INVESTORS TITLE CO

Previous wording

The Company is a holding company that engages primarily in issuing title insurance through two subsidiaries, Investors Title Insurance Company (“ITIC”) and National Investors Title Insurance Company (“NITIC”). Through ITIC and NITIC, the Company underwrites land title insurance for owners and mortgagees as a primary insurer. Total revenues from the title segment accounted for 90.1% of the Company's revenues for the nine-month period ended September 30, 2025.

Current wording

The Company is a holding company that engages primarily in issuing title insurance through two subsidiaries, Investors Title Insurance Company (“ITIC”) and National Investors Title Insurance Company (“NITIC”). Through ITIC and NITIC, the Company underwrites land title insurance for owners and mortgagees as a primary insurer. Total revenues from the title segment accounted for 91.1% of the Company's revenues for the three-month period ended March 31, 2026.

Previous wording

The Company’s exchange services division, consisting of the operations of Investors Title Exchange Corporation (“ITEC”) and Investors Title Accommodation Corporation (“ITAC”), provides customer services in connection with tax-deferred real property exchanges. ITEC acts as a qualified intermediary in tax-deferred exchanges of real property held for productive use in a trade or business or for investment, and its income is derived from fees for handling exchange transactions and a portion of the interest earned on client deposits held by the Company. 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 time the old property is sold and the new property is purchased, and accepting the formal identification of the replacement property within the required identification period. ITAC provides services as an exchange accommodation titleholder for accomplishing “parking transactions” as set forth in the safe harbor contained in Internal Revenue Procedure 2000-37. These transactions include reverse exchanges when taxpayers decide to acquire replacement property before selling the relinquished property, or “build to suit” exchanges, when improvements must be made to the replacement property before the taxpayer acquires the improved replacement property. The services provided by the Company’s exchange services division, ITEC and ITAC, are pursuant to provisions in the Internal Revenue Code of 1986. 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 services division.

Current wording

The Company’s exchange services division, consisting of the operations of Investors Title Exchange Corporation (“ITEC”) and Investors Title Accommodation Corporation (“ITAC”), provides customer services in connection with tax-deferred real property exchanges. ITEC acts as a qualified intermediary in tax-deferred exchanges of real property held for productive use in a trade or business or for investment, and its income is derived from fees for handling exchange transactions and a portion of the interest earned on client deposits held by the Company. 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 time the old property is sold and the new property is purchased, and accepting the formal identification of the replacement property within the required identification period. ITAC provides services as an exchange accommodation titleholder for accomplishing “parking transactions” as set forth in the safe harbor contained in Internal Revenue Procedure 2000-37. These transactions include reverse exchanges when taxpayers decide to acquire replacement property before selling the relinquished property, or “build to suit” exchanges, when improvements must be made to the replacement property before the taxpayer acquires the improved replacement property. The services provided by the Company’s exchange services division, ITEC and ITAC, are pursuant to provisions in the Internal Revenue Code of 1986. 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 services division. Given that income is derived from a portion of the interest earned on client deposits held by the Company, interest rate fluctuations may also impact the profitability of the Company's exchange services division.

Previous wording

Inflationary pressures, the federal government shutdown, ongoing geopolitical and military conflicts, and changes in government regulations and policy, including as a result of policies implemented by the Trump administration such as the implementation of widespread tariff reform, have created additional volatile market conditions and uncertainties in the global economy. These events have impacted and could continue to impact the Company in a number of ways including, but not limited to, future fluctuations in the Company's investment portfolio and potential decreases in net premiums written. The Federal Open Market Committee (“FOMC”) of the Federal Reserve has closely monitored the risks associated with these developments and responded by increasing the target federal funds rate across several meetings from 2022 through 2023, followed by a gradual reduction beginning in 2024 and continuing into 2025. Although the federal funds rate does not directly impact mortgage interest rates, it can have a significant influence as lenders pass on the costs of rate increases to consumers. The current period of elevated mortgage interest rates has impacted the demand and pricing of real estate.

Current wording

Inflationary pressures, ongoing geopolitical and military conflicts, and changes in government regulations and policy, including as a result of policies implemented by the Trump administration, have created additional volatile market conditions and uncertainties in the global economy. These events have impacted and could continue to impact the Company in a number of ways including, but not limited to, future fluctuations in the Company's investment portfolio and potential decreases in net premiums written. The Federal Open Market Committee (“FOMC”) of the Federal Reserve has closely monitored the risks associated with these developments and responded by increasing the target federal funds rate across several meetings from 2022 through 2023, followed by a gradual reduction in 2024 and 2025. Although the federal funds rate does not directly impact mortgage interest rates, it can have a significant influence as lenders pass on the costs of rate increases to consumers. The current period of elevated mortgage interest rates has impacted the demand and pricing of real estate.

