Document And Entity Information
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Document And Entity Information (USD $)
12 Months Ended
Dec. 31, 2011
Feb. 17, 2012
Jun. 30, 2011
Document And Entity Information [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Dec. 31, 2011    
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2011    
Entity Registrant Name INVESTORS TITLE CO    
Entity Central Index Key 0000720858    
Current Fiscal Year End Date --12-31    
Entity Filer Category Smaller Reporting Company    
Entity Common Stock, Shares Outstanding   2,103,501  
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Well-known Seasoned Issuer No    
Entity Public Float     $ 59,616,808

Consolidated Balance Sheets
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Consolidated Balance Sheets (USD $)
Dec. 31, 2011
Dec. 31, 2010
Assets:    
Fixed maturities, available-for-sale, at fair value (amortized cost: 2011: $78,783,968; 2010: $81,784,262) $ 85,407,365 $ 86,033,557
Equity securities, available-for-sale, at fair value (cost: 2011: $17,652,745; 2010: $9,458,773) 22,549,975 13,872,370
Short-term investments 14,112,262 27,203,550
Other investments 3,631,714 2,888,958
Total investments 125,701,316 129,998,435
Cash and cash equivalents 18,042,258 8,117,031
Premium and fees receivable (less allowance for doubtful accounts: 2011: $1,218,000; 2010: $1,421,000) 6,810,000 7,253,786
Accrued interest and dividends 1,108,156 1,150,602
Prepaid expenses and other assets 2,743,517 2,816,661
Property, net 3,553,216 3,672,317
Deferred income taxes, net   476,534
Total Assets 157,958,463 153,485,366
Liabilities and Stockholders' Equity    
Reserves for claims 37,996,000 38,198,700
Accounts payable and accrued liabilities 12,330,383 10,301,495
Current income taxes payable 640,533 1,056,356
Deferred income taxes, net 479,363  
Total liabilities 51,446,279 49,556,551
Commitments and Contingencies      
Stockholders' Equity    
Common stock-no par value (shares authorized 10,000,000; 2,107,681 and 2,282,596 shares issued and outstanding 2011 and 2010, respectively, excluding 291,676 shares for 2011 and 2010, respectively, of common stock held by the Company's subsidiary) 1 1
Retained earnings 99,003,018 98,240,109
Accumulated other comprehensive income 7,509,165 5,688,705
Total stockholders' equity 106,512,184 103,928,815
Total Liabilities and Stockholders' Equity 157,958,463 153,485,366
Class A Junior Participating Preferred Stock [Member]
   
Stockholders' Equity    
Class A Junior Participating preferred stock (shares authorized 100,000; no shares issued)      

Consolidated Balance Sheets (Parenthetical)
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Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2011
Dec. 31, 2010
Available-for-sale, amortized cost $ 78,783,968 $ 81,784,262
Equity securities, available-for-sale, cost 17,652,745 9,458,773
Premiums and fees receivable, allowance for doubtful accounts $ 1,218,000 $ 1,421,000
Common stock, no par value      
Common stock, shares authorized 10,000,000 10,000,000
Common stock, shares issued 2,107,681 2,282,596
Common stock, shares outstanding 2,107,681 2,282,596
Common stock, held by company's subsidiary 291,676 291,676
Class A Junior Participating Preferred Stock [Member]
   
Preferred stock, shares authorized 100,000 100,000
Preferred stock, shares issued 0 0

Consolidated Statements Of Income
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Consolidated Statements Of Income (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Revenues:    
Net premiums written $ 81,529,333 $ 61,462,441
Investment income - interest and dividends 3,595,036 3,671,178
Net realized gain on investments 28,559 654,674
Other 5,532,228 5,521,062
Total Revenues 90,685,156 71,309,355
Operating Expenses    
Commissions to agents 49,596,250 31,189,207
Provision for claims 3,342,427 4,435,066
Salaries, employee benefits and payroll taxes 18,552,504 17,695,956
Office occupancy and operations 3,722,803 3,935,563
Business development 1,706,834 1,544,588
Filing fees, franchise and local taxes 516,380 573,075
Premium and retaliatory taxes 1,729,830 1,279,400
Professional and contract labor fees 1,513,466 1,511,283
Other 505,726 529,591
Total Operating Expenses 81,186,220 62,693,729
Income before Income Taxes 9,498,936 8,615,626
Provision for Income Taxes 2,565,000 2,243,000
Net Income $ 6,933,936 $ 6,372,626
Basic Earnings per Common Share $ 3.22 $ 2.79
Weighted Average Shares Outstanding - Basic 2,151,350 2,284,657
Diluted Earnings per Common Share $ 3.20 $ 2.78
Weighted Average Shares Outstanding - Diluted 2,169,636 2,289,847
Cash Dividends Paid per Common Share $ 0.28 $ 0.28

Consolidated Statements Of Comprehensive Income
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Consolidated Statements Of Comprehensive Income (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Consolidated Statements Of Comprehensive Income [Abstract]    
Net income $ 6,933,936 $ 6,372,626
Other comprehensive income, before tax:    
Amortization related to prior year service cost 13,038 20,388
Amortization of unrecognized (loss) gain (318) 2,572
Accumulated postretirement (benefit) expense obligation adjustment (115,089) 163,503
Unrealized gains on investments arising during the year 2,886,294 1,951,329
Reclassification adjustment for sale of securities included in net income (353,950) (1,084,915)
Reclassification adjustment for write-down of securities included in net income 325,391 430,241
Other comprehensive income, before tax 2,755,366 1,483,118
Income tax (benefit) expense related to postretirement health benefits (34,804) 63,398
Income tax expense related to unrealized gains on investments arising during the year 976,277 680,503
Income tax benefit related to reclassification adjustment for sale of securities included in net income (122,594) (351,856)
Income tax expense related to reclassification adjustment for write-down of securities included in net income 116,027 132,626
Net income tax expense on other comprehensive income 934,906 524,671
Other comprehensive income 1,820,460 958,447
Comprehensive income $ 8,754,396 $ 7,331,073

Consolidated Statements Of Stockholders' Equity
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Consolidated Statements Of Stockholders' Equity (USD $)
Common Stock [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Income [Member]
Total
Balance at Dec. 31, 2009 $ 1 $ 92,528,818 $ 4,730,258 $ 97,259,077
Balance, shares at Dec. 31, 2009 2,285,289      
Net income   6,372,626   6,372,626
Dividends ($.28 per share)   (639,734)   (639,734)
Shares of common stock repurchased and retired   (378,770)   (378,770)
Shares of common stock repurchased and retired, shares (12,138)      
Stock options exercised   140,500   140,500
Stock options exercised, shares 9,445      
Share-based compensation expense   216,669   216,669
Amortization related to postretirement health benefits     15,160 15,160
Accumulated postretirement benefit obligation adjustment     107,913 107,913
Net unrealized gain on investments     835,374 835,374
Balance at Dec. 31, 2010 1 98,240,109 5,688,705 103,928,815
Balance, shares at Dec. 31, 2010 2,282,596      
Net income   6,933,936   6,933,936
Dividends ($.28 per share)   (599,241)   (599,241)
Shares of common stock repurchased and retired   (5,940,463)   (5,940,463)
Shares of common stock repurchased and retired, shares (182,615)      
Stock options exercised   155,163   155,163
Stock options exercised, shares 7,700      
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 at Dec. 31, 2011 $ 1 $ 99,003,018 $ 7,509,165 $ 106,512,184
Balance, shares at Dec. 31, 2011 2,107,681      

