ITIC 10-K & 10-Q changes, risk factors and insider trading

The Company relies upon the North Carolina, Texas, Georgia, South Carolina, Georgia and Florida markets for a significant portion of its premiums. Changes in the economic or regulatory environments in these states could have an adverse impact on the Company.

North Carolina, Texas, Georgia, South Carolina, Georgia, and Florida are the largest sources of premium revenue for the Company’s title insurance subsidiaries. In 2024,2025, these states represented 34.5%,35.3%, 27.9%,27.1%, 8.8%,8.6%, 7.6%8.1%, and 7.2%6.4% of total premiums written by the Company, respectively. A decrease in the level of real estate activity in these states, whether driven by weak economic conditions, changes in regulatory environments or other factors that influence demand, could have a negative impact on the Company’s financial results.

The Company’s title insurance subsidiaries are subject to regulations by the CFPB, created by the Dodd-Frank Act. The CFPB has extensive regulatory and enforcement authority over real estate and mortgage markets, including RESPA, the primary federal regulatory guidance governing the real estate settlement industry. The manner and extent to which the CFPB will implement new regulations is not fully known; however, any new regulations implemented could result in changes to internal processes, including changes to systems and forms. Leadership transitionschanges at the CFPB under the new presidential administration may result in changespolicy or regulatory shifts that could affectimpact the title insurance industry.

TheFailure Companyto maytimely encounteradopt, difficultieseffectively managing systemimplement or technologicalappropriately changes,govern whichnew technologies could adversely affect itsthe Company’s financial and operating results.

Technological changesdevelopments in the title insurance industry are driven primarily by evolutionadvances in technology, competitive factorsdynamics, and regulatory changes.requirements. These changesdevelopments have resultedaccelerated the delivery of information and increased reliance on automated and highly efficient production processes, including the growing use of automation and artificial intelligence (“AI”). The Company’s competitiveness depends, in fasterpart, informationon deliveryits ability to evaluate, adopt, integrate, and efficient,maintain highlytechnologies automatedin productionways processes.that Themeet inabilityevolving ofindustry thestandards, Companyregulatory toexpectations, manage,and developcustomer or successfully implement new systems or technological changes could negatively impact profitability.preferences.

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 exchangesexchanges, 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, as amended (the “IRC”).IRC. 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.

AInflationary recent period of inflation,pressures, ongoing geopolitical and military conflicts, and changes in government regulations and policy, including as a result of policies implemented by the recentTrump changeadministration insuch presidentialas administration,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 beenclosely highly attentive tomonitored the risks thatassociated with these events have created,developments and inresponded responseby adjustedincreasing the target federal funds rate atacross several meetings held from 2022 tothrough 2024.2023, 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. HigherThe current period of elevated mortgage interest rates havehas impacted the demand and pricing of real estate.

The FOMC issues disclosures on a periodic basis that include projections of the federal funds rate and expected actions. The FOMC maintained a target range between 0.00% and 0.25% from March 2020 until March 2022. Starting at the March 2022 meeting of the FOMC,FOMC through July 2023, the FOMC consistentlyrepeatedly raisedincreased the target federal funds raterange, rangereaching througha Julyhigh 2023, when the FOMC increased the target range toof between 5.25% and 5.50%. During several meetings in 2024 and 2025, the FOMC meetingslowered throughoutthe 2024,federal funds rate. The most recent adjustment, in December 2025, reduced the target federal funds rate was reduced, with the most recent adjustment occurring in December 2024, lowering the raterange to a range of 4.25% to 4.50%. During its January 2025 meeting, the FOMC opted to keep the target federal funds rate unchanged within the 4.25% to 4.50% range, emphasizing a cautious approach due to prevailing economic uncertainties3.5% and a desire to evaluate upcoming economic data.3.75%. 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.

