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Investors Title Company announced its results for the second quarter ended June 30, 2014. Net income attributable to the Company decreased 15.8% to $3,373,598, or $1.65 per diluted share, compared with $4,005,675, or $1.92 per diluted share, for the prior year quarter.
Revenues decreased 1.4% to $33,221,553 versus the prior year quarter, primarily due to a 1.9% decrease in net premiums written. The premium decrease reflects substantially lower levels of refinance activity resulting from higher mortgage interest rates, partially offset by an increase in the level of purchase activity and growth in underlying real estate values upon which premiums are based.
Operating expenses increased 2.6% to $28,542,509 versus the prior year quarter, primarily due to an increase in agent commissions resulting from increased activity in markets which are predominantly agent-based. The increase in agent commissions was partially offset by a reduction in the provision for claims related to favorable experience in recent policy years. All other operating expenses were up slightly in total, primarily due to increases in payroll, equipment, and depreciation related to hardware upgrade projects.
For the six months ended June 30, 2014, net income attributable to the Company decreased 40.9% to $4,360,036, or $2.14 per diluted share, compared with $7,382,405, or $3.54 per diluted share, for the prior year period. Revenues increased 1.9% to $61,675,627 versus the prior year period, primarily due to increases in premium volumes and realized gains on investments. Operating expenses increased 11.5% to $55,640,068 versus the prior year period, driven mostly by an increase in agent commissions and an increase in the provision for claims when compared to unusually high favorable development in the prior year period. Other factors affecting operating results for the first half of the year were driven predominantly by the same factors that affected the second quarter.
Chairman J. Allen Fine added, “As expected, the drop in refinance activity which began late last year led to a reduction in premium volumes for the second quarter. We are, however, pleased to see sustained increases in the level of home prices, coupled with continued strength in home purchase activity. We will continue to monitor and respond to changes in the market, while we remain focused on enhancing our competitive strengths and profitably expanding our market presence over the long term.”