Consolidated Statements Of Stockholders' Equity (Parenthetical)
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Consolidated Statements Of Stockholders' Equity (Parenthetical) (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Consolidated Statements Of Stockholders' Equity [Abstract]    
Dividends, per share $ 0.28 $ 0.28

Consolidated Statements Of Cash Flows
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Consolidated Statements Of Cash Flows (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Operating Activities    
Net income $ 6,933,936 $ 6,372,626
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation 475,679 508,450
Amortization, net 338,967 343,397
Amortization related to postretirement benefits obligation 12,720 22,961
Share-based compensation expense related to stock options 213,514 216,669
Decrease in allowance for doubtful accounts on premiums receivable (203,000) (65,000)
Net (gain) loss on disposals of property (26,528) 6,774
Net realized gain on investments (28,559) (654,674)
Net earnings from other investments (749,688) (987,632)
Provision for claims 3,342,427 4,435,066
Provision for deferred income taxes 21,000 832,000
Changes in assets and liabilities:    
Decrease (increase) in receivables 646,786 (2,018,310)
Decrease (increase) in other assets 77,056 (902,187)
Increase in accounts payable and accrued liabilities 1,913,799 1,456,661
(Decrease) increase in current income taxes payable (415,823) 386,066
Payments of claims, net of recoveries (3,545,127) (5,726,366)
Net cash provided by operating activities 9,007,159 4,226,501
Investing Activities    
Purchases of available-for-sale securities (15,318,418) (16,047,885)
Purchases of short-term securities (1,883,562) (10,371,686)
Purchases of other investments (853,599) (560,602)
Proceeds from sales and maturities of available-for-sale securities 9,851,523 18,497,720
Proceeds from maturities of held-to-maturity securities   2,000
Proceeds from sales and maturities of short-term securities 14,974,850 3,885,570
Proceeds from sales and distributions of other investments 861,865 923,013
Purchases of property (361,207) (317,530)
Proceeds from disposals of property 31,157 24,713
Net cash provided (used in) investing activities 7,302,609 (3,964,687)
Financing Activities    
Repurchases of common stock (5,940,463) (378,770)
Exercise of options 155,163 140,500
Dividends paid (599,241) (639,734)
Net cash used in financing activities (6,384,541) (878,004)
Net Increase (Decrease) in Cash and Cash Equivalents 9,925,227 (616,190)
Cash and Cash Equivalents, Beginning of Year 8,117,031 8,733,221
Cash and Cash Equivalents, End of Year 18,042,258 8,117,031
Supplemental Disclosures    
Cash Paid During the Year for Income Taxes, payments, net 2,963,000 1,079,000
Non cash net unrealized gain on investments, net of deferred tax provision of $(969,710) and $(461,281) for 2011 and 2010, respectively (1,888,025) (835,374)
Adjustments to postretirement benefits obligation, net of deferred tax (provision) benefit of $(39,130) and $55,591 for 2011 and 2010, respectively $ 75,959 $ (107,913)

Consolidated Statements Of Cash Flows (Parenthetical)
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Consolidated Statements Of Cash Flows (Parenthetical) (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Consolidated Statements Of Cash Flows [Abstract]    
Non cash net unrealized gain on investments, deferred tax provision $ (969,710) $ (461,281)
Adjustments to postretirement benefits obligation, net of deferred tax (provision) benefit $ (39,130) $ 55,591

Basis Of Presentation And Summary Of Significant Accounting Policies
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Basis Of Presentation And Summary Of Significant Accounting Policies
12 Months Ended
Dec. 31, 2011
Basis Of Presentation And Summary Of Significant Accounting Policies [Abstract]  
Basis Of Presentation And Summary Of Significant Accounting Policies

1. 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 Illinois, Kentucky, Michigan, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas and Virginia.

     Principles of Consolidation and Basis of Presentation—The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries and are prepared in accordance with smaller reporting company filing requirements. All significant intercompany balances and transactions have been eliminated.

     Reclassification—Certain 2010 amounts in the accompanying Consolidated Financial Statements have been reclassified to conform to the 2011 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. 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 comprise 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 $1,210,687 and $1,107,115 at December 31, 2011 and December 31, 2010, 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, 2011 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, 2011. 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

     Premiums are generally recorded and recognized as revenue at the time of closing of the related transaction as the earnings process is then considered complete. The Company's premium revenues from certain agency operations include accruals based on estimates using historical information, as well as other relevant trends and data. The accruals for premiums are necessary because of the lag between policy effective dates and the reporting of these transactions to the Company by the agents. In addition to accruing these earned but unreported agency premiums, the Company also accrues agent commission expenses, premium taxes and income taxes, and records a provision for claim losses at the prevailing provision rate as of the balance sheet date.

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 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 to determining the fair value of ARS are unobservable in the securities markets and are significant.

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, 2011 consists of $7,563,541 of unrealized holding gains on available-for-sale securities and $54,376 of unrecognized prior service cost and unrecognized actuarial losses associated with postretirement benefit liabilities. Accumulated other comprehensive income as of December 31, 2010 consists of $5,675,516 of unrealized holding gains on available-for-sale securities and $13,189 of unrecognized prior service cost and unrealized gains 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 expense over the employee's requisite service period.

     As 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.

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 January 2010, the FASB updated the requirements for fair value measurements and disclosures to provide for additional disclosure related to transfers in and out of fair value hierarchy Levels 1 and 2, and to require companies to present purchases, sales, issuances and settlements of Level 3 securities on a gross rather than net basis. Refer to Note 3 for a discussion of valuation hierarchy levels. The new disclosures are clarifications of existing disclosures and are effective for interim and annual reporting periods beginning after December 15, 2009, except that the disclosures requiring the presentation of Level 3 securities trading activity on a gross basis are effective for fiscal years beginning after December 15, 2010. This update did not have an impact on the Company's financial condition or results of operations.

 

Pending Accounting Standards

     In May 2011, the FASB updated requirements for measuring and disclosing fair value information, resulting in common principles and requirements in accordance with accounting principles generally accepted in the United States of America ("GAAP") and International Financial Reporting Standards ("IFRS"). For public entities, this guidance becomes effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. Management does not expect the adoption of this standard to have a material impact on the Company's Consolidated Financial Statements.

     In June 2011, the FASB updated requirements relating to the presentation of comprehensive income. The objectives of this accounting update are to facilitate convergence of GAAP and IFRS, to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. The main provisions of the guidance require that all nonowner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. For public entities, this update becomes effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Management does not expect the adoption of this standard to have a material impact on the Company's Consolidated Financial Statements.

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.

     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.


Statutory Restrictions On Consolidated Stockholders' Equity And Investments
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Statutory Restrictions On Consolidated Stockholders' Equity And Investments
12 Months Ended
Dec. 31, 2011
Statutory Restrictions On Consolidated Stockholders' Equity And Investments [Abstract]  
Statutory Restrictions On Consolidated Stockholders' Equity And Investments

2. Statutory Restrictions on Consolidated Stockholders' Equity and Investments

     The Company has designated approximately $42,288,000 and $41,892,000 of retained earnings as of December 31, 2011 and 2010, 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, 2011 and 2010 approximately $73,216,000 and $65,297,000, 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 $6,704,000 and $6,570,000 at December 31, 2011 and 2010 respectively, are deposited with the insurance departments of the states in which business is conducted.