The Mortgage Bankers Association's (“MBA”) January 19,21, 20252026 Mortgage Finance Forecast (“MBA Forecast”) projects 20252026 purchase activity to increase 8.1%6.4% to $1,392$1.4 billiontrillion and refinance activity to increase 34.4%9.5% to $660$760 billion, resulting in an increase in total mortgage originations of 15.3%7.5% to $2,052$2.2 billion,trillion, all from 20242025 levels. In 2024,2025, purchase activity accounted for 72.4%66.1% of all mortgage originations andand, according to the MBA Forecast, is projected in the MBA Forecast to represent 67.8%65.5% of all mortgage originations in 2025.2026. According to data published by Freddie Mac, the average 30-year fixed mortgage interest rates in the United States were 6.7%6.6% and 6.8%6.7% for the years ended December 31, 20242025 and 2023,2024, respectively. Per the MBA Forecast, mortgage interest rates are projected to decline modestlyin the subsequent year period, decreasing to 6.1% in subsequent2026, periods,before reachingincreasing 6.4%to 6.3% in 2026.2027. 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 recentpolicies changeimplemented inby presidentialthe Trump administration, these projections and the impact of actual future developments on the Company could be subject to material change.

If one or more of the variables or assumptions used changedwere to change such that the Company’s recorded loss ratio, or loss provision as a percentage of net title premiums, increased or decreased three loss ratio percentage points, the impact on after-tax income for the year ended December 31, 20242025 would be as follows:

Generally, title insurance premiums are recognized at the time of settlement of the related real estate transaction, as the earnings process is then considered complete, irrespective of the timing of the issuance of a title insurance policy or commitment. Expenses typically associated with premiums, including agent commissions, premium taxes, and a provision for future claimsclaims, are recognized concurrent with recognition of related premium revenue.

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 policyCompany’s effectiveinitial datenotification of an opened order and the datefinal settlement of the policiesrelated arereal reported.estate Reporting lag times vary by market. In certain markets, the lag time may be very short, but in others, can be as high as three months.transaction. From time to time, the Company adjusts the inputs to the estimation process as branches and agents reportreported transactions and new information becomes available. TheIn addition to estimating revenues, the Company reviewsalso estimates and adjustsaccrues lagagent timecommissions, estimatesclaims periodically,provision, usingpremium historicaltaxes, experienceincome taxes, and other factors,expenses andassociated with the estimated revenues that have been accrued. The Company reflects any adjustments to the accruals in the resultresults of operations in the period in which new information becomes available.

Investments in Fixed Maturity Securities: Fixed maturity securities are classified as available-for-sale and reported at estimated fair value with unrealized gains and losses, net of tax, reported as accumulated other comprehensive income. Securities are regularly reviewed for differences between the cost and estimated fair value of each security indicating impairment. Factors considered in determining whether the impairment is credit-related include the financial condition and prospects of the issuer (including credit ratings and analyst reports) and macro-economic changes. If the Company intends to sell an available-for-sale security in an unrealized loss position, or determines that it is more likely than not that the Company will be required to sell the security before it recovers its amortized cost basis, the security is impaired and it is written down to estimated fair value with all losses recognized in earnings. For available-for-sale fixed maturity securities in an unrealized loss position for which the Company does not intend to sell the security, the Company evaluates the securities to determine whether the decline in the estimated fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors. Any impairment that is not credit-related is recognized in other comprehensive income (loss) income,, net of applicable taxes. Credit-related impairment is recognized as an allowance for credit losses (“ACL”) in the Consolidated Balance Sheets, limited to the amount by which the amortized cost basis exceeds the estimated fair value, with a corresponding adjustment to earnings.

The following table presents certain Consolidated Statements of Operations data for the years ended December 31, 20242025, 2024, and 2023:

Net premiums written increased 4.1% in 2025 to $212.6 million, compared with $204.3 million in 2024, and increased 19.3% in 2024 to $204.3 million,2024, compared with $171.2 million in 2023. The increaseincreases in 2025, compared to 2024, and in 2024, compared withto 2023, waswere primarily driven by increased activity levels, which were influenced by ongoing expansion initiatives and lower average mortgage interest rates,levels and appreciation in average home prices.