Previous wording

The FOMC issues disclosures on a periodic basis that include projections of the federal funds rate and expected actions. Starting at the March 2022 meeting of the FOMC through July 2023, the FOMC repeatedly increased the target range, reaching a high of between 5.25% and 5.50%. During several meetings in 2024 and 2025, the FOMC has lowered the federal funds rate. The most recent adjustment, in October 2025, reduced the target range to 3.75% and 4.00%. In normal economic situations, future adjustments to the FOMC’s stance of monetary policy are expected to be based on realized and expected economic developments to achieve maximum employment and inflation near the FOMC's symmetric long-term 2.0% objective.

Current wording

The FOMC issues disclosures on a periodic basis that include projections of the federal funds rate and expected actions. Starting at the March 2022 meeting of the FOMC through July 2023, the FOMC repeatedly increased the target range, reaching a high of between 5.25% and 5.50%. During several meetings in 2024 and 2025, the FOMC has lowered the federal funds rate. The most recent adjustment, in December 2025, reduced the target range to 3.5% and 3.75%. During the first quarter of 2026, the FOMC maintained the target range for the federal funds rate, indicating that future policy actions would depend on continued evaluation of incoming economic data, changes in the economic outlook, and the balance of associated risks. In normal economic situations, future adjustments to the FOMC’s stance of monetary policy are expected to be based on realized and expected economic developments to achieve maximum employment and inflation near the FOMC's symmetric long-term 2.0% objective.

Previous wording

The Mortgage Bankers Association's ("MBA") October 19, 2025 Mortgage Finance Forecast (“MBA Forecast”) projects 2025 purchase activity to increase 1.3% to $1,356 billion and mortgage refinance activity to increase 94.0% to $675 billion, resulting in a net increase in total mortgage originations of 20.5% to $2,031 billion, all from 2024 levels. In 2024, purchase activity accounted for 79.4% of all mortgage originations and is projected in the MBA Forecast to represent 66.8% of all mortgage originations in 2025. According to data published by Freddie Mac, the average 30-year fixed mortgage interest rates in the United States were 6.7% and 6.8% for the nine-month periods ended September 30, 2025 and 2024, respectively. Per the MBA Forecast, mortgage interest rates are projected to decrease in subsequent periods, declining to 6.3% in 2027. Due to the rapidly changing environment brought on by inflationary pressures, the federal government shutdown, inventory constraints, geopolitical and military conflicts, and changes in government regulations and policy, including as a result of the policies implemented by the Trump administration, these projections and the impact of actual future developments on the Company could be subject to material change.

Current wording

The Mortgage Bankers Association's ("MBA") April 20, 2026 Mortgage Finance Forecast (“MBA Forecast”) projects 2026 purchase activity to increase 4.6% to $1.4 trillion and mortgage refinance activity to increase 10.8% to $769 billion, resulting in a net increase in total mortgage originations of 6.7% to $2.2 trillion, all from 2025 levels. In 2025, purchase activity accounted for 66.1% of all mortgage originations and is projected in the MBA Forecast to represent 64.8% of all mortgage originations in 2026. According to data published by Freddie Mac, the average 30-year fixed mortgage interest rates in the United States were 6.1% and 6.8% for the three-month periods ended March 31, 2026 and 2025, respectively. Per the MBA Forecast, mortgage interest rates are projected to increase in subsequent periods, reaching 6.3% in 2027 and 6.5% in 2028. Due to the rapidly changing environment brought on by inflationary pressures, inventory constraints, geopolitical and military conflicts, and changes in government regulations and policy, including as a result of the policies implemented by the Trump administration, these projections and the impact of actual future developments on the Company could be subject to material change.

Previous wording

The preparation of the Company's unaudited Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosures regarding contingencies and commitments. Actual results could differ from these estimates. During the nine-month period ended September 30, 2025, the Company did not make any material changes to its critical accounting policies as previously disclosed in Management's Discussion and Analysis in the 2024 Form 10-K.

Current wording

The preparation of the Company's unaudited Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosures regarding contingencies and commitments. Actual results could differ from these estimates. During the three-month period ended March 31, 2026, the Company did not make any material changes to its critical accounting policies as previously disclosed in Management's Discussion and Analysis in the 2025 Form 10-K.

Previous wording

The following table presents certain unaudited Consolidated Statements of Operations data for the three- and nine-month periods ended September 30, 2025 and 2024:

Current wording

The following table presents certain unaudited Consolidated Statements of Operations data for the three-month periods ended March 31, 2026 and 2025:

Previous wording

Net premiums written increased 2.8% and 7.4% for the three- and nine-month periods ended September 30, 2025 to $56.4 million and $157.2 million, respectively, compared with $54.9 million and $146.5 million for the same prior year periods. The increases for the three- and nine-month periods ended September 30, 2025 were primarily due to higher levels of real estate activity.

