UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2002 |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-11774 INVESTORS TITLE COMPANY (Exact name of registrant as specified in its charter) North Carolina 56-1110199 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 121 North Columbia Street Chapel Hill, North Carolina 27514 (919) 968-2200

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2004

		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-11774

INVESTORS TITLE COMPANY

(Exact name of registrant as specified in its charter)

North Carolina	56-1110199
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

121 North Columbia Street
Chapel Hill, North Carolina 27514
(919) 968-2200

Securities registered pursuant to section 12(b) ~~of the Act: None Securities registered pursuant to section 12(g)~~ of the Act:
None

Securities registered pursuant to section 12(g) of the Act:

Common Stock, no par value

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) 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 No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes No

The aggregate market value of the common shares held by non-affiliates was $59,365,278 based on the closing sales price on the NASDAQ National Market System on the last business day of the registrant’s most recently completed second fiscal quarter (June 30, 2004).

As of February 28, 2005, there were 2,855,744 common shares of the registrant outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Investors Title Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2004 are incorporated by reference in Parts I, II and IV hereof and portions of Investors Title Company’s definitive proxy statement for the Annual Meeting of Shareholders to be held on May 18, 2005 are incorporated by reference in Part III hereof.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, as well as information included in future filings by the Company with the Securities and Exchange Commission and information contained in written material, press releases and oral statements issued by or on behalf of the Company, contains, or may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management’s current outlook for future periods. These statements may be identified by the use of words such as “plan,” “expect,” “aim,” “believe,” “project,” “anticipate,” “intend,” “estimate,” “will,” “should,” “could” and other expressions that indicate future events and trends. All statements that address expectations or projections about the future, including statements about the Company’s strategy for growth, product and service development, market share position, claims, expenditures, financial results and cash requirements, are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events 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 |_| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X| Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes |_| No |X| The aggregate market value of the common shares held by non-affiliates was $38,094,868 based on the closing sales price on the NASDAQ National Market System on the last business day of the registrant's most recently completed second fiscal quarter (June 30, 2002). As of March 20, 2003, there were 2,855,744 common shares of the registrant outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of Investors Title Company's Annual Report to Shareholders for the fiscal year ended December 31, 2002 are incorporated by reference in Parts I, II and IV hereof and portions of Investors Title Company's Proxy Statement for the Annual Meeting of Shareholders to be held on May 21, 2003 are incorporated by reference in Part III hereof. 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 affect 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. ~~INVESTORS TITLE COMPANY AND SUBSIDIARIES INDEX~~ PART I Item 1. Business..............................................................................................1 Item 2. Properties............................................................................................9 Item 3. Legal Proceedings.....................................................................................9 Item 4. Submission of Matters to a ~~Vote~~number of ~~Security Holders...................................................9 Item~~risks and uncertainties. Actual future results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors, including, but not limited to, the following: (1) the demand for title insurance will vary due to factors such as interest rate fluctuations, the availability of mortgage funds, the level of real estate transactions, including mortgage refinance activity, the cost of real estate, consumer confidence, employment levels, family income levels and general economic conditions; (2) losses from claims may be greater than anticipated such that reserves for possible claims are inadequate; (3) unanticipated adverse changes in securities markets, including interest rates, could result in material losses on the Company’s investments; (4) the Company’s dependence on key management personnel, the loss of whom could have a material adverse affect on the Company’s business; (5) the Company’s ability to develop and offer products and services that meet changing industry standards in a timely and cost-effective manner and significant changes or additions to applicable government regulations; and (6) state statutes require the Company’s insurance subsidiaries to maintain minimum levels of capital, surplus and reserves and restrict the amount of dividends that the insurance subsidiaries may pay to the Company without prior regulatory approval.
These and 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.

INVESTORS TITLE COMPANY AND SUBSIDIARIES
TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS 4
ITEM 2. PROPERTIES 12
ITEM 3. LEGAL PROCEEDINGS 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12
ITEM 4A. ~~Executive Officers~~ EXECUTIVE OFFICERS OF THE COMPANY 12
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 14
ITEM 6. SELECTED FINANCIAL DATA 15
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 15
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 15
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 16
ITEM 9A. CONTROLS AND PROCEDURES 16
ITEM 9B. OTHER INFORMATION 16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 17
ITEM 11. EXECUTIVE COMPENSATION 17
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 17
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 17
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 17
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 18
SIGNATURES 19

PART I
ITEM 1.   BUSINESS
GENERAL
                Investors Title Company (the “Company”) is a holding company that operates through its subsidiaries and was incorporated in the State of North Carolina in February 1973. The Company became operational on June 24, 1976, when it acquired Investors Title Insurance Company (“ITIC”) as a wholly owned subsidiary under a plan of exchange of shares of common stock. On September 30, 1983, the Company acquired Northeast Investors Title Insurance Company (“NE-ITIC”), formerly Investors Title Insurance Company of South Carolina, as a wholly owned subsidiary under a plan of exchange of shares of common stock. Investors Capital Management Company (“ICMC”), a wholly owned subsidiary of the ~~Company....................................................................10 PART II Item 5. Market for Registrant's Common Equity~~Company, was organized on October 17, 2003. The Company’s most recent subsidiary, Investors Trust Company (“Investors Trust”), was granted a trust charter by the North Carolina Banking Commissioner on February 17, 2004.
                The Company engages primarily in three lines of business. The main business activity is the issuance of title insurance through ITIC and ~~Related Stockholder Matters................................10 Item 6. Selected Financial Data..............................................................................11 Item 7. Management's~~NE-ITIC. The second line of business provides tax-deferred exchange services through its subsidiaries, Investors Title Exchange Corporation (“ITEC”) and Investors Title Accommodation Corporation (“ITAC”). The Company has also recently entered into a third line of business, which it added to supplement its traditional lines of business, providing investment management and trust services to individuals, trusts and other entities. See Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations................11 Item~~Operations and Note 13 of Notes to Consolidated Financial Statements in the 2004 Annual Report to Shareholders incorporated by reference in this Form 10-K Annual Report for additional information related to the revenues, income and assets attributable to the Company’s operating segments.
The Company’s executive offices are located at 121 North Columbia Street, Chapel Hill, North Carolina 27514. The Company’s telephone number is (919) 968-2200, its facsimile number is (919) 968-2235, and its Internet address is www.invtitle.com, the contents of which are not and shall not be deemed a part of this document or any other U.S. Securities and Exchange filing. The Company makes available free of charge on its Internet website its annual report on Form 10-K, its quarterly reports on Form 10-Q, its current reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after such materials are electronically filed with or furnished to the Securities and Exchange Commission.
Title Insurance
Through its two wholly owned subsidiaries, ITIC and NE-ITIC, the Company underwrites land title insurance for owners and mortgagees as a primary insurer and as a reinsurer for other title insurance companies. Title insurance protects against loss or damage resulting from defects that affect the title to real property. The commitment and policies issued are the standard American Land Title Association approved forms.

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                There are two basic types of title insurance policies - one for the mortgage lender and one for the real estate owner. A lender often requires property owners to purchase title insurance to protect its position as a holder of a mortgage loan, but the lender’s title insurance policy does not protect the property owner. The property owner needs to purchase an owner’s title insurance policy to protect his investment.
                When real property is conveyed from one party to another, occasionally there is a hidden defect in the title or a mistake in a prior deed, will or mortgage that may give a third party a legal claim against such property. If a claim is made against real property, title insurance provides a corporate guarantee against insured defects, pays all legal expenses to eliminate any title defects, pays any claims arising from errors in title examination and recording, and pays any losses arising from hidden defects in title and defects that are not of record. Title insurance provides an assurance that the insurance holder’s ownership and use of such property will be defended promptly against claims, at no cost, whether or not the claim is valid.
                A title defect is one of any number of things that could jeopardize the property owner’s interest. It could be an unsatisfied mortgage, lien, judgment or other unrecorded claim against the property. It could arise through easements, use restrictions or other existing covenants, or it could be a hidden risk. Title insurance generally protects against four kinds of hidden risks — errors in the public records such as incorrect information in deeds and mortgages regarding names, signatures and legal descriptions; judgments, liens and mortgages or any other claims against the property or the seller which become the new owner’s responsibility after closing, such as unpaid taxes, assessments and other debts to creditors; claims to ownership by the spouse of a former owner or by the “missing heir” of a deceased owner who did not receive his share of the estate; and invalid deeds or other transfers by sellers who did not actually own the property or by previous owners who were minors or not mentally competent.
                The Company assumes and cedes reinsurance with other insurance companies in the normal course of business. Ceded reinsurance is comprised of excess of loss treaties, which protects against losses over certain amounts.
                ITIC was incorporated in the State of North Carolina on January 28, 1972, and became licensed to write title insurance in the State of North Carolina on February 1, 1972. At present, ITIC mainly writes land title insurance both as a primary insurer and as a reinsurer throughout the eastern and midwestern United States. ITIC writes title insurance through issuing agents or branch offices in the District of Columbia and the States of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia and Wisconsin. In addition to the states in which ITIC currently writes title insurance, it is also licensed to write title insurance in 17 additional states. Agents issue policies for ITIC and may provide other services such as search and settlement services.
                NE-ITIC was incorporated in the State of South Carolina on February 23, 1973, and became licensed to write title insurance in that state on November 1, 1973. It currently writes title insurance as a primary insurer and as a reinsurer in the State of New York. NE-ITIC is also licensed to write title insurance in North Carolina and South Carolina.