Investments In Securities And Fair Value
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Investments In Securities And Fair Value
12 Months Ended
Dec. 31, 2011
Investments In Securities And Fair Value [Abstract]  
Investments In Securities And Fair Value

3. 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:

                 
        Gross   Gross   Estimated
    Amortized   Unrealized   Unrealized   Fair
December 31, 2011   Cost   Gains   Losses   Value
Fixed maturities, available-for-sale, at fair value-                
Obligations of states and political subdivisions $ 62,042,929 $ 5,583,733 $ 13,869 $ 67,612,793
Corporate debt securities   12,188,639   1,202,149   148,616   13,242,172
Auction rate securities   4,552,400   -   -   4,552,400
Total $ 78,783,968 $ 6,785,882 $ 162,485 $ 85,407,365
Equity securities, available-for-sale at fair value-                
Common stocks and nonredeemable preferred stocks $ 17,652,745 $ 4,939,053 $ 41,823 $ 22,549,975
Total $ 17,652,745 $ 4,939,053 $ 41,823 $ 22,549,975
Short-term investments-                
Certificates of deposit and other $ 14,112,262 $ - $ - $ 14,112,262
Total $ 14,112,262 $ - $ - $ 14,112,262

 

                 
        Gross   Gross   Estimated
    Amortized   Unrealized   Unrealized   Fair
December 31, 2010   Cost   Gains   Losses   Value
Fixed maturities, available-for-sale, at fair value-                
Obligations of states and political subdivisions $ 64,120,509 $ 3,248,821 $ 166,690 $ 67,202,640
Corporate debt securities   12,258,359   1,123,051   22,737   13,358,673
Auction rate securities   5,405,394   66,850   -   5,472,244
Total $ 81,784,262 $ 4,438,722 $ 189,427 $ 86,033,557
Equity securities, available-for sale at fair value-                
Common stocks and nonredeemable preferred stocks $ 9,458,773 $ 4,430,175 $ 16,578 $ 13,872,370
Total $ 9,458,773 $ 4,430,175 $ 16,578 $ 13,872,370
Short-term investments-                
Certificates of deposit and other $ 27,203,550 $ - $ - $ 27,203,550
Total $ 27,203,550 $ - $ - $ 27,203,550

 

The scheduled maturities of fixed maturity securities at December 31, 2011 were as follows:

         
    Available-for-Sale
    Amortized   Fair
    Cost   Value
Due in one year or less $ 7,199,401 $ 7,326,825
Due after one year through five years   31,480,952   33,615,289
Due five years through ten years   31,679,226   35,234,049
Due after ten years   8,424,389   9,231,202
Total $ 78,783,968 $ 85,407,365

 

Earnings on investments for the years ended December 31 were as follows:

         
    2011   2010
 
Fixed maturities $ 3,233,988 $ 3,411,888
Equity securities   347,843   234,598
Invested cash and other short-term investments   12,725   23,433
Miscellaneous interest   480   1,259
Investment income $ 3,595,036 $ 3,671,178

 

 

Gross realized gains and losses on sales of available-for-sale securities for the years ended December 31 are summarized as follows:

             
    2011     2010  
Gross realized gains:            
Obligations of states and political subdivisions $ 20,845   $ 98,197  
Common stocks and nonredeemable preferred stocks   529,810     1,193,029  
Auction rate securities   43,200     -  
Total   593,855     1,291,226  
Gross realized losses:            
Obligations of states and political subdivisions   -     (111,500 )
Common stocks and nonredeemable preferred stocks   (247,117 )   (97,157 )
Other than temporary impairment of securities   (280,987 )   (335,551 )
Total   (528,104 )   (544,208 )
Net realized gain $ 65,751   $ 747,018  

 

     Realized gains and losses are determined on the specific identification method. Also included in net realized gain on sales in the Consolidated Statements of Income are net gains and impairments of other investments and net losses on sales and impairments of property acquired in the settlement of claims totaling $(37,192) and $(92,344) for the twelve months ended December 31, 2011 and 2010, respectively.

     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, 2011 and 2010.

                               
    Less than 12 Months     12 Months or Longer       Total    
December 31, 2011   Fair Value    Unrealized Loss     Fair Value   Unrealized Loss      Fair Value   Unrealized Loss   
Obligations of states and                              
political subdivisions $ 663,666 $ (64 ) $ 1,023,180 $ (13,805 ) $ 1,686,846 $ (13,869 )
Corporate debt securities   3,015,769   (148,616 )   -   -     3,015,769   (148,616 )
Total fixed maturity                              
securities $ 3,679,435 $ (148,680 ) $ 1,023,180 $ (13,805 ) $ 4,702,615 $ (162,485 )
Equity securities   957,072   (40,893 )   104,130   (930 )   1,061,202   (41,823 )
Total temporarily                              
impaired securities $ 4,636,507 $ (189,573 ) $ 1,127,310 $ (14,735 ) $ 5,763,817 $ (204,308 )
 
December 31, 2010                              
Obligations of states and                              
political subdivisions $ 7,008,818 $ (166,690 ) $ - $ -   $ 7,008,818 $ (166,690 )
Corporate debt securities   1,077,263   (22,737 )   -   -     1,077,263   (22,737 )
Total fixed maturity                              
securities $ 8,086,081 $ (189,427 ) $ - $ -   $ 8,086,081 $ (189,427 )
Equity securities   746,388   (7,710 )   220,635   (8,868 )   967,023   (16,578 )
Total temporarily                              
impaired securities $ 8,832,469 $ (197,137 ) $ 220,635 $ (8,868 ) $ 9,053,104 $ (206,005 )

 

     As of December 31, 2011, the Company held $4,702,615 in fixed maturity securities with unrealized losses of $162,485. As of December 31, 2010, the Company held $8,086,081 in fixed maturity securities with unrealized losses of $189,427. 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, 2011, the Company held $1,061,202 in equity securities with unrealized losses of $41,823. As of December 31, 2010, the Company held $967,023 in equity securities with unrealized losses of $16,578. 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 13 and 26 securities had unrealized losses at December 31, 2011 and December 31, 2010, 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 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 intent not to sell. During 2010, the Company recorded an other-than-temporary impairment charge in the amount of $382,692 related to securities, of which, $281,156 was related to Level 3 ARS that have had a history of being below cost and a change in intent not to sell. Other-than-temporary impairment charges are included in net realized gain on investments in the Consolidated Statements of Income.

     Valuation Hierarchy. 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.

     Valuation Techniques. 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.

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. Their fair value is principally based on market values obtained from a third party pricing service. Factors that are used in determining their 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 the pricing service, although as discussed below, the Company does consult other price resources when confirming that the prices it obtains reflect the fair values of the instruments in accordance with 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, 2011 and 2010, 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 third party 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 ARS because quoted prices were unavailable due to the failure of auctions. Some of the inputs to this model are unobservable in the market and are significant—therefore, the Company utilizes another third party pricing service to assist in the determination of fair market value of these securities. That 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, 2011 and 2010:

         
  2011   2010  
Cumulative probability of earning maximum rate until maturity 0.0-0.1 % 0.0-0.8 %
Cumulative probability of principle returned prior to maturity 95.4-98.7 % 85.3-98.6 %
Cumulative probability of default at some future point 1.3-4.6 % 1.4-14.7 %

 

     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 2011 and 2010, the difference in the low and high values of the ranges was approximately three percent of the carrying value of the Company's ARS.