Current wording

Net premiums written increased 9.9% for the three-month period ended March 31, 2026 to $50.9 million, compared with $46.3 million for the same prior year period. The increase for the three-month period ended March 31, 2026 was primarily due to higher levels of real estate activity and ongoing expansion initiatives.

Previous wording

Total premiums include an estimate of premiums for policies that have been issued directly and by agents, but not reported to the Company as of the balance sheet date. To determine the estimated premiums, the Company uses historical experience, as well as other factors, to make certain assumptions about the average elapsed time between the policy effective date and the date the policies are reported. From time to time, the Company adjusts the inputs to the estimation process as reported transactions and new information becomes available. In addition to estimating revenues, the Company also estimates and accrues agent commissions, claims provision, premium taxes, income taxes, and other expenses associated with the estimated revenues that have been accrued. The Company reflects any adjustments to the accruals in the results of operations in the period in which new information becomes available.

Current wording

Total premiums include an estimate of premiums for policies that have been issued directly and by agents, but not reported to the Company as of the balance sheet date. To determine the estimated premiums, the Company uses historical experience, as well as other factors, to make certain assumptions about the average elapsed time between the Company’s initial notification of an open order and the final settlement of the related real estate transaction. From time to time, the Company adjusts the inputs to the estimation process as reported transactions and new information becomes available. In addition to estimating revenues, the Company also estimates and accrues agent commissions, claims provision, premium taxes, income taxes, and other expenses associated with the estimated revenues that have been accrued. The Company reflects any adjustments to the accruals in the results of operations in the period in which new information becomes available.

Previous wording

Title insurance companies typically issue title insurance policies directly or through title agencies. Following is a breakdown of premiums generated by direct and agency operations for the three- and nine-month periods ended September 30, 2025 and 2024:

Current wording

Title insurance companies typically issue title insurance policies directly or through title agencies. Following is a breakdown of premiums generated by direct and agency operations for the three-month periods ended March 31, 2026 and 2025:

Previous wording

Direct Net Premiums – The Company's direct business consists of operations at the home office, branch offices, and wholly owned title insurance agencies. In the Company's direct operations, the Company issues a title insurance policy and retains the entire premium, as no commissions are recognized in connection with these policies. Net premiums written from direct operations increased 0.4% and 1.3% for the three- and nine-month periods ended September 30, 2025, respectively, compared with the same prior year periods. The increases for the three- and nine-month periods ended September 30, 2025 were primarily the result of higher levels of real estate activity.

Current wording

Direct Net Premiums – The Company's direct business consists of operations at the home office, branch offices, and wholly owned title insurance agencies. In the Company's direct operations, the Company issues a title insurance policy and retains the entire premium, as no commissions are recognized in connection with these policies. Net premiums written from direct operations increased 5.1% for the three-month period ended March 31, 2026, compared with the same prior year period. The increase for the three-month period ended March 31, 2026 was primarily due to higher levels of real estate activity and ongoing expansion initiatives.

Previous wording

Agency Net Premiums– When a policy is written through a non-wholly owned title agency, the premium is shared between the agency and the Company. The agent retains a majority of the premium as a commission and remits the net amount to the Company. Title insurance commissions earned by the Company’s agents are recognized as expenses concurrently with premium recognition. Agency net premiums written increased 3.8% and 10.1% for the three- and nine-month periods ended September 30, 2025, respectively, compared with the same prior year periods. The increases for the three- and nine-month periods ended September 30, 2025 were primarily due to higher levels of real estate activity.

Current wording

Agency Net Premiums– When a policy is written through a non-wholly owned title agency, the premium is shared between the agency and the Company. The agent retains a majority of the premium as a commission and remits the net amount to the Company. Title insurance commissions earned by the Company’s agents are recognized as expenses concurrently with premium recognition. Agency net premiums written increased 11.9% for the three-month period ended March 31, 2026, compared with the same prior year period. The increase for the three-month period ended March 31, 2026 was primarily due to higher levels of real estate activity and ongoing expansion initiatives.

