10-Q


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[ X ]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ___________________  to ___________________

Commission File Number:  0-11774
 
INVESTORS TITLE COMPANY
(Exact name of registrant as specified in its charter)
 
North Carolina
 
56-1110199
 
 
(State of incorporation)
 
(I.R.S. Employer Identification No.)
 
                                        
121 North Columbia Street, Chapel Hill, North Carolina 27514
(Address of principal executive offices)  (Zip Code)

(919) 968-2200
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes     X    No        
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes    X    No        

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):
Large accelerated filer
 
 
Accelerated filer
X
 
Non-accelerated filer
 
 
Smaller reporting company
 
 
 
 
 
 
 
(do not check if a smaller reporting company)
 
 
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   
Yes         No     X   

As of October 15, 2015, there were 1,953,217 common shares of the registrant outstanding.




INVESTORS TITLE COMPANY
AND SUBSIDIARIES

INDEX
 
PART I.
FINANCIAL INFORMATION
 
 
 
 
Item 1.
Financial Statements:
 
 
 
 
 
Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014
 
 
 
 
Consolidated Statements of Income For the Three and Nine Months Ended September 30, 2015 and 2014
 
 
 
 
Consolidated Statements of Comprehensive Income For the Three and Nine Months Ended September 30, 2015 and 2014
 

 
 
Consolidated Statements of Stockholders’ Equity For the Nine Months Ended September 30, 2015 and 2014
 
 
 
 
Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2015 and 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PART II.
OTHER INFORMATION
 
 
 
 
Legal Proceedings
 
 
 
Risk Factors
 
 
 
 
 
 
Item 5.
Other Information
 
 
 
 
 
 
 
 
 
 




PART I.   FINANCIAL INFORMATION

Item 1.  Financial Statements

Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of September 30, 2015 and December 31, 2014
(Unaudited)
 
September 30,
2015
 
December 31,
2014
Assets:
 
 
 
Investments in securities:
 
 
 
Fixed maturities, available-for-sale, at fair value (amortized cost: 2015: $94,114,403; 2014: $104,421,050)
$
98,034,042

 
$
109,048,290

Equity securities, available-for-sale, at fair value (cost: 2015: $24,247,215; 2014: $24,128,753)
35,135,885

 
39,254,981

Short-term investments
13,884,266

 
2,576,993

Other investments
10,069,708

 
8,530,929

Total investments
157,123,901

 
159,411,193

 
 
 
 
Cash and cash equivalents
19,290,813

 
15,826,515

Premium and fees receivable
9,067,775

 
8,544,183

Accrued interest and dividends
1,286,710

 
1,063,837

Prepaid expenses and other assets
8,599,846

 
7,732,677

Property, net
7,176,557

 
5,460,805

Total Assets
$
202,545,602

 
$
198,039,210

 
 
 
 
Liabilities and Stockholders’ Equity
 

 
 

Liabilities:
 

 
 

Reserves for claims
$
37,897,000

 
$
36,677,000

Accounts payable and accrued liabilities
19,441,453

 
18,290,819

Current income taxes payable
248,679

 
92,192

Deferred income taxes, net
5,635,321

 
5,415,493

Total liabilities
63,222,453

 
60,475,504

 
 
 
 
Commitments and Contingencies

 

 
 
 
 
Stockholders’ Equity:
 

 
 

Preferred stock (1,000,000 authorized shares; no shares issued)

 

Common stock - no par value (10,000,000 authorized shares; 1,953,418 and 2,023,270 shares issued and outstanding 2015 and 2014, respectively, excluding 291,676 shares for 2015 and 2014 of common stock held by the Company's subsidiary)
1

 
1

Retained earnings
129,585,111

 
124,707,196

Accumulated other comprehensive income
9,606,451

 
12,856,509

Total stockholders’ equity attributable to the Company
139,191,563

 
137,563,706

Noncontrolling interests
131,586

 

Total stockholders' equity
139,323,149

 
137,563,706

Total Liabilities and Stockholders’ Equity
$
202,545,602

 
$
198,039,210


See notes to the Consolidated Financial Statements.

1



Investors Title Company and Subsidiaries
Consolidated Statements of Income
For the Three and Nine September 30, 2015 and 2014
(Unaudited)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
Net premiums written
$
30,945,532

 
$
26,356,835

 
$
86,372,154

 
$
81,115,940

Investment income - interest and dividends
1,117,529

 
1,064,995

 
3,427,055

 
3,130,846

Net realized (loss) gain on investments
(338,631
)
 
8,689

 
601,336

 
592,908

Other
2,816,828

 
2,077,711

 
7,924,329

 
6,344,163

Total Revenues
34,541,258

 
29,508,230

 
98,324,874

 
91,183,857

 
 
 
 
 
 
 
 
Operating Expenses:
 

 
 
 
 

 
 

Commissions to agents
16,898,323

 
14,440,264

 
48,393,553

 
48,242,923

Provision for claims
703,979

 
1,507,814

 
3,621,401

 
4,177,478

Salaries, employee benefits and payroll taxes
6,957,874

 
6,609,425

 
21,101,955

 
19,250,116

Office occupancy and operations
1,342,288

 
1,257,009

 
4,089,806

 
3,683,980

Business development
568,189

 
552,215

 
1,633,358

 
1,581,872

Filing fees, franchise and local taxes
134,880

 
233,079

 
572,621

 
648,022

Premium and retaliatory taxes
573,336

 
491,927

 
1,684,674

 
1,332,492

Professional and contract labor fees
661,879

 
621,305

 
1,926,469

 
1,976,272

Other
264,012

 
196,702

 
708,918

 
656,653

Total Operating Expenses
28,104,760

 
25,909,740

 
83,732,755

 
81,549,808

 
 
