Investors Title Company Announces Record Second Quarter 2018 Financial Results
Aug. 06, 2018
CHAPEL HILL, N.C.--(BUSINESS WIRE)--Aug 6, 2018--Investors Title Company (NASDAQ: ITIC) today announced its results for the second quarter ended June 30, 2018. Net income attributable to the Company increased 22.4% to a new second quarter record of $6.9 million, or $3.66 per diluted share, versus $5.7 million, or $2.99 per diluted share, for the prior year period.
Revenues also set a new second quarter record, increasing 4.5% to $41.9 million, compared with $40.1 million in the prior year period. Net premiums written increased due to higher real estate values, as well as a shift to higher-premium purchase activity, which offset the decline in refinance activity that has occurred over the past year. Other investment income increased primarily due to higher earnings from partnership investments. Implementation of a new accounting standard in 2018 resulted in recognition of a $0.3 million net unrealized gain on equity investments.
Operating expenses increased 4.2% versus the prior year quarter, mainly driven by higher personnel and claims expenses. Personnel costs increased as a result of higher staffing levels related to the support of growth, increases in contract services related to software initiatives, and normal inflationary increases in salaries and benefits. The provision for claims was higher in the current quarter mainly due to comparison to a prior year period which included a significant amount of favorable loss development from earlier policy years. In addition, the Company’s net income benefitted from recent tax reform legislation.
For the six months ended June 30, 2018, net income attributable to the Company increased 9.6% to $11.1 million, or $5.87 per diluted share, versus $10.2 million, or $5.35 per diluted share, for the prior year period. Revenues decreased 2.8% to $75.7 million, while operating expenses decreased 2.3% to $61.7 million. Results for the first half of the year have been shaped predominantly by the same factors that affected the second quarter, with the exception of more favorable claims experience for the six months ended June 30, 2018 versus the prior year period.
Chairman J. Allen Fine added, “We are pleased to report a record level of revenue and earnings for the second quarter. Revenue growth from purchase activity was strong enough to offset the impact of lower levels of refinance activity. In addition, we continued to benefit from stable levels of claims experience. We remain optimistic that low unemployment levels and wage growth will continue to offset headwinds resulting from the effects of rising interest rates and housing supply constraints, resulting in another strong year for real estate, mortgage lending, and title insurance.”
Investors Title Company’s subsidiaries issue and underwrite title insurance policies. The Company also provides investment management services and services in connection with tax-deferred exchanges of like-kind property.
Certain statements contained herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, among others, any statements regarding the Company’s expected performance for this year, future home price fluctuations, changes in home purchase or refinance activity and the mix thereof, interest rate changes, expansion of the Company’s market presence, enhancing competitive strengths, positive development in housing affordability, wages, unemployment or overall economic conditions or statements regarding our actuarial assumptions and the application of recent historical claims experience to future periods. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from anticipated and historical results. Such risks and uncertainties include, without limitation: the cyclical demand for title insurance due to changes in the residential and commercial real estate markets; the occurrence of fraud, defalcation or misconduct; variances between actual claims experience and underwriting and reserving assumptions, including the limited predictive power of historical claims experience; declines in the performance of the Company’s investments; government regulation; changes in the economy; loss of agency relationships, or significant reductions in agent-originated business; difficulties managing growth, whether organic or through acquisitions and other considerations set forth under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission, and in subsequent filings.
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