Previous wording

Following is a schedule of net premiums written for the three- and nine-month periods ended September 30, 2025 and 2024 in select states in which the Company's two insurance subsidiaries, ITIC and NITIC, currently underwrite title insurance:

Current wording

Following is a schedule of net premiums written for the three-month periods ended March 31, 2026 and 2025 in select states in which the Company's two insurance subsidiaries, ITIC and NITIC, currently underwrite title insurance:

Previous wording

Title insurance rates vary by state and are subject to extensive regulatory oversight. In certain jurisdictions, insurers are required to adhere to rates established by state regulatory authorities and are not permitted to modify such rates independently. Regulatory authorities may approve rate adjustments to reflect current market conditions and cost factors affecting the title insurance industry. The Texas Commissioner of Insurance is evaluating a proposed 6.2% reduction in title insurance rates, which, if approved, would become effective March 1, 2026 and supersede the previously mandated 10% rate decrease originally scheduled to become effective on July 1, 2025. The Georgia Insurance and Safety Fire Commissioner approved a rate increase that became effective on July 1, 2024, which the Company estimates increased its revenues by approximately 17%. The North Carolina Department of Insurance recently approved a 9.4% rate increase effective October 1, 2025, and the Ohio Department of Insurance recently approved a 9.0% rate increase effective January 1, 2026. Overall, the Company anticipates that these rate adjustments, along with other approved rate changes, will have a favorable net impact on premium revenues in future reporting periods.

Current wording

Title insurance rates vary by state and are subject to extensive regulatory oversight. In certain jurisdictions, insurers are required to adhere to rates established by state regulatory authorities and are not permitted to modify such rates independently. Regulatory authorities may approve rate adjustments to reflect current market conditions and cost factors affecting the title insurance industry. The Texas Commissioner of Insurance approved a 6.2% reduction in title insurance rates that became effective March 1, 2026. The North Carolina Department of Insurance recently approved a 9.4% rate increase that became effective October 1, 2025, and the Ohio Department of Insurance approved a 9.0% rate increase that became effective January 1, 2026. Overall, the Company anticipates that these rate adjustments, along with other approved rate changes, will have a favorable net impact on premium revenues in future reporting periods.

Previous wording

Escrow and other title-related fees consist primarily of commission income, escrow and other various fees associated with the issuance of title insurance policies including settlement, examination and closing fees. Escrow and other title-related fee revenues were $4.8 million and $14.4 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $4.6 million and $13.1 million for the same prior year periods. The increases for the three- and nine-month periods ended September 30, 2025 were primarily due to higher levels of real estate activity.

Current wording

Escrow and other title-related fees consist primarily of commission income, escrow and other various fees associated with the issuance of title insurance policies including settlement, examination and closing fees. Escrow and other title-related fee revenues were $5.0 million for the three-month period ended March 31, 2026, compared with $3.9 million for the same prior year period. The increase for the three-month period ended March 31, 2026 was primarily due to higher levels of real estate activity and ongoing expansion initiatives.

Previous wording

Revenue from non-title services includes trust services, agency management services and exchange services income. Non-title service revenues were $6.3 million and $16.3 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $4.3 million and $12.9 million for the same prior year periods. The increases for the three- and nine-month periods ended September 30, 2025 were primarily related to increases in revenue from like-kind exchanges and management services.

Current wording

Revenue from non-title services includes trust services, agency management services and exchange services income. Non-title service revenues were $4.4 million for the three-month period ended March 31, 2026, compared with $4.6 million for the same prior year period. The decrease for the three-month period ended March 31, 2026 was primarily related to lower revenue from like-kind exchanges.

Previous wording

Investment-related revenues include interest and dividends, other investment income, and net investment gains.

Current wording

Investment-related revenues include interest and dividends, other investment income, and net investment gains (losses).

Previous wording

Interest and dividends were $2.4 million and $7.1 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $2.7 million and $7.8 million for the same prior year periods. Interest and dividend levels are primarily a function of general market performance, interest rates and the amount of cash available for investments that meet the Company's investment policy. The decreases for the three- and nine-month periods ended September 30, 2025 were primarily impacted by prevailing interest rates and the composition of investment holdings.

Current wording

Interest and dividends remained consistent at $2.3 million for the three-month periods ended March 31, 2026 and 2025. Interest and dividend levels are primarily a function of general market performance, interest rates and the amount of cash available for investments that meet the Company's investment policy.

Previous wording

Other investment income was $985 thousand and $2.0 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $995 thousand and $2.0 million for the same prior year periods. Changes in other investment income are impacted by fluctuations in the carrying value of the underlying investment and distributions received.

Current wording

Other investment income was $664 thousand for the three-month period ended March 31, 2026, compared with $410 thousand for the same prior year period. Changes in other investment income are impacted by fluctuations in the carrying value of the underlying investment and distributions received.

Previous wording

The net realized investment gains were $856 thousand and $4.0 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $235 thousand and $4.7 million for the same prior year periods. The Company recorded impairment charges of $50 thousand and $469 thousand on other investments in the three- and nine-month periods ended September 30, 2025, respectively, compared with $309 thousand and $383 thousand on fixed maturity securities and other investments for the same prior year periods. Management believes unrealized losses on the remaining fixed maturity securities at September 30, 2025 are temporary in nature.