 
 
 
 
 
 
Income before Income Taxes
6,436,498

 
3,598,490

 
14,592,119

 
9,634,049

 
 
 
 
 
 
 
 
Provision for Income Taxes
1,941,000

 
1,004,000

 
4,250,000

 
2,656,000

 
 
 
 
 
 
 
 
Net Income
4,495,498

 
2,594,490

 
10,342,119

 
6,978,049

 
 
 
 
 
 
 
 
Net Income Attributable to Noncontrolling Interests
(4,536
)
 

 
(4,536
)
 
(23,523
)
 
 
 
 
 
 
 
 
Net Income Attributable to the Company
$
4,490,962

 
$
2,594,490

 
$
10,337,583

 
$
6,954,526

 
 
 
 
 
 
 
 
Basic Earnings per Common Share
$
2.28

 
$
1.28

 
$
5.18

 
$
3.42

 
 
 
 
 
 
 
 
Weighted Average Shares Outstanding – Basic
1,967,923

 
2,028,818

 
1,995,120

 
2,033,637

 
 
 
 
 
 
 
 
Diluted Earnings per Common Share
$
2.28

 
$
1.28

 
$
5.17

 
$
3.41

 
 
 
 
 
 
 
 
Weighted Average Shares Outstanding – Diluted
1,972,233

 
2,032,644

 
2,000,043

 
2,038,875

 
 
 
 
 
 
 
 
Cash Dividends Paid per Common Share
$
0.08

 
$
0.08

 
$
0.24

 
$
0.24


See notes to the Consolidated Financial Statements.

2



Investors Title Company and Subsidiaries
Consolidated Statements of Comprehensive Income
For the Three and Nine September 30, 2015 and 2014
(Unaudited)
 
Three Months Ended
 September 30,
 
Nine Months Ended
September 30,
 
2015
 
2014
 
2015
 
2014
Net income
$
4,495,498

 
$
2,594,490

 
$
10,342,119

 
$
6,978,049

Other comprehensive (loss) income, before tax:


 


 
 

 
 

Amortization related to prior year service cost
1,098

 
554

 
3,293

 
1,663

Amortization of unrecognized loss
878

 

 
2,635

 

Unrealized (losses) gains on investments arising during the period
(2,359,495
)
 
(960,948
)
 
(4,223,992
)
 
2,023,167

Reclassification adjustment for sales of securities included in net income
(458,058
)
 
(6,534
)
 
(1,390,070
)
 
(840,170
)
Reclassification adjustment for write-downs of securities included in net income
657,755

 

 
668,904

 

Other comprehensive (loss) income, before tax
(2,157,822
)
 
(966,928
)
 
(4,939,230
)
 
1,184,660

Income tax expense related to postretirement health benefits
672

 
188

 
2,016

 
565

Income tax (benefit) expense related to unrealized (losses) gains on investments arising during the year
(809,994
)
 
(332,034
)
 
(1,446,083
)
 
699,001

Income tax benefit related to reclassification adjustment for sales of securities included in net income
(156,447
)
 
(2,328
)
 
(474,198
)
 
(288,078
)
Income tax expense related to reclassification adjustment for write-downs of securities included in net income
225,293

 

 
229,093

 

Net income tax (benefit) expense on other comprehensive (loss) income
(740,476
)
 
(334,174
)
 
(1,689,172
)
 
411,488

Other comprehensive (loss) income
(1,417,346
)
 
(632,754
)
 
(3,250,058
)
 
773,172

Comprehensive Income
$
3,078,152

 
$
1,961,736

 
$
7,092,061

 
$
7,751,221

Comprehensive income attributable to noncontrolling interests
(4,536
)
 

 
(4,536
)
 
(23,523
)
Comprehensive Income Attributable to the Company
$
3,073,616

 
$
1,961,736

 
$
7,087,525

 
$
7,727,698


See notes to the Consolidated Financial Statements.

3



Investors Title Company and Subsidiaries
Consolidated Statements of Stockholders’ Equity
For the Nine Months Ended September 30, 2015 and 2014
(Unaudited)
 
Common Stock
 
Retained Earnings

 
Accumulated
Other
Comprehensive
Income

 
Noncontrolling Interests

 
Total
Stockholders’
Equity

 
Shares
 
Amount
 
 
 
 
Balance, January 1, 2014
2,037,135

 
$
1

 
$
116,714,749

 
$
11,347,404

 
$

 
$
128,062,154

Net income attributable to the Company
 

 
 

 
6,954,526

 
 

 
 
 
6,954,526

Dividends ($0.24 per share)
 

 
 

 
(488,127
)
 
 

 
 
 
(488,127
)
Shares of common stock repurchased and retired
(9,824
)
 
 

 
(652,657
)
 
 

 
 
 
(652,657
)
Stock options and stock appreciation rights exercised
1,507

 
 

 
27,100

 
 

 
 
 
27,100

Share-based compensation expense
 

 
 

 
88,291

 
 

 
 
 
88,291

Amortization related to postretirement health benefits
 

 
 

 
 

 
1,098

 
 
 
1,098

Net unrealized gain on investments
 

 
 

 
 

 
772,074

 
 
 
772,074

Purchase of redeemable noncontrolling interest of subsidiary
 
 
 
 
(114,320
)
 
 
 
 
 
(114,320
)
Income tax benefit from share-based compensation
 
 
 
