CHAPEL HILL, N.C., Feb. 17, 2009 (GLOBE NEWSWIRE) -- Investors Title Company (Nasdaq:ITIC) today announced its results for the quarter and year ended December 31, 2008. For the fourth quarter ended December 31, 2008, the Company reported a net loss of $3,950,278 compared with net income of $1,068,080 for the same three-month period in 2007. Net loss per diluted share equaled $1.72 compared with net income per diluted share of $0.43 in the same period last year. Net premiums written decreased 20.4% to $12,389,025; investment income decreased 23.1% to $1,086,935; and exchange services revenue decreased 87.1% to $152,201.
For the year ended December 31, 2008, the Company reported a net loss of $1,182,799, compared with net income of $8,402,335 for 2007. Diluted loss per share was $0.50, compared with diluted income per share of $3.35 for 2007. Net premiums written decreased 9.0% to $63,662,187; investment income decreased 12.3% to $4,558,735; and revenues decreased 16.3% to $71,123,261 compared with the prior year.
Operating results for the fourth quarter ended December 31, 2008 were primarily impacted by an increase in the provision for claims, which included $5.2 million for three large claims, and $2.25 million in realized losses on investments which include approximately $1.4 million of losses on sales related to tax planning and $855,000 of charges due to impairments. Ongoing weakness in real estate activity led to a 19.2% decline in net premiums written from the third quarter level. Lower transaction volumes along with declining values of investment properties dramatically lowered the demand for tax-deferred exchange services.
"Operating conditions remained extremely challenging during the fourth quarter as we experienced not only a continued decline in sales but a spike in claims," commented J. Allen Fine, the Company's Chairman. "The bulk of the increase in claims was comprised of three occurrences and they are generally attributable to extreme conditions in the real estate market. The largest, at $3.3 million, was for unpaid mechanic liens by a large regional builder and the other two were both fraud-related, where funds intended to pay off mortgages were diverted out of trust accounts for personal use by individuals."
"As sales of new homes continued to deteriorate rapidly in the last quarter of 2008, we tightened underwriting procedures for providing mechanic lien coverage in our core market in order to improve the process for discovering the presence of unpaid subcontractors at the time of a new home sale," Mr. Fine continued. "Although fraud-related claims can be difficult to detect, we continually work to further refine risk management practices to mitigate this type of risk."
"We are closely monitoring conditions in the current real estate market in order to best position the Company during this downturn while being mindful of opportunities to enhance our competitive strengths and marketing position, and prepare ourselves for when the market stabilizes."
Investors Title Company is engaged through its subsidiaries in the business of issuing and underwriting title insurance policies. The Company also provides services in connection with tax-deferred exchanges of like-kind property and investment management services to individuals, companies, banks and trusts.
Certain statements contained herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include any predictions regarding activity in the U.S. real estate market. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from anticipated and historical results. For more details on risk, uncertainties and other factors that could affect expectations, refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2007, as filed with the Securities and Exchange Commission.
Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of December 31, 2008 and 2007
(Unaudited)
December 31, December 31,
2008 2007
------------ ------------
Assets
Investments in securities:
Fixed maturities:
Held-to-maturity, at
amortized cost $ 451,681 $ 1,052,535
Available-for-sale, at fair value 87,708,500 90,530,946
Equity securities,
available-for-sale,
at fair value 9,965,297 14,431,866
Short-term investments 15,725,513 21,222,533
Other investments 2,040,962 1,788,501
------------ ------------
Total investments 115,891,953 129,026,381
Cash and cash equivalents 5,155,046 3,000,762
Premiums and fees receivable, net 4,933,797 6,900,968
Accrued interest and dividends 1,225,070 1,254,641
Prepaid expenses and other assets 3,992,975 1,276,806
Property acquired in settlement
of claims 395,734 278,476
Property, net 4,422,318 5,278,891
Deferred income taxes, net 3,841,295 2,625,495
------------ ------------
Total Assets $139,858,188 $149,642,420
============ ============
Liabilities and Stockholders' Equity
Liabilities:
Reserves for claims $ 39,238,000 $ 36,975,000
Accounts payable and accrued
liabilities 10,294,912 11,236,781
Commissions and reinsurance payable 467,388 406,922
Current income taxes payable -- 1,747,877
------------ ------------
Total liabilities 50,000,300 50,366,580
------------ ------------
Stockholders' Equity:
Common stock - no par value
