v2.4.0.8
Document And Entity Information (USD $)
12 Months Ended
Dec. 31, 2013
Feb. 14, 2014
Jun. 30, 2013
Document And Entity Information [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Dec. 31, 2013    
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2013    
Entity Registrant Name INVESTORS TITLE CO    
Entity Central Index Key 0000720858    
Current Fiscal Year End Date --12-31    
Entity Filer Category Accelerated Filer    
Entity Common Stock, Shares Outstanding   2,037,331  
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Well-known Seasoned Issuer No    
Entity Public Float     $ 109,863,998
v2.4.0.8
Consolidated Balance Sheets (USD $)
Dec. 31, 2013
Dec. 31, 2012
Investments in securities:    
Fixed maturities, available-for-sale, at fair value (amortized cost: 2013: $87,980,160; 2012: $75,573,673) $ 91,445,413 $ 81,936,978
Equity securities, available-for-sale, at fair value (cost: 2013: $22,200,369; 2012: $21,229,114) 36,144,065 28,510,933
Short-term investments 7,926,373 13,567,648
Other investments 7,247,831 6,763,100
Total investments 142,763,682 130,778,659
Cash and cash equivalents 23,626,761 20,810,018
Premium and fees receivable (less allowance for doubtful accounts: 2013: $2,620,903; 2012: $1,902,581) 8,750,224 11,037,714
Accrued interest and dividends 1,006,698 1,037,447
Prepaid expenses and other assets 7,466,141 4,651,115
Property, net 4,325,538 3,603,323
Current income taxes recoverable 366,772 0
Total Assets 188,305,816 171,918,276
Liabilities:    
Reserves for claims 35,360,000 39,078,000
Accounts payable and accrued liabilities 20,324,190 15,477,545
Current income taxes payable 0 1,336,824
Deferred income taxes, net 4,013,983 893,156
Total liabilities 59,698,173 56,785,525
Commitments and Contingencies 0 0
Redeemable Noncontrolling Interest 545,489 493,861
Stockholders' Equity:    
Preferred stock (1,000,000 authorized shares; no shares issued) 0 0
Common stock - no par value (10,000,000 authorized shares; 2,037,135 and 2,043,359 shares issued and outstanding 2013 and 2012, respectively, excluding 291,676 shares for 2013 and 2012 of common stock held by the Company’s subsidiary) 1 1
Retained earnings 116,714,749 105,820,459
Accumulated other comprehensive income 11,347,404 8,818,430
Total stockholders’ equity 128,062,154 114,638,890
Total Liabilities and Stockholders’ Equity $ 188,305,816 $ 171,918,276
v2.4.0.8
Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Statement of Financial Position [Abstract]    
Fixed maturities, available-for-sale, amortized cost $ 87,980,160 $ 75,573,673
Equity securities, available-for-sale, cost 22,200,369 21,229,114
Premiums and fees receivable, allowance for doubtful accounts $ 2,620,903 $ 1,902,581
Preferred stock, shares authorized 1,000,000 1,000,000
Preferred stock, shares issued 0 0
Common stock, no par value      
Common stock, shares authorized 10,000,000 10,000,000
Common stock, shares issued 2,037,135 2,043,359
Common stock, shares outstanding 2,037,135 2,043,359
Common stock, held by Company's subsidiary 291,676 291,676
v2.4.0.8
Consolidated Statements Of Income (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Revenues:      
Net premiums written $ 113,886,266 $ 102,331,102 $ 81,529,333
Investment income – interest and dividends 3,894,608 3,980,411 3,595,036
Net realized gain on investments 195,800 1,066,239 28,559
Other 8,274,823 7,701,340 5,532,228
Total Revenues 126,251,497 115,079,092 90,685,156
Operating Expenses:      
Commissions to agents 67,150,810 59,427,070 49,596,250
(Benefit) provision for claims (571,596) 6,072,115 3,342,427
Salaries, employee benefits and payroll taxes 25,386,511 21,881,540 18,556,802
Office occupancy and operations 4,430,220 3,994,244 3,723,803
Business development 2,145,639 1,856,848 1,671,834
Filing fees, franchise and local taxes 681,935 846,168 516,380
Premium and retaliatory taxes 2,558,227 1,885,760 1,729,830
Professional and contract labor fees 2,171,606 2,420,387 1,507,368
Other 755,407 615,053 541,526
Total Operating Expenses 104,708,759 98,999,185 81,186,220
Income before Income Taxes 21,542,738 16,079,907 9,498,936
Provision for Income Taxes 6,746,000 4,889,000 2,565,000
Net Income 14,796,738 11,190,907 6,933,936
Less: Net Income Attributable to Redeemable Noncontrolling Interest (88,528) (88,411) 0
Net Income Attributable to the Company $ 14,708,210 $ 11,102,496 $ 6,933,936
Basic Earnings per Common Share $ 7.15 $ 5.33 $ 3.22
Weighted Average Shares Outstanding – Basic 2,056,169 2,081,703 2,151,350
Diluted Earnings per Common Share $ 7.08 $ 5.24 $ 3.20
Weighted Average Shares Outstanding – Diluted 2,076,628 2,116,793 2,169,636
Dividend declared per share $ 0.32 $ 0.29 $ 0.28
v2.4.0.8
Consolidated Statements Of Comprehensive Income (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Statement of Other Comprehensive Income [Abstract]      
Net income $ 14,796,738 $ 11,190,907 $ 6,933,936
Other comprehensive income, before tax:      
(Accretion) amortization related to prior year service cost (1,518) 9,396 13,038
Amortization (accretion) of unrecognized loss (gain) 6,293 680 (318)