 
15,999

 
 
 
 
 
15,999

Balance, September 30, 2014
2,028,818

 
$
1

 
$
122,545,561

 
$
12,120,576

 
$

 
$
134,666,138

 
 
 
 
 
 
 
 
 
 
 
 
Balance, January 1, 2015
2,023,270

 
$
1

 
$
124,707,196

 
$
12,856,509

 
$

 
$
137,563,706

Net income attributable to the Company
 

 
 

 
10,337,583

 
 

 
 
 
10,337,583

Dividends ($0.24 per share)
 

 
 

 
(477,392
)
 
 

 
 
 
(477,392
)
Shares of common stock repurchased and retired
(72,044
)
 
 

 
(5,166,846
)
 
 

 
 
 
(5,166,846
)
Stock options and stock appreciation rights exercised
2,192

 
 

 
54,988

 
 

 
 
 
54,988

Share-based compensation expense
 

 
 

 
102,707

 
 

 
 
 
102,707

Amortization related to postretirement health benefits
 

 
 

 
 

 
3,912

 
 
 
3,912

Net unrealized loss on investments
 

 
 

 
 

 
(3,253,970
)
 
 
 
(3,253,970
)
Net effect of changes in ownership
 
 
 
 
 
 
 
 
127,050

 
127,050

Net income attributable to noncontrolling interests
 
 
 
 
 
 
 
 
4,536

 
4,536

Income tax benefit from share-based compensation
 

 
 

 
26,875

 
 

 
 
 
26,875

Balance, September 30, 2015
1,953,418

 
$
1

 
$
129,585,111

 
$
9,606,451

 
$
131,586

 
$
139,323,149


See notes to the Consolidated Financial Statements.

4



Investors Title Company and Subsidiaries
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2015 and 2014
(Unaudited)
 
Nine Months Ended September 30,
 
2015
 
2014
Operating Activities
 
 
 
Net income
$
10,342,119

 
$
6,978,049

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Depreciation
654,838

 
583,979

Amortization, net
542,841

 
458,635

Amortization related to postretirement benefits obligation
5,928

 
1,663

Share-based compensation expense related to stock options
102,707

 
88,291

Net (gain) loss on the disposals of property
(30,374
)
 
6,487

Net realized gain on investments
(601,336
)
 
(592,908
)
Net earnings from other investments
(1,774,927
)
 
(990,657
)
Provision for claims
3,621,401

 
4,177,478

Provision for deferred income taxes
1,909,000

 
1,468,000

Changes in assets and liabilities:
 

 
 

(Increase) decrease in receivables
(457,484
)
 
261,128

Increase in other assets
(1,110,322
)
 
(1,407,762
)
Increase in current income taxes recoverable

 
(1,257,252
)
Increase (decrease) in accounts payable and accrued liabilities
1,150,634

 
(1,640,499
)
Increase in current income taxes payable
156,487

 

Payments of claims, net of recoveries
(2,401,401
)
 
(3,285,478
)
Net cash provided by operating activities
12,110,111

 
4,849,154

 
 
 
 
Investing Activities
 

 
 

Purchases of available-for-sale securities
(5,794,149
)
 
(13,572,217
)
Purchases of short-term investments
(11,642,357
)
 
(2,923,269
)
Purchases of other investments
(3,164,415
)
 
(1,036,110
)
Proceeds from sales and maturities of available-for-sale securities
16,212,924

 
10,321,679

Proceeds from sales and maturities of short-term investments
335,084

 
4,694,893

Proceeds from sales and distributions of other investments
3,167,494

 
1,050,427

Proceeds from sales of other assets
113,238

 
26,233

Purchase of subsidiary
(72,600
)
 

Purchase of redeemable noncontrolling interest of subsidiary

 
(515,275
)
Purchases of property
(2,313,052
)
 
(1,649,412
)
Proceeds from the sale of property
74,395

 
15,400

Net cash used in investing activities
(3,083,438
)
 
(3,587,651
)
 
 
 
 
Financing Activities
 

 
 

Repurchases of common stock
(5,166,846
)
 
(652,657
)
Exercises of stock options and SARs
54,988

 
27,100

Distributions to noncontrolling interest

 
(168,057
)
Excess tax benefits related to exercise of stock options and SARs
26,875

 
15,999

Dividends paid
(477,392
)
 
(488,127
)
Net cash used in financing activities
(5,562,375
)
 
(1,265,742
)
 
 
 
 
Net Increase (Decrease) in Cash and Cash Equivalents
3,464,298

 
(4,239
)
Cash and Cash Equivalents, Beginning of Period
15,826,515

 
23,626,761

Cash and Cash Equivalents, End of Period
$
19,290,813

 
$
23,622,522


5




Consolidated Statements of Cash Flows, continued
 
 
Nine Months Ended September 30,
 
2015
 
2014
Supplemental Disclosures:
 
 
 
Cash Paid During the Year for:
 
 
 
Income tax payments, net
$
2,727,700

 
$
2,443,000

Non Cash Investing and Financing Activities
 
 
 
Non cash net unrealized loss (gain) on investments, net of deferred tax benefit (provision) of $1,691,188 and $(410,923) for 2015 and 2014, respectively
$
3,253,970

 
$
(772,074
)

See notes to the Consolidated Financial Statements.

6



INVESTORS TITLE COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2015
(Unaudited)

Note 1 - Basis of Presentation and Significant Accounting Policies

Reference should be made to the “Notes to Consolidated Financial Statements” appearing in the Annual Report on Form 10-K for the year ended December 31, 2014 of Investors Title Company (the “Company”) for a complete description of the Company’s significant accounting policies.

