News Column

A.M. Best Assigns Ratings to Investors Title Company, Inc. and Its Subsidiaries

May 23, 2014



OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has assigned a financial strength rating of A (Excellent) and issuer credit ratings (ICR) of ďaĒ to the two subsidiaries of Investors Title Company, Inc.(ITIC) [Nasdaq:ITIC]: Investors Title Insurance Company and National Investors Title Insurance Company (Columbia, SC). The companies are collectively referred to as the Investors Title Company Group (ITC Group). A.M. Best also has assigned an ICR of ďbbbĒ to ITIC. The outlook assigned to all ratings is stable. All companies are domiciled in Chapel Hill, NC, unless otherwise specified.

The assigned ratings reflect ITC Groupís excellent capitalization as evidenced by its conservative underwriting leverage ratios, which are relatively modest compared to the title industry as a whole. In 2013, the groupís statutory surplus level increased for the fifth straight year. The groupís operating results have been consistently favorable in recent years, posting an underwriting profit in each of the past five years, and net pre-tax operating results have been solid throughout this period. ITC Groupís favorable results are partly due to its efforts to carefully manage its expense structure while limiting losses, including those from agency defalcations, through comprehensive reinsurance protection and instituting extensive safeguards in the selecting, monitoring and auditing of its title agency force and other providers. Partly as a result of these initiatives, the group has incurred no material defalcation losses in the last five years. ITC Group also has availed itself of additional protections against such losses through the use of escrow security bonds as well as fidelity coverage provided by high quality reinsurers. Additionally, the group has taken initiatives to diversify its book of business by reducing its concentration in North Carolina, its largest state, which previously represented nearly half of its book, to approximately 25% as of year-end 2013. ITC Group also has expanded its geographic footprint in recent years into more than 20 states, including Texas, which is currently its second-largest state. Furthermore, while its North Carolina business continues to be conducted primarily through directly owned branches, the group distributes its business in Texas and other states primarily through independent agents, which has resulted in greater diversification of its distribution channels.

The current economic environment and housing market conditionsóboth of which determine the future revenue and earnings potential of title insurersóhave somewhat improved in recent quarters. However, uncertainties remain as to the future direction of U.S. monetary policy and its effect on long-term interest rates, which drive title insurance activity, as well as the effect on the macroeconomic environment of potential geo-political events. Nevertheless, combined with ITC Groupís expense and risk management efforts, these generally improving conditions have produced steadily increasing operating earnings in the past five years, with particularly robust results in 2012 and 2013, along with continued favorable operating results in the first quarter of 2014.

While the group is well positioned to maintain its current rating level in the near term, any significant volatility in operating performance and/or erosion of its risk-adjusted capitalization may result in negative pressure on its current ratings and/or stable outlook.

The methodology used in determining these ratings is Bestís Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestís rating process and contains the different rating criteria employed in the rating process. Bestís Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.





A.M. Best

Senior Financial Analyst

Neil Das Gupta, 908-439-2200, ext. 5206

neil.dasgupta@ambest.com

or

Senior Manager, Public Relations

Rachelle Morrow, 908-439-2200, ext. 5378

rachelle.morrow@ambest.com

or

Assistant Vice President

Gary A. Davis, 908-439-2200, ext. 5665

gary.davis@ambest.com

or

Assistant Vice President, Public Relations

Jim Peavy, 908-439-2200, ext. 5644

james.peavy@ambest.com


Source: A.M. Best


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Source: Business Wire