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FOR IMMEDIATE RELEASE
OLDWICK - JUNE 28, 2017 03:09 PM (EDT)
A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of the two subsidiaries of Investors Title Company, Inc. (ITIC) [NASDAQ: ITIC]: Investors Title Insurance Company and National Investors Title Insurance Company (Austin, TX). These subsidiaries are collectively referred to as Investors Title Company Group (ITC Group). A.M. Best also has affirmed the Long-Term ICR of “bbb” of ITIC. The outlook of these Credit Ratings (ratings) is stable. All companies are domiciled in Chapel Hill, NC, unless otherwise specified.
The rating affirmations reflect ITC Group’s excellent capitalization as evidenced by its conservative underwriting leverage ratios, which are relatively modest compared to the title industry as a whole. In 2016, the group’s statutory surplus level increased for the sixth consecutive year. The group’s operating results have been consistently favorable in recent years, posting an underwriting profit in each of the past six years, and pre-tax operating results have been solid throughout this same period. ITC Group’s favorable results are partly due to its efforts to carefully manage its expense structure while limiting losses, including those from agency defalcations, through comprehensive reinsurance protection and instituting extensive safeguards in the selecting, monitoring and auditing of its title agency force and other providers. Partly as a result of these initiatives, the group has incurred no material defalcation losses in the last five years. ITC Group has expanded its geographic footprint in recent years into more than 21 states, including Texas, which is currently its second-largest state. Furthermore, while its North Carolina business continues to be conducted primarily through directly owned branches, the group distributes its business in Texas and other states primarily through independent agents, which has resulted in greater diversification of its distribution channels.
The current economic environment and housing market conditions — both of which determine the future revenue and earnings potential of title insurers — have improved somewhat in recent years. Uncertainty regarding potential economic and policy changes that may occur under the current presidential administration continue to persist over the industry and its prospects as a whole. With that being said, the ITC Group’s consistent expense and risk management efforts have been able to weather consistently these uncertainties, as reflected in their financial results over the past several years.
A.M. Best does not expect the current ratings or outlook to change in the near term. Upward movement in rating or outlook will depend on the ITC Group’s ability to sustain a positive operating performance trend along with maintaining favorable risk-adjusted capitalization in the operating companies. Conversely, significant deterioration in operating performance or significant erosion in risk-adjusted capitalization levels in the operating companies may result in downward movement in the rating or outlook.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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