(shares authorized 10,000,000;
2,293,268 and 2,411,318 shares
issued and outstanding 2008 and
2007, respectively, excluding
291,676 shares for 2008 and
2007 of common stock held
by the Company's subsidiary) 1 1
Retained earnings 88,248,452 95,739,827
Accumulated other
comprehensive income 1,609,435 3,536,012
------------ ------------
Total stockholders' equity 89,857,888 99,275,840
------------ ------------
Total Liabilities and Stockholders'
Equity $139,858,188 $149,642,420
============ ============
Investors Title Company and Subsidiaries
Consolidated Statements of Income
December 31, 2008 and 2007
(Unaudited)
For The Three For The Twelve
Months Ended Months Ended
December 31 December 31
-------------------------- --------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
Revenues:
Underwriting
income:
Premiums
Written $ 12,444,198 $ 15,622,242 $ 63,937,276 $ 70,248,166
Less-
premiums
for
reinsurance
ceded 55,173 51,427 275,089 264,177
------------ ------------ ------------ ------------
Net
premiums
written 12,389,025 15,570,815 63,662,187 69,983,989
Investment
income-
interest and
dividends 1,086,935 1,413,938 4,558,735 5,197,178
Net realized
(loss) gain
on investments (2,252,790) 34,660 (2,922,376) 921,871
Exchange
services
revenue 152,201 1,182,189 1,166,141 4,340,062
Other 937,608 1,240,400 4,658,574 4,499,187
------------ ------------ ------------ ------------
Total
Revenues 12,312,979 19,442,002 71,123,261 84,942,287
------------ ------------ ------------ ------------
Operating
Expenses:
Commissions
to agents 5,740,911 6,386,094 27,717,807 28,424,960
Provision
for claims 6,876,805 1,609,440 15,206,637 10,134,719
Salaries,
employee
benefits
and payroll
taxes 3,542,233 5,317,243 19,605,500 20,819,094
Office
occupancy and
operations 1,267,435 1,419,183 5,107,843 5,598,576
Business
development 482,199 625,540 2,104,935 2,183,853
Filing
fees and
taxes, other
than payroll
and income 163,123 62,192 587,235 531,777
Premium and
retaliatory
taxes 251,999 317,516 1,281,297 1,496,448
Professional
and contract
labor fees 289,146 712,420 1,684,208 2,789,878
Other 245,406 377,294 1,044,598 1,138,647
------------ ------------ ------------ ------------
Total
Operating
Expenses 18,859,257 16,826,922 74,340,060 73,117,952
------------ ------------ ------------ ------------
(Loss) Income
Before Income
Taxes (6,546,278) 2,615,080 (3,216,799) 11,824,335
------------ ------------ ------------ ------------
(Benefit)
Provision
For Income
Taxes (2,596,000) 1,547,000 (2,034,000) 3,422,000
------------ ------------ ------------ ------------
Net (Loss)
Income $(3,950,278) $ 1,068,080 $(1,182,799) $ 8,402,335
============ ============ ============ ============
Basic (Loss)
Earnings
Per Common
Share $ (1.72) $ 0.44 $ (0.50) $ 3.39
============ ============ ============ ============
Weighted
Average
Shares
Outstanding -
Basic 2,293,086 2,452,416 2,364,361 2,479,321
============ ============ ============ ============
Diluted (Loss)
Earnings Per
Common Share $ (1.72) $ 0.43 $ (0.50) $ 3.35
============ ============ ============ ============
Weighted
Average
Shares
Outstanding -
Diluted 2,293,086 2,473,049 2,364,361 2,508,609
============ ============ ============ ============
Investors Title Company and Subsidiaries
Net Premiums Written By State
December 31, 2008 and 2007
(Unaudited)
For the For the
Three Months Ended Twelve Months Ended
December 31 December 31
State 2008 2007 2008 2007
------------------------------------------------------------------
Illinois $ 555,933 $ 372,152 $ 2,140,440 $ 1,653,518
Kentucky 563,858 683,496 2,957,744 2,563,039
Michigan 594,403 723,256 3,326,904 3,073,006
New York 435,994 605,560 2,106,033 2,412,625
North Carolina 5,505,815 7,678,826 30,527,923 34,544,366
Pennsylvania 373,473 370,792 1,762,444 1,512,745
South Carolina 1,677,829 1,886,231 7,556,153 7,637,330
Tennessee 343,527 565,678 2,063,411 2,599,686
Virginia 1,087,891 1,274,943 5,789,337 6,121,746
West Virginia 460,496 484,318 2,077,603 2,029,885
Other 775,680 945,841 3,462,391 6,057,404
----------- ----------- ----------- -----------
Direct
Premiums $12,374,899 $15,591,093 $63,770,383 $70,205,350
Reinsurance
Assumed 69,299 31,149 166,893 42,816
Reinsurance
Ceded (55,173) (51,427) (275,089) (264,177)
----------- ----------- ----------- -----------
Net Premiums
Written $12,389,025 $15,570,815 $63,662,187 $69,983,989
=========== =========== =========== ===========
Investors Title Company and Subsidiaries
Net Premiums Written By Branch and Agency
December 31, 2008 and 2007
(Unaudited)
For The Three Months Ended
December 31
----------------------------------------------
2008 % 2007 %
----------- --- ----------- ---
Branch $ 4,360,037 35 $ 6,746,222 43
Agency 8,028,988 65 8,824,593 57
----------- --- ----------- ---
Total $12,389,025 100 $15,570,815 100
=========== === =========== ===
For The Twelve Months Ended
December 31
----------------------------------------------
2008 % 2007 %
----------- --- ----------- ---
Branch $24,312,013 38 $30,144,691 43
Agency 39,350,174 62 39,839,298 57
----------- --- ----------- ---
Total $63,662,187 100 $69,983,989 100
=========== === =========== ===