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 policyCompany’s effectiveinitial datenotification of an opened order and the datefinal settlement of the policiesrelated arereal reported.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.

Title insurance companies typically issue title insurance policies directly or through title agencies. Following is a breakdown of net premiums generated by direct and agency operations for the years ended December 31, 20242025, 2024, and 2023.

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 2.0% in 2025 to $61.9 million, compared with $60.6 million in 2024, and increased 4.4% in 2024 to $60.6 million,2024, compared with $58.1 million in 2023. The increaseincreases in net premiums written from direct operations forin 2025, compared with 2024, and in 2024, compared with 2023, waswere primarily driven by increased activity levels, which were influenced by ongoing expansion initiatives and lower average mortgage interest rates,levels and appreciation in average home prices.

Agency Net Premiums: When a policy is written through a non-wholly owned title agency, the premium is shared between the agency and the underwriter. 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 5.0% in 2025 to $150.8 million, compared with $143.6 million in 2024, and increased 27.0% in 2024 to $143.6 million,2024, compared with $113.1 million in 2023. The increaseincreases in 2025, compared with 2024, and in 2024, compared with 2023, waswere primarily driven by increased activity levels, which were influenced by ongoing expansion initiatives and lower average mortgage interest rates,levels and appreciation in average home prices.

Escrow and other title-related fees consists primarily of commission income, escrow and other various fees associated with the issuance of a title insurance policy including settlement, examination and closing fees. In 2024, escrowEscrow and other title-related fee revenue increased 4.9%7.6% in 2025 to $19.3 million, compared with $18.0 million,million in 2024, and increased 4.9% in 2024, compared with $17.1 million in 2023. The increases in 2025, compared with 2024, and in 2024, compared with 2023, were primarily due to an increaseincreases in real estate activity levels.

Revenue from non-title services includes trust services, agency management services and exchange services income. Non-title service revenues increased 25.6% in 2025 to $21.6 million, compared with $17.2 million in 2024, and decreased 10.6% in 2024 to $17.2 million,2024, compared with $19.2 million in 2023. The increase in 2025, compared with 2024, primarily related to increases in revenue from like-kind exchanges and management services. The decrease in 2024, compared with 2023, was primarily related to a decrease in like-kind exchange revenues.

Interest and dividends were $10.0 million in 2025, compared with $10.7 million in 2024,2024 compared withand $9.1 million in 2023. Interest and investment income levels are primarily a function of general market performance, interest rates and the amount of cash available for investment. The decrease in 2025, compared to 2024, was primarily impacted by prevailing interest rates. The increase in 20242024, primarilycompared to 2023, related to elevated levels of interest income, predominantly influenced by the amount of fixed maturity securities held, interest rates, and general market performance. Refer to Note 3 in the accompanying Consolidated Financial Statements for the major categories of investments, scheduled maturities, amortized costs, estimated fair values of investment securities and earnings by security category.

Other investment income was $2.7 million in 2025, compared with $2.6 million in 2024,2024 compared withand $3.8 million in 2023. Changes in other investment income are impacted by fluctuations in the carrying value of the underlying investment and/or distributions received.

Net investment gains include realized gains and losses on the sale of investment securities and changes in the estimated fair value of equity security investments. Net investment gains were $3.2 million, $4.7 million and $3.4 million in 2025, 2024 and 2023, respectively.

The net realized investment gains were $5.0$4.2 million for 2024,2025, compared with $5.0 million in 2024 and $15.6 million forin 2023. The net realized gains in 20242025, 2024, and 2023 included impairment charges of $0, $74 thousand and $201 thousand, respectively, for certain fixed maturity securities where the intent to hold had changed. There waswere also an impairment chargecharges of $469 thousand and $309 thousand in 20242025 and 2024, respectively, related to a write-down of other assets and investments. Management believes unrealized losses on the remaining fixed maturity securities at December 31, 20242025 are not credit-related.