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                Each state license authorizing ITIC or NE-ITIC to write title insurance must be renewed annually. These licenses are necessary for the companies to operate as a title insurer in each state in which they are held and the loss of a license in any state by either company would prevent the company from issuing title insurance in that state.
                In the State of North Carolina, ITIC issues title insurance commitments and policies through its home office and its 27 branch offices that are located throughout North Carolina. The Company also has a branch office in South Carolina and Michigan. Title policies are primarily issued through issuing agents in other states.
                In the ordinary course of business, ITIC and NE-ITIC reinsure certain risks with other title insurers for the purpose of limiting their exposure. They also assume reinsurance for certain risks of other title insurers for which they receive additional income. For the last three years, reinsurance activities accounted for less than 1% of total premium volume.
                As of December 31, 2004, ITIC had a risk retention limit of $2,750,000, meaning that it assumed primary risks up to $2,750,000. It then reinsured the next $250,000 of risk with NE-ITIC, and all risks above $3,000,000 were reinsured with an unrelated reinsurer.
                As of December 31, 2004, NE-ITIC had a risk retention limit of $250,000, meaning that it assumed primary risks up to $250,000. It then reinsured the next $2,750,000 of risk with ITIC, and all amounts above $3,000,000 were reinsured with an unrelated reinsurer.
                Both ITIC’s and NE-ITIC’s risk retention limits are self-imposed and are more conservative than state insurance regulations require. ITIC’s self-imposed retention of $2,750,000 is only 15% of its statutorily permitted retention of $18,371,349. NE-ITIC’s self-imposed retention of $250,000 is only 12.3% of its statutorily permitted retention of $2,025,024.
                ITIC has been recognized by two independent Fannie Mae-approved actuarial firms, Demotech, Inc. and LACE Financial Corporation, with rating categories of “A Double Prime” and “A.” NE-ITIC’s financial stability also has been recognized by Demotech, Inc. and LACE Financial Corporation with rating categories of “A Prime” and “A+.” According to Demotech, title insurance underwriters earning a financial stability rating of A’’ (A Double Prime) or A’ (A Prime) possess unsurpassed financial stability related to maintaining positive surplus as regards policyholders, regardless of the severity of a general economic downturn or deterioration in the title insurance cycle. A LACE rating of “A+” or “A” indicates that a title insurance company has a strong overall financial condition that will allow it to meet its future claims and that, generally, the company has good operating earnings, is well capitalized and has adequate reserves.
Exchange Services
                In 1988, the Company established Investors Title Exchange Corporation, a wholly owned subsidiary (“ITEC”), to provide services in connection with tax-deferred exchanges of like-kind property. ITEC acts as an intermediary in tax-deferred exchanges of property held for productive use in a trade or business or for investments, and its income is derived from fees for handling exchange transactions.

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                The Company established South Carolina Document Preparation Company (“SCDPC”) as a wholly owned subsidiary in 1994. In the first quarter of 2001, SCDPC changed its name to Investors Title Accommodation Corporation (“ITAC”) and began serving as an exchange accommodation titleholder, offering a vehicle for accomplishing a reverse exchange when a taxpayer must acquire replacement property before selling the relinquished property.
Investment Management and Trust Services
                The Company organized ICMC, a wholly owned subsidiary, as a North Carolina corporation on October 17, 2003. ICMC is currently licensed as an investment adviser in North Carolina and South Carolina. Investors Trust, also a wholly owned subsidiary of the Company, received its North Carolina trust charter on February 17, 2004. The Company anticipates that ICMC and Investors Trust will work together to provide investment management and trust services to individuals, companies, banks and trusts. These subsidiaries did not have significant activities in 2004, and are not currently a reportable segment for which financial information is presented in the financial statements and there is no assurance that this business will be successful.
OPERATIONS OF SUBSIDIARIES
                For a description of net premiums written geographically, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations. See Note 13 of Notes to Consolidated Financial Statements in the 2004 Annual Report to Shareholders incorporated by reference in this Form 10-K Annual Report for additional information related to the Company’s operating segments.
Title Insurance
                ITIC and NE-ITIC issues title insurance coverage through its direct operations or through partially owned or independent title insurance agents. ITIC and NE-ITIC offer primary title insurance coverage to owners and mortgagees of real estate and reinsurance of title insurance risks to other title insurance companies. Title insurance premiums written reflect a one-time premium payment, with no recurring premiums. Premiums are recorded and policies or commitments are issued upon receipt of final certificates or preliminary reports with respect to titles. Title insurance commissions earned by the Company’s agents are recognized as expense concurrently with premium recognition.
Exchange Services
                ITEC and ITAC provide customer services in connection with tax-deferred real property exchanges pursuant to Section 1031 of the Internal Revenue Code. As a qualified intermediary, ITEC holds the proceeds from sales of relinquished properties until the acquisition of identified replacement properties occurs. ITAC facilitates tax-deferred reverse exchanges pursuant to IRS Revenue Procedure 2000-37. These exchanges require ITAC, using funds borrowed on a non-recourse basis from the customer or his lender, to acquire the designated replacement property on behalf of the customer by taking temporary title to the customer’s property until after the disposition of identified relinquished property occurs.

7

SEASONALITY
Title Insurance
                Title insurance premiums are closely related to the level of real estate activity and the average price of real estate sales. The availability of funds to finance purchases directly affects real estate sales. Other factors include consumer confidence, economic conditions, supply and demand, mortgage interest rates and family income levels. Historically, the first quarter has the least real estate activity because fewer real estate transactions occur, while the remaining quarters are more active. Refinance activity is generally less seasonal, but it is subject to interest rate volatility. Fluctuations in mortgage interest rates can cause shifts in real estate activity outside of the normal seasonal pattern.
Exchange Services
                Seasonal factors affecting the level of real estate activity and the volume of title premiums written will also affect the demand for exchange services.
MARKETING
Title Insurance
ITIC delivers title insurance coverage through a home office, branch offices, and issuing agents. In North Carolina, ITIC issues policies primarily through a home office and 27 branch offices. The Company also has a branch office in South Carolina and Michigan. ITIC also writes title insurance policies through issuing agents in the District of Columbia and the States of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia and Wisconsin. Issuing agents are typically real estate attorneys or subsidiaries of community and regional mortgage lending institutions, depending on local customs and regulations and the Company’s marketing strategy in a particular territory.
NE-ITIC currently operates through agency offices in the State of New York.
                ITIC and NE-ITIC strive to provide superior service to their customers and consider this an important factor in attracting and retaining customers. Branch and corporate personnel strive to develop new business and agency relationships to increase market share and ITIC’s Commercial Services Division provides services to commercial clients. The Company’s marketing efforts are also enhanced through advertising in various periodicals.
Exchange Services
                Marketing of exchange services offered by ITEC and ITAC has been increasingly incorporated into the marketing of the core title products offered by ITIC and NE-ITIC. The Commercial Services Division of ITIC also markets the services offered by ITEC and ITAC to its clients.

8

CUSTOMERS
                The Company is not dependent upon any single customer or a few customers, and the loss of any single customer would not have a material adverse effect on the Company.
INSURED RISK ON POLICIES IN FORCE
                Generally, the amount of the insured risk on a title insurance policy is equal to the lesser of the purchase price of the insured property or the fair market value of the property. In the event that a claim is made against the property, the insurer is also responsible for paying all legal expenses in connection with defending the insured party and eliminating any title defects affecting the property. The insurer may, however, choose to pay the policy limits to the insured, at which time the insurer’s duty to defend the claim is satisfied.
                At any given time, the insurer’s actual financial risk is only a portion of the aggregate insured risk of all policies in force. The reduction in risk results in part from the reissuance of title insurance policies by other underwriters when the property is conveyed or refinanced. An owner’s policy is effective only as long as the insured has an ownership interest in the property or has liability under warranties of title. Furthermore, the coverage on a lender’s title insurance policy is reduced and eventually terminated as the loan it secures is paid. Due to the variability of these factors, the aggregate contingent liability of the Company and its subsidiaries cannot be determined with any precision.
ENVIRONMENTAL MATTERS
                The title insurance policies ITIC and NE-ITIC currently issue exclude liability for environmental risks and contamination. Although policies issued prior to 1992 may not specifically exclude such environmental risks, they generally do not provide affirmative coverage for such risks. As a result, the Company does not anticipate that it or its subsidiaries will incur any significant expenses related to environmental claims.
                In connection with effecting tax-deferred exchanges of like-kind property, ITEC and ITAC may temporarily hold title to property pursuant to an accommodation titleholder agreement. In such situations, the person or entity for which title is being held must execute an indemnification agreement pursuant to which it agrees to indemnify ITEC or ITAC, as appropriate, for any environmental or other claims which may arise as a result of the arrangement.
REGULATIONS
Title Insurance
                The Company is an insurance holding company and therefore it is subject to regulation in the states in which its insurance subsidiaries do business. These regulations, among other things, require insurance holding companies to register and file certain reports and require prior regulatory approval of the payment of dividends and other intercompany transfers.

