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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: March 31, 2003
----------------
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 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 is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes No X
--- ---
As of May 1, 2003, there were 2,855,744 outstanding shares of common stock of
Investors Title Company, including 365,447 shares held by Investors Title
Insurance Company, a wholly-owned subsidiary of Investors Title Company.
1
INVESTORS TITLE COMPANY
AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 2003
and December 31, 2002..............................................1
Consolidated Statements of Income:
Three Months Ended March 31, 2003 and 2002.........................2
Consolidated Statements of Cash Flows:
Three Months Ended March 31, 2003 and 2002.........................3
Notes to Consolidated Financial Statements.........................4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations...............................................7
Item 3. Quantitative and Qualitative Disclosures About Market Risk .........10
Item 4. Controls and Procedures.............................................10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K....................................10
SIGNATURES...................................................................11
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
---------------------
Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of March 31, 2003 and December 31, 2002
March 31, 2003 December 31, 2002
---------------------------------------------
(Unaudited) (Audited)
Assets
Cash and cash equivalents $ 5,289,205 $ 3,781,961
Investments in securities:
Fixed maturities:
Held-to-maturity, at amortized cost 4,191,196 4,395,081
Available-for-sale, at fair value 51,988,574 52,491,648
Equity securities, at fair value 7,761,187 7,884,928
Other investments 1,047,159 564,782
---------------- -------------
Total investments 64,988,116 65,336,439
Premiums receivable, less allowance for doubtful accounts of 8,052,168 7,949,904
$1,875,000 and $1,800,000 for 2003 and 2002, respectively
Accrued interest and dividends 652,101 720,902
Prepaid expenses and other assets 927,799 1,095,230
Property acquired in settlement of claims 759,431 749,562
Property, net 4,099,541 4,109,885
Deferred income taxes, net 681,540 893,263
---------------- -------------
Total Assets $ 85,449,901 $ 84,637,146
================ =============
Liabilities and Stockholders' Equity
Liabilities:
Reserves for claims (Note 2) $ 26,075,000 $ 25,630,000
Accounts payable and accrued liabilities 2,622,944 4,780,865
Commissions and reinsurance payables 298,871 401,040
Premium taxes payable 413,530 268,972
Current income taxes payable 997,963 888,085
---------------- -------------
Total liabilities 30,408,308 31,968,962
---------------- -------------
Stockholders' Equity:
Class A Junior Participating preferred stock
(shares authorized 100,000; no shares issued) - -
Common stock-no par value (shares authorized 10,000,000;
2,510,379 and 2,515,804 shares issued and outstanding 2003 and 2002,
respectively, excluding 345,365 and 339,940 shares 2003 and 2002,
respectively, of common stock held by the Company's subsidiary) 1 1
Retained earnings 52,008,343 49,613,044
Accumulated other comprehensive income, net of deferred taxes of
$1,563,154 and $1,574,431 for 2003 and 2002, respectively (Note 3) 3,033,249 3,055,139
---------------- -------------
Total stockholders' equity 55,041,593 52,668,184
---------------- -------------
Total Liabilities and Stockholders' Equity $ 85,449,901 $ 84,637,146
================ =============
See notes to consolidated financial statements.
1
Investors Title Company and Subsidiaries
Consolidated Statements of Income
For the Three Months Ended March 31, 2003 and 2002
(Unaudited)
2003 2002
----------- ----------
Revenues:
Underwriting income:
Premiums written $ 19,840,174 $ 14,783,848
Less-premiums for reinsurance ceded 97,189 103,123
----------- -----------
Net premiums written 19,742,985 14,680,725
Investment income - interest and dividends 674,578 669,038
Net realized gain on sales of investments 23,047 285,807
Other 662,833 434,003
----------- -----------
Total 21,103,443 16,069,573
----------- -----------
Operating Expenses:
Commissions to agents 9,392,790 7,009,679
Provision for claims (Note 2) 2,083,038 1,679,411
Salaries, employee benefits and payroll taxes 3,547,057 2,938,591
Office occupancy and operations 1,097,116 1,200,397
Business development 380,952 388,121
Taxes, other than payroll and income 54,123 76,237
Premium and retaliatory taxes 421,286 329,766
Professional fees 207,344 210,255
Other 126,931 37,937
----------- -----------
Total 17,310,637 13,870,394
----------- -----------
Income Before Income Taxes 3,792,806 2,199,179
Provision For Income Taxes 1,184,245 652,000
----------- -----------
Net Income $ 2,608,561 $ 1,547,179
=========== ===========
Basic Earnings Per Common Share (Note 4) $ 1.04 $ 0.61
=========== ===========
Weighted Average Shares Outstanding - Basic (Note 4) 2,513,507 2,516,555
=========== ===========
Diluted Earnings Per Common Share (Note 4) $ 1.00 $ 0.60
=========== ===========
Weighted Average Shares Outstanding - Diluted (Note 4) 2,610,242 2,585,773
=========== ===========
Dividends Paid $ 75,471 $ 73,904
=========== ===========
Dividends Per Share $ 0.03 $ 0.03
=========== ===========
See notes to consolidated financial statements.