Current wording

The net realized investment gains were $117 thousand for the three-month period ended March 31, 2026, compared with $2.0 million for the same prior year period. The Company did not record any impairment charges in the three-month period ended March 31, 2026, compared to $275 thousand on other investments for the same prior year period. Management believes unrealized losses on the remaining fixed maturity securities at March 31, 2026 are temporary in nature.

Previous wording

Changes in the Estimated Fair Value of Equity Security Investments – Changes in the estimated fair value of equity security investments were $1.2 million and $(1.0) million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $741 thousand and $(18) thousand for the same prior year periods. Such fluctuations are typically the result of changes in general market conditions during the respective periods, however, the sale of appreciated investment securities can result in a reduction in unrealized gains as they are reclassified to net realized investment gains, which is not indicative of a decline in estimated fair value.

Current wording

Changes in the Estimated Fair Value of Equity Security Investments – Changes in the estimated fair value of equity security investments were $407 thousand for the three-month period ended March 31, 2026, compared with $(3.2) million for the same prior year period. Such fluctuations are typically the result of changes in general market conditions during the respective periods, however, the sale of appreciated investment securities can result in a reduction in unrealized gains as they are reclassified to net realized investment gains, which is not indicative of a decline in estimated fair value.

Previous wording

Other revenues primarily include miscellaneous income and gains and losses on the disposal of fixed assets and real estate. Other revenues were $106 thousand and $3.2 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $388 thousand and $748 thousand for the same prior year periods. The increase for the nine-month period ended September 30, 2025 was related to a gain on the disposition of assets transferred to a joint venture.

Current wording

Other revenues primarily include miscellaneous income and gains and losses on the disposal of fixed assets and real estate. Other revenues were $182 thousand for the three-month period ended March 31, 2026, compared with $149 thousand for the same prior year period.

Previous wording

The Company's operating expenses consist primarily of commissions to agents, personnel expenses, office and technology expenses and the provision for claims. Operating expenses increased 1.2% and 5.8% for the three- and nine-month periods ended September 30, 2025, compared with the same prior year periods. The increases for the three- and nine-month periods ended September 30, 2025 were primarily due to increases in commissions to agents and other expenses, partially offset by decreases in personnel expenses.

Current wording

The Company's operating expenses consist primarily of commissions to agents, personnel expenses, office and technology expenses and the provision for claims. Operating expenses increased 7.2% for the three-month period ended March 31, 2026, compared with the same prior year period. The increase for the three-month period ended March 31, 2026 was primarily due to increases in commissions to agents, personnel expenses and other expenses.

Previous wording

Following is a summary of the Company's operating expenses for the three- and nine-month periods ended September 30, 2025 and 2024. Inter-segment eliminations have been netted; therefore, the individual segment amounts will not agree to Note 4 to the unaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Current wording

Following is a summary of the Company's operating expenses for the three-month periods ended March 31, 2026 and 2025. Inter-segment eliminations have been netted; therefore, the individual segment amounts will not agree to Note 4 to the unaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Previous wording

On a combined basis, the after-tax profit margins were 16.7% and 13.6% for the three- and nine-month periods ended September 30, 2025, respectively, compared with 13.5% and 12.1% for the same prior year periods. The increases for the three- and nine-month periods ended September 30, 2025 were primarily due to growth in net premiums written and non-title service revenues, lower personnel expenses, and, for the three-month period, net investment gains. These increases were partially offset by increases in commissions to agents and other expenses. The nine-month period was also impacted by an increase in other revenues. The Company continually strives to enhance its competitive strengths and market position, including ongoing initiatives to manage its operating expenses.

Current wording

On a combined basis, the after-tax profit margin was 9.5% for the three-month period ended March 31, 2026, compared with 5.6% for the same prior year period. The increase for the three-month period ended March 31, 2026 was primarily due to growth in net premiums written, escrow and other title-related fees, and net investment gains (losses), partially offset by increases in commissions to agents, personnel expenses and other expenses. The Company continually strives to enhance its competitive strengths and market position, including ongoing initiatives to manage its operating expenses.

Previous wording

Personnel Expenses– Personnel expenses include base salaries, benefits and payroll taxes, bonuses paid to employees and contract labor expenses. Personnel expenses were $17.4 million and $53.2 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $18.1 million and $54.8 million for the same prior year periods. On a consolidated basis, personnel expenses as a percentage of total revenues were 23.9% and 26.2% for the three- and nine-month periods ended September 30, 2025, respectively, compared with 26.2% and 29.2% for the same prior year periods. The decreases in personnel expenses for the three- and nine-month periods ended September 30, 2025 were primarily due to lower staffing levels, reduced health insurance costs, and decreased contractors expenditures.