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Title insurance companies are extensively regulated under applicable state laws. All states have requirements for admission to do business as an insurance company, including minimum levels of capital and surplus. State regulatory authorities monitor the stability and service of insurance companies and possess broad powers with respect to the licensing of title insurers and agents, rates, type and amount of investments, policy forms, financial reporting, reserve requirements, and dividend restrictions, as well as examinations and audits of title insurers. The Company’s two insurance subsidiaries are subject to examination at any time by the insurance regulators in the states where they are licensed.
                Proposals to change the laws and regulations governing insurance holding companies and the title insurance industry are often introduced in Congress, in the state legislatures and before the various insurance regulatory agencies. The Company regularly monitors such proposals and legislation, although the likelihood and timing of them and the impact they may have on the Company and its subsidiaries cannot be determined at this time.
ITIC is domiciled in North Carolina and is subject to North Carolina insurance regulations. The North Carolina Department of Insurance typically schedules financial examinations every five years. ITIC was last examined by the North Carolina Department of Insurance for the period January 1, 1995 through December 31, 1999. No material deficiencies were noted in the report.
                NE-ITIC is domiciled in South Carolina and subject to South Carolina insurance regulations. The South Carolina Department of Insurance periodically schedules financial examinations. NE-ITIC was examined by the South Carolina Department of Insurance for the period January 1, 1998 through December 31, 2000. No material deficiencies were noted in the report.
In addition to financial examinations, ITIC and NE-ITIC are subject to market conduct examinations by the North Carolina Department of Insurance and the South Carolina Department of Insurance, respectively. These audits examine domiciled state activity. ITIC’s last market conduct examination commenced on May 3, 2004 for the period January 1, 2001 through December 31, 2003, with no material deficiencies noted. NE-ITIC’s last market conduct examination coincided with its financial examination, which commenced in November 2001 for the period January 1, 1998 through December 31, 2000. No material deficiencies were noted for NE-ITIC by the market conduct examiners.
Both ITIC and NE-ITIC meet the statutory premium reserve requirements and the minimum capital and surplus requirements of the states in which they are licensed.
Exchange Services
                Intermediary services are not federally regulated and neither ITEC nor ITAC operate in any states that regulate this industry. ITEC and ITAC both provide services to taxpayers pursuant to Internal Revenue Service (“IRS”) regulations that provide taxpayers a safe harbor by using a qualified intermediary to structure tax-deferred exchanges of property and using an exchange accommodation titleholder to hold property in reverse exchange transactions. Periodically, changes to the tax code provisions affecting like-kind exchanges are considered, which could possibly eliminate the need for the services the exchange segment provides.

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COMPETITION
Title Insurance
                ITIC currently operates primarily in North Carolina, Michigan, Pennsylvania, South Carolina, Tennessee and Virginia and NE-ITIC currently operates in New York. ITIC’s and NE-ITIC’s major competitors, which together comprise a majority of the title insurance market on a national level, are Chicago Title Insurance Company, Commonwealth Land Title Insurance Company, Fidelity National Title Insurance Company, First American Title Insurance Company, Lawyers Title Insurance Corporation, Old Republic National Title Insurance Company and Stewart Title Guaranty Company. Key factors that affect competition in the title insurance industry are price, expertise, timeliness and quality of service and the financial strength and size of the insurer. Title insurance underwriters also compete for agents based upon the ratio of premium splits between the underwriter and the agent.
                In addition, there are numerous industry-related regulations and statutes that set out conditions and requirements to conduct business. Changes to or the removal of such regulations and statutes could result in additional competition from alternative title insurance products or new entrants into the industry that could materially affect the Company’s business operations and financial condition.
Exchange Services
                Competition for ITEC and ITAC comes from other title insurance companies as well as some major banks that offer exchange services. Key elements that affect competition are price, expertise, timeliness and quality of service and the financial strength and size of the company. Exchange services are not a regulated industry; therefore, there is no market data available regarding the Company’s market position in this industry.
INVESTMENTS
                The Company and its subsidiaries derive a substantial portion of their income from investments in bonds (municipal and corporate) and equity securities. The investment policy is designed to maintain a high quality portfolio and maximize income. Some state laws impose restrictions upon the types and amounts of investments that can be made by the Company’s insurance subsidiaries.
                See Note 3 of Notes to Consolidated Financial Statements in the 2004 Annual Report to Shareholders incorporated by reference in this Form 10-K Annual Report for the major categories of investments, earnings by investment categories, scheduled maturities, amortized cost, and market values of investment securities.
EMPLOYEES
                The Company has no paid employees. Officers of the Company are full-time paid employees of ITIC. The Company’s subsidiaries had 214 full-time employees and 13 part-time employees as of December 31, 2004.
                None of the employees of the Company or its subsidiaries are subject to a collective bargaining agreement. Management considers its relationship with its employees to be favorable.

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INTELLECTUAL PROPERTY
                The Company has registered two service marks with the United States Patent and Trademark Office (the “USPTO”). The first mark was registered with the USPTO on August 29, 2000 and the second mark was registered on September 12, 2000. In addition, ITIC registered a service mark with the USPTO on February 3, 1987. In the Company’s opinion, the loss of these registrations would not materially affect its business or the business of its subsidiaries.
ITEM 2.   PROPERTIES
                 The Company owns two adjacent office buildings and property located on the corner of North Columbia and West Rosemary Streets in Chapel Hill, North Carolina, which serves as the Company’s corporate headquarters. The main building contains approximately 23,000 square feet and has on-site parking facilities. The Company’s principal subsidiary, ITIC, leases office space in 33 locations throughout North Carolina, South Carolina, Michigan, Nebraska and Tennessee. NE-ITIC leases office space in one location in New York. Each of the office facilities occupied by the Company and its subsidiaries are in good condition and adequate for present operations. In September 2004, additional space in Chapel Hill, North Carolina was leased for ITEC, ITAC, ITIC’s Commercial Services Division and ITIC’s Settlement Services Division.
ITEM 3.   LEGAL PROCEEDINGS
                The Company and its subsidiaries are involved in various legal proceedings that are incidental to their business. In the Company’s opinion, based on the present status of these proceedings, any potential liability of the Company or its subsidiaries with respect to these legal proceedings will not, in the aggregate, be material to the Company’s consolidated financial condition or operations.
ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended December 31, 2004.
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY
                Following is information regarding the executive officers of the Company as of February 28, 2005. Each officer is appointed at the annual meeting of the Board of Directors to serve until the next annual meeting of the Board or until his or her respective successor has been elected and qualified.

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Name Age Position with Registrant
J. Allen Fine 70 Chief Executive Officer and Chairman of the Board
James A. Fine, Jr. 42 President, Treasurer, Chief Financial Officer, Chief
Accounting Officer and Director
W. Morris Fine 38 Executive Vice President, Secretary and Director
J. Allen Fine has been Chief Executive Officer and Chairman of the Board of the Company since its incorporation in 1973. Mr. Fine also served as President of the Company until May 1997. Mr. Fine is the father of James A. Fine, Jr., President, Treasurer and Director of the Company, and W. Morris Fine, Executive Vice President, Secretary and Director of the Company.
James A. Fine, Jr. was named Vice President of the Company in 1987. In 1997, he was named President and Treasurer and appointed as a Director of the Company. He is the son of J. Allen Fine, Chief Executive Officer and Chairman of the Board of the Company, and the brother of W. Morris Fine, Executive Vice President, Secretary and Director of the Company.
W. Morris Fine was named Vice President of the Company in 1992. In 1993, he was named Treasurer of the Company and served in that capacity until 1997. In 1997, he was named Executive Vice President and Secretary of the Company. In 1999, he was appointed as a Director of the Company. W. Morris Fine is the son of J. Allen Fine, Chief Executive Officer and Chairman of the Board of the Company, and the brother of James A. Fine, Jr., President, Treasurer and Director of the Company.