Principles of Consolidation – The accompanying unaudited Consolidated Financial Statements include the accounts and operations of Investors Title Company and its subsidiaries, and have been prepared in accordance with generally accepted accounting principles for interim financial information, with the instructions to Form 10-Q and with Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. Earnings attributable to noncontrolling interests in majority-owned insurance agencies, including redeemable noncontrolling interests, are recorded in the Consolidated Statements of Income. Noncontrolling interests representing the portion of equity not related to the Company's ownership interests are recorded in separate sections of the Consolidated Balance Sheets. All intercompany balances and transactions have been eliminated in consolidation.

In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position, results of operations and cash flows of the Company in the accompanying unaudited Consolidated Financial Statements have been included. All such adjustments are of a normal recurring nature. Operating results for the quarter ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

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 premiums and fees receivable.

Use of Estimates and Assumptions – The preparation of the Company’s Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (“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. Actual results could differ from those estimates and assumptions used.

Subsequent Events – The Company has concluded that there were no material subsequent events requiring adjustment to or disclosure in its Consolidated Financial Statements.

Recently Issued Accounting Standards – In February 2015, the Financial Accounting Standards Board (“FASB”) updated guidance to change the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities ("VIEs") or voting interest entities; eliminate the presumption that a general partner should consolidate a limited partnership; affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; and provide a scope exception from consolidation guidance for reporting entities that are required to comply with or operate in accordance with certain requirements similar to those for registered money market funds. For public entities, this update becomes effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted. The Company is currently evaluating the impact that the recently issued accounting standard will have on the Company's financial position and results of operations, but does not expect it to have a material impact.

In May 2014, the FASB updated guidance to improve the comparability of revenue recognition practices for entities that either enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards such as insurance contracts or lease standards. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For public entities, this update originally became effective for interim and annual reporting periods beginning after December 15, 2016. In August 2015, the FASB updated guidance to defer the effective date of the standard by one year. Early adoption is not permitted, although public entities are permitted to elect to adopt the amendments on the original effective date. The Company is currently evaluating the impact that the recently issued accounting standard will have on the Company's financial position and results of operations, but does not expect it to have a material impact.

7




Note 2 - Reserves for Claims

Transactions in the reserves for claims for the nine months ended September 30, 2015 and the year ended December 31, 2014 are summarized as follows:
 
September 30, 2015
 
December 31, 2014
Balance, beginning of period
$
36,677,000

 
$
35,360,000

Provision, charged to operations
3,621,401

 
5,229,716

Payments of claims, net of recoveries
(2,401,401
)
 
(3,912,716
)
Ending balance
$
37,897,000

 
$
36,677,000


The total reserve for all reported and unreported losses the Company incurred through September 30, 2015 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 claims that have been incurred but not yet reported (“IBNR”). Despite the variability of such estimates, management believes that the reserves are adequate to cover claim losses which might result from pending and future claims under title insurance policies issued through September 30, 2015. Management continually reviews and adjusts its reserve estimates to reflect its loss experience and any new information that becomes available. Adjustments resulting from such reviews may be significant.

A summary of the Company’s loss reserves, broken down into its components of known title claims and IBNR, follows:
 
September 30, 2015
 
%
 
December 31, 2014
 
%
Known title claims
$
5,276,778

 
13.9
 
$
5,364,645

 
14.6
IBNR
32,620,222

 
86.1
 
31,312,355

 
85.4
Total loss reserves
$
37,897,000

 
100.0
 
$
36,677,000

 
100.0

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 Company carries assets at the lower of cost or estimated realizable value, net of any indebtedness on the property.

Note 3 - Earnings Per Common Share and Share Awards

Basic earnings per common share is computed by dividing net income attributable to the Company by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income attributable to the Company 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 include 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 services that the Company has not yet recognized; and (c) the amount of estimated tax benefits that would be recorded in retained earnings, if any, are assumed to be used to repurchase shares in the current period. The number of incremental dilutive potential common shares, calculated using the treasury stock method, was 4,310 and 3,826 for the three months ended September 30, 2015 and 2014, respectively, and 4,923 and 5,238 for the nine months ended September 30, 2015 and 2014, respectively.


8



The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Net income attributable to the Company
$
4,490,962

 
$
2,594,490

 
$
10,337,583

 
$
6,954,526

Weighted average common shares outstanding – Basic
1,967,923

 
2,028,818

 
1,995,120

 
2,033,637

Incremental shares outstanding assuming the exercise of dilutive stock options and SARs (share-settled)
4,310

 
3,826

 
4,923

 
5,238

Weighted average common shares outstanding – Diluted
1,972,233

 
2,032,644

 
2,000,043

 
2,038,875

Basic earnings per common share
$
2.28

 
$
1.28

 
$
5.18

 
$
3.42

Diluted earnings per common share
$
2.28

 
$
1.28

 
$
5.17

 
$
3.41


There were 7,500 and 3,000 potential shares excluded from the computation of diluted earnings per share for the three months ended September 30, 2015 and 2014, respectively. There were 4,500 and 0 potential shares excluded from the computation of diluted earnings per share for the nine months ended September 30, 2015 and 2014, respectively. These potential shares were anti-dilutive because the underlying share awards had strike prices that exceeded the fair market value.
 
The Company has adopted employee stock award plans under which restricted stock, and options or stock appreciation rights ("SARs") to acquire 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 generally expire in five to ten years from the date of grant and are exercisable and vest: immediately; within one year; or at 10% to 20% per year beginning on the date of grant. All SARs issued to date have been share-settled only.

