Budget (“OMB”) on August 21, 2008. The OMB can hold the rules
under consideration for a maximum of 90 days, but has indicated that their
comments will be released in the coming weeks. According
to HUD, the proposed rules are intended to improve disclosure of the loan terms
and closing costs consumers pay when purchasing or refinancing their
home. HUD continues to be committed to implementing the proposed
rules prior to the change in the current administration. HUD has also
indicated that it intends to seek legislative changes to RESPA that will
complement the proposed rules and provide HUD with enforcement mechanisms for
some of the most important consumer disclosures and
protections. Based on the information known to management at this
time, it is not possible to predict the outcome of any of the proposed HUD rules
for the title insurance industry’s market and other matters, or the market’s
response to them. However, any material change in the Company’s
regulatory environment may have an adverse effect on its business.
Exchange Services: The
Company’s second business segment provides customer services in connection with
tax-deferred real property exchanges through its subsidiaries Investors Title
Exchange Corporation (“ITEC”) and Investors Title Accommodation Corporation
(“ITAC”). ITEC serves as a qualified intermediary in like-kind exchanges of real
or personal property under Section 1031 of the Internal Revenue Code of 1986, as
amended. In its role as qualified intermediary, ITEC coordinates the
exchange aspects of the real estate transaction, and its duties include drafting
standard exchange documents, holding the exchange funds between the sale of the
old property and the purchase of the new property, and accepting the formal
identification of the replacement property within the required identification
period. ITAC serves as exchange accommodation titleholder in reverse
exchanges. As exchange accommodation titleholder, ITAC offers a
vehicle for accommodating a reverse exchange when the taxpayer must acquire
replacement property before selling the relinquished property.
Factors
that influence the title insurance industry will also generally affect the
exchange services industry. For further discussion, see “Results of
Operations – Operating Revenues.”
In
addition, the services provided by the Company’s exchange services segment are
pursuant to provisions in the Internal Revenue Code. From time to
time, these laws are subject to review and changes, which may negatively affect
the demand for tax-deferred exchanges in general, and consequently the revenues
and profitability of the Company’s exchange segment.
Other
Services: Other operating business segments not required to be
reported separately are reported in a category called All
Other. Other services include those offered by the parent holding
company and by its wholly owned subsidiaries Investors Trust Company (“Investors
Trust”), Investors Capital Management Company (“ICMC”) and Investors Title
Management Services, Inc. (“ITMS”). In conjunction with Investors
Trust, ICMC provides investment management and trust services to individuals,
companies, banks and trusts. ITMS offers consulting services to
clients.
Critical Accounting
Estimates and Policies
The
preparation of the Company’s financial statements requires management to make
estimates and judgments that affect the reported amounts of certain assets,
liabilities, revenue, expenses and related disclosures surrounding contingencies
and commitments. Actual results could differ from these
estimates. During the quarter ended September 30, 2008, the Company
made no material changes in its critical accounting policies as previously
disclosed in Management’s Discussion and Analysis in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2007 as filed with the Securities
and Exchange Commission.
Results of
Operations
For the
third quarter ended September 30, 2008, net premiums written decreased 19.3% to
$15,331,820, investment income decreased 17.1% to $1,079,760, total revenues
decreased 23.7% to $17,596,563, and net income decreased 76.2% to $917,033
compared with $3,857,892 compared with the same period of 2007. Net
income per diluted share was $0.39, versus $1.54 in the same period of
2007.
For the
nine-month period ended September 30, 2008, net premiums written decreased 5.8%
to $51,273,162, investment income decreased 8.2% to $3,471,800, total revenues
decreased 10.2% to $58,810,282 and net income decreased 62.3% to $2,767,479, all
compared with the first nine months of 2007. Net income per basic and
diluted common share decreased 60.7% and 60.5% to $1.16 and $1.15, respectively,
compared with the nine-month period ended September 30, 2007. For the
nine months ended September 30, 2008, the title insurance segment’s operating
revenues decreased 5.3% compared with the same period in 2007, while the
exchange services segment's operating revenues decreased 67.9% for the nine
months ended September 30, 2008 compared with the same period of
2007.
