Investors title company announces record fourth quarter and fiscal year 2019 results
Chapel hill, n.c.--(business wire)--investors title company today announced results for the fourth quarter and year ended december 31, 2019. for the year, net income attributable to the company increased 43.7% to a record $31.5 million, or $16.59 per diluted share, versus $21.9 million, or $11.54 per diluted share, in the prior year. for the quarter, net income attributable to the company increased to a record $11.4 million, or $6.00 per diluted share, versus $135,000, or $0.07 per diluted share, in the prior year period. revenues for the year increased 17.4% to a record $183.5 million, compared with $156.3 million in the prior year. revenues benefitted from a $10.3 million increase in the fair value of equity security investments, compared to a $4.1 million decrease in the fair value of equity security investments in the prior year. in addition, net premiums written increased 5.6% to $145.8 million, a new record. the increase in premiums stemmed from a favorable interest rate environment, continued increases in home prices and a high level of home sales activity. finally, revenues from non-title services increased $2.8 million due mainly to growth in our like-kind property exchange business. operating expenses increased 11.2% to $143.7 million, compared with $129.2 million in the prior year. higher premium levels drove an increase in agent commissions. personnel expenses increased due to normal inflationary increases in salaries and benefits, growth in staffing levels associated with higher activity levels and targeted investments in key areas of our business, and continued support of multi-year technology initiatives. the claims provision was higher due to less favorable loss development and higher incurred claims in the current period. income before income taxes increased to $14.6 million and $39.8 million for the quarter and year ended december 31, 2019, versus $470,000 and $27.1 million in the prior year periods, respectively. excluding the impact of changes in the fair value of equity security investments, income before income taxes (non-gaap) increased $3.3 million in the current quarter and decreased $1.7 million in the current year compared with the same periods in the prior year (see appendix a for a reconciliation of gaap to non-gaap measures used in this press release.) chairman j. allen fine commented, “we are pleased to report another year of strong performance for the company. for both the quarter and the year, the company set new records for revenues, premiums, and earnings. a strong economy led to another year of increases in the level of home sales and average real estate values, while historically low interest rates drove a sharp increase in the level of refinance activity. even though claims expense increased, we continued to experience a low level of overall claims activity. we believe this is the result of market factors driving foreclosure rates to pre-recession levels, as well as our own efforts to improve the risk profile of our company and our business partners. as we head into the new year, we are optimistic that the strength in the economy will result in conditions favorable for continued strength in the real estate market. regardless of market conditions, however, we remain focused on enhancing our competitive strengths, profitably expanding our market presence, and strengthening our financial position.” 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, 2018, as filed with the securities and exchange commission, and in subsequent filings. investors title company and subsidiaries consolidated statements of income for the three and twelve months ended december 31, 2019 and 2018 (in thousands, except per share amounts) (unaudited) three months ended december 31, twelve months ended december 31, 2019 2018 2019 2018 revenues: net premiums written $ 41,900 $ 34,002 $ 145,842 $ 138,125 escrow and other title-related fees 1,858 1,631 7,474 7,096 non-title services 2,478 1,999 9,922 7,082 interest and dividends 1,147 1,238 4,752 4,619 other investment income 1,147 828 3,191 3,107 net realized investment gains (losses) 141 (739 ) 1,340 (110 ) changes in the estimated fair value of equity security investments 4,085 (6,756 ) 10,303 (4,130 ) other 128 83 678 470 total revenues 52,884 32,286 183,502 156,259 operating expenses: commissions to agents 21,519 16,833 72,780 65,775 (benefit) provision for claims (78 ) (487 ) 3,532 (332 ) personnel expenses 11,187 