Accumulated postretirement benefit obligation adjustment 77,213 (82,918) (115,089)
Unrealized gains on investments arising during the period 3,959,623 3,190,737 2,886,294
Reclassification adjustment for sale of securities included in net income (229,869) (1,166,179) (353,950)
Reclassification adjustment for write-down of securities included in net income 34,070 99,940 325,391
Other 0 (36,600) 0
Other comprehensive income, before tax 3,845,812 2,015,056 2,755,366
Income tax expense (benefit) related to postretirement health benefits 27,887 (24,764) (34,804)
Income tax expense related to unrealized gains on investments arising during the year 1,354,439 1,122,003 976,277
Income tax benefit related to reclassification adjustment for sale of securities included in net income (78,622) (426,017) (122,594)
Income tax expense related to reclassification adjustment for write-down of securities included in net income 13,134 34,569 116,027
Net income tax expense on other comprehensive income 1,316,838 705,791 934,906
Other comprehensive income 2,528,974 1,309,265 1,820,460
Comprehensive Income 17,325,712 12,500,172 8,754,396
Less: Comprehensive income attributable to redeemable noncontrolling interest (88,528) (88,411) 0
Comprehensive Income Attributable to the Company $ 17,237,184 $ 12,411,761 $ 8,754,396
v2.4.0.8
Consolidated Statements Of Stockholders' Equity (USD $)
Total
Common Stock
Retained Earnings
Accumulated Other Comprehensive Income
Balance, beginning of year at Dec. 31, 2010 $ 103,928,815 $ 1 $ 98,240,109 $ 5,688,705
Balance, beginning of year, shares at Dec. 31, 2010   2,282,596    
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net income attributable to the Company 6,933,936   6,933,936  
Dividends (599,241)   (599,241)  
Shares of common stock repurchased and retired (in shares)   (182,615)    
Shares of common stock repurchased and retired (5,940,463)   (5,940,463)  
Stock options and stock appreciation rights exercised (in shares)   7,700    
Stock options and stock appreciation rights exercised 155,163   155,163  
Share-based compensation expense 213,514   213,514  
Amortization related to postretirement health benefits 8,394     8,394
Accumulated postretirement benefit obligation adjustment (75,959)     (75,959)
Net unrealized gain on investments 1,888,025     1,888,025
Balance, end of year at Dec. 31, 2011 106,512,184 1 99,003,018 7,509,165
Balance, end of year, shares at Dec. 31, 2011   2,107,681    
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net income attributable to the Company 11,102,496   11,102,496  
Dividends (603,334)   (603,334)  
Shares of common stock repurchased and retired (in shares)   (70,702)    
Shares of common stock repurchased and retired (3,975,532)   (3,975,532)  
Stock options and stock appreciation rights exercised (in shares)   6,380    
Stock options and stock appreciation rights exercised 160,557   160,557  
Share-based compensation expense 74,553   74,553  
Amortization related to postretirement health benefits 6,648     6,648
Accumulated postretirement benefit obligation adjustment (54,726)     (54,726)
Net unrealized gain on investments 1,393,943     1,393,943
Other 22,101   58,701 (36,600)
Balance, end of year at Dec. 31, 2012 114,638,890 1 105,820,459 8,818,430
Balance, end of year, shares at Dec. 31, 2012   2,043,359    
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net income attributable to the Company 14,708,210   14,708,210  
Dividends (657,914)   (657,914)  
Shares of common stock repurchased and retired (in shares)   (56,223)    
Shares of common stock repurchased and retired (4,262,260)   (4,262,260)  
Stock options and stock appreciation rights exercised (in shares)   49,999    
Stock options and stock appreciation rights exercised 75,797   75,797  
Share-based compensation expense 83,852   83,852  
Amortization related to postretirement health benefits 3,140     3,140
Accumulated postretirement benefit obligation adjustment 50,961     50,961
Net unrealized gain on investments 2,474,873     2,474,873
Income tax benefit from share-based compensation 946,605   946,605  
Balance, end of year at Dec. 31, 2013 $ 128,062,154 $ 1 $ 116,714,749 $ 11,347,404
Balance, end of year, shares at Dec. 31, 2013   2,037,135    
v2.4.0.8
Consolidated Statements Of Stockholders' Equity (Parenthetical) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Statement of Stockholders' Equity [Abstract]      
Dividend declared per share $ 0.32 $ 0.29 $ 0.28
v2.4.0.8
Consolidated Statements Of Cash Flows (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Operating Activities      
Net income $ 14,796,738 $ 11,190,907 $ 6,933,936
Adjustments to reconcile net income to net cash provided by (used in) operating activities:      
Depreciation 669,727 486,922 475,679
Amortization, net 507,111 468,006 338,967
Amortization related to postretirement benefits obligation 4,765 10,076 12,720
Share-based compensation expense related to stock options 83,852 74,553 213,514
Increase (decrease) in allowance for doubtful accounts on premiums receivable 718,322 684,581 (203,000)