Net
operating results for the quarter and nine months ended September 30, 2008 were
primarily impacted by a decrease in premiums written, a decrease in exchange
services revenue and net realized losses on investments. For the nine
months ended September 30, 2008, the exchange services segment experienced a
steeper decline in revenue than the title insurance segment due to the
significant decreased demand for tax-deferred exchange services and to the
decreased interest income earned on exchange funds.
Operating revenues: Operating
revenues include net premiums written plus other fee income and exchange
services segment income. Investment income and realized investment gains and
losses are not included in operating revenues and are discussed separately
following operating revenues.
Net
premiums written in the first nine months of 2008 decreased over the same period
in 2007. The total number of policies and commitments issued declined
in the first nine months of 2008 to 160,387, which is a decrease of 10.6%
compared with 179,446 policies and commitments issued in the same period in
2007. The Company believes that the weak housing market and ongoing
general decline in real estate activity was the primary reason for the decline
in policies and commitments issued. The depressed conditions in the
domestic housing market and the recent extreme volatility and disruption of
financial markets have had an impact on aspects of the Company’s
businesses.
Following
is a breakdown between branch and agency premiums for the three and nine months
ended September 30:
|
|
|
Three Months
Ended
September
30,
|
|
|
Nine Months
Ended
September
30,
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
%
|
|
|
2007
|
|
|
%
|
|
|
2008
|
|
|
%
|
|
|
2007
|
|
|
%
|
|
|
Branch
|
|
$ |
5,680,591 |
|
|
|
37 |
|
|
$ |
8,310,859 |
|
|
|
44 |
|
|
$ |
19,920,404 |
|
|
|
39 |
|
|
$ |
23,351,770 |
|
|
|
43 |
|
|
Agency
|
|
|
9,651,229 |
|
|
|
63 |
|
|
|
10,683,594 |
|
|
|
56 |
|
|
|
31,352,758 |
|
|
|
61 |
|
|
|
31,061,404 |
|
|
|
57 |
|
|
Total
|
|
$ |
15,331,820 |
|
|
|
100 |
|
|
$ |
18,994,453 |
|
|
|
100 |
|
|
$ |
51,273,162 |
|
|
|
100 |
|
|
$ |
54,413,174 |
|
|
|
100 |
|
Agency net
premiums decreased 9.7% for the quarter ended September 30, 2008 compared with
the same period in the prior year. Agency net premiums increased 0.9%
for the nine months ended September 30, 2008 compared with the same period in
the prior year.
Net
premiums written from branch operations decreased 31.6% for the three months
ended September 30, 2008 compared with the same period in the prior
year. Net premiums written from branch operations decreased 14.7% for
the nine months ended September 30, 2008 from the same period in the prior year,
primarily, management believes, due to the softening of the real estate market
noted above. Of the Company’s 29 branch locations that underwrite title
insurance policies, 27 are located in North Carolina, and as a result, branch
premiums written primarily represent North Carolina business.
Following
is a schedule of premiums written for the three and nine months ended September
30, 2008 and 2007 in all states in which the Company’s two insurance
subsidiaries ITIC and NE-ITIC currently underwrite insurance:
|
|
|
Three Months
Ended
September
30,
|
|
|
Nine Months
Ended
September
30,
|
|
|
State
|
|
2008
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Illinois
|
|
$ |
429,954 |
|
|
$ |
431,878 |
|
|
$ |
1,584,507 |
|
|
$ |
1,281,366 |
|
|
Kentucky
|
|
|
761,945 |
|
|
|
654,399 |
|
|
|
2,393,886 |
|
|
|
1,879,543 |
|
|
Michigan
|
|
|
781,939 |
|
|
|
771,564 |
|
|
|
2,732,501 |
|
|
|
2,349,750 |
|
|
New
York
|
|
|
472,152 |
|
|
|
641,631 |
|
|
|
1,670,039 |
|
|
|
1,807,065 |
|
|
North
Carolina
|
|
|
7,305,962 |
|
|
|
9,733,783 |
|
|
|
25,022,108 |
|
|
|
26,865,540 |
|
|
Pennsylvania
|
|
|
423,695 |
|
|
|
409,063 |
|
|
|
1,388,971 |
|
|
|
1,141,953 |
|
|
South
Carolina
|
|
|
1,962,189 |
|
|
|
2,177,495 |
|
|
|
5,878,324 |
|
|
|
5,751,099 |
|
|
Tennessee
|
|
|
564,210 |
|
|
|
652,157 |
|
|
|
1,719,884 |
|
|
|
2,034,008 |
|
|
Virginia
|
|
|
1,492,819 |
|
|
|
1,713,647 |
|
|
|
4,701,446 |
|
|
|
4,846,803 |
|
|
West
Virginia
|
|
|
504,672 |
|
|
|
531,815 |
|
|
|
1,617,107 |
|
|
|
1,545,567 |
|
|
Other