Current wording

Personnel Expenses– Personnel expenses include base salaries, benefits and payroll taxes, bonuses paid to employees and contract labor expenses. Personnel expenses were $19.0 million for the three-month period ended March 31, 2026, compared with $18.3 million for the same prior year period. The increase in personnel expenses for the three-month period ended March 31, 2026 was primarily due to merit increases in salaries and contractor expenditures. On a consolidated basis, personnel expenses as a percentage of total revenues were 29.7% for the three-month period ended March 31, 2026, compared with 32.4% for the same prior year period.

Previous wording

Office and Technology Expenses– Office and technology expenses primarily include facilities expenses, software and hardware expenses, depreciation expense, telecommunications expenses, and business insurance. Office and technology expenses remained relatively consistent with the prior year periods at $4.2 million and $13.0 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $4.4 million and $13.2 million for the same prior year periods.

Current wording

Office and Technology Expenses– Office and technology expenses primarily include facilities expenses, software and hardware expenses, depreciation expense, telecommunications expenses, and business insurance. Office and technology expenses remained relatively consistent with the prior year period at $4.5 million for the three-month periods ended March 31, 2026 and 2025.

Previous wording

Other Expenses– Other expenses primarily include business development expenses, premium-related taxes and licensing, professional services, title and service fees, amortization of intangible assets and other general expenses. Other expenses were $4.9 million and $14.3 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $4.0 million and $12.1 million for the same prior year periods. The increases for the three- and nine-month periods ended September 30, 2025 were primarily due to increases in professional services, miscellaneous expenditures, and expenses associated with higher title insurance revenues.

Current wording

Other Expenses– Other expenses primarily include business development expenses, premium-related taxes and licensing, professional services, title and service fees, amortization of intangible assets and other general expenses. Other expenses were $4.8 million for the three-month period ended March 31, 2026, compared with $4.5 million for the same prior year period. The increase for the three-month period ended March 31, 2026 was primarily due to increases in expenses associated with higher title insurance revenues and business development expenses, partially offset by a decline in professional service expenses.

Previous wording

Commissions to Agents– Agent commissions represent the portion of premiums retained by agents pursuant to the terms of their respective agency contracts. Commissions to agents increased 3.9% and 11.5% for the three- and nine-month periods ended September 30, 2025, respectively, compared with the same prior year periods. Commission expense as a percentage of net premiums written by agents was 75.4% for the three- and nine-month periods ended September 30, 2025, respectively, compared with 75.4% and 74.5% for the same prior year periods. The changes in commission expense, and commission expense as a percentage of net premiums written, were commensurate with the increases in agent premium volume. Commission rates vary by market due to local practice, competition and state regulations.

Current wording

Commissions to Agents– Agent commissions represent the portion of premiums retained by agents pursuant to the terms of their respective agency contracts. Commissions to agents increased 10.4% for the three-month period ended March 31, 2026, compared with the same prior year period. The change in commission expense was commensurate with the increase in agent premium volume. Commission expense as a percentage of net premiums written by agents was 74.8% for the three-month period ended March 31, 2026, compared with 75.8% for the same prior year period. Commission rates vary by market due to local practice, competition and state regulations.

Previous wording

Provision for Claims– The provision for claims decreased 27.5% and increased 3.7% for thethree- and nine-month periods ended September 30, 2025, respectively, compared with the same prior year periods. The provision for claims as a percentage of net premiums written was 2.1% and 2.3% for thethree- and nine-month periods ended September 30, 2025, respectively, compared with 3.0% and 2.4% for the same prior year periods. The decreases in the provision for claims as a percentage of net premiums written for the three- and nine-month periods ended September 30, 2025 were primarily due to higher levels of favorable loss development during the current year periods.

Current wording

Provision for Claims– The provision for claims increased 46.1% for thethree-month period ended March 31, 2026, compared with the same prior year period. The provision for claims as a percentage of net premiums written was 0.9% for thethree-month period ended March 31, 2026, compared with 0.7% for the same prior year period. The increase in the provision for claims as a percentage of net premiums written for the three-month period ended March 31, 2026 was primarily attributable to actuarial projections resulting in higher current‑year loss expectations.

Previous wording

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. Actual payments of claims, net of recoveries, were $2.5 million and $3.6 million for the nine-month periods ended September 30, 2025 and 2024, respectively.

Current wording

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. Actual payments of claims, net of recoveries, were $670 thousand and $386 thousand for the three-month periods ended March 31, 2026 and 2025, respectively.

Previous wording

At September 30, 2025, the total reserve for claims was $38.2 million. Of that total, approximately $3.3 million was reserved for specific claims, and approximately $34.9 million 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 claims may not materialize for several years, reserve estimates are subject to variability.

