Investors Title Company (ITIC Quick QuoteITIC - Free Report) reported earnings per share of $4.92 for the third quarter of 2024, up from $3.75 per share in the same quarter of the previous year. This marks a notable increase, reflecting 31% year-over-year growth in earnings per share. 

Revenues for the quarter rose to $68.8 million, a 12.1% increase from the prior year's $61.4 million. The growth in revenues was attributed primarily to an expansion in net premiums written, supported by successful entry and growth in the Texas and Florida markets, alongside a positive swing in investment gains.

The company’s overall quarterly performance highlighted robust operational resilience and improved profitability. Management commentary underscored the company’s success in navigating a challenging environment while maintaining growth. Chairman J. Allen Fine noted that rising agent-sourced premiums, cost-saving measures and improved investment returns contributed to the positive financial results. 

Despite industry-wide challenges, including reduced transaction volumes compared to pre-pandemic levels, the company saw stabilization in activity. Notably, market conditions improved slightly in the third quarter compared to the second quarter, with the Federal Reserve’s monetary easing contributing to a marginal reduction in interest rates, albeit tempered by stronger-than-expected economic data.

Key Business Metrics

Net Premiums Written

Net premiums written, a core metric for title insurance companies, showed an improvement, totaling $54.9 million, up from $49.8 million in the prior-year quarter, reflecting growth of approximately 10%. This was largely attributed to an increase in the volume of agent premiums, particularly in newly entered markets in Texas and Florida. While the agency premiums constituted the bulk, direct premiums saw a minor reduction, indicating a strategic pivot toward agent-driven growth, which increased from 64.9% to 70.3% of the total premium volume over the last year.

Investment Gains and Income

Investment income, comprising interest, dividends, and gains from investments, saw notable growth. Net investment gains amounted to $1 million for the quarter, a substantial improvement over a $0.8 million loss in the same period last year. This positive shift, alongside an increase in dividends and interest, was primarily driven by the favorable market valuation of equity securities.

Operating Expenses

Total operating expenses rose 8.4% to $57.2 million, driven primarily by higher commissions paid to agents, aligned with the increase in agent-sourced premium volume. However, Investors Title effectively contained personnel expenses by optimizing staffing levels, leading to a marginal decrease in these costs year over year. Office and technology expenses remained largely stable, indicating effective cost management measures. Overall, while expenses rose, the increase was well-contained relative to revenue growth, supporting improved operating margins.

Income Before Taxes

Income before income taxes reached $11.6 million for the third quarter of 2024, an increase from $8.6 million in the prior-year period. On an adjusted basis, excluding net investment gains and losses, income before taxes was $10.6 million, up from $9.4 million a year earlier. This 12.8% rise in adjusted income reflects enhanced operational performance and a favorable business mix driven by effective cost management and strategic growth in agent-focused markets.

Net Income

Net income for the third quarter of 2024 rose to $9.3 million, marking an increase from $7.1 million in the same period the prior year. This represents an impressive 31% year-over-year increase, driven by stronger revenue generation and effective cost control. The increase in net income was bolstered by higher premiums, especially from agent-sourced markets, and a favorable turnaround in investment gains.

Balance Sheet Update (As of Sept. 30, 2024)

Investors Title held $25.5 million in cash and cash equivalents, reflecting a modest increase from $24 million at the end of 2023. 

Total assets for the company rose to $352 million, up from $330.6 million as of Dec. 31, 2023. 

Lease liabilities slightly decreased to $6.1 million from $6.4 million at year-end 2023. 

Stockholders’ equity saw a meaningful rise, reaching $271.3 million compared to $251.6 million at the end of 2023.