States
|
|
|
709,837 |
|
|
|
1,317,755 |
|
|
|
2,686,711 |
|
|
|
5,111,563 |
|
|
Direct
Premiums
|
|
|
15,409,374 |
|
|
|
19,035,187 |
|
|
|
51,395,484 |
|
|
|
54,614,257 |
|
|
Reinsurance
Assumed
|
|
|
1,050 |
|
|
|
- |
|
|
|
97,594 |
|
|
|
11,667 |
|
|
Reinsurance
Ceded
|
|
|
(78,604 |
) |
|
|
(40,734 |
) |
|
|
(219,916 |
) |
|
|
(212,750 |
) |
|
Net
Premiums
|
|
$ |
15,331,820 |
|
|
$ |
18,994,453 |
|
|
$ |
51,273,162 |
|
|
$ |
54,413,174 |
|
Operating
revenues from the Company’s two subsidiaries that provide tax-deferred exchange
services (ITEC and ITAC) decreased 47.9% compared with the third quarter of
2007. For
the first nine months ended September 30, 2008, operating revenues from ITEC and
ITAC decreased 67.9% compared with the first nine months of
2007. Demand for tax-deferred exchange services has declined
significantly. The decrease in 2008 revenues was primarily due
to a decrease in transaction volume and related lower levels of interest spread
income earned on exchange fund deposits held by the Company due to declines in
the average balances of deposits held during the first nine months of
2008.
In July
2008, the Internal Revenue Service (“IRS”) finalized its proposed regulations
regarding treatment of funds held by qualified intermediaries. As
originally proposed, the rules would have negatively affected the ability of
qualified intermediaries to retain a portion of the interest earned on exchange
funds held during exchange transactions, which could have had a material adverse
effect upon the profitability of the Company’s exchange segment. As
adopted however, the new regulations apply only to individual exchange account
balances over $2 million.
In
addition, the final regulations clarify that qualified intermediaries may earn
marketing fees from financial institutions. The Company currently believes that
any marketing fees earned on deposits in the future would at least partially
offset the loss of interest spread retained on exchange deposits under prior
business practices. Consequently, the Company currently believes that
the final regulations should not have a material impact on the earnings of the
exchange services segment. The regulations however have only recently
been adopted, and therefore the Company has had only limited experience under
this new regime; it is possible that these new regulations may have
unanticipated consequences that will negatively affect tax-deferred exchanges,
which could have an adverse effect on the revenues and profitability of the
Company’s exchange services segment.
Also, a
new safe harbor ruling issued earlier in 2008 requires that in order for
residential properties to be eligible for Section 1031, the taxpayer’s personal
use of the property must be limited to no more than 14 days per year or 10% of
the rental period, and the properties must be rented for at least 2 weeks per
year for 2 years preceding and following the exchange. As a result,
the Company has seen a decrease in the utilization of Section 1031 exchanges on
these types of vacation homes.
Other
revenues primarily include investment management fee income, income related to
the Company’s other equity method investments and agency service fees, as well
as search fee and other ancillary fees. Other revenues decreased 0.9%
in 2008 compared with the third quarter of the prior year. Other
revenues increased 14.2% in the nine months ended September 30, 2008 compared
with the nine months ended September 30, 2007, primarily due to increases from
investment management fee income generated by the Company’s trust division and
equity in earnings of unconsolidated affiliates.
Nonoperating revenues:
Investment income and realized gains and losses from sales of investments
are included in non-operating revenues.
The
Company derives a substantial portion of its income from investments in bonds
(municipal and corporate) and equity securities. The Company’s title
insurance subsidiaries are required by statute to maintain minimum levels of
investments in order to protect the interests of policyholders. In
formulating its investment strategy, the Company has emphasized after-tax
income. The investments are primarily in fixed maturity securities
and, to a lesser extent, equity securities.