Changes in the Estimated Fair Value of Equity Security Investments - Changes in the estimated fair value of equity security investments were $(1.0) million in 2025, compared with $(318) thousand in 2024 and $(12.2) million in 2023. Such fluctuations are 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.

Other revenues primarily includes gains and losses on the disposal of assets, rental income from real estate investments and miscellaneous revenues. Other revenues were virtually$3.3 unchangedmillion atin 2025, compared with $947 thousand in 2024,2024 compared withand $991 thousand in 2023. The increase for 2023.2025 was related to a gain recognized on assets contributed to a joint venture, with 2024 and 2023 being virtually unchanged.

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 4.3% in 2025, compared with 2024, primarily due to increases in commissions to agents and other expenses. Operating expenses increased 10.2% in 2024, compared with 2023, primarily due to an increase in commissions to agents, partially offset by a decrease in personnel expenses.

Following is a summary of the Company’s operating expenses for 20242025, 2024, and 2023. Intersegment eliminations have been netted; therefore, the individual segment amounts will not agree to Note 12 in the accompanying Consolidated Financial Statements.

Personnel Expenses: Personnel expenses include base salaries, benefits and payroll taxes, bonuses paid to employees and contract labor expenses. Personnel expenses were $72.2 million, $72.5 millionmillion, and $76.7 million for 20242025, 2024, and 2023, respectively. Personnel expenses decreased by 0.4% in 2025, compared with 2024, and decreased 5.5% in 2024, compared with 2023, primarily due to lower staffing levels. Employee headcount decreased by 3.7%,0.9% whenin compared2025, tofrom the2024, sameand prior3.7% yearin period,2024, primarilyfrom due to the Company's cost saving measures.2023. On a consolidated basis, personnel expenses as a percentage of total revenues were 28.1%26.5%, 28.1%, and 34.1% in 20242025, 2024, and 2023, respectively.

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 $17.2 million, $17.5 millionmillion, and $17.4 million for 20242025, 2024, and 2023, respectively. Office and technology expenses decreased in 2025, compared to 2024, primarily due to lower office and occupancy expenses partially offset by an increase in technology expenses. The slight increase in office and technology expenses in 2024, compared with 2023, was primarily due to an increase in technology expenses partially offset by a decline in office expenses.

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 $20.5 million, $16.9 millionmillion, and $16.3 million for 20242025, 2024, and 2023, respectively. The increase in 2025, compared with 2024, was mainly due to higher professional service expenses associated with agency acquisitions and several projects. The increase in 2024, compared with 2023, was mainly due to expenses associated with higher title insurance revenues and business development.

Commissions to Agents: Agent commissions represent the portion of premiums retained by agents pursuant to the terms of their respective agency contracts. In 2025, commissions to agents increased 5.9% to $113.7 million, compared with $107.3 million in 2024. In 2024, commissions to agents increased 28.7% to $107.3 million, compared with $83.4 million in 2023. Commission expense as a percentage of net premiums written by agents was 74.7%75.4%, 74.7%, and 73.7% in 20242025, 2024, and 2023, respectively. The increase in commission expense, when comparing 2025 with 2024, and 2024 with 2023, was commensurate with the increaseincreases in agent premium volume. Commission rates vary by market due to local practice, competition and state regulations.

Provision for Claims: The provision for claims increased 1.7% in 2025, compared to 2024, and decreased 4.9% in 2024, compared to 2023. The provision for claims as a percentage of net premiums written was 2.2%2.2%, 2.2%, and 2.8% in 20242025, 2024, and 2023, respectively. The provision for claims as a percentage of net premiums written remained relatively consistent between 2025 and 2024. The decrease in the provision for claims as a percentage of net premiums written in 2024, compared with 2023, was primarily due to higher levels of favorable loss development in the current year period.development.

