On this page of StockholderLetter.com we present the latest annual shareholder letter from INVESTORS TITLE CO — ticker symbol ITIC. Reading current and past ITIC letters to shareholders can bring important insights into the investment thesis.

 •  4/12/2024 Letter Continued (Full PDF)
 •  4/11/2023 ITIC Stockholder Letter
 •  More "Insurance Brokers" Category Stockholder Letters
 •  ITIC Benford's Law Stock Score = 76

ITIC Shareholder/Stockholder Letter Transcript:

April 12, 2024
To Our Fellow Shareholders:
In a challenging year for the real estate market, we focused on proactive steps to strengthen our company and
were able to report relatively favorable financial performance. Market conditions remained daunting as interest
rates rose to 20-year highs and the supply of available homes for sale remained low. These factors combined
to push transaction volumes to lows not seen since the mid-1990s and were the primary reasons for the
decline in our revenue. Despite these market-related headwinds, our company achieved an 11.7% pre-tax
profit margin, made targeted investments to expand our geographic footprint, and leveraged technology to
strengthen our competitive position.
The demand spurred during the COVID-19 era by shifts to remote work combined with the low inventory of
homes for sale to drive real estate values to new highs. As the pandemic subsided, the Federal Reserve raised
interest rates to curb inflation. The elevated cost to obtain mortgage financing and higher home prices
combined to erode affordability. Additionally, many potential sellers have been reluctant to forgo low interest
rates on their current mortgages. The net result was that mortgage originations declined last year to the lowest
annual level in two decades, which, in turn, pushed title insurance transaction volume down.
The Company   s total title insurance premiums declined 31.2% in 2023 but compared favorably to industry
declines, generally due to the relative health of our core markets and the growth experienced from our recent
expansion into markets such as Florida. This, combined with disciplined expense management, helped soften
the impact of premium declines on earnings. In addition to the expenses that typically decline commensurate
with volume, such as agent commissions, we implemented targeted reductions in almost all expense
categories, including personnel-related costs, especially in geographic areas most affected by the market
slowdown.
Other factors that helped mitigate premium declines included higher investment earnings and growth in
revenue from non-title services such as like-kind exchange business. For the first time in many years, we were
able to invest our investment portfolio at interest rates more in line with historical averages. Interest and
dividend income increased 92.5% over the previous year. Higher interest-rate levels also favorably impacted
revenue in our like-kind exchange subsidiary. Other non-title services, such as the wealth-management
solutions offered by our Investors Trust Company subsidiary, which celebrates 20 years of operations in 2024,
also performed well and contributed positively to revenues.
Claims expense increased 12% but, in general, remained in line with the trend of recent years. Title claims
often experience an uptick with downturns in the real estate business cycle, but we have not observed a
noticeable increase in this market. As in any year, we continue to maintain a robust program of proactive risk
mitigation that includes education for both internal and external audiences designed to raise awareness of
potential problems.
Disciplined loss prevention and expense management go hand in hand with maximizing internal efficiencies
and delivering solutions that save time for business partners. In 2023, we continued to invest significantly in
technology initiatives that simplify internal procedures, promote productivity, and meet the complex and
evolving needs of diverse customer segments. We implemented new accounting, contract management, and
human resources systems. We also launched an improved title insurance rate calculator, refreshed websites
with new features such as mobile-device responsiveness, and enhanced our existing or introduced new
customer-facing production and payment solutions. These investments optimize operations, strengthen
existing relationships, and demonstrate our attractive value proposition to new customers, all of which
reinforces our strong financial position and ability to return value to shareholders.
(Con  nued on page 2)
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Continued from page 1
For the seventh consecutive year, the board of directors declared a special dividend, which reflects our strong
relative operational performance and balance sheet. This financial strength provides flexibility to continue to
invest in our Company despite the occasional downturn in the real estate market. Our ongoing investments
help support growth, strengthen our competitive position, and maintain the financial stability required to ensure
policyholder protection. Our superior financial stability continues to be affirmed by rating agencies, such as
AM Best, as being among the highest in the industry.
Looking ahead, we see signs that support an optimistic economic outlook: The economy has avoided slipping
into recession thus far, employment remains strong, and the Fed has paused rate hikes. Knowing the exact
timing of a future turn in the real estate market is impossible, but we are confident the discipline that has
helped us navigate market cycles in the past will help us persevere through this one and be fully prepared to
maximize opportunities at the onset of the next upturn. Conservative operating and investment principles,
strategic and mutually beneficial relationships with partners, and dedication to outstanding service will continue
to differentiate us.
We are grateful to our talented and passionate employees for their commitment to the foundational values that
have propelled our company forward since its inception in 1972, our partners for their loyal support and their
contribution to our mutual success, and you, our fellow shareholders, for your confidence in us and the
Company   s continued prosperity.
Investors Title Company | 121 N Columbia St, Chapel Hill, NC 27514 | 919.968.2200 / F 919.968.2227
invtitle.com | nititle.com | invtrust.com
Cautionary Information about Forward-Looking Statements
Certain statements contained herein may constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements include, among others, statements about new software
making our agents more efficient; management   s intent to continue its disciplined approach toward maintaining our
competitive advantages while using our superior capital position to prudently grow the business and its returns; and our
strategy for capital allocation. 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; the possible loss of agency
relationships or significant reductions in agent-originated business; 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, 2023, as filed with the
Securities and Exchange Commission, and in subsequent filings.
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 4/12/2024 Letter Continued (Full PDF)