Net loss (gain) on disposals of property 7,831 (28,538) (26,528)
Net realized gain on investments (195,800) (1,066,239) (28,559)
Net earnings from other investments (1,257,266) (1,674,594) (749,688)
(Benefit) provision for claims (571,596) 6,072,115 3,342,427
Provision (benefit) for deferred income taxes 1,804,000 (292,000) 21,000
Excess tax benefits related to exercise of stock options and SARs 946,605 22,101 0
Changes in assets and liabilities:      
Decrease (increase) in receivables 1,569,167 (4,912,295) 646,786
(Increase) decrease in other assets (2,906,224) (407,252) 77,056
Increase in income taxes recoverable (366,772) 0 0
Increase in accounts payable and accrued liabilities 4,923,858 2,372,995 1,913,799
(Decrease) increase in current income taxes payable (1,336,824) 696,291 (415,823)
Payments of claims, net of recoveries (3,146,404) (4,990,115) (3,545,127)
Net cash used in operating activities 16,251,090 8,707,514 9,007,159
Investing Activities      
Purchases of available-for-sale securities (23,466,037) (15,899,439) (15,318,418)
Purchases of short-term securities (2,638,908) (6,347,527) (1,883,562)
Purchases of other investments (1,369,210) (3,441,412) (853,599)
Capital contribution to subsidiaries 0 (350,000) 0
Proceeds from sales and maturities of available-for-sale securities 9,892,634 15,646,381 9,851,523
Proceeds from sales and maturities of short-term securities 8,280,183 6,892,141 14,974,850
Proceeds from sales and distributions of other investments 2,107,675 2,301,647 861,865
Proceeds from sales of other assets 40,366 220,455 0
Purchases of property (1,424,108) (568,728) (361,207)
Proceeds from disposals of property 24,335 65,837 31,157
Net cash provided by investing activities (8,553,070) (1,480,645) 7,302,609
Financing Activities      
Repurchases of common stock (4,262,260) (3,975,532) (5,940,463)
Exercise of options 75,797 160,557 155,163
Distribution to noncontrolling interest (36,900) (40,800) 0
Dividends paid (657,914) (603,334) (599,241)
Net cash used in financing activities (4,881,277) (4,459,109) (6,384,541)
Net Increase in Cash and Cash Equivalents 2,816,743 2,767,760 9,925,227
Cash and Cash Equivalents, Beginning of Period 20,810,018 18,042,258 8,117,031
Cash and Cash Equivalents, End of Period 23,626,761 20,810,018 18,042,258
Cash Paid During the Year for:      
Income tax payments, net 5,724,000 4,479,000 2,963,000
Non cash net unrealized gain on investments, net of deferred tax provision of $(1,288,951), $(730,555) and $(969,710) for 2013, 2012 and 2011, respectively (2,474,873) (1,393,943) (1,888,025)
Adjustments to postretirement benefits obligation, net of deferred tax provision of $26,252, $(28,192) and $(39,130) for 2013, 2012 and 2011, respectively (50,961) 54,726 75,959
Non cash intangible assets acquired from purchase of subsidiary 0 (1,481,900) 0
Non cash contingent liability from purchase of subsidiary $ 0 $ 691,250 $ 0
v2.4.0.8
Consolidated Statements Of Cash Flows (Parenthetical) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Statement of Cash Flows [Abstract]      
Non cash net unrealized gain on investments, deferred tax provision $ (1,288,951) $ (730,555) $ 969,710
Adjustments to postretirement benefits obligation, net of deferred tax benefit (provision) $ 26,252 $ (28,192) $ (39,130)
v2.4.0.8
Basis Of Presentation and Significant Accounting Policies
12 Months Ended
Dec. 31, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis Of Presentation and Significant Accounting Policies
Basis of Presentation and Summary of Significant Accounting Policies    
Description of Business – Investors Title Company’s (the “Company”) primary business, and only reportable segment, is title insurance. The title insurance segment, through its two subsidiaries, Investors Title Insurance Company (“ITIC”) and National Investors Title Insurance Company (“NITIC”), is licensed to insure titles to residential, institutional, commercial and industrial properties. The Company issues title insurance policies primarily through approved attorneys from underwriting offices and through independent issuing agents in 22 states and the District of Columbia, primarily in the eastern half of the United States. The majority of the Company’s business is concentrated in Georgia, Illinois, Kentucky, Michigan, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas and Virginia.
Principles of Consolidation and Basis of Presentation – The accompanying Consolidated Financial Statements include the accounts and operations of Investors Title Company and its subsidiaries, and have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).   Earnings attributable to the redeemable noncontrolling interest are recorded on the Consolidated Statements of Income for majority-owned subsidiaries. The redeemable noncontrolling interest representing the portion of equity not related to the Company’s ownership interest is recorded as redeemable equity in a separate section of the Consolidated Balance Sheets.  All intercompany balances and transactions have been eliminated in consolidation.

