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Mar 31, 2020
Investors Title Q1 2020 Earnings Report
Reported a net loss due to a decrease in the fair value of equity security investments, despite an increase in net premiums written and revenues from non-title services.
Key Takeaways
Investors Title Company reported a net loss of $7.0 million, or $3.71 per diluted share, compared to a net income of $6.6 million, or $3.49 per diluted share, for the prior year period. Total revenues decreased by 25.1% to $29.9 million, primarily due to a $14.5 million decrease in the fair value of equity security investments. Excluding the impact of changes in the estimated fair value of equity security investments, income before income taxes (non-GAAP) increased 62.8% to $5.9 million.
Net premiums written increased 34.1% to a quarterly record of $38.6 million.
Revenues from non-title services increased 6.7% due to growth in 1031 exchange and management services.
Total revenues decreased 25.1% to $29.9 million due to a $14.5 million decrease in the fair value of equity security investments.
Operating expenses increased 21.5% primarily from higher agent commissions.
Pre-tax loss was $8.5 million compared to an $8.3 million pre-tax profit in the prior year period.
Revenue by Segment
Forward Guidance
The ultimate impacts of COVID-19, both on the overall economy and on our own business, remain uncertain at this time. Predictions about the impact of the virus on home sales are constantly evolving, but we expect the volume of transactions to be curtailed as long as quarantining measures are in place and the economic repercussions from business closures linger.
Positive Outlook
- Strong operational results in the first quarter, despite the unrealized losses in our equities portfolio.
- Low interest rates contributed to a healthy pipeline.
- Initial strong economy prior to the impacts of the coronavirus pandemic.
- Technology investments have enhanced the ability for remote work and virtual loan closings.
- Strong support for strengthening real estate activity and values as the impact of the virus subsides.
Challenges Ahead
- Unrealized losses in equities portfolio.
- Impacts of the coronavirus pandemic continue to weigh heavily on the economy.
- Outlook on real estate transaction levels and mortgage lending remains mixed.
Revenue & Expenses
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Historical Earnings Impact
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Avg. Return Before/After Earnings
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