As new
funds become available, they are invested in accordance with the Company’s
investment policy and corporate goals. The Company strives to
maintain a high quality investment portfolio. Interest and investment
income levels are primarily a function of securities markets, interest rates and
the amount of cash available for investment.
Investment
income decreased 8.2% to $3,471,800 in the first nine months of 2008, compared
with $3,783,240 in the same period in 2007 and decreased 17.1% to
$1,079,760 from $1,301,878 for the three months ended September 30, 2008
compared with the same period in 2007. The decline in
investment income was due to lower levels of interest earned on short-term funds
and a decline in the investment portfolio.
Net
realized loss on investments totaled $669,586 for the nine months ended
September 30, 2008, compared with net realized gain of $887,211 for the
corresponding period in 2007. These net losses resulted primarily
from impairment losses of approximately $714,000 on several equity and fixed
income securities in the Company’s portfolio that were deemed to be other than
temporary. Management has determined that the unrealized losses from
remaining equity securities at September 30, 2008 are temporary in
nature.
Operating
Expenses: The Company’s operating expenses consist primarily
of commissions to agents, salaries, employee benefits and payroll taxes,
provisions for claims and office occupancy and operations. Total
operating expenses decreased 8.4% and 1.4% for the three and nine-month periods
ended September 30, 2008 compared with the same periods in 2007. The
total decrease in third quarter operating expenses resulted primarily from a
lower level of premiums written by the Company’s agents and the corresponding
decrease in commissions paid to agents, along with decreases in contract labor,
partially offset by an increase in salaries and employee benefits.
Following
is a summary of the Company’s operating expenses for the three and nine months
ended September 30, 2008 and 2007. Intersegment eliminations have
been netted with each segment; therefore, the individual segment amounts will
not agree to Note 5 in the accompanying Consolidated Financial
Statements.
| |
|
Three Months
Ended
September
30,
|
|
|
Nine Months
Ended
September
30,
|
|
|
|
|
2008
|
|
|
%
|
|
|
2007
|
|
|
%
|
|
|
2008
|
|
|
%
|
|
|
2007
|
|
|
%
|
|
|
Title
insurance
|
|
$ |
15,353,302 |
|
|
|
92 |
|
|
$ |
16,916,228 |
|
|
|
93 |
|
|
$ |
51,480,504 |
|
|
|
93 |
|
|
$ |
52,672,529 |
|
|
|
94 |
|
|
Exchange
services
|
|
|
297,565 |
|
|
|
2 |
|
|
|
326,927 |
|
|
|
2 |
|
|
|
947,917 |
|
|
|
2 |
|
|
|
1,062,364 |
|
|
|
2 |
|
|
All
other
|
|
|
940,663 |
|
|
|
6 |
|
|
|
872,936 |
|
|
|
5 |
|
|
|
3,052,382 |
|
|
|
5 |
|
|
|
2,556,137 |
|
|
|
4 |
|
|
Total
|
|
$ |
16,591,530 |
|
|
|
100 |
|
|
$ |
18,116,091 |
|
|
|
100 |
|
|
$ |
55,480,803 |
|
|
|
100 |
|
|
$ |
56,291,030 |
|
|
|
100 |
|
On a
combined basis, profit margins were 4.7% and 11.2% for the nine months ended
September 30, 2008 and 2007, respectively. Total revenues decreased
10.2% in the first nine months of 2008, while operating expenses only decreased
1.4%, contributing to a lower combined profit margin for 2008, partially offset
by a decrease in the effective income tax rate.
Agent
commissions represent the portion of premiums retained by agents pursuant to the
terms of their respective agency contracts. Commissions to agents
decreased 10.1% from the prior year third quarter primarily due to decreased
premiums from agency operations of 9.7% in 2008 as noted
previously. Commission expense as a percentage of net premiums
written by agents was 69.5% and 69.8% for the third quarter 2008 and 2007,
respectively. Commission rates vary by the geographic area in which
the commission is paid and may be influenced by state regulations.
