Investors Title Company today announced its results for the third quarter ended September 30, 2011. Net income increased 68.4% to $2,440,465, or $1.14 per diluted share, compared with $1,449,101, or $0.63 per diluted share, for the prior year period.
Revenues increased 36.3% to $26,116,870 versus the prior year period primarily due to a 43.2% increase in net premiums written. The premium growth was mainly attributable to the Company’s recent expansion into Texas. Premium growth in Texas was partially offset by declines in other markets. In addition, premiums in the third quarter were comprised of a larger percentage of higher-margin purchase transactions relative to the prior year period.
Operating expenses increased 32.1% to $22,655,405 versus the prior year period, primarily due to increases in commissions to agents. Commissions to agents increased 75.6%, 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 substantially lower in the current quarter compared with the prior year primarily due to an adjustment for 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 nine months ended September 30, 2011, net income increased 26.2% to $5,054,477, or $2.32 per diluted share, compared with $4,004,076, or $1.75 per diluted share, for the prior year period. Revenues increased 42.3% to $69,858,103, while operating expenses increased 43.0% versus the prior year period, largely as a result of factors noted above for the quarter.
Chairman J. Allen Fine added, “We are pleased to report an increase in revenues for the quarter and year-to-date, driven by our entry into the Texas market and continued expansion of our agent base. Although commission expense has increased as we have grown our agent base, other operating expense categories, in total, are favorable to last year due to positive developments in claims loss rates and the continued impact of cost reduction initiatives from the past several years. We will continue to focus on enhancing our competitive strengths by emphasizing growth in market presence and careful management of expenses.”