A summary of share-based award transactions for all share-based award plans follows:
 
Number
Of Shares
 
Weighted
Average
Exercise Price
 
Average Remaining
Contractual
Term (Years)
 
Aggregate
Intrinsic
Value
Outstanding as of January 1, 2014
19,000

 
$
45.74

 
3.43
 
$
669,610

SARs granted
4,500

 
68.70

 
 
 
 

SARs exercised
(1,500
)
 
49.04

 
 
 
 

Options exercised
(1,000
)
 
27.21

 
 
 
 

Options/SARs canceled/forfeited/expired

 

 
 
 
 

Outstanding as of December 31, 2014
21,000

 
$
51.30

 
3.64
 
$
453,510

SARs granted
4,500

 
73.00

 
 
 
 

SARs exercised
(2,000
)
 
47.88

 
 
 
 

Options exercised
(1,500
)
 
36.79

 
 
 
 

Options/SARs canceled/forfeited/expired

 

 
 
 
 

Outstanding as of September 30, 2015
22,000

 
$
57.04

 
4.18
 
$
355,455

Exercisable as of September 30, 2015
19,750

 
$
55.23

 
3.90
 
$
355,005

Unvested as of September 30, 2015
2,250

 
$
73.00

 
6.64
 
$
450


During the second quarters of both 2015 and 2014, the Company issued a total of 4,500 share-settled SARs to the 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. 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 table shown below. Expected volatilities are based on both the implied and historical volatility of the Company's stock. The Company uses historical data to project SAR exercises and pre-exercise forfeitures within the valuation model. The expected term of awards represents the period of time that SARs granted are expected to be outstanding. The interest rate assumed for the expected life of the award is based on the U.S. Treasury yield curve at the time of the grant. The weighted average fair values for the SARs issued during 2015 and 2014 were $31.16 and $28.98, respectively.


9



The weighted average fair values for SARs issued during 2015 and 2014 were estimated using the weighted average assumptions shown in the table below:
 
2015
 
2014
Expected life in years
7.0

 
6.9

Volatility
40.7
%
 
39.9
%
Interest rate
2.0
%
 
2.1
%
Yield rate
0.4
%
 
0.4
%

There was approximately $103,000 and $88,000 of compensation expense relating to SARs or options vesting on or before September 30, 2015 and 2014, respectively, included in salaries, employee benefits and payroll taxes in the Consolidated Statements of Income. As of September 30, 2015, there was approximately $70,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Company’s stock award plans. That cost is expected to be recognized over a period of approximately 5 months based on weighted average durations.

There have been no stock options or SARs granted where the exercise price was less than the market price on the date of grant.

Note 4 – 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 real estate.

Provided below is selected financial information about the Company's operations by segment for the periods ended September 30, 2015 and 2014:
Three Months Ended September 30, 2015
Title
Insurance
 
All
Other
 
Intersegment
Eliminations
 
Total
Insurance and other services revenues
$
32,583,093

 
$
1,684,088

 
$
(504,821
)
 
$
33,762,360

Investment income
1,000,839

 
140,024

 
(23,334
)
 
1,117,529

Net realized loss on investments
(309,874
)
 
(28,757
)
 

 
(338,631
)
Total revenues
$
33,274,058

 
$
1,795,355

 
$
(528,155
)
 
$
34,541,258

Operating expenses
27,001,636

 
1,590,524

 
(487,400
)
 
28,104,760

Income before income taxes
$
6,272,422

 
$
204,831

 
$
(40,755
)
 
$
6,436,498

Total assets
$
160,754,846

 
$
41,790,756

 
$

 
$
202,545,602

Three Months Ended September 30, 2014
Title
Insurance
 
All
Other
 
Intersegment
Eliminations
 
Total
Insurance and other services revenues
$
27,381,759

 
$
1,517,927

 
$
(465,140
)
 
$
28,434,546

Investment income
956,894

 
131,435

 
(23,334
)
 
1,064,995

Net realized gain on investments
5,781

 
2,908

 

 
8,689

Total revenues
$
28,344,434

 
$
1,652,270

 
$
(488,474
)
 
$
29,508,230

Operating expenses
24,940,774

 
1,416,685

 
(447,719
)
 
25,909,740

Income before income taxes
$
3,403,660

 
$
235,585

 
$
(40,755
)
 
$
3,598,490

Total assets
$
152,813,417

 
$
42,681,883

 
$

 
$
195,495,300


10



Nine Months Ended September 30, 2015
Title
Insurance
 
All
Other
 
Intersegment
Eliminations
 
Total
Insurance and other services revenues
$
90,824,523


$
4,803,604


$
(1,331,644
)

$
94,296,483

Investment income
3,061,857


435,200


(70,002
)

3,427,055

Net realized gain (loss) on investments
604,093


(2,757
)



601,336

Total revenues
$
94,490,473


$
5,236,047


$
(1,401,646
)

$
98,324,874

Operating expenses
80,214,039


4,798,097


(1,279,381
)

83,732,755

Income before income taxes
$
14,276,434


$
437,950


$
(122,265
)

$
14,592,119

Total assets
$
160,754,846


$
41,790,756


$


$
202,545,602

Nine Months Ended September 30, 2014
Title
Insurance
 
All
Other
 
Intersegment
Eliminations
 
Total
Insurance and other services revenues
$
84,257,427

 
$
4,418,659

 
$
(1,215,983
)
 