Based on
the Company’s review of the underlying claims data and trends, the provision for
claims as a percentage of net premiums written (loss provision ratio) was 12.9%
for the third quarter of 2008 versus 12.4% for the same period in
2007. For the nine months ended September 30, 2008 and 2007, the
provision for claims as a percentage of net premiums written was 16.2% and
15.7%, respectively. These high loss provision ratios in both 2008
and 2007 reflect the negative impact of large fraud-related claims that were
reported in both the current and prior years. Loss provision ratios
are subject to variability and are reviewed and adjusted as experience
develops.
Declining
economic conditions and/or declining real estate transaction volumes have
historically been drivers of increased claim expenses due to increased mechanics
liens, defalcations and other related risks which may be discovered during
property foreclosures. The increase in the loss provision ratio for
the nine months ended September 30, 2008 from the 2007 level resulted in
approximately $295,000 more in reserves than would have been recorded at the
lower 2007 level.
Based on
actuarial projections, paid claims and specific case reserve emergence has been
greater than expected during 2008. The unfavorable loss emergence in
the third quarter of 2008 is concentrated in the 2006 through 2008 policy years,
partially offset by favorable claims experience in earlier policy
years. The unfavorable loss emergence primarily resulted from the
occurrence of a large fraud claim in the current year, as noted
earlier. If material occurrences of mortgage-related fraud and other
similar types of claims occur, the Company’s ultimate loss estimates for recent
policy years could increase, which could result in an increase in the provision
for claims in current operations. Management will continue to monitor
actual versus expected loss emergence. Management considers the loss
provision ratios for the third quarter and first nine months of 2008 and
2007 to be appropriate given the long-tail nature of title insurance claims and
the inherent uncertainty in title insurance claims emergence
patterns. Title claims are typically reported and paid within the
first several years of policy issuance.
The
provision for claims reflects actual payments of claims, net of recovery
amounts, plus adjustments to the specific and incurred but not reported claims
reserves, the latter of which are actuarially determined based on historical
claims experience, among other factors. Actual payments of claims,
net of recoveries, were $8,014,832 and $6,854,279 in the first nine months of
2008 and 2007, respectively.
At
September 30, 2008, the total reserves for claims were
$37,290,000. Of that total, $4,570,779 was reserved for specific
claims, and $32,719,221 was reserved for claims for which the Company had no
notice. Because of the uncertainty of future claims, changes in
economic conditions and the fact that many claims do not materialize for several
years, reserve estimates are subject to variability.
On a
consolidated basis, salaries, employee benefits and payroll taxes as a
percentage of total revenues were 29.9% and 22.3% for the third quarter ended
September 30, 2008 and 2007, respectively. For the first nine months of the
year, salaries, employee benefits and payroll taxes as a percentage of total
revenues were 27.3% and 23.7% for 2008 and 2007, respectively. The
increase in salary and employee benefit costs in 2008 was primarily related to
salary increases and additional personnel costs related to staff hired by
Investors Trust Company. The title insurance segment’s total
salaries, employee benefits and payroll taxes accounted for 83.9% and 85.3% of
the total consolidated amount for the nine months ended September 30, 2008 and
2007, respectively.
Expenses
related to overall office occupancy and operations as a percentage of total
revenues was 6.5% and 5.6% for the third quarter ended September 30, 2008 and
2007, respectively, and 6.5% and 6.4% for the first nine months of 2008 and
2007, respectively.
Title
insurance companies are generally not subject to state income or franchise
taxes. However, in most states they are subject to premium and
retaliatory taxes. Premium and retaliatory taxes as a percentage of
premiums written were 2.0% and 2.2% for the nine months ended September 30, 2008
and 2007, respectively.
Professional
and contract labor fees for the three and nine months ended September 30, 2008
compared with the same period in 2007 decreased primarily due to a decrease in
contract labor fees associated with investments in infrastructure and technology
in 2007.
Other
operating expenses primarily include miscellaneous operating expenses of the
trust division and other miscellaneous expenses of the title
segment.
Income Taxes: The
provision for income taxes was 16.9% and 20.4% of income before income taxes for
the nine months ended September 30, 2008 and 2007, respectively. The
effective income tax rates for the quarters were below the U.S. federal
statutory income tax rate (34%), primarily due to tax-exempt investment
income.
Net Income: On a
consolidated basis, the Company reported net income in the first nine months of
2008 of $2,767,479, or $1.15 per share on a diluted basis, compared with
$7,334,255 or $2.91 per share on a diluted basis, for the prior year
period.
