10-Q 1 form10q.txt FORM 10Q - 3RD QUARTER 2002 - INVESTORS TITLE 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: September 30, 2002 ---------------- 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 --- Shares outstanding of each of the issuer's classes of common stock as of September 30, 2002: Common Stock, no par value 2,515,349 -------------------------- --------- Class Shares Outstanding 1 INVESTORS TITLE COMPANY AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001...3 Consolidated Statements of Income: Three and Nine Months Ended September 30, 2002 and 2001.................4 Consolidated Statements of Cash Flows: Three and Nine Months Ended September 30, 2002 and 2001.................5 Notes to Consolidated Financial Statements...................................6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................................8 Item 3. Quantitative and Qualitative Disclosures About Market Risk ..........11 Item 4. Controls and Procedures..............................................11 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K.................................... 11 SIGNATURES....................................................................12 CERTIFICATIONS................................................................13 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements ------------------------------ Investors Title Company and Subsidiaries Consolidated Balance Sheets As of September 30, 2002 and December 31, 2001
September 30, 2002 December 31, 2001 ----------------- ------------------- (Unaudited) (Audited) Assets Cash and cash equivalents $ 7,952,322 $ 3,452,455 Investments in securities: Fixed maturities: Held-to-maturity, at amortized cost 4,496,366 4,907,066 Available-for-sale, at fair value 47,888,006 42,683,660 Equity securities, at fair value 4,359,109 5,433,557 Other investments 623,296 64,888 ----------------- ------------------- Total investments 57,366,777 53,089,171 Premiums receivable (less allowance for doubtful accounts: 2002: $1,505,000 and 2001: $1,405,000) 6,599,391 7,104,580 Accrued interest and dividends 677,044 725,757 Prepaid expenses and other assets 723,200 765,348 Property acquired in settlement of claims 448,617 294,510 Property, net 4,235,439 4,433,855 Deferred income taxes, net 295,653 354,024 ----------------- ------------------- Total Assets (Note 5) $ 78,298,443 $ 70,219,700 ================= =================== Liabilities and Stockholders' Equity Liabilities: Reserves for claims (Note 2) $ 24,538,500 $ 21,460,000 Accounts payable and accrued liabilities 2,568,361 3,700,095 Commissions and reinsurance payables 512,152 281,961 Premium taxes payable 242,878 367,055 Current income taxes payable 275,060 138,821 ----------------- ------------------- Total liabilities 28,136,951 25,947,932 ----------------- ------------------- Stockholders' Equity: Common stock - no par value (shares authorized 10,000,000; 2,515,349 and 2,516,298 issued and outstanding 2002 and 2001, respectively) (Note 4) 1 1 Retained earnings 47,072,166 41,928,575 Accumulated other comprehensive income (net unrealized gain on investments) (net of deferred taxes: 2002: $1,592,041; 2001: $1,207,670) (Note 3) 3,089,325 2,343,192 ----------------- ------------------- Total stockholders' equity 50,161,492 44,271,768 ----------------- ------------------- Total Liabilities and Stockholders' Equity $ 78,298,443 $ 70,219,700 ================= ===================
See notes to consolidated financial statements. 3 Investors Title Company and Subsidiaries Consolidated Statements of Income For the Three and Nine Months Ended September 30, 2002 and 2001 (Unaudited)
For the Three For the Nine Months Ended Months Ended September 30 September 30 -------------------------------- -------------------------------- 2002 2001 2002 2001 ------------- ------------- -------------- ------------- Revenues: Underwriting income: Premiums written $ 18,135,156 $ 14,849,202 $ 47,916,019 $ 41,296,179 Less - premiums for reinsurance ceded 93,735 119,168 322,676 261,143 ------------- ------------ ------------- -------------- Net premiums written 18,041,421 14,730,034 47,593,343 41,035,036 Investment income - interest and dividends 680,991 661,803 2,042,810 2,019,734 Net realized gain on sales of investments 9,882 - 300,732 2,053 Other 556,775 529,310 1,513,844 1,429,083 ------------- ------------ ------------- -------------- Total 19,289,069 15,921,147 51,450,729 44,485,906 ------------- ------------ ------------- -------------- Operating Expenses: Commissions to agents 8,615,016 6,762,756 22,391,778 18,842,967 Provision for claims (Note 2) 1,949,054 1,765,253 5,332,105 5,117,088 Salaries, employee benefits and payroll taxes 3,106,076 2,920,136 8,773,836 8,022,825 Office occupancy and operations 1,067,244 1,048,337 3,538,436 3,641,988 Business development 706,341 419,606 1,543,221 1,303,375 Taxes, other than payroll and income 72,707 31,386 264,301 184,258 Premium and retaliatory taxes 353,588 285,708 987,446 858,385 Professional fees 166,974 158,078 567,480 598,424 Other 142,644 147,343 247,924 290,582 ------------- ------------ ------------- -------------- Total 16,179,644 13,538,603 43,646,527 38,859,892 ------------- ------------ ------------- -------------- Income Before Income Taxes (Note 5) 3,109,425 2,382,544 7,804,202 5,626,014 ------------- ------------ ------------- -------------- Provision For Income Taxes 963,400 778,100 2,410,000 1,736,900 ------------- ------------ ------------- -------------- Net Income $ 2,146,025 $ 1,604,444 $ 5,394,202 $ 3,889,114 ============= ============ ============= ============== Basic Earnings Per Common Share $ 0.85 $ 0.63 $ 2.14 $ 1.52 ============= ============ ============= ============== Weighted Average Shares Outstanding - Basic (Note 4) 2,517,762 2,555,778 2,517,351 2,561,721 ============= ============ ============= ============== Diluted Earnings Per Common Share (Note 4) $ 0.83 $ 0.61 $ 2.08 $ 1.49 ============= ============ ============= ============== Weighted Average Shares Outstanding - Diluted (Note 4) 2,594,915 2,611,806 2,593,984 2,607,741 ============= ============ ============= ============== Dividends Paid $ 73,955 $ 85,672 $ 225,029 $ 257,017 ============= ============ ============= ============== Dividends Per Share $ 0.03 $ 0.03 $ 0.09 $ 0.09 ============= ============ ============= ==============
See notes to consolidated financial statements. 4 Investors Title Company and Subsidiaries Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2002 and 2001 (Unaudited)
2002 2001 ------------------ ------------------ Operating Activities: Net income $ 5,394,202 $ 3,889,114 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 707,490 1,148,316 Amortization, net 20,060 5,408 Provision for losses on premiums receivable 100,000 125,000 Net gain on disposals of property (12,435) (21,248) Net realized gain on sales of investments (300,732) (2,053) Benefit for deferred income taxes (326,000) (669,622) Provision for claims 5,332,105 5,117,088 Payments of claims, net of recoveries (2,253,605) (2,297,088) Changes in assets and liabilities: (Increase) decrease in receivables and other assets 341,943 (2,908,444) Decrease in accounts payable and accrued liabilities (1,131,734) (288,079) Increase in commissions and reinsurance payables 230,191 73,680 Increase (decrease) in premium taxes payable (124,177) 340,863 Increase in current income taxes payable 136,239 317,152 ------------- ------------- Net cash provided by operating activities 8,113,547 4,830,087 ------------- ------------- Investing Activities: Purchases of available-for-sale securities (10,357,900) (7,184,820) Purchases of held-to-maturity securities (362,470) (600,000) Purchases of other securities (558,408) - Proceeds from sales of available-for-sale securities 7,638,598 3,089,464 Proceeds from sales of held-to-maturity securities 773,750 10,000 Purchases of property (546,272) (339,280) Proceeds from sales of property 49,633 58,103 ------------- ------------- Net cash used in investing activities (3,363,069) (4,966,533) ------------- ------------- Financing Activities: Repurchases of common stock, net (39,753) (206,047) Exercise of options 14,171 33,162 Dividends paid (225,029) (257,017) ------------- ------------- Net cash used in investing activities (250,611) (429,902) ------------- ------------- Net Increase (Decrease) in Cash and Cash Equivalents 4,499,867 (566,348) Cash and Cash Equivalents, Beginning of Year 3,452,455 4,268,713 ------------- ------------- Cash and Cash Equivalents, End of Period $ 7,952,322 $ 3,702,365 ============= ============== Supplemental Disclosures: Cash Paid During the Year for: Income Taxes, net of refunds $ 2,601,076 $ 2,097,721 ============= ==============
