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 91.1% of the Company's revenues for the three-month period ended March 31, 2026.

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 92.0% of the Company's revenues for the six-month period ended June 30, 2026.

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 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.

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 lowered the federal funds rate. The most recent adjustment, in December 2025, reduced the target range to 3.5% and 3.75%. Through the second 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") 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.

Current wording

The Mortgage Bankers Association's ("MBA") July 22, 2026 Mortgage Finance Forecast (“MBA Forecast”) projects 2026 purchase activity to increase 4.4% to $1.4 trillion and mortgage refinance activity to increase 7.6% to $747 billion, resulting in a net increase in total mortgage originations of 5.5% 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 65.5% 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 6.3% and 6.8% for the six-month periods ended June 30, 2026 and 2025, respectively. The MBA Forecast projects that mortgage interest rates will reach 6.5% in 2026 and remain relatively flat through 2028. Due to the rapidly changing environment brought on by inflationary pressures, federal government shutdowns, 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 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.

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 six-month period ended June 30, 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-month periods ended March 31, 2026 and 2025:

Current wording

The following table presents certain unaudited Consolidated Statements of Operations data for the three- and six-month periods ended June 30, 2026 and 2025:

Previous 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.

Current wording

Net premiums written increased 23.9% and 17.5% for the three- and six-month periods ended June 30, 2026 to $67.5 million and $118.5 million, respectively, compared with $54.5 million and $100.8 million for the same prior year periods. The increases for the three- and six-month periods ended June 30, 2026 were primarily due to higher levels of real estate activity and ongoing expansion initiatives.

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-month periods ended March 31, 2026 and 2025:

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- and six-month periods ended June 30, 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 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.

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 24.8% and 15.7% for the three- and six-month periods ended June 30, 2026, respectively, compared with the same prior year periods. The increases for the three- and six-month periods ended June 30, 2026 were primarily the result of 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 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.

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 23.6% and 18.2% for the three- and six-month periods ended June 30, 2026, respectively, compared with the same prior year periods. The increases for the three- and six-month periods ended June 30, 2026 were 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-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:

Current wording

Following is a schedule of net premiums written for the three- and six-month periods ended June 30, 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 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.

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 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 $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.

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 $6.0 million and $11.0 million for the three- and six-month periods ended June 30, 2026, respectively, compared with $5.7 million and $9.6 million for the same prior year periods. The increases for the three- and six-month periods ended June 30, 2026 were 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 $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.

Current wording

Revenue from non-title services includes trust services, agency management services and exchange services income. Non-title service revenues were $5.1 million and $9.5 million for the three- and six-month periods ended June 30, 2026, respectively, compared with $5.5 million and $10.1 million for the same prior year periods. The decreases for the three- and six-month periods ended June 30, 2026 were primarily related to declines in revenue from like-kind exchanges.

Previous wording

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

Current wording

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

Previous 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.

Current wording

Interest and dividends were $2.3 million and $4.6 million for the three- and six-month periods ended June 30, 2026, respectively, compared with $2.4 million and $4.7 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 six-month periods ended June 30, 2026 were primarily due to declines in lower average yields.

Previous wording

Other investment income consists primarily of income related to investments in unconsolidated affiliates, typically structured as limited liability companies ("LLCs"), accounted for under either the equity method of accounting or the measurement alternative for investments that do not have readily determinable fair values. The measurement alternative method requires investments without readily determinable fair values to be recorded at cost, less impairments, and plus or minus any changes resulting from observable price changes. The Company monitors any events or changes in circumstances that may have had a significant adverse effect on the fair value of these investments and makes any necessary adjustments.

Current wording

Other investment income consists primarily of income related to investments in unconsolidated affiliates, typically structured as either limited partnerships ("LPs") or limited liability companies ("LLCs"), accounted for under either the equity method of accounting or the measurement alternative for investments that do not have readily determinable fair values. The measurement alternative method requires investments without readily determinable fair values to be recorded at cost, less impairments, and plus or minus any changes resulting from observable price changes. The Company monitors any events or changes in circumstances that may have had a significant adverse effect on the fair value of these investments and makes any necessary adjustments.

Previous 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.

Current wording

Other investment income was $667 thousand and $1.3 million for the three- and six-month periods ended June 30, 2026, respectively, compared with $609 thousand and $1.0 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.

Previous 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.

Current wording

The net realized investment gains were $1.5 million and $1.6 million for the three- and six-month periods ended June 30, 2026, respectively, compared with $1.1 million and $3.1 million for the same prior year periods. The Company recorded impairment charges of $362 thousand on other investments for both the three- and six-month periods ended June 30, 2026, compared with $144 thousand and $419 thousand on other investments for the same prior year periods. Management believes unrealized losses on the remaining fixed maturity securities at June 30, 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 $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.