Liquidity and Capital
Resources
Cash flows: Net
cash provided by operating activities for the nine months ended September 30,
2008 amounted to $3,787,909, compared with $8,426,631 for the same nine-month
period of 2007. The decrease in net cash provided by operating
activities was primarily the result of the decrease in net income, an increase
in claims payments and a decrease in current taxes
payable. Historically, cash flow from operations has been the
primary source of financing for operations, additions to property, dividends to
shareholders and other requirements.
The
principal non-operating uses of cash and cash equivalents for the three and nine
month periods ended September 30, 2008 and 2007 were repurchases of common stock
and payment of dividends. Of the shares repurchased by the Company,
96,000, or approximately 93% of the total shares repurchased by the Company
during the quarter, were repurchased in two private transactions, one of which
was with a non-employee director of the Company at a per share price of $47.50
and the other of which was with a family member of such non-employee director at
a per share price of $44.01. Each price represents the current bid price on the
day of the respective transaction.
Payment of
dividends: The Company’s significant sources of funds are
dividends and distributions from its subsidiaries, which are subject to
regulation in the states in which they do business. These
regulations, among other things, require prior regulatory approval of the
payment of dividends and other intercompany transfers. The Company
believes amounts available for transfer from the insurance subsidiaries are
adequate to meet the Company’s current operating needs.
Liquidity: Due to
the Company’s historical ability to generate positive cash flows from its
operations, management believes that funds generated from operations will enable
the Company to adequately meet its anticipated cash needs and is unaware of any
trend or occurrence that is likely to result in adverse liquidity
changes. The Company’s insurance subsidiaries generate cash from
premiums earned and their respective investment portfolios, and the Company
believes these funds are adequate to satisfy the payments of claims and other
liabilities. The Company’s current cash requirements include
operating expenses, taxes, capital expenditures and dividends on its common
stock declared by the Board of Directors.
In
addition to operational liquidity, the Company maintains a high degree of
liquidity within its investment portfolio in the form of short-term investments
and other readily marketable securities. As of September 30, 2008,
the Company held cash and cash equivalents of $6,302,937, short-term investments
of $26,268,940 and various other readily marketable securities.
Investments
as of September 30, 2008 include $10.5 million par value and $10.3 million fair
value of auction rate securities (“ARS”) held on the books of the
Company. ARS were structured to provide purchase and sale liquidity
through a Dutch auction process. Due to the increasingly stressed and
liquidity-constrained environment in money markets, the auction process for ARS
began failing in February 2008 as broker-dealers ceased supporting auctions with
their own capital. As of September 30, 2008, these securities were
recorded at a fair value that reflects the current lack of liquidity using a
discounted cash flow methodology. The credit quality of the ARS is
high, as all are rated investment grade, and the Company continues to receive
interest income. The Company does not believe the current illiquidity
of these securities will impact its operations.
Capital Expenditures: During
2008, the Company has plans for various capital improvement projects, including
computer hardware purchases and several software development
projects. All anticipated capital expenditures are subject to
periodic review and may vary depending on various factors.
Off-Balance Sheet Arrangements and
Contractual Obligations: It is not the general practice of the
Company to enter into off-balance sheet arrangements; nor is it the policy of
the Company to issue guarantees to third parties. Off-balance sheet
arrangements are generally limited to the future payments under noncancelable
operating leases, payments due under various agreements with third party service
providers, and unaccrued obligations pursuant to certain executive employment
agreements.
The total
reserve for all reported and unreported losses the Company incurred through
September 30, 2008 is represented by the reserves for claims. Information
regarding the claims reserves can be found in Note 2 to the consolidated
financial statements of this Form 10-Q and under “Results of Operations –
Operating expenses” above. Further information on contractual
obligations related to the reserves for claims can be found in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2007 as filed with
the SEC.
In
conducting its operations, the Company routinely holds customers’ assets in
escrow, pending completion of real estate transactions. Certain of
these amounts are maintained in segregated bank accounts and have not been
included in the Consolidated Balance Sheets.