Reclassification Certain 2012 and 2011 amounts in the accompanying unaudited Consolidated Financial Statements have been reclassified to conform to the 2013 classifications. These reclassifications had no effect on stockholders’ equity or net income as previously reported.
Significant Accounting Policies – The significant accounting policies of the Company are summarized below.
Cash and Cash Equivalents
For the purpose of presentation in the Company’s Consolidated Statements of Cash Flows, cash equivalents are highly liquid instruments with remaining original maturities of three months or less. The carrying amount of cash and cash equivalents is a reasonable estimate of fair value due to the short-term maturity at purchase of these instruments.
Investments in Securities
Securities for which the Company has the intent and ability to hold to maturity are classified as held-to-maturity and reported at cost, adjusted for amortization of premiums or accretion of discounts, and other-than-temporary declines in fair value. Securities held principally for resale in the near term are classified as trading securities and recorded at fair values. Realized and unrealized gains and losses on trading securities are included in other income. Securities not classified as either trading or held-to-maturity are classified as available-for-sale and reported at fair value with unrealized gains and losses, net of tax, adjusted for other-than-temporary declines in fair value, reported as accumulated other comprehensive income. As of December 31, 2013 and 2012, all investments in securities are classified as available-for-sale. Securities are regularly reviewed for differences between the cost and estimated fair value of each security for factors that may indicate that a decline in fair value is other-than-temporary. Some factors considered in evaluating whether or not a decline in fair value is other-than-temporary include the duration and extent to which the fair value has been less than cost and the Company’s ability and intent to retain the investment for a period of time sufficient to allow for a recovery in value. Such reviews are inherently uncertain and the value of the investment may not fully recover or may decline in future periods resulting in a realized loss. Fair values of the majority of investments are based on quoted market prices. Realized gains and losses are determined on the specific identification method.  Refer to Note 3 for further information regarding investments in securities and fair value.
Short-term Investments
Short-term investments are comprised of money market accounts which are invested in short-term funds, time deposits with banks and savings and loan associations, and other investments expected to have maturities or redemptions greater than three months and less than twelve months. The Company monitors any events or changes in circumstances that may have a significant adverse effect on the fair value of these investments.
Other Investments
Other investments consist primarily of investments in title insurance agencies structured as limited liability companies (“LLCs”), which are accounted for under the equity or cost methods of accounting. The aggregate cost of the Company’s cost method investments totaled $1,834,229 and $1,778,115 at December 31, 2013 and December 31, 2012, respectively. 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.
Property Acquired in Settlement of Claims
Property acquired in settlement of claims is held for sale and valued at the lower of cost or market. Adjustments to reported estimated realizable values and realized gains or losses on dispositions are recorded as increases or decreases in claim costs.
Property and Equipment
Property and equipment are recorded at cost and are depreciated principally under the straight-line method over the estimated useful lives (three to twenty-five years) of the respective assets. Maintenance and repairs are charged to operating expenses and improvements are capitalized.
Reserves for Claims
The total reserve for all reported and unreported losses the Company incurred through December 31, 2013 is represented by the reserves for claims. The Company’s reserves for unpaid losses and loss adjustment expenses are established using estimated amounts required to settle claims for which notice has been received (reported) and the amount estimated to be required to satisfy incurred claims of policyholders which may be reported in the future. Despite the variability of such estimates, management believes that the reserves are adequate to cover claim losses resulting from pending and future claims for policies issued through December 31, 2013.  The Company continually reviews and adjusts its reserve estimates as necessary to reflect its loss experience and any new information that becomes available. Adjustments resulting from such reviews may be significant.
Claims and losses paid are charged to the reserves for claims. Although claims losses are typically paid in cash, occasionally claims are settled by purchasing the interest of the insured or the claimant in the real property. When this event occurs, the acquiring company carries assets at the lower of cost or estimated realizable value, net of any indebtedness on the property.
Income Taxes
The Company makes certain estimates and judgments in determining income tax expense (benefit) for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. The Company provides for deferred income taxes (benefits) for the tax consequences in future years of temporary differences between the financial statements’ carrying values and the tax bases of assets and liabilities using currently enacted tax rates.  The Company establishes valuation allowances if it believes that it is more likely than not that some or all of its deferred tax assets will not be realized.  Refer to Note 8 for further information regarding income taxes.
Premiums Written and Commissions to Agents
Generally, title insurance premiums are recognized at the time of closing of the related real estate transaction, as the earnings process is then considered complete. Policies or commitments are issued upon receipt of final certificates or preliminary reports with respect to titles. Title insurance commissions earned by the Company’s agents, taxes and a provision for claims losses are recognized as expenses concurrent with recognition of related premium revenue.
The Company’s premium revenues from certain agency operations include accruals based on estimates. These accruals estimate unreported agency premiums related to transactions which have settled as of the balance sheet date. Accruals for premiums from certain agencies are necessary because of the lag between policy effective dates and the reporting of these transactions to the Company by the agents. The lag time has historically been between 30 and 120 days, with the majority of agencies reporting within 60 to 90 days. The lag time is reviewed periodically to monitor accruals.  The accrual of premium revenues is based on historical data that includes transactional volume, fluctuations in the real estate market and the mix between refinance and purchase transactions.  There have been no material changes in historical estimates during the periods presented.
Quarterly, the Company evaluates the collectability of receivables. Premiums not collected within 7 months are fully reserved. Write-offs of receivables have not been material to the Company.
Allowance for Doubtful Accounts
Company management continually evaluates the collectability of receivables and provides an allowance for doubtful accounts equal to estimated losses expected to be incurred in the collection of amounts receivable.  Changes to the allowance for doubtful accounts are reflected within net premiums written in the Consolidated Statements of Income.  Amounts are charged off in the period they are deemed to be uncollectible.
Exchange Services Revenue
Fees are recognized at the signing of a binding agreement and investment earnings are recognized as they are earned.
Fair Values of Financial Instruments
The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents, short-term investments, premium and fees receivable, accrued interest and dividends, accounts payable, commissions payable, reinsurance payable and current income taxes recoverable/payable approximate fair value due to the short-term nature of these assets and liabilities.  Fair values for the majority of investment securities are based on quoted market prices.  Auction rate securities (“ARS”) are valued using discounted cash flow models to determine the estimated fair value of these investments.  Some of the inputs for determining the fair value of ARS are unobservable in the securities markets and are significant.  Refer to Note 3 for further information regarding investments in securities and fair value.
Comprehensive Income
The Company’s accumulated other comprehensive income is comprised of unrealized holding gains/losses on available-for-sale securities, net of tax, and unrecognized prior service cost and unrealized gains/losses associated with postretirement benefit liabilities, net of tax.  Accumulated other comprehensive income as of December 31, 2013 consists of $11,395,757 of unrealized holding gains on available-for-sale securities and $48,353 of unrecognized prior service cost and unrecognized actuarial losses associated with postretirement benefit liabilities.  Accumulated other comprehensive income as of December 31, 2012 consists of $8,920,884 of unrealized holding gains on available-for-sale securities and $102,454 of unrecognized prior service cost and unrecognized actuarial losses associated with postretirement benefit liabilities.
Share-Based Compensation
The Company accounts for share-based compensation in accordance with the fair value based principles required by the Financial Accounting Standards Board (“FASB”).  Estimated compensation expense for awards outstanding at the effective date is recognized over their remaining service period using the compensation cost.  Share-based compensation cost is generally measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense over the employee’s requisite service period.
As the share-based compensation expense recognized in the Consolidated Statements of Income is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.  Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Other Intangible Assets
The Company’s other intangible assets consist of a non-compete agreement and referral relationships resulting from an agency acquisition and are recorded at fair value.  The referral relationships are amortized on a straight-line basis over the useful life and amortization of the non-compete contract will start at a future date when the related employment agreement is terminated.  Intangible assets are reviewed and tested for impairment at least quarterly.
Subsequent Events
The Company has evaluated and concluded that there were no material subsequent events requiring adjustment or disclosure to its Consolidated Financial Statements.
Recently Issued Accounting Standards
In July 2013, the FASB updated guidance to eliminate diversity in practice relating to the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, similar tax loss or a tax credit carryforward exists. The main provision of the update requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, be presented in the financial statements as a reduction to deferred tax assets for a net operating loss carryforward, a similar tax loss or a tax credit carryforward, except to the extent that a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date to settle any additional income taxes that would result from disallowance of a tax position, or the tax law does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, in which case the unrecognized tax benefit should be presented as a liability. For public entities, this update becomes effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted, and the Company elected to adopt this new guidance in the third quarter of 2013. This update did not have an impact on the Company’s financial condition or results of operations.