TheA slight decrease in the loss provision rate in 2024,2025, from the 20232024 level, resulted in approximately $1.2$109 millionthousand less in reserves than would have been recorded at the higher 20232024 level. Loss provision rates are subject to variability and are reviewed and adjusted as experience develops.

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 $3.6 million, $4.6 millionmillion, and $4.8 million in 20242025, 2024, and 2023, respectively.

The provision for income taxes was $9.4 million, $8.4 millionmillion, and $4.5 million for 20242025, 2024, and 2023, respectively. Income tax expense, including federal and state taxes, as a percentage of income before income taxes was 21.3%21.0%, 21.3%, and 17.3% for 20242025, 2024, and 2023, respectively. The effective income tax rates for both2025, 20242024, and 2023 differ from the U.S. federal statutory income tax rate of 21% primarily due to the effects of deferred tax adjustments, tax credits, tax-exempt income and state taxes.

The Company’s after-tax profit margin varies according to a number of factors, including the volume and type of real estate activity. On a combined basis, the after-tax profit margins were 12.0%12.9%, 12.0%, and 9.6% in 20242025, 2024, and 2023, respectively. The increaseincreases in after-tax margin in 2025 compared with 2024, and 2024 compared with 2023, waswere primarily relateddriven toby anrevenue increase in total revenuesgrowth outpacing the increaseincreases in expenses. The Company achieved gains in revenue, while profitability was aided by ongoing cost control measures. The Company continually strives to enhance its competitive strengths and market position, including ongoing initiatives to manage its operating expenses.

Cash Flows: Net cash flows provided by operating activities were $30.9 million, $29.8 millionmillion, and $7.4 million for 20242025, 2024, and 2023, 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.

Cash flows from non-operating activities have historically consisted of purchases and proceeds from investing activities, the issuance of dividends and repurchases of common stock. In 2025, the Company distributed less dividends and used more cash in investing activities in comparison to 2024. In 2024, the Company distributed more dividends while reducing investment purchase activity and generatinggenerated lowermore proceedscash from investmentinvesting salesactivities and maturities, comparedrelative to 2023. In the fourth quarters of 20242025, 2024, and 2023, the Company paid special cash dividends in the amounts of $14.00$8.72, $14.00, and $4.00 per share, respectively, in addition to regular cash dividends. Total dividends paid per share were $15.84$10.56, $15.84, and $5.84 in 20242025, 2024, and 2023, respectively.

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 December 31, 2024,2025, the Company held cash and cash equivalents of $24.7$20.8 million, short-term investments of $59.1$68.8 million, available-for-sale fixed maturity securities of $113.0$118.1 million and equity securities of $39.9$41.5 million. The net effect of all activities on total cash and cash equivalents was ana increasedecrease of $623$3.8 thousandmillion for 2024.2025.

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 2025, 7,039 shares in 2024 at an average price of $155.95$155.95, and 7,000 shares in 2023 at an average per share price of $137.00 in 2024 and 2023, respectively.$137.00. 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 the existing alternative uses for such cash.

Capital Expenditures: Capital expenditures were approximately $5.6 million, $7.4 millionmillion, and $9.2 million during 20242025, 2024, and 2023, respectively. Cash flows from operations are expected to fund the Company's investment in technology and system development initiatives and hardware purchases, given ongoing capital improvement projects and plans for future projects. All material anticipated capital expenditures are subject to periodic review and revision and may vary depending on a number of factors.