Noncash Financing Activities: Bonuses and fees totaling $51,752 and $56,155 were paid for the nine months ended September 30, 2002 and 2001, respectively, by issuance of the Company's common stock. See notes to consolidated financial statements. 5 Notes to Consolidated Financial Statements September 30, 2002 (Unaudited) Note 1 - Basis of Presentation ------------------------------ The consolidated financial statements include Investors Title Company and its subsidiaries, and have been prepared in conformity with accounting principles generally accepted in the United States of America. 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. Certain 2001 amounts have been reclassified to conform to 2002 classifications. Reference should be made to the "Notes to Consolidated Financial Statements" of the Registrant's Annual Report to Shareholders for the year ended December 31, 2001 for a description of accounting policies. No significant accounting policies of the Company have changed since December 31, 2001. Note 2 - Reserves for Claims ---------------------------- Transactions in the reserves for claims for the nine months ended September 30, 2002 and the twelve months ended December 31, 2001 were as follows:
September 30, December 31, 2002 2001 -------------- -------------- Balance, beginning of year $ 21,460,000 $ 17,944,665 Provision, charged to operations 5,332,105 6,786,263 Recoveries 457,146 873,532 Payments of claims (2,710,751) (4,144,460) -------------- ------------- Ending balance $ 24,538,500 $ 21,460,000 ============== =============
In management's opinion, the reserves are adequate to cover losses which might result from pending and possible claims. Note 3 - Comprehensive Income ----------------------------- Total comprehensive income for the three months ended September 30, 2002 and 2001 was $2,469,708 and $1,898,034, respectively. Total comprehensive income for the nine months ended September 30, 2002 and 2001 was $6,140,335 and $4,196,236, respectively. Other comprehensive income is comprised solely of unrealized gains or losses on the Company's available-for-sale securities. 6 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 77,153 and 56,028 for the three months ended September 30, 2002 and 2001, respectively and 76,633 and 46,020 for the nine months ended September 30, 2002 and 2001, respectively. Options to purchase 73,686 and 55,626 shares of common stock were outstanding for the three months ended September 30, 2002 and 2001, respectively and 73,686 and 57,626 for the nine months ended September 30, 2002 and 2001, respectively but were not included in the computation of diluted EPS because the options' exercise prices were greater than the average market price of the common shares. Issued and outstanding shares for the nine months ended September 30, 2002 and 2001 do not include 340,395 and 339,446 shares, respectively, of common stock held by the Company's subsidiary, Investors Title Insurance Company. Note 5 - Segment Information ----------------------------
Income Three Months Operating Before Ended Revenues Income Taxes Assets -------------------------------------------------------------------------------------------- September 30, 2002 -------------------------------------------------------------------------------------------- Title Insurance $18,260,367 $ 2,970,073 $71,019,015 Exchange Services 282,083 172,386 449,687 All Other 55,746 (33,034) 6,829,741 -------------------------------------------------------------------------------------------- $18,598,196 $ 3,109,425 $78,298,443 -------------------------------------------------------------------------------------------- September 30, 2001 -------------------------------------------------------------------------------------------- Title Insurance $14,831,527 $ 2,165,734 $61,865,185 Exchange Services 242,711 138,651 312,777 All Other 185,106 78,159 4,115,324 -------------------------------------------------------------------------------------------- $15,259,344 $ 2,382,544 $66,293,286 -------------------------------------------------------------------------------------------- Income Nine Months Operating Before Ended Revenues Income Taxes Assets -------------------------------------------------------------------------------------------- September 30, 2002 -------------------------------------------------------------------------------------------- Title Insurance $48,105,439 $ 7,480,851 $71,019,015 Exchange Services 568,880 222,782 449,687 All Other 432,868 100,569 6,829,741 -------------------------------------------------------------------------------------------- $49,107,187 $ 7,804,202 $78,298,443 -------------------------------------------------------------------------------------------- September 30, 2001 -------------------------------------------------------------------------------------------- Title Insurance $41,218,843 $ 5,023,551 $61,865,185 Exchange Services 732,910 433,454 312,777 All Other 512,366 169,009 4,115,324 -------------------------------------------------------------------------------------------- $42,464,119 $ 5,626,014 $66,293,286 --------------------------------------------------------------------------------------------