$
87,460,103

Investment income
2,823,098

 
377,750

 
(70,002
)
 
3,130,846

Net realized gain on investments
536,309

 
56,599

 

 
592,908

Total revenues
$
87,616,834

 
$
4,853,008

 
$
(1,285,985
)
 
$
91,183,857

Operating expenses
78,256,239

 
4,457,289

 
(1,163,720
)
 
81,549,808

Income before income taxes
$
9,360,595

 
$
395,719

 
$
(122,265
)
 
$
9,634,049

Total assets
$
152,813,417

 
$
42,681,883

 
$

 
$
195,495,300


Note 5 – Retirement Agreements and Other Postretirement Benefits

The Company’s subsidiary, Investors Title Insurance Company ("ITIC"), is party to employment agreements with key executives that provide for the continuation of certain employee benefits and other payments due under the agreements upon retirement estimated to total $7,731,000 and $7,111,000 as of September 30, 2015 and December 31, 2014, respectively. The executive employee benefits include health insurance, dental, vision and life insurance and are unfunded. These amounts are classified as accounts payable and accrued liabilities in the Consolidated Balance Sheets. The following sets forth the net periodic benefits cost for the executive benefits for the periods ended September 30, 2015 and 2014:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2015
 
2014
 
2015
 
2014
Service cost – benefits earned during the year
$
4,187

 
$
3,666

 
$
12,561

 
$
11,000

Interest cost on the projected benefit obligation
7,693

 
7,618

 
23,079

 
22,854

Amortization of unrecognized prior service cost
1,098

 
554

 
3,293

 
1,663

Amortization of unrecognized losses
878

 

 
2,635

 

Net periodic benefits costs
$
13,856

 
$
11,838

 
$
41,568

 
$
35,517


Note 6 - Fair Value Measurement
 
Valuation of Financial Assets and Liabilities
 
The FASB has established a valuation hierarchy for disclosure of the inputs 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 are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value.

A financial instrument’s classification within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement – consequently, if there are multiple significant valuation inputs that are categorized in different levels of the hierarchy, the instrument’s hierarchy level is the lowest level (with Level 3 being the lowest level) within which any significant input falls.


11



Debt and Equity Securities

The Level 1 category includes equity securities that are measured at fair value using quoted active market prices.

The Level 2 category includes fixed maturity investments such as corporate bonds, U.S. government and agency bonds and municipal bonds. Fair value is principally based on market values obtained from a third party pricing service. Factors that are used in determining fair market value include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. The Company receives one quote per security from a third party pricing service, although as discussed below, the Company does consult other pricing resources when confirming that the prices it obtains reflect the fair values of the instruments in accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures. Generally, quotes obtained from the pricing service for instruments classified as Level 2 are not adjusted and are not binding. As of September 30, 2015 and December 31, 2014, 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 are classified as Level 2 because the pricing service from which the Company has obtained fair values for these instruments uses valuation models that use observable market inputs in addition to trading prices. Substantially all of the input assumptions used in the service’s model are observable in the marketplace or can be derived or supported by observable market data.

The Level 3 category only includes the Company’s investments in student loan auction rate securities (“ARS”) because quoted prices are unavailable due to the failure of auctions. The Company’s ARS portfolio is comprised entirely of investment grade student loan ARS. The par value of these securities was $1,000,000 as of September 30, 2015 and December 31, 2014, with approximately 97.0% as of both September 30, 2015 and December 31, 2014, guaranteed by the U.S. Department of Education.

Some of the inputs to ARS valuation are unobservable in the market and are significant – therefore, the Company utilizes another third party pricing service to assist in the determination of the fair market value of these securities. This service uses a proprietary valuation model that considers factors such as the following: the financial standing of the issuer; reported prices and the extent of public trading in similar financial instruments of the issuer or comparable companies; the ability of the issuer to obtain required financing; changes in the economic conditions affecting the issuer; pricing by other dealers in similar securities; time to maturity; and interest rates. The following table summarizes some key assumptions the service used to determine the fair value of the ARS portfolio as of September 30, 2015 and December 31, 2014:
 
2015
 
2014
Cumulative probability of earning maximum rate until maturity
—%
 
—%
Cumulative probability of principal returned prior to maturity
95.2%
 
95.2%
Cumulative probability of default at some future point
4.8%
 
4.8%

Significant increases or decreases in any of the inputs in isolation could result in significant changes to the fair value measurement. Generally, increases in default probabilities and liquidity risk premiums lower the fair market value while increases in principal being returned and earning maximum rates increase fair market values.

Based upon these inputs and assumptions, the pricing service provides a range of values to the Company for its ARS. The Company records the fair value based on the midpoint of the range and believes that this valuation is the most reasonable estimate of fair value. In 2015 and 2014, the difference in the low and high values of the ranges was approximately one to four percent of the carrying value of the Company’s ARS.

The following table presents, by level, the financial assets carried at fair value measured on a recurring basis as of September 30, 2015 and December 31, 2014. The table does not include cash on hand and also does not include assets that are measured at historical cost or any basis other than fair value. Level 3 assets are comprised solely of ARS.

