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Investors Title Company Announces Fourth Quarter and Fiscal Year 2010 Results

Investors Title Company today announced its results for the fourth quarter and year ended December 31, 2010. For the quarter, net income increased to $2,368,550, or $1.04 per diluted share, compared with $309,300, or $0.14 per diluted share, for the prior year period. For the year, net income increased 32.0% to $6,372,626, or $2.78 per diluted share, compared with $4,828,779, or $2.10 per diluted share, for the prior year.

The increase in net income for the quarter was driven primarily by revenue growth and favorable claims experience. Higher levels of refinance activity led to a 53.7% increase in net premiums written. Operating expenses increased 28.9% to $18,641,944 versus the prior year period, primarily due to a 73.2% increase in commissions, commensurate with the increase in premium volumes and a greater contribution from agency business. The increase in commission expense was partially offset by lower claims expense. Despite the increase in premium volume, the provision for claims decreased 31.2% versus the prior year period due to a recovery of approximately $600,000 as well as favorable claims experience related to prior policy years.

The increase in net income for the year is due to reductions in claims expense and other operating expenses, as well as realized gains on investments, partially offset by a higher effective income tax rate compared with 2009. While total revenues were flat versus 2009, operating expenses decreased 4.1% to $62,693,729. The higher effective income tax rate is attributable to a change in the mix of tax-exempt investment income relative to the prior year.

Chairman J. Allen Fine added, “We are pleased to report a substantial improvement in operating results for 2010. Net premiums written in the second half of the year increased 41.7% over the first half from an increase in refinance activity as well as contributions from new agents. Operating expenses were favorable compared with the prior year due to continued improvement in our claims loss rate as well as reductions in other operating expense categories. Our balance sheet and financial condition remain very strong, and we continue to enhance our competitive strengths and market position by emphasizing operational efficiency and the expansion of our agency base.”

Investors Title Company is engaged through its subsidiaries in the business of issuing and underwriting title insurance policies. The Company also provides investment management services to individuals, companies, banks and trusts, as well as services in connection with tax-deferred exchanges of like-kind property.

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 other statements, any predictions regarding activity in the U.S. real estate market, future enhancement of our operational efficiency or agency base expansion. 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: 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; declines in the performance of the Company’s investments; government regulation; 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, 2009, 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, 2010 and 2009

(Unaudited)
Three Months EndedTwelve Months Ended
December 31December 31

2010

2009

2010

2009

Revenues:
Underwriting income:
Premiums Written $ 19,367,125 $ 12,587,939 $ 61,664,348 $ 62,250,774
Less-premiums for reinsurance ceded 79,331 37,511 201,907 95,523
Net premiums written 19,287,794 12,550,428 61,462,441 62,155,251
Investment income-interest and dividends 913,950 921,045 3,671,178 3,783,116
Net realized gain (loss) on investments 348,608 (97,329 ) 654,674 (498,089 )
Other 1,681,142 1,268,431 5,521,062 5,867,882
Total Revenues 22,231,494 14,642,575 71,309,355 71,308,160
Operating Expenses:
Commissions to agents 10,481,297 6,052,270 31,189,207 29,254,311
Provision for claims 1,190,725 1,731,724 4,435,066 8,465,123
Salaries, employee benefits and payroll taxes 4,510,829 4,326,490 17,695,956 18,189,483
Office occupancy and operations 897,072 1,041,088 3,935,563 4,333,579
Business development 582,473 469,748 1,544,588 1,398,057
Filing fees, franchise and local taxes 38,602 24,603 573,075 571,677
Premium and retaliatory taxes 359,745 255,177 1,279,400 1,268,301
Professional and contract labor fees 472,438 379,758 1,511,283 1,362,706
Other 108,763 185,417 529,591 549,144
Total Operating Expenses 18,641,944 14,466,275 62,693,729 65,392,381
Income Before Income Taxes3,589,550 176,300 8,615,626 5,915,779
Provision (Benefit) For Income Taxes1,221,000 (133,000 ) 2,243,000 1,087,000
Net Income $ 2,368,550 $ 309,300 $ 6,372,626 $ 4,828,779
Basic Earnings Per Common Share $ 1.04 $ 0.14 $ 2.79 $ 2.11
Weighted Average Shares Outstanding - Basic2,283,513 2,285,991 2,284,657 2,291,816
Diluted Earnings Per Common Share $ 1.04 $ 0.14 $ 2.78 $ 2.10
Weighted Average Shares Outstanding - Diluted2,287,201 2,288,814 2,289,847 2,299,429

Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of December 31, 2010 and 2009
(Unaudited)

December 31, 2010

December 31, 2009
Assets
Investments in securities:
Fixed maturities:
Held-to-maturity, at amortized cost $ - $ 2,000
Available-for-sale, at fair value 86,033,557 88,801,186
Equity securities, available-for-sale, at fair value 13,872,370 11,854,301
Short-term investments 27,203,550 20,717,434
Other investments 2,888,958 2,307,220
Total investments 129,998,435 123,682,141
Cash and cash equivalents 8,117,031 8,733,221
Premiums and fees receivable, net 7,253,786 5,170,476
Accrued interest and dividends 1,150,602 1,122,806
Prepaid expenses and other assets 2,688,723 1,815,653
Property acquired in settlement of claims 127,938 175,476
Property, net 3,672,317 3,894,724
Deferred income taxes, net 476,534 1,833,207
Total Assets $ 153,485,366 $ 146,427,704
Liabilities and Stockholders' Equity
Liabilities:
Reserves for claims $ 38,198,700 $ 39,490,000
Accounts payable and accrued liabilities 10,301,495 9,008,337
Current income taxes payable 1,056,356 670,290
Total liabilities 49,556,551 49,168,627
Stockholders' Equity:

Common stock - no par value (shares authorized 10,000,000; 2,282,596 and 2,285,289 shares issued and outstanding as of December 31, 2010 and 2009, respectively, excluding 291,676 shares for 2010 and 2009 of common stock held by the Company's subsidiary)

1 1
Retained earnings 98,240,109 92,528,818
Accumulated other comprehensive income 5,688,705 4,730,258
Total stockholders' equity 103,928,815 97,259,077
Total Liabilities and Stockholders' Equity$153,485,366 $ 146,427,704

Investors Title Company and Subsidiaries
Net Premiums Written By Branch and Agency
For the Three and Twelve Months Ended December 31, 2010 and 2009
(Unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31
2010% 2009 % 2010% 2009 %
Branch$4,920,51225.5 $ 4,093,859 32.6 $17,961,14429.2 $ 21,474,082 34.5
Agency14,367,28274.5 8,456,569 67.4 43,501,29770.8 40,681,169 65.5
Total$19,287,794100.0 $ 12,550,428 100.0 $61,462,441100.0 $ 62,155,251 100.0

Contacts:

Investors Title Company
Elizabeth B. Lewter, 919-968-2200
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