2
Investors Title Company and Subsidiaries
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2003 and 2002
(Unaudited)
2003 2002
------------------ ------------------
Operating Activities:
Net income $ 2,608,561 $ 1,547,179
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 198,341 280,317
Amortization, net 5,867 5,372
Issuance of common stock in payment of bonuses and fees 5,014 27,338
Provision for losses on premiums receivable 75,000 -
Net loss on disposals of property 2,128 2,320
Net realized gain on sales of investments (23,047) (285,807)
Provision (benefit) for deferred income taxes 223,000 (84,400)
Changes in assets and liabilities:
Decrease in receivables and other assets 49,099 1,121,530
Decrease in accounts payable and accrued liabilities (2,157,921) (942,952)
Increase (decrease) in commissions and reinsurance
payables (102,169) 2,751
Increase (decrease) in premium taxes payable 144,558 (171,974)
Increase in current income taxes payable 109,878 620,914
Provision for claims 2,083,038 1,679,411
Payments of claims, net of recoveries (1,638,038) (887,411)
------------------ ------------------
Net cash provided by operating activities 1,583,309 2,914,588
------------------ ------------------
Investing Activities:
Purchases of available-for-sale securities (2,317,518) (4,160,011)
Purchases of held-to-maturity securities (3,035) (162,470)
Purchases of other securities (486,000) (257,800)
Proceeds from sales of available-for-sale securities 2,928,643 2,676,095
Proceeds from sales of held-to-maturity securities 205,000 258,750
Proceeds from other securities 5,246 -
Purchases of property (190,310) (73,988)
Proceeds from sales of property 185 665
------------------ ------------------
Net cash provided by (used in) investing activities 142,211 (1,718,759)
------------------ ------------------
Financing Activities:
Repurchases of common stock (174,691) (14,354)
Exercise of options 31,886 890
Dividends paid (75,471) (73,904)
------------------ ------------------
Net cash used in financing activities (218,276) (87,368)
------------------ ------------------
Net Increase in Cash and Cash Equivalents 1,507,244 1,108,461
Cash and Cash Equivalents, Beginning of Year 3,781,961 3,069,929
------------------ ------------------
Cash and Cash Equivalents, End of Period $ 5,289,205 $ 4,178,390
================== ==================
Supplemental Disclosures:
Cash Paid During the Year for:
Income Taxes, net of refunds $ 862,000 $ 118,000
================== ==================
Noncash Financing Activities:
Bonuses and fees totaling $5,014 and $27,338 were paid for the three months
ended March 31, 2003 and 2002, respectively, by issuance of the Company's common
stock.
See notes to consolidated financial statements.
3
INVESTORS TITLE COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
------------------------------------------
March 31, 2003
(Unaudited)
Note 1 - Basis of Presentation
- ------------------------------
Reference should be made to the "Notes to Consolidated Financial Statements" of
the Company's Annual Report to Shareholders for the year ended December 31, 2002
for a complete description of the Company's significant accounting policies.
Principles of consolidation - The unaudited consolidated financial statements
include the accounts and operations of Investors Title Company and its
subsidiaries, and have been prepared in conformity with accounting principles
generally accepted in the United States of America. All intercompany balances
and transactions have been eliminated in consolidation.
In the opinion of management, all necessary adjustments have been reflected for
a fair presentation of the financial position, results of operations and cash
flows in the accompanying unaudited consolidated financial statements. All such
adjustments are of a normal recurring nature.
Reclassification - Certain 2002 amounts have been reclassified to conform to
2003 classifications.
Earnings per share - Basic net income per share information is computed using
the weighted average number of shares of common stock outstanding during the
period. Diluted net income per common share is computed using the weighted
average number of shares of common and dilutive potential common shares
outstanding during the period.