12



As of September 30, 2015
Level 1
 
Level 2
 
Level 3
 
Total
Short-term investments
$
13,884,266

 
$

 
$

 
$
13,884,266

Equity securities:
 

 
 

 
 

 
 

Common stock
35,135,885

 

 

 
35,135,885

Fixed maturities:
 

 
 

 
 

 
 

Obligations of U.S. states, territories and political subdivisions*

 
78,912,653

 

 
78,912,653

Corporate debt securities*

 
18,182,389

 
939,000

 
19,121,389

Total
$
49,020,151

 
$
97,095,042

 
$
939,000

 
$
147,054,193

As of December 31, 2014
Level 1
 
Level 2
 
Level 3
 
Total
Short-term investments
$
2,576,993

 
$

 
$

 
$
2,576,993

Equity securities:
 
 
 
 
 
 
 
Common stock and nonredeemable preferred stock
39,254,981

 

 

 
39,254,981

Fixed maturities:
 
 
 
 
 
 
 
Obligations of U.S. states, territories and political subdivisions*

 
85,780,755

 

 
85,780,755

Corporate debt securities*

 
22,328,435

 
939,100

 
23,267,535

Total
$
41,831,974

 
$
108,109,190

 
$
939,100

 
$
150,880,264


*Denotes fair market value obtained from pricing services.

There were no transfers into or out of Levels 1, 2 or 3 during the period.

To help ensure that fair value determinations are consistent with ASC 820, 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 respective service reevaluates the price to corroborate the market information and then reviews inputs to the evaluation in light of potentially new market data. The Company believes that these processes and inputs result in appropriate classifications and fair values consistent with ASC 820.

Other Financial Instruments

The Company uses various financial instruments in the normal course of its business. In the measurement of the fair value of certain financial instruments, other valuation techniques were utilized if quoted market prices were not available. These derived fair value estimates are significantly affected by the assumptions used. Additionally, ASC 820 excludes from its scope certain financial instruments, including those related to insurance contracts, pension and other postretirement benefits, and equity method investments.
 
In estimating the fair value of the financial instruments presented, the Company used the following methods and assumptions:
 
Cash and cash equivalents
 
The carrying amount for cash and cash equivalents is a reasonable estimate of fair value due to the short-term maturity of these investments.
 
Cost-basis investments
 
The estimated fair value of cost-basis investments is calculated from the book value of the underlying entities, which is not materially different from the fair value of the underlying entity. These items are included in other investments in the Consolidated Balance Sheets.
 

13



Accrued dividends and interest
 
The carrying amount for accrued dividends and interest is a reasonable estimate of fair value due to the short-term maturity of these assets.
 
The carrying amounts and fair values of these financial instruments (please note investments are disclosed in a previous table) as of September 30, 2015 and December 31, 2014 are presented in the following table:
As of September 30, 2015
Carrying Value
 
Estimated Fair
Value
 
Level 1
 
Level 2
 
Level 3
Financial assets:
 
 
 
 
 
 
 
 
 
Cash
$
19,290,813

 
$
19,290,813

 
$
19,290,813

 
$

 
$

Cost-basis investments
3,284,868

 
3,553,562

 

 

 
3,553,562

Accrued dividends and interest
1,286,710

 
1,286,710

 
1,286,710

 

 

Total
$
23,862,391

 
$
24,131,085

 
$
20,577,523

 
$

 
$
3,553,562

As of December 31, 2014
Carrying Value
 
Estimated Fair
Value
 
Level 1
 
Level 2
 
Level 3
Financial assets:
 
 
 
 
 
 
 
 
 
Cash
$
15,826,515

 
$
15,826,515

 
$
15,826,515

 
$

 
$

Cost-basis investments
2,516,608

 
2,675,817

 

 

 
2,675,817

Accrued dividends and interest
1,063,837

 
1,063,837

 
1,063,837

 

 

Total
$
19,406,960

 
$
19,566,169

 
$
16,890,352

 
$

 
$
2,675,817


The following table presents a reconciliation of the Company’s assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3), which are all ARS securities, for the period ended September 30, 2015 and the year ended December 31, 2014:
Changes in fair value during the period ended:
2015
 
2014
Beginning balance at January 1
$
939,100

 
$
935,700

Redemptions and sales

 

Realized gain – included in net realized (loss) gain on investments

 

Unrealized loss – included in other comprehensive (loss) income
(100
)
 
3,400

Ending balance, net
$
939,000

 
$
939,100

 
Certain cost-basis investments are measured at estimated fair value on a non-recurring basis, such as investments that are determined to be other-than temporarily impaired during the period and recorded at estimated fair value in the Consolidated Financial Statements as of September 30, 2015 and December 31, 2014. The following table summarizes the corresponding estimated fair value hierarchy of such investments at September 30, 2015 and December 31, 2014 and the related impairments recognized:
As of September 30, 2015
Valuation
Method
 
Impaired
 
Level 1
 
Level 2
 
Level 3
 
Total at
Estimated
Fair
Value
 
Impairment
Losses
Cost-basis investments
Fair Value
 
Yes
 
$

 
$

 
$
163,350

 
$
163,350

 
$
(233,069
)
Total cost-basis investments
 
 
 
 
$

 
$

 
$
163,350

 
$
163,350

 
$
(233,069
)
As of December 31, 2014
Valuation
Method
 
Impaired
 
Level 1
 
Level 2
 
Level 3
 
Total at
Estimated
Fair
Value
 
Impairment
Losses
Cost-basis investments
Fair Value
 
Yes
 
$

 
$

 
$
22,682

 
$
22,682

 
$
(10,062
)
Total cost-basis investments
 
 
 
 
$

 
$

 
$
22,682

 
$
22,682

 
$
(10,062
)

14




Note 7 – Investments in Securities

The aggregate estimated fair value, gross unrealized holding gains, gross unrealized holding losses and cost or amortized cost for securities by major security type are as follows:
As of September 30, 2015
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross Unrealized Losses
 