     The Company's ARS portfolio is comprised entirely of investment grade student loan ARS. The par value of the ARS bonds was $5,000,000 and $5,900,000 as of December 31, 2011 and 2010, respectively, with approximately 79.6% and 82.2% as of December 31, 2011 and 2010, respectively, guaranteed by the U.S. Department of Education.

     The following table presents, by level, the financial assets carried at fair value measured on a recurring basis as of December 31, 2011 and 2010. 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, 2011   Level 1   Level 2   Level 3   Total
Equity                
Common stock and nonredeemable preferred stock $ 22,549,975 $ - $ - $ 22,549,975
Fixed Maturities                
Obligations of states and political subdivisions*   -   67,612,793   1,834,700   69,447,493
Corporate debt securities*   -   13,242,172   2,717,700   15,959,872
Total $ 22,549,975 $ 80,854,965 $ 4,552,400 $ 107,957,340

 

 

                 
As of December 31, 2010   Level 1   Level 2   Level 3   Total
Equity Securities                
Common stock and nonredeemable preferred stock $ 13,872,370 $ - $ - $ 13,872,370
Fixed Maturities                
Obligations of states and political subdivisions*   -   67,202,640   2,618,844   69,821,484
Corporate debt securities*   -   13,358,673   2,853,400   16,212,073
Total $ 13,872,370 $ 80,561,313 $ 5,472,244 $ 99,905,927

 

*Denotes fair market value obtained from pricing services.

     There were no transfers into or out of Levels 1 and 2 during 2011. The following table presents a reconciliation of the Company's assets measured at fair value using significant unobservable inputs (Level 3) as defined for the period ended December 31, 2011 and 2010:

             
Changes in fair value during the year ended December 31:   2011     2010  
Beginning balance at January 1 $ 5,472,244   $ 10,097,795  
Redemptions and sales   (900,000 )   (4,938,500 )
Realized gain – included in net realized gain on investments   43,199     78,270  
Realized loss – included in net realized gain on investments   (101,861 )   (392,656 )
Unrealized gain - included in other comprehensive income   38,818     627,335  
Ending balance at December 31 $ 4,552,400   $ 5,472,244  

 

     Certain cost method investments are measured at estimated fair value on a non-recurring basis, such as investments that are impaired during the period and recorded at estimated fair value in the Consolidated Financial Statements as of December 31, 2011 and 2010. The following table summarizes the corresponding estimated fair value hierarchy of such investments at December 31, 2011 and 2010 and the related impairments recognized:

                           
                    Total      
                    Estimated      
                    Fair      
  Valuation                 Market   Impairment  
December 31, 2011 Method Impaired Level 1   Level 2     Level 3   Value   Losses  
Cost method                          
investments Fair Value Yes $ - $ - $ 58,281 $ 58,281 $ (28,904 )
Other assets Fair Value Yes   -   -   17,000   17,000   (15,500 )
Total cost method                          
investments and other                          
assets     $ - $ - $ 75,281 $ 75,281 $ (44,404 )
 
 
December 31, 2010                          
Cost method                          
investments Fair Value Yes $ - $ - $ 52,625 $ 52,625 $ (47,141 )
Other assets Fair Value Yes   -   -   -   -   (47,550 )
Total cost method                          
investments and other                          
assets     $ - $ - $ 52,625 $ 52,625 $ (94,691 )

 

     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.


Property And Equipment
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Property And Equipment
12 Months Ended
Dec. 31, 2011
Property And Equipment [Abstract]  
Property And Equipment

4. Property and Equipment

Property and equipment and estimated useful lives at December 31 are summarized as follows:

    2011     2010  
Land $ 1,107,582   $ 1,107,582  
Office buildings and improvements (25 years)   3,259,383     3,196,546  
Furniture, fixtures and equipment (3 to 10 years)   5,114,112     4,975,753  
Automobiles (3 years)   792,592     704,417  
Total   10,273,669     9,984,298  
Less accumulated depreciation   (6,720,453 )   (6,311,981 )
Property and equipment, net $ 3,553,216   $ 3,672,317  

Reinsurance
v0.0.0.0
Reinsurance
12 Months Ended
Dec. 31, 2011
Reinsurance [Abstract]  
Reinsurance

5. Reinsurance

     The Company assumes and cedes reinsurance with other insurance companies in the normal course of business. Premiums assumed and ceded were approximately $17,000 and $177,000, respectively, for 2011 and $33,000 and $202,000, respectively, for 2010. Ceded reinsurance is comprised of excess of loss treaties, which protects against losses over certain amounts. The Company remains liable to the insured for claims under ceded insurance policies in the event that the assuming insurance companies are unable to meet their obligations under these contracts. The Company has not paid or recovered any reinsured losses during the years ended December 31, 2011 and 2010.


Reserves For Claims
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Reserves For Claims
12 Months Ended
Dec. 31, 2011
Reserves For Claims [Abstract]  
Reserves For Claims

6. Reserves for Claims

Changes in the reserves for claims for the years ended December 31 are summarized as follows based on the year in which the policies were written:

             
    2011     2010  
Balance, beginning of year $ 38,198,700   $ 39,490,000  
Provisions related to:            
Current year   6,845,338     6,744,917  
Prior years   (3,502,911 )   (2,309,851 )
Total provision charged to operations   3,342,427     4,435,066  
Claims paid, net of recoveries, related to:            
Current year   (305,079 )   (303,800 )
Prior years   (3,240,048 )   (5,422,566 )
Total claims paid, net of recoveries   (3,545,127 )   (5,726,366 )
Balance, end of year $ 37,996,000   $ 38,198,700  

 

     The Company continually refines its reserve estimates as current loss experience develops and credible data emerges. Movements in the reserves related to prior periods were primarily the result of claim recoveries, as well as changes to estimates to better reflect the latest reported loss data. The Company does not recognize claim recoveries until an actual payment has been received by the Company. During 2011, the Company realized claim recoveries of approximately $1,488,000. During 2010, the Company realized claim recoveries of approximately $3,100,000.

     The provision for claims as a percentage of net premiums written was 4.1% and 7.2% in 2011 and 2010, respectively. The change in estimate for calendar year 2011 from 2010 resulted mostly from favorable development in 2011 versus prior year related primarily to policy years 2007 through 2010. Due to variances between actual and expected loss payments, loss development is subject to significant variability.

     A large claim is defined as a claim with incurred losses exceeding $250,000. Due to the small volume of large claims, the long-tail nature of title insurance claims and the inherent uncertainty in loss emergence patterns, large claim activity can vary significantly between policy years. The estimated development of large claims by policy year is therefore subject to significant changes as experience develops.

A summary of the Company's loss reserves, broken down into its components of known title claims and IBNR claims follows:

                 
    2011 Percentage     2010 Percentage  
Known title claims $ 6,233,501 16.4 % $ 6,121,941 16.0 %
IBNR   31,762,499 83.6 %   32,076,759 84.0 %
Total loss reserves $ 37,996,000 100.0 % $ 38,198,700 100.0 %

 

In management's opinion, the reserves are adequate to cover claim losses which might result from pending and future claims.