Current wording

Changes in the Estimated Fair Value of Equity Security Investments – Changes in the estimated fair value of equity security investments were $3.3 million and $3.7 million for the three- and six-month periods ended June 30, 2026, respectively, compared with $973 thousand and $(2.2) million 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.

Previous 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.

Current wording

Other revenues primarily include miscellaneous income and gains and losses on the disposal of fixed assets and real estate. Other revenues were $154 thousand and $336 thousand for the three- and six-month periods ended June 30, 2026, respectively, compared with $2.9 million and $3.1 million for the same prior year periods. The decreases for the three- and six-month periods ended June 30, 2026 were primarily due to non-recurring gains from the prior year.

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 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.

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 15.9% and 11.8% for the three- and six-month periods ended June 30, 2026, compared with the same prior year periods. The increases for the three- and six-month periods ended June 30, 2026 were primarily due to increases in commissions to agents, personnel expenses and the provision for claims.

Previous 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.

Current wording

Following is a summary of the Company's operating expenses for the three- and six-month periods ended June 30, 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 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.

Current wording

On a combined basis, the after-tax profit margins were 16.9% and 13.8% for the three- and six-month periods ended June 30, 2026, respectively, compared with 16.7% and 11.9% for the same prior year periods. The increases for the three- and six-month periods ended June 30, 2026 were primarily attributable to increases in net premiums written, escrow and other title-related fees, and net investment gains, partially offset by decreases in other revenues and increases in commissions to agents, personnel expenses and the provision for claims. 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 $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.

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 and $38.1 million for the three- and six-month periods ended June 30, 2026, respectively, compared with $17.5 million and $35.8 million for the same prior year periods. The increases in personnel expenses for the three- and six-month periods ended June 30, 2026 were primarily due to increases in staffing levels and incentive compensation. On a consolidated basis, personnel expenses as a percentage of total revenues were 22.0% and 25.3% for the three- and six-month periods ended June 30, 2026, respectively, compared with 23.7% and 27.5% for the same prior year periods.

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 period at $4.5 million for the three-month periods ended March 31, 2026 and 2025.

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 were $4.7 million and $9.2 million for the three- and six-month periods ended June 30, 2026, respectively, compared with $4.3 million and $8.9 million for the same prior year periods. The increases for the three- and six-month periods ended June 30, 2026 were primarily due to increases in software expenses.

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 $4.8 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.

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 $4.9 million and $9.8 million for the three- and six-month periods ended June 30, 2026, respectively, compared with $4.9 million and $9.4 million for the same prior year periods. The increase for the six-months ended June 30, 2026 was primarily due to increases in expenses associated with higher title insurance revenues, partially offset by a decline in professional fees.

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 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.

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 22.6% and 17.0% for the three- and six-month periods ended June 30, 2026, respectively, compared with the same prior year periods. The changes in commission expense were commensurate with the increases in agent premium volume. Commission expense as a percentage of net premiums written by agents was 74.6% and 74.7% for the three- and six-month periods ended June 30, 2026, respectively, compared with 75.2% and 75.4% for the same prior year periods. Commission rates vary by market due to local practice, competition and state regulations.

Previous 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.

Current wording

Provision for Claims– The provision for claims increased 33.8% and 35.5% for thethree- and six-month periods ended June 30, 2026, respectively, compared with the same prior year periods. The provision for claims as a percentage of net premiums written was 4.1% and 2.7% for thethree- and six-month periods ended June 30, 2026, respectively, compared with 3.8% and 2.4% for the same prior year periods. The increases in the provision for claims for the three- and six-month periods ended June 30, 2026 were primarily due to the impacts of increased premium volume and changes in actuarially determined loss ratio estimates.

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 $670 thousand and $386 thousand for the three-month periods ended March 31, 2026 and 2025, 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 $2.2 million and $1.4 million for the six-month periods ended June 30, 2026 and 2025, respectively.

Previous 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.

Current wording

At June 30, 2026, the total reserve for claims was $39.1 million. Of that total, approximately $2.8 million was reserved for specific claims, and approximately $36.3 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 $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.

Current wording

The provision for income taxes was $4.8 million and $6.5 million for the three- and six-month periods ended June 30, 2026, respectively, compared with $3.5 million and $4.4 million for the same prior year periods. Income tax expense, including federal and state taxes, as a percentage of income before income taxes was 24.8% and 23.8% for the three- and six-month periods ended June 30, 2026, respectively, compared with 22.3% and 22.2% for the same prior year periods. 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 effect of tax credits, tax-exempt income and state taxes.

Previous 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.