Estimated Fair Value
Fixed maturities, available-for-sale, at fair value:
 
 
 
 
 
 
 
General obligations of U.S. states, territories and political subdivisions
$
27,857,108

 
$
1,064,674

 
$
35,992

 
$
28,885,790

Special revenue issuer obligations of U.S. states, territories and political subdivisions
47,745,393

 
2,365,492

 
84,022

 
50,026,863

Corporate debt securities
17,587,935

 
619,909

 
25,455

 
18,182,389

Auction rate securities
923,967

 
15,033

 

 
939,000

Total
$
94,114,403

 
$
4,065,108

 
$
145,469

 
$
98,034,042

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

 
 

 
 

 
 

Common stocks
$
24,247,215

 
$
11,612,947

 
$
724,277

 
$
35,135,885

Total
$
24,247,215

 
$
11,612,947

 
$
724,277

 
$
35,135,885

Short-term investments:
 

 
 

 
 

 
 

Money market funds and certificates of deposit
$
13,884,266

 
$

 
$

 
$
13,884,266

Total
$
13,884,266

 
$

 
$

 
$
13,884,266

As of December 31, 2014
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
Fixed maturities, available-for-sale, at fair value:
 
 
 
 
 
 
 
General obligations of U.S. states, territories and political subdivisions
$
35,215,247

 
$
1,527,794

 
$
19,542

 
$
36,723,499

Special revenue issuer obligations of U.S. states, territories and political subdivisions
46,707,033

 
2,405,725

 
55,502

 
49,057,256

Corporate debt securities
21,576,641

 
823,133

 
71,339

 
22,328,435

Auction rate securities
922,129

 
16,971

 

 
939,100

Total
$
104,421,050

 
$
4,773,623

 
$
146,383

 
$
109,048,290

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

 
 

 
 

 
 

Common stocks and nonredeemable preferred stocks
$
24,128,753

 
$
15,225,459

 
$
99,231

 
$
39,254,981

Total
$
24,128,753

 
$
15,225,459

 
$
99,231

 
$
39,254,981

Short-term investments:
 

 
 

 
 

 
 

Money market funds and certificates of deposit
$
2,576,993

 
$

 
$

 
$
2,576,993

Total
$
2,576,993

 
$

 
$

 
$
2,576,993



15



The special revenue category for both periods presented includes at least 50 individual bonds with revenue sources from a variety of industry sectors.

The scheduled maturities of fixed maturity securities at September 30, 2015 were as follows:
 
Available-for-Sale
 
Amortized
Cost
 
Fair
Value
Due in one year or less
$
8,587,887

 
$
8,741,312

Due after one year through five years
47,565,502

 
49,628,257

Due five years through ten years
35,968,475

 
37,206,814

Due after ten years
1,992,539

 
2,457,659

Total
$
94,114,403

 
$
98,034,042


Realized gains and losses on investments for the nine months ended September 30 are summarized as follows:
 
2015
 
2014
Gross realized gains:
 

 
 

Corporate debt securities
$
5,417

 
$
4,286

Common stocks and nonredeemable preferred stocks
1,436,386

 
1,013,931

Total
$
1,441,803

 
$
1,018,217

Gross realized losses:
 

 
 

General obligations of U.S. states, territories and political subdivisions
$
(12,319
)
 
$

Special revenue issuer obligations of U.S. states, territories and political subdivisions
(397
)
 

Common stocks and nonredeemable preferred stocks
(39,017
)
 
(178,047
)
Impairments of bonds, debt and equity securities
(668,904
)
 

Total
$
(720,637
)
 
$
(178,047
)
Net realized gain from securities
$
721,166

 
$
840,170

Net realized (losses) gains on other investments:
 
 
 
Impairments of other investments
$
(233,069
)
 
$
(10,062
)
Gains on other investments
113,239

 
26,234

Losses on other investments

 
(263,434
)
Total
$
(119,830
)
 
$
(247,262
)
Net realized gain on investments
$
601,336

 
$
592,908


Realized gains and losses are determined on the specific identification method.  

The following table presents the gross unrealized losses on investment securities and the fair value of the securities, aggregated by investment category and length of time that individual securities have been in a continuous loss position at September 30, 2015 and December 31, 2014:
 
Less than 12 Months
 
12 Months or Longer
 
Total
As of September 30, 2015
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
General obligations of U.S. states, territories and political subdivisions
$
2,387,882

 
$
(35,992
)
 
$

 
$

 
$
2,387,882

 
$
(35,992
)
Special revenue issuer obligations of U.S. states, territories and political subdivisions
6,995,291

 
(74,308
)
 
1,200,232

 
(9,714
)
 
8,195,523

 
(84,022
)
Corporate debt securities
1,472,615

 
(25,455
)
 

 

 
1,472,615

 
(25,455
)
Total fixed income securities
$
10,855,788

 
$
(135,755
)
 
$
1,200,232

 
$
(9,714
)
 
$
12,056,020

 
$
(145,469
)
Equity securities
$
4,336,722

 
$
(630,150
)
 
$
92,475

 
$
(94,127
)
 
$
4,429,197

 
$
(724,277
)
Total temporarily impaired securities
$
15,192,510

 
$
(765,905
)
 
$
1,292,707

 
$
(103,841
)
 
$
16,485,217

 
$
(869,746
)

16



 
Less than 12 Months
 
12 Months or Longer
 
Total
As of December 31, 2014
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
General obligations of U.S. states, territories and political subdivisions
$
2,113,194

 
$
(19,542
)
 
$