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PART II
ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
                The high and low sales prices for the Company’s common stock, as reported on the NASDAQ National Market System, the dividends paid per common share for each quarter in the last two fiscal years and the approximate number of shareholders of record are set forth under the caption “Common Stock Data” in the 2004 Annual Report to Shareholders and are incorporated by reference in this Form 10-K Annual Report. For a discussion of factors that may limit the Company’s ability to pay dividends on its common stock, refer to the subsection of Management’s Discussion and Analysis of Financial Condition and Results of Operations entitled “Liquidity and Capital Resources” in the 2004 Annual Report to Shareholders, incorporated by reference in this Form 10-K Annual Report.
                The following table provides information about the Company’s compensation plans under which equity securities are authorized for issuance as of December 31, 2004. The Company does not have any equity compensation plans that have not been approved by its shareholders.
Plan Category Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights Weighted Average
Price of Outstanding
Options, Warrants
and Rights Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans

Equity compensation plans
approved by shareholders 246,781 $  16.45 196,300

Equity compensation plans not
approved by shareholders — — —
     Total 246,781 $  16.45 196,300
                The following table provides information about purchases by the Company (and all affiliated purchasers) during the quarter ended December 31, 2004 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act:
Issuer Purchases of Equity Securities
Period Total Number of
Shares
Purchased Average Price
Paid per Share Total Number of
Shares Purchased as
Part of Publicly
Announced Plan Maximum Number of
Shares that May Yet Be
Purchased Under the
Plan

Beginning of period 505,855
10/01/04 - 10/31/04 2,052 $ 31.30 2,052 503,803
11/01/04 - 11/30/04 236 $ 33.87 236 503,567
12/01/04 - 12/31/04 8,695 $ 34.81 8,695 494,872

Total: 10,983 $ 34.13 10,983 494,872

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(1) For the quarter ended December 31, 2004, ITIC purchased an aggregate of 10,983 shares of the Company’s common stock pursuant to the purchase plan (the “Plan”) that was publicly announced on June 5, 2000.
(2) On June 5, 2000, the Board of Directors of ITIC approved the purchase by ITIC of up to an aggregate of 500,000 shares of the Company’s common stock pursuant to the Plan. Subsequently, the Board of Directors of ITIC approved the purchase of an additional 125,000 shares of the Company’s common stock pursuant to the Plan. Unless terminated earlier by resolution of the Board of Directors of ITIC, the Plan will expire when ITIC has purchased all shares authorized for purchase thereunder.
(3) ITIC intends to make further purchases under this Plan.
ITEM 6.   SELECTED FINANCIAL DATA
                The selected financial data for the last five fiscal years of the Company and its subsidiaries is set forth under the caption “Financial Highlights” in the 2004 Annual Report to Shareholders and is incorporated by reference in this Form 10-K Annual Report. The information should be read in conjunction with the Consolidated Financial Statements, Notes to Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2004 Annual Report to Shareholders, which are incorporated by reference in this Form 10-K Annual Report.
ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2004 Annual Report to Shareholders is incorporated by reference in this Form 10-K Annual Report.
ITEM 7A.    ~~Quantitative~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                The subsection entitled “Quantitative and Qualitative Disclosures ~~About~~about Market ~~Risk...........................................11~~Risk” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2004 Annual Report to Shareholders is incorporated by reference in this Form 10-K Annual Report.
ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                The financial statements and supplementary data in the 2004 Annual Report to Shareholders are incorporated by reference in this Form 10-K Annual Report.
                The financial statements meeting the requirements of Regulation S-X are attached hereto as Schedules I, II, III, IV and V.
                The supplementary financial information set forth in the section entitled “Selected Quarterly Financial Data” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2004 Annual Report to Shareholders is incorporated by reference in this Form 10-K Annual Report.

15

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
                No reportable item.
ITEM 9A.   CONTROLS AND PROCEDURES
                The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 (the “Act”) was recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms. An evaluation was performed under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(e) under the Act. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2004. In reaching this conclusion, the Company’s Chief Executive Officer and Chief Financial Officer determined that the Company’s disclosure controls and procedures were effective in ensuring that such information was accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure.
                During the quarter ended December 31, 2004, there was no change in the Company’s internal control over financial reporting identified in connection with the above-referenced evaluation that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 9B.   OTHER INFORMATION
There was no information required to be disclosed in a report on Form 8-K during the fourth quarter of the year that has not been reported.

16

PART III
ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
                Information pertaining to Directors of the Company under the heading “Election of Directors” in the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on May 18, 2005 is incorporated by reference in this Form 10-K Annual Report. Other information with respect to executive officers is contained in Part I - Item 8. Financial Statements and Supplementary Data..........................................................11 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................11 PART III Item 10. Directors and Executive4(a) under the caption “Executive Officers of the ~~Registrant...................................................12 Item~~Company”.
                The Company has adopted a written Code of Business Conduct and Ethics that applies to all officers, directors and employees of the Company and its subsidiaries. The Code of Business Conduct and Ethics can be found on the Company’s website at www.invtitle.com. The Company intends to make all required disclosures concerning any amendments to, or waivers from, the Code of Business Conduct and Ethics on its website.
ITEM 11.   ~~Executive Compensation...............................................................................12 Item~~EXECUTIVE COMPENSATION
                Information set forth under the headings “Executive Compensation” and “Compensation Committee Interlocks and Insider Participation” in the Company’s definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 18, 2005 is incorporated by reference in this Form 10-K Annual Report.
ITEM 12.    ~~Security~~SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
                Information pertaining to securities ownership of certain beneficial owners and management under the heading “Stock Ownership of Executive Officers and Certain Beneficial ~~Owners~~Owners” in the Company’s definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 18, 2005 is incorporated by reference in this Form 10-K Annual Report.
ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
                Information set forth under the heading “Executive Employment Agreements” in the Company’s definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 18, 2005 is incorporated by reference in this Form 10-K Annual Report.
ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES
                Information pertaining to principal accountant fees and ~~Management~~services under the heading “Independent Auditor Audit and ~~Related Stockholder Matters.......12 Item 13. Certain Relationships~~Non-Audit Fees” in the Company’s definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 18, 2005 is incorporated by reference in this Form 10-K Annual Report.

17

PART IV
ITEM 15.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements.
The following financial statements in the 2004 Annual Report to Shareholders are hereby incorporated
by reference in this Form 10-K Annual Report:
Consolidated Balance Sheets as of December 31, 2004 and ~~Related Transactions.......................................................12 Item 14. Controls~~2003
Consolidated Statements of Income for the Years Ended December 31, 2004, 2003 and ~~Procedures..............................................................................12 PART IV Item 15. Exhibits,~~ 2002
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2004, 2003 and 2002
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2004, 2003 and 2002
Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and 2002
Notes to Consolidated Financial Statements
Report of Independent Auditors
(a)(2) Financial Statement Schedules.
Following is a list of financial statement schedules filed as part of this Form 10-K Annual Report:
Schedule Number Description
I Summary of Investments - Other Than Investments in Related Parties
II Condensed Financial Information of Registrant
III Supplementary Insurance Information
IV Reinsurance
V Valuation and ~~Reports~~Qualifying Accounts
All other schedules are omitted, as the required information either is not applicable, is not required, or is presented in the consolidated financial statements or the notes thereto.
(a)(3)    Exhibits.
              The exhibits filed as a part of this report and incorporated herein by reference to other documents are listed in the Index to Exhibits to this Annual Report on Form 8-K.....................................13 Signatures......................................................................................................16 Certifications..................................................................................................17 10-K.