Current wording

At March 31, 2026, the total reserve for claims was $37.9 million. Of that total, approximately $2.9 million was reserved for specific claims, and approximately $35.0 million 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 claims may not materialize for several years, reserve estimates are subject to variability.

Previous wording

The provision for income taxes was $2.9 million and $7.3 million for the three- and nine-month periods ended September 30, 2025, respectively, compared with $2.3 million and $5.9 million for the same prior year periods. Income tax expense, including federal and state taxes, as a percentage of income before income taxes was 19.1% and 20.8% for the three- and nine-month periods ended September 30, 2025, respectively, compared with 19.6% and 20.7% for the same prior year periods. The effective income tax rates for both 2025 and 2024 differ from the U.S. federal statutory income tax rate of 21% primarily due to the effect of tax-exempt income and state taxes. Tax-exempt income lowers the effective tax rate.

Current wording

The provision for income taxes was $1.6 million for the three-month period ended March 31, 2026, compared with $882 thousand for the same prior year period. Income tax expense, including federal and state taxes, as a percentage of income before income taxes was 21.4% for the three-month period ended March 31, 2026, compared with 21.8% for the same prior year period. The effective income tax rates for both 2026 and 2025 differ from the U.S. federal statutory income tax rate of 21% primarily due to the effects of tax credits, tax-exempt income and state taxes.

Previous wording

The Company’s material cash requirements include general operating expenses, contractual and other obligations for the future payment of title claims, employment agreements, lease agreements, income taxes, capital expenditures, dividends on its common stock and other contractual commitments for goods and services needed for operations. All other arrangements entered into by the Company are not reasonably likely to have a material effect on liquidity or the availability of capital resources. Cash flows from operations have historically been the primary source of financing for expanding operations, whether through organic growth or outside investments. The Company believes its balances of cash, short-term investments and other readily marketable securities, along with cash flows generated by ongoing operations, will be sufficient to satisfy its cash requirements over the next 12 months and thereafter, including the funding of operating activities and commitments for investing and financing activities. The Company's cash flows for the three- and nine-month periods ended September 30, 2025, reflect the third-quarter 2025 recognition of the now-effective OBBBA provisions, which primarily accelerated certain tax deductions. The Company is currently evaluating the effects of provisions that have not yet become effective. At this time, the Company is not aware of any other known trends likely to materially affect its capital resources, nor does it anticipate any additional material changes in the composition or relative cost of those resources, except as otherwise disclosed in the Business Trends and Recent Conditions section of this Management’s Discussion and Analysis.

Current wording

The Company’s material cash requirements include general operating expenses, contractual and other obligations for the future payment of title claims, employment agreements, lease agreements, income taxes, capital expenditures, dividends on its common stock and other contractual commitments for goods and services needed for operations. All other arrangements entered into by the Company are not reasonably likely to have a material effect on liquidity or the availability of capital resources. Cash flows from operations have historically been the primary source of financing for expanding operations, whether through organic growth or outside investments. The Company believes its balances of cash, short-term investments and other readily marketable securities, along with cash flows generated by ongoing operations, will be sufficient to satisfy its cash requirements over the next 12 months and thereafter, including the funding of operating activities and commitments for investing and financing activities. At this time, the Company is not aware of any other known trends likely to materially affect its capital resources, nor does it anticipate any additional material changes in the composition or relative cost of those resources, except as otherwise disclosed in the Business Trends and Recent Conditions section of this Management’s Discussion and Analysis.

Previous wording

Cash Flows– Net cash flows provided by operating activities were $25.9 million and $17.7 million for the nine-month periods ended September 30, 2025 and 2024, respectively. Cash flows provided by operating activities differ from net income due to adjustments for non-cash items, such as gains and losses on investments and property, the timing of disbursements for taxes, claims and other accrued liabilities, and collections or changes in receivables and other assets.

Current wording

Cash Flows– Net cash flows provided by (used in) operating activities were $1.6 million and $(75) thousand for the three-month periods ended March 31, 2026 and 2025, respectively. Cash flows provided by (used in) operating activities differ from net income due to adjustments for non-cash items, such as gains and losses on investments and property, the timing of disbursements for taxes, claims and other accrued liabilities, and collections or changes in receivables and other assets.

Previous wording

Cash flows related to non-operating activities have historically consisted of purchases and proceeds from investing activities, the issuance of dividends and repurchases of common stock. Net cash was used in investing activities and financing activities for the nine-month periods ended September 30, 2025 and 2024.

Current wording

Cash flows related to non-operating activities have historically consisted of purchases and proceeds from investing activities, the issuance of dividends and repurchases of common stock. Net cash was provided by investing activities and used in financing activities for the three-month periods ended March 31, 2026 and 2025.