Earnings Per Share And Stock Options
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Earnings Per Share And Stock Options
12 Months Ended
Dec. 31, 2011
Earnings Per Share And Stock Options [Abstract]  
Earnings Per Share And Stock Options

7. Earnings Per Share and Stock Options

     Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income by the combination of dilutive potential common stock, comprised of shares issuable under the Company's share-based compensation plans and the weighted-average number of common shares outstanding during the reporting period. Dilutive common share equivalents includes the dilutive effect of in-the-money share-based awards, which are calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, when share-based awards are exercised, (a) the exercise price of a share-based award; (b) the amount of compensation cost, if any, for future service that the Company has not yet recognized; and (c) the amount of estimated tax benefits that would be recorded in additional paid-in capital, if any, are assumed to be used to repurchase shares in the current period. The incremental dilutive potential common shares, calculated using the treasury stock method was 18,286 and 5,190 for 2011 and 2010, respectively. The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31:

         
For the Years Ended December 31,   2011   2010
Net income $ 6,933,936 $ 6,372,626
Weighted average common shares outstanding - Basic   2,151,350   2,284,657
Incremental shares outstanding assuming        
the exercise of dilutive stock options and SARs (share settled)   18,286   5,190
Weighted average common shares outstanding - Diluted   2,169,636   2,289,847
Basic earnings per common share $ 3.22 $ 2.79
Diluted earnings per common share $ 3.20 $ 2.78

 

     In 2011 and 2010, 11,500 and 13,500 awards, respectively, were excluded from the computation of diluted earnings per share because their exercise price was greater than the stock price and therefore considered anti-dilutive.

     The Company has adopted employee stock award plans (the "Plans") under which restricted stock, and options or stock appreciation rights ("SARs") to purchase shares (not to exceed 500,000 shares) of the Company's stock may be granted to key employees or directors of the Company at a price not less than the market value on the date of grant. SARs and options (which have predominantly been incentive stock options) awarded under the Plans thus far are exercisable and vest immediately or within one year or at 10% to 20% per year beginning on the date of grant and generally expire in five to ten years. All SARs issued to date have been share settled only. No SARs were exercised in 2011 or 2010.

A summary of share-based award transactions for all share-based award plans follows:

               
        Weighted Average    
        Average Remaining   Aggregate
  Number     Exercise Contractual   Intrinsic
  of Shares     Price Term (years)   Value
Outstanding as of January 1, 2010 117,245   $ 27.54 5.10 $ 541,543
SARs granted 3,000     33.31      
Options exercised (9,445 )   14.88      
Options/SARs cancelled/forfeited/expired -     -      
Outstanding as of December 31, 2010 110,800   $ 28.77 4.51 $ 353,955
SARs granted 3,000     41.50      
Options exercised (7,700 )   20.15      
Options/SARs cancelled/forfeited/expired (4,500 )   28.61      
Outstanding as of December 31, 2011 101,600   $ 29.81 3.91 $ 697,780
 
Exercisable as of December 31, 2011 99,630   $ 29.76 3.91 $ 686,604
 
Unvested as of December 31, 2011 1,970   $ 32.28 3.58 $ 11,176

 

     The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company's common stock at December 31, 2011. The intrinsic values of options exercised during 2011 and 2010 were approximately $118,000 and $158,000, respectively.

 

The following tables summarize information about fixed stock options outstanding at December 31, 2011:

                       
          Options Outstanding at Year-End   Options Exercisable at Year-End
            Weighted Weighted     Weighted
            Average Average     Average
          Number Remaining Exercise Number   Exercise
  Range of Exercise Prices Outstanding Contractual Life Price Exercisable   Price
$ 10.00 - $ 19.99 500 0.28 $ 18.92 500 $ 18.92
  20.00 -   27.96 5,400 1.10   22.77 4,800   22.87
  27.98 -   31.99 3,700 2.43   31.08 3,080   31.08
  33.32 -   36.79 2,000 3.38   36.79 2,000   36.79
$ 10.00 - $ 36.79 11,600 1.88 $ 27.67 10,380 $ 27.80

 

                       
          SARs Outstanding at Year-End   SARs Exercisable at Year-End
            Weighted Weighted     Weighted
            Average Average     Average
          Number Remaining Exercise Number   Exercise
  Range of Exercise Prices Outstanding Contractual Life Price Exercisable   Price
$ 27.97 - $ 27.97 75,000 4.17 $ 27.97 75,000 $ 27.97
  32.00 -   32.00 2,500 4.39   32.00 2,500   32.00
  33.31 -   33.31 3,000 5.39   33.31 3,000   33.31
  36.80 -   49.04 9,500 3.70   45.25 8,750   45.57
$ 27.97 - $ 49.04 90,000 4.17 $ 30.08 89,250 $ 29.99

 

In 2011, 21,336 options and SARs vested with a fair value of $204,965.

     During the second quarter of 2011, the Company issued 3,000 share settled SARs to select officers and directors of the Company. During the second quarter of 2010, the Company issued 3,000 share settled SARs to select officers and directors of the Company. SARs give the holder the right to receive stock equal to the appreciation in the value of shares of stock from the grant date for a specified period of time, and as a result, are accounted for as equity instruments. As such, the SARs were valued using the Black-Scholes option valuation model. The fair value of each award is estimated on the date of grant using the Black-Scholes option valuation model with the weighted-average assumptions noted in the following table. Expected volatilities are based on both the implied and historical volatility of the Company's stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of awards represents the period of time that options granted are expected to be outstanding. The interest rate for periods during the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of the grant.

     The weighted-average fair values for the SARs issued during 2011 and 2010 were $15.55 and $12.30, respectively, and were estimated using the following weighted-average assumptions:

         
  2011   2010  
Expected Life in Years 5.0   5.0  
Expected Volatility 43.6 % 42.4 %
Weighted-Average Volatility 43.6 % 42.4 %
Interest Rate 1.87 % 2.13 %
Yield Rate 0.84 % 0.83 %

 

     There was approximately $214,000 and $217,000 of compensation expense relating to shares vesting on or before December 31, 2011 and December 31, 2010, respectively, included in salaries, employee benefits and payroll taxes of the Consolidated Statements of Income. As of December 31, 2011, there was approximately $42,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Company's stock awards plans. That cost is expected to be recognized over a weighted-average period of approximately 5 months.

The estimated weighted-average grant-date fair value of SARs granted for the years ended December 31 was as follows:

         
For the Years Ended December 31,   2011   2010
Exercise price equal to market price on date of grant:        
Weighted-average market price $ 41.50 $ 33.31
Weighted-average grant-date fair value $ 15.55 $ 12.30

 

There are no stock options or SARs granted where the exercise price is less than the market price on the date of grant.


Income Taxes
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Income Taxes
12 Months Ended
Dec. 31, 2011
Income Taxes [Abstract]  
Income Taxes

8. Income Taxes

The components of income tax expense for the years ended December 31 are summarized as follows:

           
For the Years Ended December 31,   2011     2010
Current:          
Federal $ 2,515,000   $ 1,388,000
State   29,000     23,000
Total current   2,544,000     1,411,000
Deferred:          
Federal   28,131     825,465
State   (7,131 )   6,535
Total deferred   21,000     832,000
Total $ 2,565,000   $ 2,243,000

 

     For state income tax purposes, ITIC and NITIC generally pay only a gross premium tax found in premium and retaliatory taxes in the Consolidated Statements of Income.