18
PART I ITEM 1. BUSINESS GENERAL Investors Title Company (the "Company") is a holding company that was incorporated in the State of North Carolina in February 1973. The Company became operational on June 24, 1976, when it acquired Investors Title Insurance Company ("ITIC") as a wholly owned subsidiary under a plan of exchange of shares of common stock. On September 30, 1983, the Company acquired Northeast Investors Title Insurance Company ("NE-ITIC"), formerly Investors Title Insurance Company of South Carolina, as a wholly owned subsidiary under a plan of exchange of shares of common stock. The Company's executive offices are located at 121 North Columbia Street, Chapel Hill, North Carolina 27514. The Company's telephone number is (919) 968-2200, its facsimile number is (919) 968-2235, and its website address is www.invtitle.com. The Company engages primarily in two segments of business. The main business activity is the issuance of title insurance through ITIC and NE-ITIC. The second segment provides tax-free exchange services through its subsidiaries, Investors Title Exchange Corporation and Investors Title Accommodation Corporation. See Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 13 of Notes to Consolidated Financial Statements in the 2002 Annual Report to Shareholders incorporated by reference in this Form 10-K Annual Report for additional information related to the Company's operating segments. Title Insurance Through its two wholly owned subsidiaries, ITIC and NE-ITIC, the Company underwrites land title insurance for owners and mortgagees as a primary insurer and as a reinsurer for other title insurance companies. Title insurance protects against loss or damage resulting from defects that affect the title to real property. The commitment and policies issued are the standard American Land Title Association approved forms. There are two basic types of title insurance policies - one for the mortgage lender and one for the real estate owner. A lender often requires property owners to purchase title insurance to protect its position as a holder of a mortgage loan, but the lender's title insurance policy does not protect the property owner. The property owner needs to purchase an owner's title insurance policy to protect his investment. When real property is conveyed from one party to another, occasionally there is a hidden defect in the title or a mistake in a prior deed, will or mortgage that may give a third party a legal claim against such property. If a claim is made against real property, title insurance provides a corporate guarantee against insured defects, pays all legal expenses to eliminate any title defects, pays any claims arising from errors in title examination and recording, and pays any losses arising from hidden defects in title and defects that are not of record. Title insurance provides an assurance that the insurance holder's ownership and use of such property will be defended promptly against claims, at no cost, whether or not the claim is valid. 1 A title defect is one of any number of things that could jeopardize the property owner's interest. It could be an unsatisfied mortgage, lien, judgment or other unrecorded claim against the property. It could arise through easements, use restrictions or other existing covenants, or it could be a hidden risk. Title insurance generally protects against four kinds of hidden risks -- errors in the public records such as incorrect information in deeds and mortgages regarding names, signatures and legal descriptions; judgments, liens and mortgages or any other claims against the property or the seller which become the new owner's responsibility after closing, such as unpaid taxes, assessments and other debts to creditors; claims to ownership by the spouse of a former owner or by the "missing heir" of a deceased owner who did not receive his share of the estate; and invalid deeds or other transfers by sellers who did not actually own the property or by previous owners who were minors or not mentally competent. ITIC was incorporated in the State of North Carolina on January 28, 1972, and became licensed to write title insurance in the State of North Carolina on February 1, 1972. At present, ITIC mainly writes land title insurance both as a primary insurer and as a reinsurer throughout the eastern and midwestern United States. ITIC is the leading title insurer of North Carolina property and has held this position of most premiums written for nineteen years based on amounts reported to the North Carolina Department of Insurance. ITIC writes title insurance through issuing agents or branch offices in the District of Columbia and the States of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kentucky, Maryland, Michigan, Minnesota, Mississippi, Nebraska, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia and Wisconsin. In addition to the states in which ITIC currently writes title insurance, it is also licensed to write title insurance in the States of Arizona, Colorado, Connecticut, Delaware, Idaho, Kansas, Louisiana, Maine, Massachusetts, Missouri, Montana, Nevada, North Dakota, Oklahoma, Rhode Island, Texas, Utah, Vermont and Wyoming. Agents issue policies for ITIC and may provide other services such as escrow and settlement services. The Settlement Services division of ITIC, which became operational in January 2002, provides a variety of closing-related services to lenders. The services provided by this division include scheduling closings for lenders, preparing HUD statements, paying off existing mortgages and liens, making post-closing disbursements and providing witness closers upon request. By December 31, 2002, Settlement Services was providing closing assistance to lenders in Maryland, Michigan and Virginia, and it anticipates expanding into additional states in 2003. The Settlement Services division derives its income from the fees it charges on a transactional basis, and such fees vary based upon the state in which services are provided. NE-ITIC was incorporated in the State of South Carolina on February 23, 1973, and became licensed to write title insurance in that state on November 1, 1973. It currently writes title insurance as a primary insurer and as a reinsurer in the State of New York. NE-ITIC is also licensed to write title insurance in North Carolina and South Carolina. Each state license authorizing ITIC or NE-ITIC to write title insurance must be renewed annually. These licenses are necessary for the companies to operate as a title insurer in each state in which they are held and the loss of a license in any state by either company would prevent the company from issuing title insurance in that state. 2 In the State of North Carolina, ITIC issues title insurance commitments and policies through its home office and its 27 branch offices that are located throughout North Carolina. In the ordinary course of business, ITIC and NE-ITIC reinsure certain risks with other title insurers for the purpose of limiting their exposure. They also assume reinsurance for certain risks of other title insurers for which they receive additional income. For the last three years, reinsurance activities accounted for less than 1% of total premium volume. As of December 31, 2002, ITIC had a risk retention limit of $2,000,000, meaning that it assumed primary risks up to $2,000,000. It then reinsured the next $250,000 of risk with NE-ITIC, and all risks above $2,250,000 were reinsured with an unrelated reinsurer. As of December 31, 2002, NE-ITIC had a risk retention limit of $250,000, meaning that it assumed primary risks up to $250,000. It then reinsured the next $2,000,000 of risk with ITIC, and all amounts above $2,250,000 were reinsured with an unrelated reinsurer. Both ITIC's and NE-ITIC's risk retention limits are self-imposed and are more conservative than state insurance regulations require. ITIC's self-imposed retention of $2,000,000 is only 14.9% of its statutorily permitted retention of $13,398,715. NE-ITIC's self-imposed retention of $250,000 is only 14.6% of its statutorily permitted retention of $1,708,111. ITIC's financial stability has been recognized by two Fannie Mae-approved actuarial firms with rating categories of "A Double Prime - unsurpassed financial stability" and "A - strong overall financial condition." NE-ITIC's financial stability has been recognized by two Fannie Mae- approved actuarial firms with rating categories of "A Prime - unsurpassed financial stability" and "A+ - strong overall financial condition." Exchange Services In 1988, the Company established Investors Title Exchange Corporation, a wholly owned subsidiary ("ITEC"), to provide services in connection with tax-free exchanges of like-kind property. ITEC acts as an intermediary in tax-free exchanges of property held for productive use in a trade or business or for investments, and its income is derived from fees for handling exchange transactions. The Company established South Carolina Document Preparation Company ("SCDPC") as a wholly owned subsidiary in 1994. In the first quarter of 2001, SCDPC changed its name to Investors Title Accommodation Corporation ("ITAC") and began serving as an exchange accommodation titleholder, offering a vehicle for accomplishing a reverse exchange when a taxpayer must acquire replacement property before selling the relinquished property. 3 OPERATIONS OF SUBSIDIARIES For a description of net premiums written geographically, refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2002 Annual Report to Shareholders incorporated by reference in this Form 10-K Annual Report. Title Insurance ITIC and NE-ITIC offer primary title insurance coverage to owners and mortgagees of real estate and reinsurance of title insurance risks to other title insurance companies. Title insurance premiums written reflect a one-time premium payment, with no recurring premiums. Premiums are recorded and policies or commitments are issued upon receipt of final certificates or preliminary reports with respect to titles. Title insurance commissions earned by the Company's agents are recognized as expense concurrently with premium recognition. See Note 13 of Notes to Consolidated Financial Statements in the 2002 Annual Report to Shareholders incorporated by reference in this Form 10-K Annual Report for additional information related to the Company's operating segments. Exchange Services ITEC and ITAC offer services in connection with tax-free exchanges. See Note 13 of Notes to Consolidated Financial Statements in the 2002 Annual Report to Shareholders incorporated by reference in this Form 10-K Annual Report for additional information related to the Company's operating segments. SEASONALITY Title Insurance Title insurance premiums are closely related to the level of real estate activity and the average price of real estate sales. The availability of funds to finance purchases directly affects real estate sales. Other factors include consumer confidence, economic conditions, supply and demand, mortgage interest rates and family income levels. Historically, the first quarter has the least real estate activity because fewer real estate transactions occur, while the remaining quarters are more active. Refinance activity is generally less seasonal, but it is subject to interest rate volatility. Fluctuations in mortgage interest rates can cause shifts in real estate activity outside of the normal seasonal pattern. Exchange Services Seasonal factors affecting the level of real estate activity and the volume of title premiums written will also affect the demand for exchange services. MARKETING Title Insurance ITIC's marketing plan is based upon providing fast and efficient service in the delivery of title insurance coverage through a home office, branch offices, and issuing agents. In North Carolina, ITIC operates through a home 4 office and 27 branch offices. In South Carolina, ITIC operates through a branch office and issuing agents located conveniently to customers throughout the state. ITIC also writes title insurance policies through issuing agents in the District of Columbia and the States of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kentucky, Maryland, Michigan, Minnesota, Mississippi, Nebraska, New Jersey, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and Wisconsin. NE-ITIC currently operates through agency offices in the State of New York. ITIC and NE-ITIC strive to provide superior service to their customers and consider this an important factor in attracting and retaining customers. Branch and corporate personnel strive to develop new business and agency relationships to increase market share. A Commercial Services Division established in the first quarter of 2001 provides services to commercial clients. The Company's marketing efforts are also enhanced through advertising in various periodicals. Exchange Services Marketing of exchange services offered by ITEC and ITAC has been increasingly incorporated into the marketing of the core title products offered by ITIC and NE-ITIC. ITEC and ITAC are also promoted through the marketing efforts of this division. The Commercial Services Division of ITIC also markets the services offered by ITEC and ITAC to its clients. CUSTOMERS The Company is not dependent upon any single customer or a few customers, and the loss of any single customer would not have a material adverse effect on the Company. RESERVES The total reserve for all reported and unreported losses the Company incurred through December 31, 2002, is represented by the reserve for claims. The Company's reserves for unpaid losses and loss adjustment expenses are established using estimated amounts required to settle claims for which notice has been received (reported) and the amount estimated to be required to satisfy incurred claims of policyholders which may be reported in the future. Despite the variability of such estimates, management believes that the reserves are adequate to cover claim losses which might result from pending and future claims. The Company continually reviews and adjusts its reserve estimates to reflect its loss experience and any new information that becomes available. Claims and losses paid are charged to the reserves for claims. Although claims losses are typically paid in cash, occasionally claims are settled by purchasing the interest of the insured or the claimant in the real property. When this occurs, the acquiring company carries assets at the lower of cost or estimated realizable value, net of any indebtedness on the property. Refer to Note 6 of Notes to Consolidated Financial Statements in the 2002 Annual Report to Shareholders incorporated by reference in this Form 10-K Annual Report for a further discussion of reserves. 