Previous wording

The Company maintains a high degree of liquidity within its investment portfolio in the form of cash, short-term investments and other readily marketable securities. As of September 30, 2025, the Company held cash and cash equivalents of $22.8 million, short-term investments of $88.1 million, available-for-sale fixed maturity securities of $111.1 million and equity securities of $39.7 million. The net effect of all activities on total cash and cash equivalents was a decrease of $1.9 million in 2025.

Current wording

The Company maintains a high degree of liquidity within its investment portfolio in the form of cash, short-term investments and other readily marketable securities. As of March 31, 2026, the Company held cash and cash equivalents of $26.7 million, short-term investments of $58.4 million, available-for-sale fixed maturity securities of $117.3 million and equity securities of $46.4 million. The net effect of all activities on total cash and cash equivalents was an increase of $5.9 million in 2026.

Previous wording

Due to the Company’s historical ability to consistently generate positive cash flows from its consolidated operations and investment income, management believes that funds generated from operations will enable the Company to adequately meet its current operating needs for the foreseeable future. However, given inflationary pressures and geopolitical and military tensions and conflicts, there can be no assurance that future experience will be similar to historical experience, since it is influenced by such factors as the interest rate environment, real estate activity, the Company’s claims-paying ability and its financial strength ratings. In addition to operational and investment considerations, taking advantage of opportunistic external growth opportunities may necessitate obtaining additional capital resources. The Company is carefully monitoring the U.S. political environment (including the federal government shutdown), inflation, geopolitical and military tensions and conflicts, and other trends that could potentially result in material adverse liquidity changes, and will continually assess its capital allocation strategy, including decisions relating to payment of dividends, repurchasing the Company’s common stock and/or conserving cash.

Current wording

Due to the Company’s historical ability to consistently generate positive cash flows from its consolidated operations and investment income, management believes that funds generated from operations will enable the Company to adequately meet its current operating needs for the foreseeable future. However, given inflationary pressures and geopolitical and military tensions and conflicts, there can be no assurance that future experience will be similar to historical experience, since it is influenced by such factors as the interest rate environment, real estate activity, the Company’s claims-paying ability and its financial strength ratings. In addition to operational and investment considerations, taking advantage of opportunistic external growth opportunities may necessitate obtaining additional capital resources. The Company is carefully monitoring the U.S. political environment, inflation, geopolitical and military tensions and conflicts, and other trends that could potentially result in material adverse liquidity changes, and will continually assess its capital allocation strategy, including decisions relating to payment of dividends, repurchasing the Company’s common stock and/or conserving cash.

Previous wording

Purchase of Company Stock– On November 9, 2015, the Board of Directors of the Company approved the purchase of an additional 163,335 shares pursuant to the Company’s repurchase plan, such that there was authority remaining under the plan to purchase up to an aggregate of 500,000 shares of the Company’s common stock pursuant to the plan immediately after this approval. 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. Pursuant to the Company’s ongoing purchase program, the Company purchased no shares in the nine-month period ended September 30, 2025 and 7,039 shares in the corresponding period in 2024. The Company anticipates making further purchases under this plan from time to time in the future, depending on such factors as the prevailing market price of the Company’s common stock, the Company’s available cash and then existing alternative uses for such cash.

Current wording

Purchase of Company Stock– On November 9, 2015, the Board of Directors of the Company approved the purchase of an additional 163,335 shares pursuant to the Company’s repurchase plan, such that there was authority remaining under the plan to purchase up to an aggregate of 500,000 shares of the Company’s common stock pursuant to the plan immediately after this approval. 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. Pursuant to the Company’s ongoing purchase program, the Company purchased no shares in the three-month periods ended March 31, 2026 and 2025. The Company anticipates making further purchases under this plan from time to time in the future, depending on such factors as the prevailing market price of the Company’s common stock, the Company’s available cash and then existing alternative uses for such cash.

Previous wording

Capital Expenditures– Capital expenditures were approximately $4.2 million for the nine-month period ended September 30, 2025. In 2025, the Company has plans for various capital improvement projects, including investment in a number of technology and system development initiatives and hardware purchases which are anticipated to be funded via cash flows from operations. All material anticipated capital expenditures are subject to periodic review and revision and may vary depending on a number of factors.

Current wording

Capital Expenditures– Capital expenditures were approximately $1.1 million for the three-month period ended March 31, 2026. In 2026, the Company has plans for various capital improvement projects, including investment in a number of technology and system development initiatives and hardware purchases which are anticipated to be funded via cash flows from operations. All material anticipated capital expenditures are subject to periodic review and revision and may vary depending on a number of factors.