Recent Accounting Pronouncements - In June 2002, the Financial Accounting
Standards Board (the "FASB") issued Statement of Financial Accounting Standards
No. 146, Accounting for Costs Associated with Exit or Disposal Activities ("SFAS
No. 146"). SFAS No. 146 addresses accounting and reporting for costs associated
with exit or disposal activities and supercedes Emerging Issues Task Force Issue
No. 94-3, Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (Including Certain Costs Incurred in a
Restructuring). SFAS No. 146 requires that a liability for a cost associated
with an exit or disposal activity be recognized and measured initially at fair
value when the liability is incurred. SFAS No. 146 is effective for exit or
disposal activities that are initiated after December 31, 2002. The adoption of
this statement had no material impact on the financial statements.
FASB Interpretation No. 45, Guarantor's Accounting and Disclosures Requirements
for Guarantees, including Indirect Guarantees of Indebtedness of Others, became
effective on December 31, 2002. This Interpretation addresses the disclosure
requirements for guarantees and indemnification agreements entered into by the
entity. The implementation of this pronouncement did not have any effect on the
Company's financial statements.
Stock-Based Compensation - The Company accounts for stock-based compensation
based on the provisions of Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued
4
to Employees ("APB No. 25"), which states that, for fixed plans, no compensation
expense is recorded for stock options or other stock-based awards to employees
that are granted with an exercise price equal to or above the estimated fair
value per share of the Company's common stock on the grant date. In the event
that stock options are granted with an exercise price below the estimated fair
value of the Company's common stock at the grant date, the difference between
the fair value of the Company's common stock and the exercise price of the stock
option is recorded as deferred compensation. Deferred compensation is amortized
to compensation expense over the vesting period of the stock option. The Company
has adopted the disclosure requirements of Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation ("SFAS No. 123"), and
Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment to FASB Statement No.
123, which together require compensation expense to be disclosed based on the
fair value of the options granted at the date of the grant.
Had compensation cost for the Company's stock option plan been determined based
on the fair value at the grant dates for awards under the plan consistent with
the method required by SFAS No. 123, the Company's net income and diluted net
income per common share would have been the pro forma amounts indicated in the
following table:
For the Three-Month Periods Ended
March 31
---------------------------------------
2003 2002
---------------------------------------
Net income as reported $ 2,608,561 $ 1,547,179
Less: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax effects (37,913) (29,504)
---------------------------------------
Pro forma net income $ 2,570,648 $ 1,517,675
============== ============
Net income per share:
Basic - as reported $ 1.04 $ 0.61
Basic - pro forma $ 1.02 $ 0.60
Diluted - as reported $ 1.00 $ 0.60
Diluted - pro forma $ 0.98 $ 0.59
5
Note 2 - Reserves for Claims
- ----------------------------
Transactions in the reserves for claims for the three months ended March 31,
2003 and the twelve months ended December 31, 2002 were as follows:
March 31, 2003 December 31, 2002
---------------------- ---------------------------
Balance, beginning of year $ 25,630,000 $ 21,460,000
Provision, charged to operations 2,083,038 6,871,822
Payments of claims, net of recoveries (1,638,038) (2,701,822)
-------------- -------------
Ending balance $ 26,075,000 $ 25,630,000
============== =============
In management's opinion, the reserves are adequate to cover claim losses which
might result from pending and possible claims.
Note 3 - Comprehensive Income
- -----------------------------
Total comprehensive income for the three months ended March 31, 2003 and 2002
was $2,586,671 and $1,300,961, respectively. Other comprehensive income is
comprised solely of unrealized gains or losses on the Company's
available-for-sale securities.
Note 4 - Earnings Per Common Share
- ----------------------------------
Employee stock options are considered outstanding for the diluted earnings per
common share calculation and are computed using the treasury stock method. The
total increase in the weighted average shares outstanding related to these
equivalent shares was 96,735 and 69,218 for the three months ended March 31,
2003 and 2002, respectively. Options to purchase 313,021 and 288,566 shares of
common stock were outstanding for the three months ended March 31, 2003 and
2002, respectively. Of the total options outstanding, 60,436 and 54,686 options
were not included in the computation of diluted EPS for the three months ended
March 31, 2003 and 2002, respectively because the options' exercise prices were
greater than the average market price of the common shares.