In February 2013, the FASB updated guidance to improve the reporting of reclassifications from accumulated other comprehensive income.  The main provisions of this guidance require an entity to provide information about the amount reclassified from accumulated other comprehensive income by component.  In addition, an entity is required to present, either on the face of the statement where net income is presented or in the footnotes, the amount reclassified out of accumulated other comprehensive income by the respective line items of net income if the amount is reclassified to net income in its entirety in the same reporting period.  For other amounts that are not required to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures providing additional detail about those amounts.  The amendments do not change the requirements for reporting net income or other comprehensive income in financial statements.  The Company complied with this update, and it did not have an impact on the Company’s financial condition or results of operations.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period and accompanying notes. Actual results could differ materially from those estimates and assumptions used.  The more significant of these estimates and assumptions include the following:
Claims – The Company’s reserves for claims are established using estimated amounts required to settle claims for which notice has been received (reported) and the amount estimated to be required to satisfy incurred claims of policyholders which may be reported in the future (incurred but not reported,  or “IBNR”).  A provision for estimated future claims payments is recorded at the time policy revenue is recorded as a percentage of premium income. By their nature, title claims can often be complex, vary greatly in dollar amounts, vary in number due to economic and market conditions such as an increase in mortgage foreclosures, and involve uncertainties as to ultimate exposure. In addition, some claims may require a number of years to settle and determine the final liability for indemnity and loss adjustment expense. The payment experience may extend for more than 20 years after the issuance of a policy. Events such as fraud, defalcation and multiple property defects can substantially and unexpectedly cause increases in estimates of losses. Due to the length of time over which claim payments are made and regularly occurring changes in underlying economic and market conditions, these estimates are subject to variability.
Management considers factors such as the Company’s historical claims experience, case reserve estimates on reported claims, large claims, actuarial projections and other relevant factors in determining loss provision rates and the aggregate recorded expected liability for claims. In establishing reserves, actuarial projections are compared with recorded reserves to evaluate the adequacy of such recorded claims reserves and any necessary adjustments are then recorded in current operations. As the most recent claims experience develops and new information becomes available, the loss reserve estimate related to prior periods will change to more accurately reflect updated and improved emerging data. The Company reflects any adjustments to reserves in the results of operations in the period in which new information (principally claims experience) becomes available.
The Company’s reserves for claims are established using estimated amounts required to settle claims for which notice has been received (reported) and the amount estimated to be required to satisfy incurred claims of policyholders which have been incurred but not reported (“IBNR”).  During the third quarter of 2013 certain actuarial inputs were changed  to provide a more refined IBNR reserve estimate. See Note 6 in the accompanying Consolidated Financial Statements for further information regarding this change in accounting estimate.
Impairments – Securities are regularly evaluated and reviewed for differences between the cost and estimated fair value of each security for factors that may indicate that a decline in fair value is other-than-temporary.  When, in the opinion of management, a decline in the fair value of an investment is considered to be other-than-temporary, such investment is written down to its fair value. Some factors considered in evaluating whether or not a decline in fair value is other-than-temporary include the duration and extent to which the fair value has been less than cost, the probability that the Company will be unable to collect all amounts due under the contractual terms of the security; with respect to equity securities, whether the Company’s ability and intent to retain the investment for a period of time is sufficient to allow for a recovery in value; with respect to fixed maturity securities, whether the Company has the intent to sell or will more likely than not be required to sell a particular security before recovery in value; and the financial condition and prospects of the issuer (including credit ratings).  These factors are reviewed quarterly and any material degradation in the prospect for recovery will be considered in the other-than-temporary impairment analysis.  Such reviews are inherently uncertain and the value of the investment may not fully recover or may decline in future periods resulting in a realized loss.  The fair values of the majority of the Company’s investments are based on quoted market prices from independent pricing services.
v2.4.0.8
Statutory Restrictions on Consolidated Stockholders' Equity and Investments
12 Months Ended
Dec. 31, 2013
Statutory Restrictions on Consolidated Stockholders' Equity and Investments [Abstract]  
Statutory Restrictions on Consolidated Stockholders' Equity and Investments
Statutory Restrictions on Consolidated Stockholders’ Equity and Investments
The Company has designated approximately $47,405,000 and $44,829,000 of retained earnings as of December 31, 2013 and 2012, respectively, as appropriated to reflect the required statutory premium and supplemental reserves.  See Note 8 for the tax treatment of the statutory premium reserve.
As of December 31, 2013 and 2012, approximately $83,311,000 and $76,167,000, respectively, of consolidated stockholders’ equity represents net assets of the Company’s subsidiaries that cannot be transferred in the form of dividends, loans or advances to the parent company under statutory regulations without prior insurance department approval.
Bonds totaling approximately $7,022,000 and $6,700,000 at December 31, 2013 and 2012, respectively, are deposited with the insurance departments of the states in which business is conducted.
v2.4.0.8
Investments in Securities and Fair Value
12 Months Ended
Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]  
Investments In Securities and Fair Value
Investments in Securities and Fair Value
The aggregate fair value, gross unrealized holding gains, gross unrealized holding losses, and amortized cost for securities by major security type at December 31 were as follows:
December 31, 2013
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
Fixed maturities, available-for-sale, at fair value:
 