At December 31, the approximate tax effect of each component of deferred income tax assets and liabilities is summarized as follows:

           
For the Years Ended December 31,   2011     2010
Deferred income tax assets:          
Recorded reserves for claims, net of statutory premium reserves $ -   $ 29,911
Accrued benefits and retirement services   2,491,168     2,215,857
Postretirement benefit obligation   28,026     -
Other-than-temporary impairment of assets   434,929     420,305
Reinsurance and commissions payable   38,969     25,302
Allowance for doubtful accounts   414,120     483,140
Net operating loss carryforward   30,000     49,000
Capital loss carryforward   5,194     -
Excess of book over tax depreciation   113,648     90,352
Other   491,479     416,214
Total   4,047,533     3,730,081
Deferred income tax liabilities:          
Recorded reserves for claims, net of statutory premium reserves   290,318     -
Net unrealized gain on investments   3,956,708     2,986,999
Postretirement benefit obligation   -     6,785
Discount accretion on tax-exempt obligations   -     23,813
Other   279,870     235,950
Total   4,526,896     3,253,547
Net deferred income tax (liabilities) assets $ (479,363 ) $ 476,534

 

     At December 31, 2011 and 2010, no valuation allowance was recorded. Based upon the Company's historical results of operations, the existing financial condition of the Company and management's assessment of all other available information, management believes that it is more likely than not that the benefit of these deferred income tax assets will be realized.

     A reconciliation of income tax as computed for the years ended December 31 at the U.S. federal statutory income tax rate (34%) to income tax expense follows:

             
For the Years Ended December 31,   2011     2010  
Anticipated income tax expense $ 3,229,638   $ 2,929,313  
Increase (decrease) related to:            
State income taxes, net of federal income tax benefit   19,140     15,180  
Tax-exempt interest income (net of amortization)   (700,300 )   (743,025 )
Other, net   16,522     41,532  
Provision for income taxes $ 2,565,000   $ 2,243,000  

 

     In accounting for uncertainty in income taxes, the Company is required to recognize in its financial statements the impact of a tax position if that position is more likely than not of being sustained on an audit, based on the technical merits of the position. In this regard, an uncertain tax position represents the Company's expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. There were no unrecognized tax benefits or liabilities as of December 31, 2011.

     The amount of unrecognized tax benefit or liability may increase or decrease in the future for various reasons, including adding amounts for current tax year positions, expiration of open income tax returns due to the expiration of the applicable statute of limitations, changes in management's judgment about the level of uncertainty, status of examinations, litigation and legislative activity and the additions or eliminations of uncertain tax positions.

 

The Company's policy is to report interest and penalties related to income taxes in the Other line item in the Consolidated Statements of Income.

     The Company, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U.S. federal or state and local examinations by taxing authorities for years before 2008.


Leases
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Leases
12 Months Ended
Dec. 31, 2011
Leases [Abstract]  
Leases

9. Leases

     The Company leases certain office facilities and equipment under operating leases. Rental expense also includes occasional rental of automobiles. Rent expense totaled approximately $623,000 and $773,000 in 2011 and 2010, respectively. The future minimum lease payments under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 2011, are summarized as follows:

Year Ended:    
2012 $ 476,822
2013   261,798
2014   176,877
2015   134,027
2016   79,826
Thereafter   -
Total $ 1,129,350

Retirement Agreements And Other Postretirement Benefit Plan
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Retirement Agreements And Other Postretirement Benefit Plan
12 Months Ended
Dec. 31, 2011
Retirement Agreements And Other Postretirement Benefit Plan [Abstract]  
Retirement Agreements And Other Postretirement Benefit Plan

10. Retirement Agreements and Other Postretirement Benefit Plan

     The Company has a 401(k) savings plan. In order to participate, individuals must be employed for one full year and work at least 1,000 hours annually. The Company makes a 3% Safe Harbor contribution and also has the option annually to make a discretionary profit share contribution. Individuals may elect to make contributions up to the maximum deductible amount as determined by the Internal Revenue Code. Expenses related to the 401(k) were approximately $479,000 and $484,000 for 2011 and 2010, respectively.

     In November 2003, ITIC, a wholly owned subsidiary of the Company, entered into employment agreements with the Chief Executive Officer, Chief Financial Officer and Chief Operating Officer of ITIC. These individuals also serve as the Chairman, President and Executive Vice President, respectively, of the Company. The agreements provide compensation and life, health, dental and vision benefits upon the occurrence of specific events, including death, disability, retirement, termination without cause or upon a change in control. The employment agreements also prohibit each of these executives from competing with ITIC and its parent, subsidiaries and affiliates in the State of North Carolina while employed by ITIC and for a period of two years following termination of their employment.

     In addition, during the second quarter of 2004, ITIC entered into nonqualified deferred compensation plan agreements with these executives. The amount accrued for all agreements at December 31, 2011 and 2010 was approximately $5,740,000 and $5,134,000, respectively, which includes postretirement compensation and health benefits, and was calculated based on the terms of the contract. Both the 2011 and 2010 accruals are included in the Accounts Payable and Accrued Liability line item of the Consolidated Balance Sheets. These executive contracts are accounted for on an individual contract basis. On December 24, 2008, the executive contracts were amended effective January 1, 2009 to bring them into compliance with Section 409A of the Internal Revenue Code, and were amended and restated to provide for an annual cash payment to the officers equal to the amounts the Company would have contributed to their accounts under its 401(k) Plan if such contributions were not limited by the federal tax laws, less the amount of any contributions that the Company actually makes to their accounts under the Company's 401(k) Plan.

     On November 17, 2003, ITIC entered into employment agreements with key executives that provide for the continuation of certain employee benefits upon retirement. The executive employee benefits include health insurance, dental insurance, vision insurance and life insurance. The benefits are unfunded. Estimated future benefit payouts expected to be paid for each of the next five years are $4,437 in 2012, $5,678 in 2013, $6,201 in 2014, $6,729 in 2015, $7,262 in 2016 and $88,280 in the next five years thereafter.

Cost of the Company's postretirement benefits included the following components:

           
    2011     2010
Net periodic benefit cost          
Service cost – benefits earned during the year $ 19,503   $ 25,698
Interest cost on projected benefit obligation   24,607     30,755
Amortization of unrecognized prior service cost   13,038     20,388
Amortization of unrecognized (gain) loss   (318 )   2,572
Net periodic benefit cost at end of year $ 56,830   $ 79,413

 

     The Company is required to recognize the funded status (i.e., the difference between the fair value of the assets and the accumulated postretirement benefit obligations of its postretirement benefits) in its Consolidated Balance Sheet, with a corresponding adjustment to accumulated other comprehensive income, net of tax. The net amount in accumulated other comprehensive income is $(82,392), $(54,376) net of tax, for December 31, 2011, and $19,977, $13,189 net of tax, for December 31, 2010, and represents the net unrecognized actuarial losses and unrecognized prior service costs. The effects of the funded status on the Company's Consolidated Balance Sheets at December 31, 2011 and 2010 are presented in the following table:

 