In
addition, the Company holds proceeds from tax-deferred property exchanges for
customers until a qualifying exchange can occur, which results in a contingent
liability to the Company. These are funds of the party conducting the
exchange however and, as is industry practice, are not included in the
Consolidated Balance Sheets. However, the Company is obligated to its
customers for the disbursements of the funds in accordance with its customer
agreements. These contingent liabilities, all of which are short term
in nature due to the time restriction on completing like-kind tax deferred
exchanges, are also not included on the Consolidated Balance
Sheets.
Equity Investments: The
Company’s equity investments are in public companies whose security prices are
subject to volatility. The recent extreme volatility and significant
disruptions in the financial markets contributed to a significant decrease in
other comprehensive income. In addition, for the nine months ended
September 30, 2008, the Company recorded approximately $714,000 of
other-than-temporary impairments on equity and fixed income
investments.
Recent Accounting
Pronouncements
For a
description of the Company’s recent accounting pronouncements, please see Note 1
to the Notes to Condensed Consolidated Financial Statements included elsewhere
herein.
Subsequent
Event
Subsequent
to September 30, 2008, the Company was notified that it may have exposure to
title claims arising from unpaid mechanic and materialman subcontractors on
insured properties. The Company has been made aware that a
significant builder client is experiencing financial difficulties and is
delinquent in paying such subcontractors. Although the information
available at this time is uncertain, the value of the associated claims may
total as much as $5.3 million. To date, there have been three claims
submitted totaling approximately $47,000. It is difficult to predict
the ultimate exposure to the Company because additional information is required
and the future direction of the builder is currently
indeterminable. The Company may have exposure to additional material
and mechanic lien claims to the extent other builders are experiencing similar
difficulties in paying subcontractors on a current basis.
Safe Harbor
Statement
This
Quarterly Report on Form 10-Q, as well as information included in future filings
by the Company with the SEC and information contained in written material, press
releases and oral statements issued by or on behalf of the Company, contains, or
may contain, “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 that reflect management’s current
outlook for future periods. These statements may be identified by the
use of words such as “plan,” “expect,” “aim,” “believe,” “project,”
“anticipate,” “intend,” “estimate,” “should,” “could” and other expressions that
indicate future events and trends. All statements that address expectations or
projections about the future, including statements about the Company’s strategy
for growth, product and service development, market share position, claims,
expenditures, financial results and cash requirements, are forward-looking
statements. Forward-looking statements are based on certain assumptions and
expectations of future events that are subject to risks and
uncertainties.
Actual
future results and trends may differ materially from historical results or those
projected in any such forward-looking statements depending on a variety of
factors, including the following:
|
·
|
the
level of real estate transactions, the level of mortgage origination
volumes (including refinancing) and changes to the insurance requirements
of participants in the secondary mortgage market, and the effect of these
factors on the demand for title
insurance;
|
|
·
|
significant
changes to applicable government
regulations;
|
|
·
|
the
possible inadequacy of provisions for claims to cover actual claim
losses;
|
|
·
|
heightened
regulatory scrutiny;
|
|
·
|
unanticipated
adverse changes in securities markets including interest rates, which
could result in material losses on the Company’s
investments;
|
|
·
|
the
Company’s dependence on key management personnel, the loss of whom could
have a material adverse affect on the Company’s
business;
|
|
·
|
the
Company’s ability to develop and offer products and services that meet
changing industry standards in a timely and cost-effective
manner;
|
|
·
|
statutory
requirements applicable to the Company’s insurance subsidiaries which
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
and
|
|
·
|
the
concentration of key accounting and information systems in a few
locations.
|
These and
other risks and uncertainties may be described from time to time in the
Company’s other reports and filings with the SEC. For more details on factors
that could affect expectations and future results, see the Company’s Annual
Report on Form 10-K for the year ended December 31, 2007. The Company
does not undertake to update forward-looking statements to reflect circumstances
or events that occur after the date the forward-looking statements are
made.
No
material changes in the Company’s market risk or market strategy occurred during
the current period. A detailed discussion of market risk is provided
in the Company’s 2007 Annual Report on Form 10-K for the year ended December 31,
2007. However, during the quarter ended September 30, 2008, there
were significant disruptions in the financial markets. As a result of
these disruptions, the Company had a net unrealized loss of approximately
$494,000 in its fixed maturities portfolio at September 30, 2008, compared with
a net unrealized gain of approximately $1.3 million at December 31, 2007 and a
net unrealized gain of approximately $1.6 million in its equity securities
portfolio at September 30, 2008, compared with a net unrealized gain of
approximately $4.1 million at December 31, 2007.