Current wording

Cash Flows– Net cash flows provided by operating activities were $9.8 million and $8.8 million for the six-month periods ended June 30, 2026 and 2025, 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.

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 provided by investing activities and used in financing activities for the three-month periods ended March 31, 2026 and 2025.

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 used in investing activities and financing activities for the six-month periods ended June 30, 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 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.

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 June 30, 2026, the Company held cash and cash equivalents of $20.5 million, short-term investments of $51.7 million, available-for-sale fixed maturity securities of $130.5 million and equity securities of $51.3 million. The net effect of all activities on total cash and cash equivalents was a decrease of $374 thousand 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, 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, including the impacts of federal government shutdowns, 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 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.

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 six-month periods ended June 30, 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 $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.

Current wording

Capital Expenditures– Capital expenditures were approximately $2.9 million for the six-month period ended June 30, 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.

Previous wording

Contractual Obligations -As of March 31, 2026, the Company had a claims reserve totaling $37.9 million. The amounts and timing of these obligations are estimated and not set contractually. Events such as fraud, defalcation, and multiple property title defects can substantially and unexpectedly cause increases in both the amount and timing of estimated title insurance loss payments and loss cost trends whereby increases or decreases in inflationary factors (including the value of real estate) will influence the ultimate amount of title insurance loss payments and could increase total obligations and influence claim payout patterns. Due to the length of time over which claim payments are made and regularly occurring changes in underlying economic and market conditions, claim estimates are subject to variability and future payments could increase or decrease from these estimated amounts in the future.

Current wording

Contractual Obligations -As of June 30, 2026, the Company had a claims reserve totaling $39.1 million. The amounts and timing of these obligations are estimated and not set contractually. Events such as fraud, defalcation, and multiple property title defects can substantially and unexpectedly cause increases in both the amount and timing of estimated title insurance loss payments and loss cost trends whereby increases or decreases in inflationary factors (including the value of real estate) will influence the ultimate amount of title insurance loss payments and could increase total obligations and influence claim payout patterns. Due to the length of time over which claim payments are made and regularly occurring changes in underlying economic and market conditions, claim estimates are subject to variability and future payments could increase or decrease from these estimated amounts in the future.

Previous wording

ITIC, a wholly owned subsidiary of the Company, has entered into employment agreements with certain executive officers. The amounts accrued for these agreements at March 31, 2026 and December 31, 2025, were $15.7 million and $15.6 million, respectively, which includes postretirement compensation and health benefits, and were calculated based on the terms of the contracts. These executive contracts are accounted for on an individual contract basis. As payments are based upon the occurrence of specific events, including death, disability, retirement, termination without cause or upon a change in control, payment periods are currently uncertain. Information regarding retirement agreements and other postretirement benefit plans can be found in Note 5 to the unaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Current wording

ITIC, a wholly owned subsidiary of the Company, has entered into employment agreements with certain executive officers. The amounts accrued for these agreements at June 30, 2026 and December 31, 2025, were $15.8 million and $15.6 million, respectively, which includes postretirement compensation and health benefits, and were calculated based on the terms of the contracts. These executive contracts are accounted for on an individual contract basis. As payments are based upon the occurrence of specific events, including death, disability, retirement, termination without cause or upon a change in control, payment periods are currently uncertain. Information regarding retirement agreements and other postretirement benefit plans can be found in Note 5 to the unaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Previous wording

The Company enters into lease agreements that are primarily used for office space. These leases are accounted for as operating leases, with lease expense recognized on a straight-line basis over the term of the lease. The Company occasionally assumes equipment lease agreements through business acquisitions. These leases are accounted for as finance leases. Included in a portion of the Company's current leases is an option to extend or cancel the lease term, and the exercise of such an option is solely at the Company's discretion. The total of undiscounted future minimum lease payments under operating leases that have initial or remaining noncancelable lease terms in excess of one year after 2026 is $8.2 million, which includes lease payments related to options to extend or cancel the lease term if the Company determined at the date of adoption that the lease was expected to be renewed or extended. Information about leases can be found in Note 12 to the unaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Current wording

The Company enters into lease agreements that are primarily used for office space. These leases are accounted for as operating leases, with lease expense recognized on a straight-line basis over the term of the lease. The Company occasionally assumes equipment lease agreements through business acquisitions. These leases are accounted for as finance leases. Included in a portion of the Company's current leases is an option to extend or cancel the lease term, and the exercise of such an option is solely at the Company's discretion. The total of undiscounted future minimum lease payments under operating leases that have initial or remaining noncancelable lease terms in excess of one year after 2026 is $8.7 million, which includes lease payments related to options to extend or cancel the lease term if the Company determined at the date of adoption that the lease was expected to be renewed or extended. Information about leases can be found in Note 12 to the unaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q.