Note 5 - Segment Information
- ----------------------------
Income
Three Months Operating Before
Ended Revenues Income Taxes Assets
---------------------------------------------------------------------------------------------------------
March 31, 2003
---------------------------------------------------------------------------------------------------------
Title Insurance $20,066,446 $ 3,733,657 $78,237,765
Exchange Services 101,089 (34,880) 336,576
All Other 238,283 94,029 6,875,560
---------------------------------------------------------------------------------------------------------
$20,405,818 $ 3,792,806 $85,449,901
---------------------------------------------------------------------------------------------------------
March 31, 2002
---------------------------------------------------------------------------------------------------------
Title Insurance $14,823,720 $ 2,147,332 $66,951,379
Exchange Services 106,255 (20,302) 242,881
All Other 184,753 72,149 4,567,110
---------------------------------------------------------------------------------------------------------
$15,114,728 $ 2,199,179 $71,761,370
---------------------------------------------------------------------------------------------------------
6
Operating revenues represent net premiums written and other revenues, excluding
investment income and net realized gain on sales of investments.
Note 6 - Commitments and Contingencies
- --------------------------------------
The Company and its subsidiaries are involved in various routine legal
proceedings that are incidental to their business. All of these proceedings
arose in the ordinary course of business and, in the Company's opinion, 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.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
------------------------------------------------------------------------
of Operations
-------------
The Company's 2002 Form 10-K and 2002 Annual Report to Shareholders should be
read in conjunction with the following discussion since they contain important
information for evaluating the Company's operating results and financial
condition.
Critical Accounting Policies:
- ------------------------------
During the quarter ended March 31, 2003, the Company made no changes in its
critical accounting policies as previously disclosed within the Company's Annual
Report on Form 10-K for the year ended December 31, 2002.
Results of Operations:
- ----------------------
For the quarter ended March 31, 2003, net premiums written increased 34% to
$19,742,985, investment income increased 1% to $674,578, revenues increased 31%
to $21,103,443 and net income increased 69% to $2,608,561, all compared with the
same quarter in 2002. Net income per basic and diluted common share increased
70% and 67%, respectively, to $1.04 and $1.00, as compared with the same prior
year period. For the quarter ended March 31, 2003, the title insurance segment's
operating revenues increased 35% versus the first three months of 2002, while
the exchange services segment's revenues decreased 5% for the three months ended
March 31, 2003, compared with the same quarter in 2002.
Operating results continued to be driven by low interest rates and ongoing
strength in mortgage lending. Mortgage interest rates drifted lower from the
levels of the previous quarter supporting strong demand for both refinancing and
home sales in the face of a sluggish economy. According to the Freddie Mac
Weekly Mortgage Rate Survey, the monthly average 30-year fixed mortgage interest
rates decreased to an average of 5.84% for the quarter ended March 31, 2003,
compared with 6.97% for the quarter ended March 31, 2002. The volume of business
increased in the first quarter of 2003 as the number of policies and commitments
issued rose to 98,227, an increase of 34.4% compared with 73,082 in the same
period in 2002.
Branch net premiums written as a percentage of total net premiums written were
36% for both the three months ended March 31, 2003 and 2002. Net premiums
written from branch operations increased 34% and 22% for the three months ended
March 31, 2003 and 2002, respectively, as compared with the same period in the
prior year.
7
Agency net premiums written as a percentage of total net premiums written were
64% for both the three months ended March 31, 2003 and 2002. Agency net premiums
increased 35% and 32% for the three months ended March 31, 2003 and 2002,
respectively, as compared with the same period in the prior year.
Shown below is a schedule of premiums written for the three months ended March
31, 2003 and 2002 in all states in which the Company's two insurance
subsidiaries, Investors Title Insurance Company and Northeast Investors Title
Insurance Company, currently underwrite insurance:
State 2003 2002
----- ---- ----
Alabama $ 283,964 $ 144,395
Arkansas 12,018 -
District of Columbia 3,025 -
Florida 14,980 -
Georgia (9,487) (33,505)
Illinois 313,331 -
Indiana 86,965 2,984
Kentucky 431,100 257,156
Louisiana 1,204 -
Maryland 404,913 300,362
Michigan 1,896,418 2,227,176
Minnesota 607,769 392,241
Mississippi 237,484 223,025
Missouri 6,582 -
Nebraska 494,856 200,666
New Jersey 17,084 3,545
New York 1,412,888 825,582
North Carolina 7,067,357 5,229,578
Ohio 24,286 1,440
Pennsylvania 1,563,339 916,885
South Carolina 1,572,149 1,127,063
Tennessee 925,698 737,215
Virginia 2,024,708 1,831,338
West Virginia 444,058 382,719
Wisconsin (100) 3,330
--------------------- ---------------------
Direct Premiums 19,836,589 14,773,195
Reinsurance Assumed 3,585 10,653
Reinsurance Ceded (97,189) (103,123)
--------------------- ---------------------
Net Premiums $19,742,985 $14,680,725
===================== =====================
Total operating expenses increased 25% for the three-month period ended March
31, 2003, compared with the same period in 2002. This was due primarily to an
increase in commission expense as a result of increased business from agent
sources. The increase in volume of premiums
8
and costs associated with entering and supporting new markets also contributed
to the increase in operating expenses.