 
 
 
 
 
 
General obligations of U.S. States, territories and political subdivisions
$
38,449,309


$
1,922,862


$
184,351


$
40,187,820

Issuer obligations of U.S. States, territories and political subdivisions special revenue
30,874,571


1,234,130


204,800


31,903,901

Corporate debt securities
17,736,608


789,840


108,456


18,417,992

Auction rate securities
919,672


16,028




935,700

Total
$
87,980,160


$
3,962,860


$
497,607


$
91,445,413

Equity securities, available-for-sale at fair value:











Common stocks and nonredeemable preferred stocks
$
22,200,369


$
14,052,780


$
109,084


$
36,144,065

Total
$
22,200,369


$
14,052,780


$
109,084


$
36,144,065

Short-term investments:











Certificates of deposit and money market funds
$
7,926,373


$


$


$
7,926,373

Total
$
7,926,373


$


$


$
7,926,373

December 31, 2012
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
Fixed maturities, available-for-sale, at fair value:
 
 
 
 
 
 
 
General obligations of U.S. States, territories and political subdivisions
$
38,658,463

 
$
3,211,445

 
$

 
$
41,869,908

Issuer obligations of U.S. States, territories and political subdivisions special revenue
18,933,299

 
1,909,106

 
10,455

 
20,831,950

Corporate debt securities
17,064,697

 
1,252,973

 
14,750

 
18,302,920

Auction rate securities
917,214

 
14,986

 

 
932,200

Total
$
75,573,673

 
$
6,388,510

 
$
25,205

 
$
81,936,978

Equity securities, available-for sale at fair value:
 
 
 
 
 
 
 
Common stocks and nonredeemable preferred stocks
$
21,229,114

 
$
7,373,056

 
$
91,237

 
$
28,510,933

Total
$
21,229,114

 
$
7,373,056

 
$
91,237

 
$
28,510,933

Short-term investments:
 

 
 

 
 

 
 

Certificates of deposit and money market funds
$
13,567,648

 
$

 
$

 
$
13,567,648

Total
$
13,567,648

 
$

 
$

 
$
13,567,648


The special revenue category for both periods presented includes over 30 individual bonds with revenue sources from a broad variety of industry sectors.
The scheduled maturities of fixed maturity securities at December 31, 2013 were as follows:
 
Available-for-Sale
 
Amortized
Cost
 
Fair
Value
Due in one year or less
$
8,685,106

 
$
8,848,668

Due after one year through five years
57,287,230

 
60,170,845

Due five years through ten years
14,159,839

 
14,285,208

Due after ten years
7,847,985

 
8,140,692

Total
$
87,980,160

 
$
91,445,413


Earnings on investments for the years ended December 31 were as follows:
 
2013
 
2012
 
2011
Fixed maturities
$
2,997,901

 
$
3,154,131

 
$
3,233,988

Equity securities
890,917

 
815,674

 
347,843

Invested cash and other short-term investments
5,754

 
10,576

 
12,725

Miscellaneous interest
36

 
30

 
480

Investment income
$
3,894,608

 
$
3,980,411

 
$
3,595,036


Gross realized gains and losses on sales of available-for-sale securities for the years ended December 31 are summarized as follows:
 
2013
 
2012
 
2011
Gross realized gains:
 
 
 
 
 
General obligations of U.S. States, territories and political subdivisions
$

 
$
250

 
$
386

Corporate

 
52,396

 
20,459

Common stocks and nonredeemable preferred stocks
369,673

 
450,461

 
529,811

Auction rate securities

 
211,061

 
43,199

Total
369,673

 
714,168

 
593,855

Gross realized losses:
 
 
 
 
 
Common stocks and nonredeemable preferred stocks
(180,169
)
 
(91,975
)
 
(247,117
)
Other than temporary impairment of securities

 
(93,436
)
 
(280,987
)
Total
(180,169
)
 
(185,411
)
 
(528,104
)
Net realized gain
$
189,504

 
$
528,757

 
$
65,751

Net realized gains (losses) on other investments:
 
 
 
 
 
Impairments of other assets and investments
$
(34,070
)
 
$
(6,504
)
 
$
(44,404
)
Gain on other assets and investments
48,946

 
543,986

 
30,238

Loss on other assets and investments
(8,580
)
 