7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ------------------------------------------------------------ The 2001 Form 10-K and the 2001 Annual Report should be read in conjunction with the following discussion since they contain important information for evaluating the Company's operating results and financial condition. Results of Operations: ---------------------- For the quarter ended September 30, 2002, net premiums written increased 22% to $18,041,421, investment income increased 3% to $680,991, total revenues increased 21% to $19,289,069 and net income increased 34% to $2,146,025, all compared with the same quarter in 2001. Net income per basic and diluted common share increased 35% and 36% to $.85 and $.83, respectively, as compared with the year ago period. For the quarter ended September 30, 2002, the title insurance segment's operating revenues increased 23% versus the third quarter of 2001, while the exchange services segment's revenues increased 16% for the three months ended September 30, 2002 compared with the prior year quarter. For the nine months ended September 30, 2002, net premiums written increased 16% to $47,593,343, investment income increased 1% to $2,042,810, revenues increased 16% to $51,450,729, net income increased 39% to $5,394,202, and net income per basic and diluted common share increased 41% and 40% to $2.14 and $2.08, respectively, as compared with the same period in 2001. For the nine months ended September 30, 2002, the title insurance segment's operating revenues increased 17% versus the same period in 2001, while the exchange services segment's operating revenues decreased 22% for the nine months ended September 30, 2002 compared with the same period in 2001. Fueled by near 40-year lows in interest rates, mortgage lending in the third quarter rose dramatically. Led by consumer demand for refinancing, the volume of total loan originations is on pace to surpass the previous year's record level. According to the Freddie Mac Weekly Mortgage Rate Survey, the monthly average 30-year fixed mortgage interest rates decreased to 6.69% for the nine months ended September 30, 2002 compared with 7.04% for the nine months ended September 30, 2001. The volume of business increased in the third quarter of 2002 as the number of policies and commitments issued rose to 86,589, an increase of 5% compared with 82,322 in the same period in 2001. Policies and commitments issued for the nine months ended September 30, 2002 were 230,172 compared with 215,663 in 2001, an increase of 7%. Branch net premiums written as a percentage of total net premiums written were 35% and 38% for the three months ended September 30, 2002 and 2001, respectively, and 36% and 38% for the nine months ended September 30, 2002 and 2001, respectively. Net premiums written from branch operations increased 13% and 34% for the three months ended September 30, 2002 and 2001, respectively, as compared with the same periods in the prior year. For the nine months ended September 30, 2002 and 2001, net premiums written from branch operations increased 10% and 29%, respectively, as compared with the same prior year periods. Agency net premiums written as a percentage of total net premiums written were 65% and 62% for the three months ended September 30, 2002 and 2001, respectively, and 64% and 62% for the nine months ended September 30, 2002 and 2001, respectively. Agency net premiums increased 28% and 54% for the three months ended September 30, 2002 and 2001, respectively, as compared with the same periods in the prior year. For the nine months ended September 30, 2002 and 2001, net premiums written from agency operations increased 20% and 54%, respectively, as compared with the same prior year periods. 