10,318 46,058 43,552 office and technology expenses 2,451 2,210 9,254 8,813 other expenses 3,234 2,942 12,055 11,382 total operating expenses 38,313 31,816 143,679 129,190 income before income taxes 14,571 470 39,823 27,069 provision for income taxes 3,191 337 8,365 5,210 net income 11,380 133 31,458 21,859 net loss attributable to noncontrolling interests — 2 — 33 net income attributable to the company $ 11,380 $ 135 $ 31,458 $ 21,892 basic earnings per common share $ 6.03 $ 0.07 $ 16.66 $ 11.60 weighted average shares outstanding – basic 1,889 1,887 1,888 1,887 diluted earnings per common share $ 6.00 $ 0.07 $ 16.59 $ 11.54 weighted average shares outstanding – diluted 1,896 1,896 1,896 1,897 investors title company and subsidiaries consolidated balance sheets as of december 31, 2019 and 2018 (in thousands) (unaudited) december 31, 2019 december 31, 2018 assets cash and cash equivalents $ 25,949 $ 18,694 investments: fixed maturity securities, available-for-sale, at fair value 104,638 88,957 equity securities, at fair value 61,108 48,489 short-term investments 13,134 32,787 other investments 13,982 12,436 total investments 192,862 182,669 premiums and fees receivable 12,523 12,128 accrued interest and dividends 1,033 946 prepaid expenses and other receivables 5,519 7,288 property, net 9,776 10,304 goodwill and other intangible assets, net 10,275 10,780 operating lease right-of-use assets 4,469 — other assets 1,487 1,459 total assets $ 263,893 $ 244,268 liabilities and stockholders’ equity liabilities: reserve for claims $ 31,333 $ 31,729 accounts payable and accrued liabilities 28,318 27,735 operating lease liabilities 4,502 — current income taxes payable 1,340 4,981 deferred income taxes, net 7,038 4,184 total liabilities 72,531 68,629 stockholders’ equity: common stock – no par value (10,000 authorized shares; 1,889 and 1,887 shares issued and outstanding as of december 31, 2019 and 2018, respectively, excluding in each period 292 shares of common stock held by the company's subsidiary) — — retained earnings 188,262 174,690 accumulated other comprehensive income 3,100 949 total stockholders’ equity 191,362 175,639 total liabilities and stockholders’ equity $ 263,893 $ 244,268 investors title company and subsidiaries net premiums written by branch and agency for the three and twelve months ended december 31, 2019 and 2018 (in thousands) (unaudited) three months ended december 31, twelve months ended december 31, 2019 % 2018 % 2019 % 2018 % branch $ 11,527 27.5 $ 10,047 29.5 $ 40,638 27.9 $ 41,305 29.9 agency 30,373 72.5 23,955 70.5 105,204 72.1 96,820 70.1 total $ 41,900 100.0 $ 34,002 100.0 $ 145,842 100.0 $ 138,125 100.0 investors title company and subsidiaries appendix a non-gaap measures reconciliation for the three and twelve months ended december 31, 2019 and 2018 (in thousands) (unaudited) management uses various financial and operational measurements, including financial information not prepared in accordance with generally accepted accounting principles ("gaap"), to analyze company performance. this includes adjusting revenues to remove the impact of changes in the estimated fair value of equity security investments, which are recognized in net income under gaap. management believes that these measures are useful to evaluate the company's internal operational performance from period to period because they eliminate the effects of external market fluctuations. the company also believes users of the financial results would benefit from having access to such information, and that certain of the company’s peers make available similar information. this information should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with gaap, and may be different from similarly titled non-gaap financial measures used by other companies. the following tables reconcile non-gaap financial measurements used by company management to the comparable measurements using gaap: three months ended december 31, twelve months ended december 31, 2019 2018 2019 2018 revenues total revenues (gaap) $ 52,884 $ 32,286 $ 183,502 $ 156,259 subtract: changes in the estimated fair value of equity security investments (4,085 ) 6,756 (10,303 ) 4,130 adjusted revenues (non-gaap) $ 48,799 $ 39,042 $ 173,199 $ 160,389 income before income taxes income before income taxes (gaap) $ 14,571 $ 470 $ 39,823 $ 27,069 subtract: changes in the estimated fair value of equity security investments (4,085 ) 6,756 (10,303 ) 4,130 adjusted income before income taxes (non-gaap) $ 10,486 $ 7,226 $ 29,520 $ 31,199