In addition, in administering tax-deferred like-kind exchanges pursuant to § 1031 of the IRC, ITEC serves as a qualified intermediary for exchanges, holding the net sales proceeds from relinquished property to be used for purchase of replacement property. ITAC serves as exchange accommodation titleholder and, through LLCs that are wholly owned subsidiaries of ITAC, holds property in reverse exchange transactions. Like-kind exchange deposits and reverse exchange property held by the Company for the purpose of completing such transactions totaled approximately $323.5$269.3 million and $263.7$323.5 million as of December 31, 20242025 and 2023,2024, respectively. These exchange deposits are held at third-party financial institutions. Exchange deposits are not considered assets of the Company and, therefore, are excluded from the Consolidated Balance Sheets; however, the Company remains contingently liable for the disposition of the transfers of property, disbursements of proceeds and the return on the proceeds at the agreed upon rate. Exchange services revenue includes earnings on these deposits; therefore, investment income is shown as non-title services rather than investment income. These like-kind exchange funds are primarily invested in money market and other short-term investments.

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%92.0% of the Company's revenues for the three-monthsix-month period ended MarchJune 31,30, 2026.

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%. DuringThrough the firstsecond 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.

The Mortgage Bankers Association's ("MBA") AprilJuly 20,22, 2026 Mortgage Finance Forecast (“MBA Forecast”) projects 2026 purchase activity to increase 4.6%4.4% to $1.4 trillion and mortgage refinance activity to increase 10.8%7.6% to $769$747 billion, resulting in a net increase in total mortgage originations of 6.7%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 64.8%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 6.1%6.3% and 6.8% for the three-monthsix-month periods ended MarchJune 31,30, 2026 and 2025, respectively. Per theThe MBA Forecast,Forecast projects that mortgage interest rates arewill projected to increase in subsequent periods, reaching 6.3% in 2027 andreach 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.

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-monthsix-month period ended MarchJune 31,30, 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.

The following table presents certain unaudited Consolidated Statements of Operations data for the three-monththree- and six-month periods ended MarchJune 31,30, 2026 and 2025:

Net premiums written increased 9.9%23.9% and 17.5% for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026 to $50.9$67.5 million and $118.5 million, respectively, compared with $46.3$54.5 million and $100.8 million for the same prior year period.periods. The increaseincreases for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026 waswere primarily due to higher levels of real estate activity and ongoing expansion initiatives.

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-monththree- and six-month periods ended MarchJune 31,30, 2026 and 2025:

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%24.8% and 15.7% for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with the same prior year period.periods. The increaseincreases for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026 waswere primarily duethe toresult of higher levels of real estate activity and ongoing expansion initiatives.

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%23.6% and 18.2% for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with the same prior year period.periods. The increaseincreases for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026 waswere primarily due to higher levels of real estate activity and ongoing expansion initiatives.

Following is a schedule of net premiums written for the three-monththree- and six-month periods ended MarchJune 31,30, 2026 and 2025 in select states in which the Company's two insurance subsidiaries, ITIC and NITIC, currently underwrite title insurance:

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.

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$6.0 million and $11.0 million for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with $3.9$5.7 million and $9.6 million for the same prior year period.periods. The increaseincreases for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026 waswere primarily due to higher levels of real estate activity and ongoing expansion initiatives.

Revenue from non-title services includes trust services, agency management services and exchange services income. Non-title service revenues were $4.4$5.1 million and $9.5 million for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with $4.6$5.5 million and $10.1 million for the same prior year period.periods. The decreasedecreases for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026 waswere primarily related to lowerdeclines in revenue from like-kind exchanges.

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

The Company’s investment strategy emphasizes after-tax income and principal preservation. The Company’s investments are primarily in fixed maturity securities, short-term investments and equity securities. The average effective maturity of the majority of the fixed maturity securities at MarchJune 31,30, 2026 is less than 10 years. The Company’s invested assets are managed to fund its obligations and evaluated to ensure long term stability of capital accounts.

Interest and dividends remained consistent atwere $2.3 million and $4.6 million for the three-monththree- and six-month periods ended MarchJune 31,30, 20262026, respectively, compared with $2.4 million and 2025.$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.

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.