8 Shown below is a schedule of premiums written for the nine months ended September 30, 2002 and 2001 in all states and districts where the Company's two insurance subsidiaries, Investors Title Insurance Company and Northeast Investors Title Insurance Company, currently underwrite insurance: 2002 2001 ---- ---- Alabama $ 445,882 $ 632 Arkansas 39,550 - District of Columbia 250 - Florida 1,745 - Georgia 45,182 218,410 Illinois 6,816 - Indiana 106,159 1,452 Iowa - 3,788 Kentucky 823,431 - Maryland 1,029,080 680,890 Michigan 7,478,133 7,812,916 Minnesota 873,195 1,069,902 Mississippi 695,708 20,103 Nebraska 842,352 710,497 New Jersey 23,130 - New York 2,356,430 2,411,705 North Carolina 17,178,141 15,644,222 Ohio 26,210 30,736 Pennsylvania 2,677,715 2,309,698 South Carolina 4,106,633 2,940,957 Tennessee 2,369,835 1,699,465 Virginia 5,579,815 4,820,625 West Virginia 1,183,924 886,986 Wisconsin 10,776 22,783 ----------- ----------- Direct Premiums 47,900,092 41,285,767 Reinsurance Assumed 15,927 10,412 Reinsurance Ceded (322,676) (261,143) ----------- ----------- Net Premiums $47,593,343 $41,035,036 ============= ============ Total operating expenses increased 20% and 12% for the three and nine-month periods ended September 30, 2002 compared with the same periods in 2001. This increase was due primarily to additional commissions relating to increase in premium volume. 9 The provision for claims as a percentage of net premiums written was 11% for the three and nine months ended September 30, 2002, versus 12% for the same periods in 2001. The provision for income taxes was 31% of income before income taxes for the three months ended September 30, 2002 versus 33% for the same period in 2001. For the nine months ended September 30, 2002 and 2001, the provision for income taxes was 31% of income before income taxes. Liquidity and Capital Resources: -------------------------------- Net cash provided by operating activities for the nine months ended September 30, 2002, amounted to $8,113,547 compared with $4,830,087 for the same nine-month period during 2001. The increase is primarily the result of a decrease in receivables and other assets, an increase in net income and a net decrease in noncash adjustments to reconcile net income to net cash, offset by a decrease in the total payables. On May 11, 1999, the Board of Directors approved the repurchase of 200,000 shares of the Company's common stock. Pursuant to this approval, the Company repurchased 200,000 shares prior to 2002 at an average price of $12.50 per share including 17,914 shares purchased at an average price of $14.66 in the nine months ended September 30, 2001. On May 9, 2000, the Board of Directors approved the repurchase of an additional 500,000 shares of the Company's common stock. Pursuant to this approval, the Company repurchased a total of 37,238 shares at an average price of $15.20, of which 5,054 shares were purchased at an average purchase price of $18.11 in the nine months ended September 30, 2002. On May 16, 2001, the Board of Directors approved the 2001 Stock Option and Restricted Stock Plan. Pursuant to the Plan, 250,000 shares of common stock are available. For the nine months ended September 30, 2002, 23,000 options have been granted. As of November 5, 2002, no shares have been issued under this plan. 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 its investment portfolio in the form of short-term investments and other readily marketable securities. 10 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 with 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 dependence of the Company 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 2001 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 have 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 -------- (99)(i) Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) (b) Reports on Form 8-K -------------------- There were no reports filed on Form 8-K for this quarter. 11 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 (Chief Financial Officer and Chief Accounting Officer) Dated: November 12, 2002 12 Certifications I, J. Allen Fine, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Investors Title Company; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 12, 2002 ---------------- /s/ J. Allen Fine ----------------- J. Allen Fine Chief Executive Officer 13 Certifications (continued) I, James A. Fine, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Investors Title Company; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 12, 2002 ----------------- /s/ James A. Fine, Jr. --------------------- James A. Fine, Jr. Chief Financial Officer 14