Disclosure
Controls and Procedures
The
Company’s disclosure controls and procedures are designed to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is
recorded, processed, summarized and reported within the time periods specified
by the SEC’s rules and forms, and include controls and procedures designed to
ensure that information required to be disclosed in such reports is accumulated
and communicated to the Company’s management as appropriate to allow timely
decisions regarding required disclosure.
No system
of controls, no matter how well designed and operated, can provide absolute
assurance that the objectives of the system of controls are met, and no
evaluation of controls can provide absolute assurance that the system of
controls has operated effectively in all cases. The Company’s
disclosure controls and procedures, however, are designed to provide reasonable
assurance that the objectives of disclosure controls and procedures are
met.
Pursuant
to Rule 13a-15(b) under the Exchange Act, an evaluation was performed under the
supervision and with the participation of the Company’s management, including
its Chief Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of the Company’s disclosure controls and
procedures. Based on that evaluation, the Company’s Chief Executive
Officer and Chief Financial Officer concluded that the Company’s disclosure
controls and procedures were effective as of September 30, 2008 to provide
reasonable assurance that the objectives of disclosure controls and procedures
are met.
Changes to Internal Control
Over Financial Reporting
During the
quarter ended September 30, 2008, there was no change in the Company's internal
control over financial reporting that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial
reporting.
PART
II. OTHER INFORMATION
Except for
the addition of the risk factor detailed below, there have been no material
changes in risks previously disclosed under Item 1A.of the Company’s Annual
Report on Form 10-K for the year ended December 31, 2007.
Current levels of real estate market
volatility are unprecedented. The real estate and credit markets have
been experiencing extreme volatility and disruption for more than 12
months. In recent weeks, the volatility and disruption have reached
unprecedented levels. In some cases, the markets have exerted
downward pressure on stock prices and security prices for certain issuers
without regard to those issuers’ underlying financial strength. If
the current levels of real estate and credit market disruption and volatility
continue or worsen, there can be no assurance that the Company will not
experience adverse effects, which may be material, on its results of
operations.
|
(c)
|
The
following table provides information about purchases by the Company (and
all affiliated purchasers) during the quarter ended September 30, 2008 of
equity securities that are registered by the Company pursuant to Section
12 of the Exchange Act:
|
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
|
|
|
|
|
|
|
|
|
|
|
|
214,010 |
|
|
07/01/08– 07/31/08
|
|
|
3,373 |
|
|
$ |
44.86 |
|
|
|
3,373 |
|
|
|
210,637 |
|
|
08/01/08– 08/31/08
|
|
|
67,145 |
|
|
$ |
47.42 |
|
|
|
67,145 |
|
|
|
143,492 |
|
|
09/01/08– 09/30/08
|
|
|
32,248 |
|
|
$ |
44.
09 |
|
|
|
32,248 |
|
|
|
32,248 |
|
|
Total:
|
|
|
102,766 |
|
|
$ |
46.29 |
|
|
|
102,766 |
|
|
|
111,244 |
|
For the
quarter ended September 30, 2008, the Company purchased an aggregate of
102,766 shares of the Company’s common stock pursuant to the purchase plan
(the “Plan”) that was publicly announced on June 5, 2000. The Board
of Directors of the Company approved the purchase of up to an aggregate of
625,000 shares of the Company’s common stock pursuant to the
Plan. Unless terminated earlier by resolution of the Board of
Directors, the Plan will expire when all shares authorized for purchase under
the Plan have been purchased. The Company intends to make further
purchases under this Plan.
| (a) |
|
Exhibits
|
|
|
| |
|
|
|
|
| |
|
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
|
Pursuant
to the requirements of the Securities and Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
| |
|
INVESTORS
TITLE COMPANY
|
| |
|
|
|
|
| |
|
By:
|
/s/ James A. Fine,
Jr.
|
|
| |
|
|
James
A. Fine, Jr.
|
|
| |
|
|
President,
Principal Financial Officer and
|
|
| |
|
|
Principal
Accounting Officer
|
|
| |
|
|
|
|
| |
|
|
|
|
|
Dated:
November 6, 2008
|
|
|
|
|
29