Other investment income was $664$667 thousand and $1.3 million for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with $410$609 thousand and $1.0 million for the same prior year period.periods. Changes in other investment income are impacted by fluctuations in the carrying value of the underlying investment and distributions received.

Net Investment Gains (Losses)

The net realized investment gains were $117$1.5 thousandmillion and $1.6 million for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with $2.0$1.1 million and $3.1 million for the same prior year period.periods. The Company did not record anyrecorded impairment charges inof $362 thousand on other investments for both the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, compared towith $275$144 thousand and $419 thousand on other investments for the same prior year period.periods. Management believes unrealized losses on the remaining fixed maturity securities at MarchJune 31,30, 2026 are temporary in nature.

Changes in the Estimated Fair Value of Equity Security Investments – Changes in the estimated fair value of equity security investments were $407$3.3 thousandmillion and $3.7 million for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with $973 thousand and $(3.22.2) million for the same prior year period.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.

Other revenues primarily include miscellaneous income and gains and losses on the disposal of fixed assets and real estate. Other revenues were $182$154 thousand and $336 thousand for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with $149$2.9 thousandmillion and $3.1 million for the same prior year period.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.

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%15.9% and 11.8% for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, compared with the same prior year period.periods. The increaseincreases for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026 waswere primarily due to increases in commissions to agents, personnel expenses and otherthe expenses.provision for claims.

Following is a summary of the Company's operating expenses for the three-monththree- and six-month periods ended MarchJune 31,30, 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.

On a combined basis, the after-tax profit marginmargins waswere 9.5%16.9% and 13.8% for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with 5.6%16.7% and 11.9% for the same prior year period.periods. The increaseincreases for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026 waswere primarily dueattributable to growthincreases in net premiums written, escrow and other title-related fees, and net investment gains (losses),gains, partially offset by decreases in other revenues and increases in commissions to agents, personnel expenses and otherthe expenses.provision for claims. The Company continually strives to enhance its competitive strengths and market position, including ongoing initiatives to manage its operating expenses.

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-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with $18.3$17.5 million and $35.8 million for the same prior year period.periods. The increaseincreases in personnel expenses for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026 waswere primarily due to merit increases in salariesstaffing levels and contractorincentive expenditures.compensation. On a consolidated basis, personnel expenses as a percentage of total revenues were 29.7%22.0% and 25.3% for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with 32.4%23.7% and 27.5% for the same prior year period.periods.

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 remainedwere relatively$4.7 consistentmillion withand the prior year period at $4.5$9.2 million for the three-monththree- and six-month periods ended MarchJune 31,30, 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 andwere 2025.primarily due to increases in software expenses.

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$4.9 million and $9.8 million for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with $4.5$4.9 million and $9.4 million for the same prior year period.periods. The increase for the three-month periodsix-months ended MarchJune 31,30, 2026 was primarily due to increases in expenses associated with higher title insurance revenues and business development expenses,revenues, partially offset by a decline in professional service expenses.fees.

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%22.6% and 17.0% for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with the same prior year period.periods. The changechanges in commission expense waswere commensurate with the increaseincreases in agent premium volume. Commission expense as a percentage of net premiums written by agents was 74.8%74.6% and 74.7% for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with 75.8%75.2% and 75.4% for the same prior year period.periods. Commission rates vary by market due to local practice, competition and state regulations.

Provision for Claims – The provision for claims increased 46.1%33.8% and 35.5% for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with the same prior year period.periods. The provision for claims as a percentage of net premiums written was 0.9%4.1% and 2.7% for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with 0.7%3.8% and 2.4% for the same prior year period.periods. The increaseincreases in the provision for claims as a percentage of net premiums written for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026 waswere primarily attributabledue to actuarialthe projectionsimpacts resultingof increased premium volume and changes in higheractuarially current‑yeardetermined loss expectations.ratio estimates.

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$2.2 thousandmillion and $386$1.4 thousandmillion for the three-monthsix-month periods ended MarchJune 31,30, 2026 and 2025, respectively.