5 INSURED RISK ON POLICIES IN FORCE Generally, the amount of the insured risk on a title insurance policy is equal to the lesser of the amount of the loan secured by the policy, the purchase price of the insured property or the fair market value of the property. In the event that a claim is made against the property, the insurer is also responsible for paying all legal expenses in connection with defending the insured party and eliminating any title defects affecting the property. The insurer may, however, choose to pay the policy limits to the insured, at which time the insurer's duty to defend the claim is satisfied. At any given time, the insurer's actual financial risk is only a portion of the aggregate insured risk of all policies in force. The reduction in risk results in part from the reissuance of title insurance policies by other underwriters when the property is refinanced. An owner's policy is effective only as long as the insured has an ownership interest in the property or has liability under warranties of title. Furthermore, the coverage on a lender's title insurance policy is reduced and eventually terminated as the loan it secures is paid. Due to the variability of these factors, the aggregate contingent liability of the Company and its subsidiaries cannot be determined with any precision. ENVIRONMENTAL MATTERS The title insurance policies ITIC and NE-ITIC currently issue exclude liability for environmental risks and contamination. Although older policies do not specifically exclude such environmental risks, they generally do not provide affirmative coverage for such risks. As a result, the Company does not anticipate that it or its subsidiaries will incur any significant expenses related to environmental claims. In connection with effecting tax-free exchanges of like-kind property, ITEC and ITAC may temporarily hold title to property pursuant to an accommodation titleholder agreement. In such situations, the person or entity for which title is being held must execute an indemnification agreement pursuant to which it agrees to indemnify ITEC or ITAC, as appropriate, for any environmental or other claims which may arise as a result of the arrangement. REGULATIONS Title insurance companies are extensively regulated under applicable state laws. The regulatory authorities possess broad powers with respect to the licensing of title insurers and agents, rates, investments, policy forms, financial reporting, reserve requirements, and dividend restrictions, as well as examinations and audits of title insurers. The Company's two insurance subsidiaries are subject to examination at any time by the insurance regulators in the states where they are licensed. ITIC is domiciled in North Carolina and is subject to North Carolina insurance regulations. The North Carolina Department of Insurance typically schedules financial examinations every five years. ITIC was last examined by the North Carolina Department of Insurance for the period January 1, 1995 through December 31, 1999. No material deficiencies were noted in the report. NE-ITIC is domiciled in South Carolina and subject to South Carolina insurance regulations. The South Carolina Department of Insurance periodically schedules financial examinations. NE-ITIC was examined by the South Carolina 6 Department of Insurance for the period January 1, 1998 through December 31, 2000. No material deficiencies were noted in the report. In addition to financial examinations, both ITIC and NE-ITIC are subject to market conduct examinations. These audits examine domiciled state activity. ITIC's last market conduct examination commenced on April 19, 1999 for the period January 1, 1996 through December 31, 1998, with no material deficiencies noted. NE-ITIC's last market conduct examination coincided with its financial examination, which commenced on November 19, 2001 for the period January 1, 1998 through December 31, 2000. No material deficiencies were noted for NE-ITIC by the market conduct examiners. In accordance with the insurance laws and regulations applicable to title insurance in the State of North Carolina, ITIC has established and maintains a statutory premium reserve for the protection of policyholders. As of December 31, 2002, ITIC's statutory premium reserve was $25,176,594. For years prior to 1999, ITIC reserved an amount equal to 10% of current year premiums written and reduced such amounts annually by 5% beginning one year subsequent to the annual addition. For years after 1998, 10% of direct premiums written plus premiums for reinsurance assumed less premiums for reinsurance ceded is reserved and reduced annually, one year subsequent to the annual addition, over a period of 20 years, as follows: 20% the first year, 10% the second and third year, 5% for years four through ten, 3% for years eleven through fifteen, and 2% for years sixteen through twenty. NE-ITIC has established and maintains a statutory premium reserve as required by the insurance laws and regulations of the State of New York. As of December 31, 2002, NE-ITIC's statutory premium reserve was $290,870. NE-ITIC has accumulated a statutory premium reserve equal to $1.50 for each risk assumed under a policy or commitment plus one-eightieth of one percent of the face amount of each commitment or policy. Beginning in the year following the annual addition, the reserve is reduced by 5%. These statutory premium reserves are not recorded for financial reporting under accounting principles generally accepted in the United States of America ("GAAP") and changes in the statutory premium reserve have no effect on net income of the Company or its subsidiaries for GAAP reporting purposes. The Company is an insurance holding company and therefore it is subject to regulation in the states in which its insurance subsidiaries do business. These regulations, among other things, require insurance holding companies to register and file certain reports and require prior regulatory approval of intercorporate transfers. All states set requirements for admission to do business, including minimum levels of capital and surplus. State insurance departments have broad administrative powers and monitor the stability and service of insurance companies. In addition to the financial statements which are required to be filed as part of this report and are prepared on the basis of generally accepted accounting principles, the Company's insurance subsidiaries also prepare financial statements in accordance with statutory accounting principles prescribed or permitted by state regulations. Based upon the latter principles, as of December 31, 2002, ITIC reported $33,496,787 of capital and surplus, and net income of $7,696,548; and NE-ITIC reported $3,416,221 of capital and surplus, and net income of $370,423. 7 Both ITIC and NE-ITIC meet the minimum capital and surplus requirements of the states in which they are licensed. COMPETITION Title Insurance ITIC currently operates primarily in Michigan, North Carolina, Pennsylvania, South Carolina, Tennessee and Virginia. ITIC's major competitors are Chicago Title Insurance Company, Commonwealth Land Title Insurance Company, Fidelity National Title Insurance Company, First American Title Insurance Company, Lawyers Title Insurance Corporation, Old Republic National Title Insurance Company and Stewart Title Guaranty Company. Key elements that affect competition are price, expertise, timeliness and quality of service and the financial strength and size of the insurer. In addition, there are numerous industry-related regulations and statutes that set out conditions and requirements to conduct business. Changes to or the removal of such regulations and statutes could result in additional competition from alternative title insurance products or new entrants into the industry that could materially affect our business operations and financial condition. Exchange Services Competition for ITEC and ITAC comes from other title insurance companies as well as some major banks that offer exchange services. Key elements that affect competition are price, expertise, timeliness and quality of service and the financial strength and size of the company. The exchange segment is dependent upon current Internal Revenue Service ("IRS") regulations that provide taxpayers a safe harbor by using a qualified intermediary to structure tax-free exchanges of property and using an exchange accommodation titleholder to hold property in reverse exchange transactions. Changes to current IRS regulations could materially affect the Company's operations. INVESTMENTS The Company and its subsidiaries derive a substantial portion of their income from investments in bonds (municipal and corporate) and equity securities. The investment policy is designed to maintain a high quality portfolio and maximize income. Some state laws impose restrictions upon the types and amounts of investments that can be made by the Company's insurance subsidiaries. See Note 3 of Notes to Consolidated Financial Statements in the 2002 Annual Report to Shareholders incorporated by reference in this Form 10-K Annual Report for the major categories of investments, earnings by investment categories, scheduled maturities, amortized cost, and market values of investment securities. 8 EMPLOYEES The Company has no paid employees. NE-ITIC had one full-time paid employee as of December 31, 2002. Officers of the Company are full-time paid employees of ITIC, which had 203 full-time employees and 15 part-time employees as of December 31, 2002. INTELLECTUAL PROPERTY The Company has registered two service marks with the United States Patent and Trademark Office (the "USPTO"). The first mark was registered with the USPTO on September 12, 2000 and the second mark was registered on August 29, 2000. In addition, ITIC registered a service mark with the USPTO on February 3, 1987. In the Company's opinion, the loss of these registrations would not materially affect its business or the business of its subsidiaries. ITEM 2. PROPERTIES The Company owns the office building and property located on the corner of North Columbia and West Rosemary Streets in Chapel Hill, North Carolina, which serves as the Company's corporate headquarters. The building contains approximately 23,000 square feet. The Company's principal subsidiary, ITIC, leases office space in 29 locations throughout North Carolina, South Carolina and Michigan. NE-ITIC leases office space in one location in New York. The Company also owns several parcels and two buildings adjacent to the Company's facility. See Note 9 of Notes to Consolidated Financial Statements in the 2002 Annual Report to Shareholders incorporated by reference in this Form 10-K Annual Report for the amounts of future minimum lease payments. Each of the office facilities occupied by the Company and its subsidiaries are in good condition and adequate for present operations. ITEM 3. LEGAL PROCEEDINGS The Company and its subsidiaries are involved in various routine legal proceedings that are incidental to their business. All of these proceedings arose in the ordinary course of business and, in the Company's opinion, any potential liability of the Company or its subsidiaries with respect to these legal proceedings will not, in the aggregate, be material to the Company's consolidated financial condition or operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended December 31, 2002. 