 
(23,026
)
Total
$
6,296

 
$
537,482

 
$
(37,192
)
Net Realized Gain
$
195,800

 
$
1,066,239

 
$
28,559


Realized gains and losses are determined on the specific identification method. 
The following table presents the gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous loss position at December 31, 2013 and 2012:
 
Less than 12 Months
 
12 Months or Longer
 
Total
December 31, 2013
Fair Value
 
Unrealized Loss
 
Fair Value
 
Unrealized Loss
 
Fair Value
 
Unrealized Loss
General obligations of U.S. states, territories and political subdivisions
$
4,198,012

 
$
(184,351
)
 
$

 
$

 
$
4,198,012

 
$
(184,351
)
Special revenue obligations of U.S. states territories and political subdivisions
11,010,093

 
(204,800
)
 

 

 
11,010,093

 
(204,800
)
Corporate debt securities
5,942,570

 
(108,456
)
 

 

 
5,942,570

 
(108,456
)
Total fixed maturity securities
$
21,150,675

 
$
(497,607
)
 
$

 
$

 
$
21,150,675

 
$
(497,607
)
Equity securities
2,035,971

 
(72,998
)
 
244,929

 
(36,086
)
 
2,280,900

 
(109,084
)
Total temporarily impaired securities
$
23,186,646

 
$
(570,605
)
 
$
244,929

 
$
(36,086
)
 
$
23,431,575

 
$
(606,691
)
December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
Special revenue obligations of U.S. states territories and political subdivisions
$
1,236,906

 
$
(10,455
)
 
$

 
$

 
$
1,236,906

 
$
(10,455
)
Corporate debt securities
985,250

 
(14,750
)
 

 

 
985,250

 
(14,750
)
Total fixed maturity securities
$
2,222,156

 
$
(25,205
)
 
$

 
$

 
$
2,222,156

 
$
(25,205
)
Equity securities
2,551,215

 
(91,237
)
 

 

 
2,551,215

 
(91,237
)
Total temporarily impaired securities
$
4,773,371

 
$
(116,442
)
 
$

 
$

 
$
4,773,371

 
$
(116,442
)

As of December 31, 2013, the Company held $21,150,675 in fixed maturity securities with unrealized losses of $497,607.  As of December 31, 2012, the Company held $2,222,156 in fixed maturity securities with unrealized losses of $25,205.  The decline in fair value of the fixed maturity securities can be attributed primarily to changes in market interest rates and changes in credit spreads over Treasury securities.  Because the Company does not have the intent to sell these securities and likely will not be compelled to sell them before it can recover its cost basis, the Company does not consider these investments to be other-than-temporarily impaired.
As of December 31, 2013, the Company held $2,280,900 in equity securities with unrealized losses of $109,084.  As of December 31, 2012, the Company held $2,551,215 in equity securities with unrealized losses of $91,237.  The unrealized losses related to holdings of equity securities were caused by market changes that the Company considers to be temporary.  Since the Company has the intent and ability to hold these equity income securities until a recovery of fair value, the Company does not consider these investments other-than-temporarily impaired.
Factors considered in determining whether a loss is temporary include the length of time and extent to which fair value has been below cost, the financial condition and prospects of the issuer (including credit ratings and analyst reports) and macro-economic changes.  A total of 26 and 7 securities had unrealized losses at December 31, 2013 and December 31, 2012, respectively.  Reviews of the values of securities are inherently uncertain and the value of the investment may not fully recover, or may decline in future periods resulting in a realized loss.  During 2013, the Company did not record any other-than-temporary impairment charges related to securities. During 2012, the Company recorded an other-than-temporary impairment charge in the amount of $93,436 related to securities.  During 2011, the Company recorded an other-than-temporary impairment charge in the amount of $280,987 related to securities, of which, $101,861 was related to Level 3 ARS that have had a history of being below cost and a change in the intent not to sell. Other-than-temporary impairment charges are included in net realized gain on investments in the Consolidated Statements of Income.
Valuation of Financial Assets and Liabilities  
The FASB has established a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value of financial assets and liabilities, such as securities. This hierarchy categorizes the inputs into three broad levels as follows.  Level 1 inputs to the valuation methodology are quoted prices (unadjusted) in active markets for identical assets or liabilities.  Level 2 inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.  Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value.
A financial instrument’s classification within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement—consequently, if there are multiple significant valuation inputs that are categorized in different levels of the hierarchy, the instrument’s hierarchy level is the lowest level (with Level 3 being the lowest level) within which any significant input falls.
Debt and Equity Securities
The Level 1 category includes equity securities that are measured at fair value using quoted active market prices.

The Level 2 category includes fixed maturity investments such as corporate bonds, U.S. government and agency bonds and municipal bonds.  Fair value is principally based on market values obtained from a third party pricing service.  Factors that are used in determining fair market value include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data.  The Company receives one quote per security from a third party pricing service, although as discussed below, the Company does consult other pricing resources when confirming that the prices it obtains reflect the fair values of the instruments in accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures.  Generally, quotes obtained from the pricing service for instruments classified as Level 2 are not adjusted and are not binding.  As of December 31, 2013 and December 31, 2012, the Company did not adjust any Level 2 fair values.

A number of the Company’s investment grade corporate bonds are frequently traded in active markets, and trading prices are consequently available for these securities.  However, these securities were classified as Level 2 because the pricing service from which the Company has obtained fair values for these instruments uses valuation models which use observable market inputs in addition to traded prices.  Substantially all of the input assumptions used in the service’s model are observable in the marketplace or can be derived or supported by observable market data.