At MarchJune 31,30, 2026, the total reserve for claims was $37.9$39.1 million. Of that total, approximately $2.9$2.8 million was reserved for specific claims, and approximately $35.0$36.3 million was reserved for claims for which the Company had no notice. Because of the uncertainty of future claims, changes in economic conditionsconditions, and the fact that claims may not materialize for several years, reserve estimates are subject to variability.

The provision for income taxes was $1.6$4.8 million and $6.5 million for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with $882$3.5 thousandmillion and $4.4 million for the same prior year period.periods. Income tax expense, including federal and state taxes, as a percentage of income before income taxes was 21.4%24.8% and 23.8% for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared with 21.8%22.3% and 22.2% for the same prior year period.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 effectseffect of tax credits, tax-exempt income and state taxes.

The Company believes it is more likely than not that the tax benefits associated with recognized impairments and unrecognized losses recorded through MarchJune 31,30, 2026 will be realized. However, this judgment could be impacted by further market fluctuations.

Cash Flows – Net cash flows provided by (used in) operating activities were $1.6$9.8 million and $(75)$8.8 thousandmillion for the three-monthsix-month periods ended MarchJune 31,30, 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.

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 providedused byin investing activities and used in financing activities for the three-monthsix-month periods ended MarchJune 31,30, 2026 and 2025.

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 MarchJune 31,30, 2026, the Company held cash and cash equivalents of $26.7$20.5 million, short-term investments of $58.4$51.7 million, available-for-sale fixed maturity securities of $117.3$130.5 million and equity securities of $46.4$51.3 million. The net effect of all activities on total cash and cash equivalents was ana increasedecrease of $5.9$374 millionthousand in 2026.

The ability of the Company's title insurance subsidiaries to pay dividends to the Company is subject to state regulation from their respective states of domicile. Each state regulates the extent to which title underwriters can pay dividends or make distributions and requires prior regulatory approval of the payment of dividends and other intercompany transfers. The maximum dividend permitted by law is not necessarily indicative of an insurer’s actual ability to pay dividends. Depending on regulatory conditions, the Company may in the future need to retain cash in its title insurance subsidiaries in order to maintain their statutory capital position. As of MarchJune 31,30, 2026, both ITIC and NITIC met the minimum capital, surplus and reserve requirements for each state in which they are licensed.

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.

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-monthsix-month periods ended MarchJune 31,30, 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.

Capital Expenditures – Capital expenditures were approximately $1.1$2.9 million for the three-monthsix-month period ended MarchJune 31,30, 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.

Contractual Obligations - As of MarchJune 31,30, 2026, the Company had a claims reserve totaling $37.9$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.

ITIC, a wholly owned subsidiary of the Company, has entered into employment agreements with certain executive officers. The amounts accrued for these agreements at MarchJune 31,30, 2026 and December 31, 2025, were $15.7$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.

In addition, in administering tax-deferred like-kind exchanges pursuant to § 1031 of the Internal Revenue Code, ITEC serves as a qualified intermediary for exchanges, holding the net sales proceeds from relinquished property to be used for purchase of replacement property. ITAC serves as exchange accommodation titleholder and, through LLCs that are wholly owned subsidiaries of ITAC, holds property for exchangers in reverse exchange transactions. Like-kind exchange deposits and reverse exchange property held by the Company for the purpose of completing such transactions totaled approximately $291.4$329.1 million and $269.3 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively. These exchange deposits are held at third-party financial institutions. Exchange deposits are not considered assets of the Company and, therefore, are excluded from the accompanying unaudited Consolidated Balance Sheets; however, the Company remains contingently liable for the disposition of the transfers of property, disbursements of proceeds and the return on the proceeds at the agreed upon rate. Exchange services revenue includes earnings on these deposits; therefore, investment income is shown as non-title services rather than investment income. These like-kind exchange funds are primarily invested in money market funds and other short-term investments.