9 ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY Following is information regarding the executive officers of the Company as of December 31, 2002. Each officer is appointed at the annual meeting of the Board of Directors to serve until the next annual meeting of the Board or until his or her respective successor has been elected and qualified. Name Age Position with Registrant Officer Since - ---- --- ------------------------ -------------- J. Allen Fine 68 Chairman, 1973 Director and CEO James A. Fine, Jr. 40 President, Director 1987 and Treasurer W. Morris Fine 36 Executive Vice 1992 President, Director and Secretary J. Allen Fine has been Chief Executive Officer and Chairman of the Board of the Company since its incorporation in 1973. Mr. Fine also served as President of the Company until May 1997. Mr. Fine is the father of James A. Fine, Jr., President, Treasurer and Director of the Company, and W. Morris Fine, Executive Vice President, Secretary and Director of the Company. James A. Fine, Jr. was named Vice President of the Company in 1987. In 1997, Mr. Fine was named President and Treasurer and appointed a Director of the Company. James A. Fine, Jr. is the son of J. Allen Fine, Chief Executive Officer and Chairman of the Board of the Company, and the brother of W. Morris Fine, Executive Vice President, Secretary and Director of the Company. W. Morris Fine was named Vice President of the Company in 1992. In 1993, Mr. Fine was named Treasurer of the Company and served in that capacity until 1997. In 1997, Mr. Fine was named Executive Vice President and Secretary of the Company. In 1999, he was appointed Director of the Company. Morris Fine is the son of J. Allen Fine, Chief Executive Officer and Chairman of the Board of the Company, and the brother of James A. Fine, Jr., President, Treasurer and Director of the Company. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The high and low sales prices for the Company's common stock, as reported on the NASDAQ National Market System, and the dividends paid per common share for each quarter in the last two fiscal years are set forth under the caption "Corporate Information" in the 2002 Annual Report to Shareholders and are incorporated by reference in this Form 10-K Annual Report. For a discussion of 10 restrictions limiting the Company's ability to pay dividends on its common stock, refer to the subsection of Management's Discussion and Analysis of Financial Condition and Results of Operations entitled "Liquidity and Capital Resources" in the 2002 Annual Report to Shareholders, incorporated by reference in this Form 10-K Annual Report. ITEM 6. SELECTED FINANCIAL DATA The selected financial data for the last five fiscal years of the Company and its subsidiaries is set forth under the caption "Financial Highlights" in the 2002 Annual Report to Shareholders and is incorporated by reference in this Form 10-K Annual Report. The information should be read in conjunction with the Consolidated Financial Statements, Notes to Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2002 Annual Report to Shareholders, which are incorporated by reference in this Form 10-K Annual Report. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2002 Annual Report to Shareholders is incorporated by reference in this Form 10-K Annual Report. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The subsection entitled "Quantitative and Qualitative Disclosures about Market Risk" in Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2002 Annual Report to Shareholders is incorporated by reference in this Form 10-K Annual Report. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and supplementary data in the 2002 Annual Report to Shareholders are incorporated by reference in this Form 10-K Annual Report. The financial statements meeting the requirements of Regulation S-X are attached hereto as Schedules I, II, III, IV and V. The supplementary financial information set forth in "Selected Quarterly Financial Data" in the 2002 Annual Report to Shareholders is incorporated by reference in this Form 10-K Annual Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes in, nor disagreements with, accountants on accounting and financial disclosure. 11 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information pertaining to Directors of the Company under the heading "Election of Directors" in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on May 21, 2003 is incorporated by reference in this Form 10-K Annual Report. Other information with respect to executive officers is contained in Part I - Item 4(a) under the caption "Executive Officers of the Company". ITEM 11. EXECUTIVE COMPENSATION Information set forth under the headings "Executive Compensation", "Performance Graph" and "Compensation Committee Interlocks and Insider Participation" in the Company's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 21, 2003 is incorporated by reference in this Form 10-K Annual Report. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information pertaining to securities ownership of certain beneficial owners and management under the heading "Ownership of Stock by Executive Officers and Certain Beneficial Owners" in the Company's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 21, 2003 is incorporated by reference in this Form 10-K Annual Report. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company has nothing to report in response to this Item. ITEM 14. 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 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. 12 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)(1) Financial Statements. The following financial statements in the 2002 Annual Report to Shareholders are hereby incorporated by reference in this Form 10-K Annual Report: Consolidated Balance Sheets as of December 31, 2002 and 2001 Consolidated Statements of Income for the Years Ended December 31, 2002, 2001 and 2000 Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2002, 2001 and 2000 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2002, 2001 and 2000 Consolidated Statements of Cash Flow for the Years Ended December 31, 2002, 2001 and 2000 Notes to Consolidated Financial Statements Report of Independent Auditors (a)(2) Financial Statement Schedules. Following is a list of financial statement schedules filed as part of this Form 10-K Annual Report: Schedule Number Description --------------- ----------- I Summary of Investments - Other Than Investments in Related Parties II Condensed Financial Information of Registrant III Supplementary Insurance Information IV Reinsurance V Valuation and Qualifying Accounts All other schedules are omitted, as the required information either is not applicable, is not required, or is presented in the consolidated financial statements or the notes thereto. (a)(3) Exhibits. Exhibit Incorporated by Number Description Reference to - ------ ----------- ------------ 3(i) Articles of Incorporation Exhibit 1 to Form 10, dated June 12, 1984 13 3(ii) Bylaws - Restated and Amended Included herewith through November 12, 2002 4 Rights Agreement, dated as of November Exhibit 1 to Form 8-A 12, 2002, between Investors Title filed November 15, 2002 Company and Central Carolina Bank, a division of National Bank of Commerce Management contracts or compensatory plans or arrangements 10(i) 1993 Incentive Stock Option Plan Exhibit 10 to Form 10-K for the year ended December 31, 1993 10(ii) Employment Agreement dated Exhibit 10 to Form 10-K February 9, 1984 with for the year ended J. Allen Fine, Chairman December 31, 1985 10(iii) Form of Incentive Stock Option Exhibit 10(v) to Form 10-K Agreement under 1993 Incentive for the year ended Stock Option Plan December 31, 1994 10(iv) 1997 Stock Option and Restricted Exhibit 10(viii) to Form Stock Plan 10-K for the year ended December 31, 1996 10(v) Form of Nonqualified Stock Option Exhibit 10(ix) to Form 10-Q Agreement to Non-employee Directors for the quarter ended dated May 13, 1997 under the 1997 June 30, 1997 Stock Option and Restricted Stock Plan 10(vi) Form of Nonqualified Stock Option Exhibit 10(x) to Form 10-K Agreement under 1997 Stock Option for the year ended and Restricted Stock Plan December 31, 1997 10(vii) Form of Incentive Stock Option Exhibit 10(xi) to Form 10-K Agreement under 1997 Stock Option for the year ended and Restricted Stock Plan December 31, 1997 10(viii) Form of Amendment to Incentive Exhibit 10(xii) to Form Stock Option Agreement between 10-Q for the quarter ended Investors Title Company and James June 30, 2000 Allen Fine, James Allen Fine, Jr., William Morris Fine, George Abbitt Snead, Ralph Nichols Strayhorn, III and Raeford Wilder Wall, Jr., respectively 14 Exhibit Incorporated by Number Description Reference to - ------ ----------- ------------ 10(ix) 2001 Stock Option and Restricted Exhibit 10(xiii) to Form Stock Plan 10-K for the year ended December 31, 2000 13 Portions of 2002 Annual Included herewith Report to Shareholders incorporated by reference in this report as set forth in Parts I, II and IV hereof 21 Subsidiaries of Registrant Included herewith 23 Independent Auditors Consent and Included herewith Report on Schedules (b) Reports on Form 8-K. No reports were filed on Form 8-K during the fourth quarter of 2002. 15 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INVESTORS TITLE COMPANY By: /s/J. Allen Fine ---------------- J. Allen Fine Chairman and Chief Executive Officer Date: March 26, 2003
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INVESTORS TITLE COMPANY
(Registrant)
By:     /s/ J. Allen Fine
———————————————————
J. Allen Fine, Chairman and Chief Executive
Officer(Principal Executive Officer)
March 16, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 26th day of March, 2003. /s/J. Allen Fine /s/James R. Morton - -------------------------------------------- -------------------------------- J. Allen Fine, Chairman and Chief James R. Morton, Director Executive Officer /s/James A. Fine, Jr. /s/Lillard H. Mount - -------------------------------------------- -------------------------------- James A. Fine, Jr., President, Treasurer and Lillard H. Mount, Director Director (Principal Financial Officer and Principal Accounting Officer) /s/W. Morris Fine /s/A. Scott Parker III - -------------------------------------------- -------------------------------- W. Morris Fine, Executive Vice President, A. Scott Parker III, Director Secretary and Director /s/David L. Francis - -------------------------------------------- David L. Francis, Director /s/Loren B. Harrell, Jr. - -------------------------------------------- Loren B. Harrell, Jr., Director /s/William J. Kennedy III - -------------------------------------------- William J. Kennedy III, Director /s/H. Joe King, Jr. - -------------------------------------------- H. Joe King, Jr., Director 16 Certifications I, J. Allen Fine, certify that: 1. I have reviewed this annual report on Form 10-K of Investors Title Company; 2. Based on my knowledge, this annual 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 annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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 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 annual 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 annual report (the "Evaluation Date"); and c) presented in this annual 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 functions): 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 annual 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: March 26, 2003 /s/J. Allen Fine - ----------------------- J. Allen Fine Chief Executive Officer 17 Certifications (continued) I, James A. Fine, Jr., certify that: 1. I have reviewed this annual report on Form 10-K of Investors Title Company; 2. Based on my knowledge, this annual 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 annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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 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 annual 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 annual report (the "Evaluation Date"); and c) presented in this annual 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 functions): 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 annual 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: March 26, 2003 /s/ James A. Fine, Jr. - ----------------------- James A. Fine, Jr. Chief Financial Officer 18 ~~SCHEDULE I INVESTORS TITLE COMPANY AND SUBSIDIARIES SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES As of December 31, 2002~~
~~Amount at which shown~~ in the ~~Type~~capacities indicated on the 16th day of ~~Investment Cost(1) Market Value Balance Sheet(2) ------- ------------ ----------------~~ ~~March, 2005.~~
    /s/ J. Allen Fine
——————————————————— ————————————————
J. Allen Fine, Chairman of the Board and James R. Morton, Director
Chief Executive Officer
(Principal Executive Officer)
    /s/ James A. Fine, Jr.     /s/ A. Scott Parker III
——————————————————— ————————————————
James A. Fine, Jr., President, Treasurer and A. Scott Parker III, Director
Director(Principal Financial Officer and
Principal Accounting Officer)
    /s/ W. Morris Fine     /s/ H. Joe King, Jr.
——————————————————— ————————————————
W. Morris Fine, Executive Vice President, H. Joe King, Jr., Director
Secretary and Director
    /s/ David L. Francis     /s/ William J. Kennedy III
——————————————————— ————————————————
David L. Francis, Director William J. Kennedy III, Director
    /s/ Loren B. Harrell, Jr.
———————————————————
Loren B. Harrell, Jr., Director

