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OLDWICK, N.J. -- (Business Wire)

A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit ratings of “a” of the two subsidiaries of Investors Title Company, Inc. (ITIC) (NASDAQ:ITIC), collectively referred to as the Investors Title Company Group (ITC Group). The two subsidiaries are Investors Title Insurance Company (Chapel Hill, NC) and National Investors Title Insurance Company (Austin, TX). A.M. Best also has affirmed the issuer credit rating of “bbb” of ITIC, which is also domiciled in Chapel Hill, NC. The outlook for all ratings remains stable.

The ratings 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 2014, the group’s statutory surplus level increased for the sixth straight year. The group’s operating results have been consistently favorable in recent years, posting an underwriting profit in each of the past five years, and net pre-tax operating results have been solid throughout this 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 third-party insurance protection and instituting extensive safeguards in the selecting, monitoring and auditing of its title agency force and other providers. As a result of these initiatives, it has incurred no material defalcation losses in the past five years. Additionally, the group has taken initiatives to diversify its book of business by reducing its concentration in North Carolina, its largest state, which previously represented nearly half of its book of business to approximately a quarter of its book as of year-end 2014. ITC Group has also expanded its geographic footprint in recent years into nearly 20 states, including Texas, which is currently its largest state.

The economic environment and housing market conditions, which determine the future revenue and earnings potential of title insurers, have somewhat improved in 2013 and 2014. However, uncertainties remain as to the future direction of U.S. monetary policy and its effect on long-term interest rates, which drive title insurance activity, as well as the effect on the macroeconomic environment of potential geo-political events. Nevertheless, combined with ITC Group’s expense and risk management efforts, these generally improving conditions have produced steadily increasing operating earnings in the past five years, with particularly robust results in 2012 and 2013, along with continued favorable operating results in 2014 as well as in the first quarter of 2015.

ITC Group’s reserving practices have historically tended to be conservative with favorable development patterns witnessed since 2009. While the group is well-positioned to maintain its current rating level in the near term, any future upward movement in its rating level and/or a positive outlook will require sustained improvement in its operating results, while maintaining or improving its favorable risk-adjusted capitalization. Conversely, any significant volatility in operating performance and/or erosion of its risk-adjusted capitalization may result in negative pressure on its current ratings and/or stable outlook.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized include:

• Analyzing Insurance Holding Company Liquidity
• BCAR for Title Insurance Companies
• Insurance Holding Company and Debt Ratings
• Rating Members of Insurance Groups
• Rating Title Insurance Companies
• Risk Management and the Rating Process for Insurance Companies

This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

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Contacts:

A.M. Best
Neil Das Gupta, 908-439-2200, ext. 5206
Senior Financial Analyst
neil.dasgupta@ambest.com
or
Gary A. Davis, 908-439-2200, ext. 5665
Assistant Vice President
gary.davis@ambest.com
or
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Source: A.M. Best Company, Inc.