             
    2011     2010  
Funded status            
Actuarial present value of future benefits:            
Fully eligible active employee $ (354,308 ) $ (36,253 )
Non-eligible active employees   (234,586 )   (393,442 )
Plan assets   -     -  
Funded status of accumulated postretirement benefit obligation, recognized in            
other liabilities $ (588,894 ) $ (429,695 )

 

Development of the accumulated postretirement benefit obligation for the years ended December 31, 2011 and 2010 includes the following:

             
    2011     2010  
Accrued postretirement benefit obligation at beginning of year $ (429,695 ) $ (536,746 )
Service cost – benefits earned during the year   (19,503 )   (25,698 )
Interest cost on projected benefit obligation   (24,607 )   (30,755 )
Plan amendments   -     25,665  
Actuarial (loss) gain   (115,089 )   137,839  
Accrued postretirement benefit obligation at end of year $ (588,894 ) $ (429,695 )

 

The changes in amounts related to accumulated other comprehensive income, pre-tax, are as follows:

             
    2011     2010  
Balance at beginning of year $ (19,977 ) $ 166,487  
Components of accumulated other comprehensive income            
Unrecognized prior service cost   (13,038 )   (20,388 )
Amortization of gain (loss), net   318     (2,572 )
Actuarial loss (gain)   115,089     (137,839 )
Plan amendments   -     (25,665 )
Balance at end of year $ 82,392   $ (19,977 )

 

For 2011, the amounts in accumulated other comprehensive income, pre-tax, to be recognized as components of net periodic benefit costs are:

     
    Projected
    2012
Amortization of unrecognized prior service cost $ 9,396
Amortization of unrecognized loss   681
Net periodic benefit cost at end of year $ 10,077

 

     Assumed health care cost trend rates do have an effect on the amounts reported for the postretirement benefit obligations. The following illustrates the effects on the net periodic postretirement benefit cost ("NPPBC") and the accumulated postretirement benefit obligation ("APBO") of a one percentage point increase and one percentage point decrease in the assumed health care cost trend rate as of December 31, 2011:

               
      One-     One-  
      Percentage     Percentage  
      Point     Point  
      Increase     Decrease  
Net periodic postretirement benefit cost              
Effect on the service cost component $   3,506   (2,619 )
Effect on interest cost     6,216     (4,745 )
Total effect on the net periodic postretirement benefit cost $   9,722   (7,364 )
Accumulated postretirement benefit obligation (including active              
employees who are not fully eligible)              
Effect on those currently receiving benefits (retirees and spouses) $   -   -  
Effect on active fully eligible     65,623     (51,191 )
Effect on actives not yet eligible     65,235     (48,702 )
Total effect on the accumulated postretirement benefit obligation $   130,858   (99,893 )

Commitments And Contingencies
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Commitments And Contingencies
12 Months Ended
Dec. 31, 2011
Commitments And Contingencies [Abstract]  
Commitments And Contingencies

11. Commitments and Contingencies

     Legal Proceedings. A class action lawsuit is pending in the United States District Court for the Southern District of West Virginia against several title insurance companies, including Investors Title Insurance Company, entitled Backel v. Fidelity National Title Insurance et al. (6:2008-CV-00181). The plaintiff in this case contends a lack of meaningful oversight by agencies with which title insurance rates are filed and approved. There are further allegations that the title insurance companies have conspired to fix title insurance rates. The plaintiffs seek monetary damages, including treble damages, as well as injunctive relief. Similar suits have been filed in other jurisdictions, several of which have already been dismissed. In West Virginia, the case has been placed on the inactive list pending the resolution of the bankruptcy of LandAmerica Financial Group, Inc. The Company believes that this case is without merit, and intends to vigorously defend against the allegations. At this stage in the litigation, the Company does not have the ability to make a reasonable range of estimates in regards to potential loss amounts, if any.

     The Company and its subsidiaries are also involved in other legal proceedings that are incidental to their business. In the Company's opinion, based on the present status of these proceedings, any potential liability of the Company or its subsidiaries with respect to these legal proceedings, will not, in the aggregate, be material to the Company's consolidated financial condition or operations.

     Potential Acquisition. In January 2012, the Company executed a membership interest purchase and sale agreement under which the Company has agreed to acquire a majority 70% ownership interest of a previously unaffiliated agency. The agreement also contains an option for the Company to acquire the entire agency. No estimated purchase price can be calculated at this time. The membership interest purchase and sale agreement stipulates a maximum purchase price of $1,041,250 for only the majority interest, and a minimum purchase price of $1,000,000 for the entire agency. The actual purchase cost may deviate from both the maximum and minimum amounts. The closing, subject to the satisfaction of certain conditions, is anticipated to be in the second quarter of 2012.

     Regulation. The Company's title insurance and trust subsidiaries are regulated by various federal, state and local governmental agencies and are subject to various audits and inquiries. It is the opinion of management that, based on its present expectations, these audits and inquiries will not have a material impact on the Company's consolidated financial condition or operations.

     Escrow and Trust Deposits. As a service to its customers, the Company, through ITIC, administers escrow and trust deposits representing earnest money received under real estate contracts, undisbursed amounts received for settlement of mortgage loans and indemnities against specific title risks. Cash held by the Company for these purposes was approximately $15,562,000 and $17,472,000 as of December 31, 2011 and 2010, respectively. These amounts are not considered assets of the Company and are excluded from the accompanying Consolidated Balance Sheets. However, the Company remains contingently liable for the disposition of these deposits.

     Like-Kind Exchange Proceeds. In administering tax-deferred property exchanges, the Company's subsidiary, ITEC, serves as a qualified intermediary for exchanges, holding the net sales proceeds from relinquished property to be used for purchase of replacement property. Another Company subsidiary, ITAC, serves as exchange accommodation titleholder and, through limited liability companies ("LLCs") that are wholly owned subsidiaries of ITAC, holds property for exchangers in reverse exchange transactions. Like-kind exchange deposits and reverse exchange property totaled approximately $35,359,000 and $23,044,000 as of December 31, 2011 and 2010, respectively. These amounts are not considered assets of the Company and, therefore, are excluded from the accompanying Consolidated Balance Sheets; however, the Company remains contingently liable for the disposition of the transfers of property, disbursements of proceeds and the return on the proceeds at the agreed upon rate. Exchange services revenues include earnings on these deposits; therefore, investment income is shown as exchange services revenue, rather than investment income. These like-kind exchange funds are primarily invested in money market and other short-term investments, including approximately $1,000,000 of par value auction rate securities, as of December 31, 2011. The Company does not believe the current illiquidity of the ARS will impact its operations, as it believes it has sufficient capital to provide continuous and immediate liquidity as necessary.


Statutory Accounting
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Statutory Accounting
12 Months Ended
Dec. 31, 2011
Statutory Accounting [Abstract]  
Statutory Accounting

12. Statutory Accounting

     The Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America which differ in some respects from statutory accounting practices prescribed or permitted in the preparation of financial statements for submission to insurance regulatory authorities.

     Combined capital and surplus on a statutory basis was $93,089,327 and $93,626,173 as of December 31, 2011 and 2010, respectively. Net income on a statutory basis was $6,416,684 and $5,797,068 for the twelve months ended December 31, 2011 and 2010, respectively.


Segment Information
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Segment Information
12 Months Ended
Dec. 31, 2011
Segment Information [Abstract]  
Segment Information

13. Segment Information

     Consistent with the requirements of reporting segment information, the Company has one reportable segment, title insurance services. The remaining immaterial segments have been combined into a group called "All Other."