The Level 3 category only includes the Company’s investments in student loan auction rate securities (“ARS”) because quoted prices were unavailable due to the failure of auctions.  The Company’s ARS portfolio is comprised entirely of investment grade student loan ARS. The par value of these securities was $1,000,000 as of December 31, 2013 and December 31, 2012,  with approximately 97.0% as of December 31, 2013 and December 31, 2012, guaranteed by the U.S. Department of Education.

Some of the inputs to ARS valuation are unobservable in the market and are significant; therefore, the Company utilizes another third party pricing service to assist in the determination of the fair market value of these securities.  This service uses a proprietary valuation model that considers factors such as the following: the financial standing of the issuer; reported prices and the extent of public trading in similar financial instruments of the issuer or comparable companies; the ability of the issuer to obtain required financing; changes in the economic conditions affecting the issuer; pricing by other dealers in similar securities; time to maturity; and interest rates.  The following table summarizes some key assumptions the service used to determine fair value as of December 31, 2013 and 2012:
 
2013
 
2012
Cumulative probability of earning maximum rate until maturity
—%
 
—%
Cumulative probability of principle returned prior to maturity
95.6%
 
96.1%
Cumulative probability of default at some future point
4.4%
 
3.9%

Significant increases or decreases in any of the inputs in isolation could result in significant changes to the fair value measurement. Generally, increases in default probabilities and liquidity risk premiums lower the fair market value while increases in principal being returned and earning maximum rates increase fair market values.
Based upon these inputs and assumptions, the pricing service provides a range of values to the Company for its ARS.  The Company records the fair value based on the midpoint of the range and believes that this valuation is the most reasonable estimate of fair value.  In 2013 and 2012, the difference in the low and high values of the ranges was approximately zero and four percent of the carrying value of the Company’s ARS.
The following table presents, by level, the financial assets carried at fair value measured on a recurring basis as of December 31, 2013 and 2012.  The table does not include cash on hand and also does not include assets which are measured at historical cost or any basis other than fair value.  Level 3 assets are comprised solely of ARS.
As of December 31, 2013
Level 1
 
Level 2
 
Level 3
 
Total
Short Term
$
7,926,373

 
$

 
$

 
$
7,926,373

Equity Securities:
 
 
 
 
 
 
 
Common stock and nonredeemable preferred stock
36,144,065

 

 

 
36,144,065

Fixed Maturities:
 
 
 
 
 
 
 
Obligations of U.S. States, territories and political subdivisions*

 
72,091,721

 

 
72,091,721

Corporate debt securities*

 
18,417,992

 
935,700

 
19,353,692

Total
$
44,070,438

 
$
90,509,713

 
$
935,700

 
$
135,515,851

As of December 31, 2012
Level 1
 
Level 2
 
Level 3
 
Total
Short Term
$
13,567,648

 
$

 
$

 
$
13,567,648

Equity Securities:
 
 
 
 
 
 
 
Common stock and nonredeemable preferred stock
28,510,933

 

 

 
28,510,933

Fixed Maturities:
 
 
 
 
 
 
 
Obligations of U.S. States, territories and political subdivisions*

 
62,701,858

 

 
62,701,858

Corporate debt securities*

 
18,302,920

 
932,200

 
19,235,120

Total
$
42,078,581

 
$
81,004,778

 
$
932,200

 
$
124,015,559

*Denotes fair market value obtained from pricing services.
There were no transfers into or out of Levels 1 and 2 during the period.
To help ensure that fair value determinations are consistent with ASC 820 fair value measurements, prices from our pricing services go through multiple review processes to ensure appropriate pricing.  Pricing procedures and inputs used to price each security include, but are not limited to, the following: unadjusted quoted market prices for identical securities such as stock market closing prices; non-binding quoted prices for identical securities in markets that are not active; interest rates; yield curves observable at commonly quoted intervals; volatility; prepayment speeds; loss severity; credit risks and default rates.  The Company reviews the procedures and inputs used by its pricing services and verifies a sample of the services’ quotes by comparing them to values obtained from other pricing resources.  In the event the Company disagrees with a price provided by its pricing services, the service reevaluates the price to corroborate the market information and then reviews inputs to the evaluation in light of potentially new market data.  The Company believes that these processes and inputs result in appropriate classifications and fair values consistent with ASC 820.
Other Financial Instruments
The Company uses various financial instruments in the normal course of its business. In the measurement of the fair value of certain financial instruments, other valuation techniques were utilized if quoted market prices were not available. These derived fair value estimates are significantly affected by the assumptions used. Additionally, ASC 820 excludes from its scope certain financial instruments including those related to insurance contracts, pension and other postretirement benefits, and equity method investments.
In estimating the fair value of the financial instruments presented, the Company used the following methods and assumptions:
Cash and cash equivalents
The carrying amount for cash and cash equivalents is a reasonable estimate of fair value due to the short-term maturity of these investments.
Cost-basis investments
The estimated fair value of cost-basis investments is calculated from the book value of the underlying entities, which is not materially different from the fair value of the underlying entity.
Accrued dividends and interest
The carrying amount for accrued dividends and interest is a reasonable estimate of fair value due to the short-term maturity of these assets.
Contingent consideration
The fair value of the contingent consideration was estimated based on the discounted value of the future cash flows.  Contingent consideration consists of additional monies the Company may become obligated to pay based on the future performance of a business the Company acquired, as discussed in Note 18.
The carrying amounts and fair values of these financial instruments (please note investments are disclosed in a previous table) as of December 31, 2013 and 2012 are presented in the following table:
As of December 31, 2013
 
 
 
 
 
 
 
 
 
Financial Assets
Carrying Value
 
Estimated Fair
Value
 
Level 1
 
Level 2
 
Level 3
Cash and cash equivalents
$
23,626,761

 
$
23,626,761

 
$
23,626,761

 
$

 
$