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Investors Title Company today announced its results for the second quarter ended June 30, 2011. Net income decreased 37.2% to $1,594,805, or $0.74 per diluted share, compared with $2,537,560, or $1.11 per diluted share, for the prior year period.
Revenues increased 46.2% to $23,719,213 versus the prior year period, primarily due to a 57.3% increase in net premiums written. The premium growth is mainly attributable to the Company’s recent expansion into Texas. In addition, premiums in the second quarter shifted slightly from refinancing transactions toward higher-margin purchase transactions relative to the prior year period and the trailing quarter.
Operating expenses increased 64.0% to $21,680,408 versus the prior year period, primarily due to increases in commissions to agents and the provision for claims. Commissions to agents increased 105.3%, commensurate with the growth in agency premiums and reflective of an increase in agent business from markets with higher premium rates, primarily Texas. The provision for claims was higher in the current quarter compared with the prior year primarily due to a $942,000 recovery in the second quarter of 2010 on a fraud-related claim. The impact of the unfavorable comparison was partially offset by favorable loss development in prior policy years, as well as a decline in the relative share of North Carolina business as a percentage of the total versus the prior year period. Since North Carolina’s premium rates are less than half the national average, the resulting loss ratio for North Carolina business is higher than for our other markets.
For the six months ended June 30, 2011, net income increased 2.3% to $2,614,012, or $1.19 per diluted share, compared with $2,554,975, or $1.11 per diluted share, for the prior year period. Revenues increased 46.2% to $43,741,233, while operating expenses increased 50.0% versus the prior year period, largely as a result of factors noted above for the quarter.