The provision for claims as a percentage of net premiums written was 10.55% for
the three months ended March 31, 2003, versus 11.44% for the same period in
2002. The decrease in the percentage of the provision for claims to net premiums
written is primarily the result of improved claims experience.
The provision for income taxes was 31.22% of income before income taxes for the
three months ended March 31, 2003, versus 29.65% for the same period in 2002.
The increase in the tax provision was primarily due to a lower mix of tax-exempt
investment income to taxable income in 2003 compared with 2002.
Liquidity and Capital Resources:
- --------------------------------
Net cash provided by operating activities for the three months ended March 31,
2003, amounted to $1,578,295 compared with $2,887,250 for the same three-month
period of 2002. The decrease is primarily the result of a decrease in accounts
payable and accrued liabilities, primarily due to the payment of accrued bonuses
and retirement contributions, and an increase in payments of claims, net of
recoveries offset by an increase in net income.
On May 9, 2000, the Board of Directors approved the repurchase of 500,000 shares
of the Company's common stock. Pursuant to this approval, the Company
repurchased 59,172 shares at an average price of $17.06 per share. For the three
months ended March 31, 2003 and 2002, a total of 7,854 and 775 shares at an
average price of $22.24 and $18.52 per share, respectively, were repurchased.
During the three months ended March 31, 2003, the Company repurchased common
stock for $174,691 and issued common stock totaling $36,900 in satisfaction of
stock option exercises, stock bonuses and other stock issuances.
Management believes that funds generated from operations (primarily underwriting
and investment income) will enable the Company to adequately meet its operating
needs and is unaware of any trend likely to result in adverse liquidity changes.
In addition to operational liquidity, the Company maintains a high degree of
liquidity within the investment portfolio in the form of short-term investments
and other readily marketable securities.
Safe Harbor Statement
- ---------------------
Except for the historical information presented, the matters disclosed in the
foregoing discussion and analysis and other parts of this report include
forward-looking statements. These statements represent the Company's current
judgment on the future and are subject to risks and uncertainties that could
cause actual results to differ materially. Such factors include, without
limitation: (1) that the demand for title insurance will vary due to factors
beyond the control of the Company such as changes in mortgage interest rates,
availability of mortgage funds, level of real estate activity, cost of real
estate, consumer confidence, supply and demand for real estate, inflation and
general economic conditions; (2) that losses from claims may be greater than
anticipated such that reserves for possible claims are inadequate; (3) that
unanticipated adverse changes in securities markets could result in material
losses on investments made by the Company; and (4) the
9
Company's dependence on key management personnel, the loss of whom could have a
material adverse effect on the Company's business. Other risks and uncertainties
may be described from time to time in the Company's other reports and filings
with the Securities and Exchange Commission.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
The Company's market risk exposure has not changed materially from the exposure
as disclosed in the Company's 2002 Annual Report on Form 10-K.
Item 4. Controls and Procedures
-----------------------
Based on their evaluation of the Company's disclosure controls and procedures,
which was completed within 90 days prior to the filing of this report, the Chief
Executive Officer and the Chief Financial Officer of the Company concluded that
the Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the Securities and Exchange Act of 1934, as amended, is
recorded, processed, summarized and reported, within the time periods specified
by the Securities and Exchange Commission's rules and forms. In reaching this
conclusion, the Company's Chief Executive Officer and Chief Financial Officer
determined that the Company's disclosure controls and procedures are effective
in ensuring that such information is accumulated and communicated to the
Company's management to allow timely decisions regarding required disclosure.
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
3(iv) Articles of Amendment to Articles of Incorporation
99(i) Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
During the quarterly period covered by this report, the Company did not
file any reports on Form 8-K.
10
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed in its
behalf by the undersigned hereunto duly authorized.
INVESTORS TITLE COMPANY
By: /s/ James A. Fine, Jr.
----------------------
James A. Fine, Jr.
President, Principal Financial Officer and
Principal Accounting Officer
Dated: May 14, 2003
11