A strong regional competitor with a fifty-year history
Investors Title Company was founded in 1972 by J. Allen Fine. In the early 1970s, the market for title insurance in North Carolina was small with total premiums of just $1.7 million. Mr. Fine anticipated increasing demand for title insurance when lenders began to sell mortgages on the secondary market and he played an instrumental role in educating lenders, attorneys, and home buyers regarding the risk of title defects.1 By 1984, Investors Title was the leading title insurer in North Carolina.2
At the age of 87, Mr. Fine still serves as Chairman and Chief Executive Officer and two of his sons have held executive positions in the company for over three decades. Mr. Fine and his sons own 24.2% of the company.3 Markel Corporation is a long-term shareholder of Investors Title and owns 11.2% of the company.4
Investors Title posted $273.9 million of net written premiums in 2021 which gives it just over 1% of the title insurance market in the United States.5 However, the company has a strong second place position in its home state of North Carolina with market share of 23%.6 North Carolina, South Carolina, Georgia and Texas accounted for 81% of net written premiums in 2021.
During 2020 and 2021, Investors Title posted cumulative net income of $106.4 million and returned $69.3 million to shareholders, primarily via special dividends. The company has benefited from a housing market boom and strong investment returns.
With the company’s stock trading at $152, Investors Title has a market capitalization of $289 million with total stockholders’ equity of $232.5 million as of March 31, 2022, indicating that the shares trade at ~1.24x book value. The company has an investment portfolio of $216.4 million, $37.3 million of cash equivalents, and no debt.
Investors Title, as well as all companies operating in the title insurance industry, are directly exposed to the cyclicality of the housing market. Housing market conditions are still strong in mid-2022, but higher mortgage interest rates, record high home prices, and low consumer confidence represent strong headwinds going forward.
Long-term investors should not be overly concerned with trends over the next few years, but it is important to examine how companies have performed during previous market cycles. This is particularly true for title insurers. This article provides an overview of Investors Title’s performance in recent years and also looks back at how the company and the stock performed during the housing bubble of the mid-2000s, the subsequent housing market crash, and the financial crisis of 2008-09.
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No position in Investors Title.
- Profile of J. Allen Fine, Triangle Business Journal, December 16, 2005.
- Investors Title has published a brief history of the company on its website.
- According to the 2022 proxy, J. Allen Fine owns 196,475 shares. W. Morris Fine individually owns 83,804 shares and James A. Fine, Jr. individually owns 83,491 shares. W. Morris Fine and James A. Fine, Jr. jointly own an additional 95,000 shares. In total, the Fine family controls 458,770 shares, or ~24.2% of the 1,897,255 shares outstanding as of April 1, 2022.
- According to the 2022 proxy, Markel Corporation owned 213,300 shares as of April 1, 2022.
- Source: National Association of Insurance Commissioners (NAIC) Report: U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results, p. 17.
- Market share by state can be found at Demotech market share report by Jurisdiction and NAIC Group – Q1 2022.