Investors Title Company Announces Record Third Quarter 2018 Financial Results

Investors Title Company (NASDAQ: ITIC) today announced its results for the third quarter ended September 30, 2018. Net income attributable to the Company was $10.6 million, or $5.61 per diluted share, versus $5.9 million, or $3.13 per diluted share, for the prior year period. The Company set all-time quarterly records for revenues, net premiums written, and net income.

Revenues increased 11.9% to $48.3 million, compared with $43.1 million in the prior year quarter. Net premiums written increased 5.3%, primarily due to higher real estate values, as well as a shift to higher-premium purchase activity, which offset the decline in refinance activity. The addition of new agencies over the past year also contributed to the higher level of net premiums written. In accordance with a new accounting standard adopted in 2018, market gains resulted in recognition of a $2.9 million net unrealized gain on equity investments.

Operating expenses increased 4.3% versus the prior year quarter, mainly as a result of increases in personnel expenses and commissions, partially offset by a decline in the provision for claims. Personnel costs increased as a result of higher staffing levels related to the support of growth, an increase in contract services related to software initiatives, normal inflationary increases in salaries and benefits, and an increase in the accrual for incentive compensation. Commissions were up commensurate with the increase in agency premiums. Claims expense declined primarily due to favorable loss experience in the current reporting period. In addition, the Company’s net income benefitted from recent tax reform legislation.

For the nine months ended September 30, 2018, net income attributable to the Company increased 35.3% to $21.8 million, or $11.47 per diluted share, versus $16.1 million, or $8.48 per diluted share, for the prior year period. Revenues increased 2.4% to $124.0 million, mainly due to an increase in the net unrealized gain on equity investments and higher earnings from partnership investments. Results for the year-to-date period have been shaped predominantly by the same factors that affected the third quarter, with the exception of lower commissions due to a decrease in agency premiums.

Chairman J. Allen Fine added, "We are pleased to report that in the third quarter, we set a new record level of quarterly revenues and earnings. Overall economic strength and record-low levels of unemployment continue to drive strong demand in the housing market as well as higher average real estate values. These factors overcame reductions in refinance activity, which remains suppressed as interest rates continue to rise, resulting in an increase in net premiums written for the quarter. The combination of solid revenue growth, stable levels of claims experience, and management of overhead expenses drove a record level of earnings for the quarter.”

Investors Title Company’s subsidiaries issue and underwrite title insurance policies. The Company also provides investment management services and services in connection with tax-deferred exchanges of like-kind property.

Certain statements contained herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, among others, any statements regarding the Company’s expected performance for this year, future home price fluctuations, changes in home purchase or refinance activity and the mix thereof, interest rate changes, expansion of the Company’s market presence, enhancing competitive strengths, positive development in housing affordability, wages, unemployment or overall economic conditions or statements regarding our actuarial assumptions and the application of recent historical claims experience to future periods. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from anticipated and historical results. Such risks and uncertainties include, without limitation: the cyclical demand for title insurance due to changes in the residential and commercial real estate markets; the occurrence of fraud, defalcation or misconduct; variances between actual claims experience and underwriting and reserving assumptions, including the limited predictive power of historical claims experience; declines in the performance of the Company’s investments; government regulation; changes in the economy; loss of agency relationships, or significant reductions in agent-originated business; difficulties managing growth, whether organic or through acquisitions and other considerations set forth under the caption "Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission, and in subsequent filings.

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