     The title insurance segment primarily issues title insurance policies through approved attorneys from underwriting offices and through independent issuing agents. Title insurance policies insure titles to residential, institutional, commercial and industrial properties.

 

Provided below is selected financial information about the Company's operations by segment for the two years ended December 31, 2011 and 2010:

    Title   All     Intersegment      
2011   Insurance   Other     Elimination     Total
Operating revenues $ 83,420,562 $ 4,455,631   $ (814,632 ) $ 87,061,561
Investment income   3,174,148   502,557     (81,669 )   3,595,036
Net realized gain (loss) on investments   97,640   (69,081 )   -     28,559
Total revenues $ 86,692,350 $ 4,889,107   $ (896,301 ) $ 90,685,156
Operating expenses   77,294,353   4,706,499     (814,632 )   81,186,220
Income before taxes $ 9,397,997 $ 182,608   $ (81,669 ) $ 9,498,936
Assets $ 123,712,762 $ 34,245,701   $ -   $ 157,958,463

 

    Title   All     Intersegment      
2010   Insurance   Other     Elimination     Total
Operating revenues $ 63,502,167 $ 4,271,433   $ (790,097 ) $ 66,983,503
Investment income   3,149,932   602,915     (81,669 )   3,671,178
Net realized gain (loss) on investments   728,508   (73,834 )   -     654,674
Total revenues $ 67,380,607 $ 4,800,514   $ (871,766 ) $ 71,309,355
Operating expenses   58,765,581   4,718,245     (790,097 )   62,693,729
Income before taxes $ 8,615,026 $ 82,269   $ (81,669 ) $ 8,615,626
Assets $ 112,664,322 $ 40,821,044   $ -   $ 153,485,366

Stockholders' Equity
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Stockholders' Equity
12 Months Ended
Dec. 31, 2011
Stockholders' Equity [Abstract]  
Stockholders' Equity

14. Stockholders' Equity

     On November 12, 2002, the Company's Board of Directors amended the Company's Articles of Incorporation, creating a series of Class A Junior Participating Preferred Stock (the "Class A Preferred Stock"). There are 1,000,000 shares of Preferred Stock authorized and 100,000 of these shares have been designated Class A Junior Participating Preferred Stock. The Class A Preferred Stock is senior to common stock in dividends or distributions of assets upon liquidations, dissolutions or winding up of the Company. Dividends on the Class A Preferred Stock are cumulative and accrue from the quarterly dividend payment date. Each share of Class A Preferred Stock entitles the holder thereof to 100 votes on all matters submitted to a vote of shareholders of the Company. These shares were reserved for issuance under the Shareholder Rights Plan (the "Plan"), which was adopted on November 21, 2002, by the Company's Board of Directors. Under the terms of the Plan, the Company's common stock acquired by a person or a group buying 15% or more of the Company's common stock would be diluted, except in transactions approved by the Board of Directors.

     In connection with the Plan, the Company's Board of Directors declared a dividend distribution of one right (a "Right") for each outstanding share of the Company's common stock paid on December 16, 2002, to shareholders of record at the close of business on December 2, 2002. Each Right entitles the registered holder to purchase from the Company a unit (a "Unit") consisting of one one-hundredth of a share of Class A Preferred Stock at a purchase price of $80 per Unit. Under the Plan, the Rights detach and become exercisable upon the earlier of (a) ten (10) days following public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of the Company's common stock, or (b) ten (10) business days following the commencement of, or first public announcement of the intent of a person or group to commence, a tender offer or exchange offer that would result in a person or group beneficially owning 15% or more of such outstanding shares of the Company's common stock. The exercise price, the kind and the number of shares covered by each right are subject to adjustment upon the occurrence of certain events described in the Plan.

     If any person or group of affiliated or associated persons acquires beneficial ownership of 15% or more of the outstanding common stock, each holder of a Right (other than the acquiring person or group) will have the right to buy, at the exercise price, common stock of the Company having a market value of twice the exercise price. If the Company is acquired in a merger or consolidation in which the Company is not the surviving corporation, or the Company engages in a merger or consolidation in which the Company is the surviving corporation and the Company's common stock is changed or exchanged, or more than 50% of the Company's assets or earning power is sold or transferred, the Rights entitle a holder (other than the acquiring person or group) to buy, at the exercise price, stock of the acquiring company having a market value equal to twice the exercise price. At any time after a person or group of affiliated or associated persons has acquired beneficial ownership of 15% or more of the outstanding common stock and prior to the acquisition by such person or group of 50% or more of the outstanding common stock, the Company's Board of Directors may exchange the Rights (other than the Rights owned by such person or group), in whole or in part, at an exchange ratio of one share of the Company's common stock, or one one-hundredth of a share of Preferred Stock, per Right.

     The Rights expire on November 11, 2012, and are redeemable upon action by the Board of Directors at a price of $0.01 per right at any time before they become exercisable. Until the Rights become exercisable, they are evidenced only by the common stock certificates and are transferred with and only with such certificates.


Concentration Of Credit Risk
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Concentration Of Credit Risk
12 Months Ended
Dec. 31, 2011
Concentration Of Credit Risk [Abstract]  
Concentration Of Credit Risk

15. Concentration of Credit Risk

     Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company invests its cash and cash equivalents into high credit quality security instruments. On November 9, 2010, the Federal Deposit Insurance Corporation, ("FDIC") issued a Final Rule implementing section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that provides for unlimited insurance coverage of noninterest-bearing transaction accounts. Beginning December 31, 2010, through December 31, 2012, all noninterest bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC insured institutions. All other deposits which exceed $250,000, including noninterest bearing transaction accounts prior to December 31, 2010, at each institution are not insured by the FDIC. Of the $18.0 million in cash and cash equivalents on the Consolidated Balance Sheets at December 31, 2011, $1.2 million was not insured by the FDIC. Of the $8.1 million in cash and cash equivalents at December 31, 2010, $3.4 million was not insured by the FDIC.


Business Concentration
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Business Concentration
12 Months Ended
Dec. 31, 2011
Business Concentration [Abstract]  
Business Concentration

16. Business Concentration

     The Company generates a significant amount of title insurance premiums in Texas and North Carolina. In 2011 and 2010, Texas accounted for 32.2% and 3.5% of total title premiums, respectively. In 2011 and 2010, North Carolina accounted for 26.6% and 38.1% of total title premiums, respectively.

In 2011, the Company had one agent that accounted for 22.6% of net premiums written.


Related Party Transactions
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Related Party Transactions
12 Months Ended
Dec. 31, 2011
Related Party Transactions [Abstract]  
Related Party Transactions

17. Related Party Transactions

     The Company does business with, and has investments in, unconsolidated limited liability companies that are primarily title insurance agencies. The Company utilizes the equity method to account for its investments in these limited liability companies. The following table sets forth the approximate values by year found within each financial statement classification:

Financial Statement Classification,        
Consolidated Balance Sheets   2011   2010
Other investments $ 2,328,000 $ 1,682,000
Premium and fees receivable $ 681,000 $ 739,000
 
Financial Statement Classification,        
Consolidated Statements of Income   2011   2010
Net premiums written $ 11,004,000 $ 11,970,000
Other income $ 1,336,000 $ 1,526,000