19

SCHEDULE I

INVESTORS TITLE COMPANY AND SUBSIDIARIES
SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES
As of December 31, 2004

Type of Investment Cost(1) Market Value Amount at
which shown
in the
Balance Sheet (2)

Fixed Maturities:
  Bonds:
    States, municipalities and political
      subdivisions $ 65,034,361 $ 66,617,609 $ 66,490,115
     Public utilities 199,662 216,346 216,346
     All other corporate bonds 7,339,755 7,967,940 7,967,940
  Short term investments 9,106,643 9,106,643 9,106,643
  Certificates of deposit 1,027,678 1,027,678 1,027,678

      Total fixed maturities 82,708,099 84,936,216 84,808,722

Equity Securities:
  Common Stocks:
      Public utilities 143,440 196,350 196,350
      Banks, trust and insurance companies 70,991 442,590 442,590
      Industrial, miscellaneous and all other 3,334,183 5,506,916 5,506,916
  Nonredeemable preferred stocks 893,690 1,094,450 1,094,450

      Total equity securities 4,442,304 7,240,306 7,240,306

Other Investments 1,211,517 1,211,517

Total investments per the consolidated balance sheet $ 88,361,920 $ 93,260,545

(1) Fixed ~~Maturities: Bonds: States,~~maturities are shown at amortized cost and equity securities are shown at original cost.
(2) Bonds of states, municipalities and political subdivisions ~~$29,255,117 $31,316,899 $31,134,911 Public utilities 199,439 231,156 231,156 All other corporate~~are shown at amortized cost for held-to-maturity bonds 13,776,077 15,002,497 15,002,497 Certificates of deposit 10,518,165 10,518,165 10,518,165 ----------- ----------- ----------- Total fixed maturities 53,748,798 57,068,717 56,886,729 ----------- ----------- -----------and fair value for available-for-sale bonds. Equity Securities: Common Stocks: Public utilities 349,966 588,180 588,180 Banks, trust and insurance companies 289,195 1,097,152 1,097,152 Industrial, miscellaneous and all other 1,676,011 2,020,826 2,020,826 Nonredeemable preferred stocks 4,078,117 4,178,770 4,178,770 ----------- ----------- ----------- Total equity securities 6,393,289 7,884,928 7,884,928 ----------- ----------- ----------- Other Investments 564,782 564,782 ----------- ----------- Total investments per the consolidated balance sheet 60,706,869 65,336,439 ----------- ----------- Cash equivalents 2,486,871 2,486,871 ----------- ----------- Total investments 63,193,740 67,823,310 =========== =========== are shown at fair value.
(1) Fixed maturities are shown at amortized cost and equity securities are shown at original cost. (2) Bonds of states, municipalities and political subdivisions are shown at amortized cost for held-to-maturity bonds and fair value for available-for-sale bonds. Equity securities are shown at fair value.

SCHEDULE II
INVESTORS TITLE COMPANY (PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
AS OF DECEMBER 31, 2004 AND 2003
2004 2003

Assets
  Cash and cash equivalents $ 207,849 $ 121,587
  Investments in fixed maturities, available-for-sale 8,956,400 773,483
  Investments in equity securities — 2,030,000
  Short term investments 1,012,182 2,494,742
  Investments in affiliated companies 58,936,521 52,597,051
  Other investments 819,936 829,123
  Other receivables 237,798 1,756,867
  Deferred income taxes, net 33,189 62,046
  Income taxes receivable 2,123,917 1,327,456
  Prepaid expenses and other assets 45,713 16,927
  Property, net 2,085,822 2,108,948

Total Assets $ 74,459,327 $ 64,118,230

Liabilities and Stockholders’ Equity
Liabilities:
  Accounts payable and accrued liabilities $ 1,952,056 $ 929,484

Stockholders’ Equity:
  Class A Junior Participating preferred stock - no par value
    (shares authorized 100,000; no shares issued) — —
  Common stock-no par (shares authorized 10,000,000; 2,481,024
    and 2,503,923 shares issued and outstanding 2004 and 2003,
    respectively, excluding 374,720 and 351,821 shares 2004 and
    2003, respectively, of common stock held by the Company’s subsidiary) 1 1
  Retained earnings 69,272,092 59,756,927
  Accumulated other comprehensive income
     (net of deferred taxes: 2004: $1,663,447; 2003: $1,768,477) 3,235,178 3,431,818
    Total stockholders’ equity 72,507,271 63,188,746

Total Liabilities and Stockholders’ Equity $ 74,459,327 $ 64,118,230
See notes to condensed financial statements.

SCHEDULE II
INVESTORS TITLE COMPANY (PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
2004 2003 2002

Revenues:
Investment income-interest and dividends $ 124,421 $ 96,952 $ 91,619
Net realized loss on sales of investments (12,500 )
               —

               —

Rental income 519,991 503,031 516,018
Miscellaneous income 69,274 11,000 5,017
     Total 701,186 610,983 612,654
Operating Expenses:
Office occupancy and operations 285,903 242,861 247,244
Business development 42,953 31,098 24,077
Taxes-other than payroll and income 75,649 65,461 61,107
Professional fees 60,161 52,758 63,490
Other expenses 59,738 47,635 45,332
     Total 524,404 439,813 441,250

Equity in Net Income of Affiliated Cos.* 10,583,384 10,850,844 7,991,438
Income Before Income Taxes 10,760,166 11,022,014 8,162,842
Provision for Income Taxes 41,000 57,000 54,000
Net Income $ 10,719,166 $ 10,965,014 $ 8,108,842
Basic Earnings per Common Share $ 4.29 $ 4.38 $ 3.22
Weighted Average Shares Outstanding-Basic 2,496,711 2,503,659 2,517,328
Diluted Earnings Per Common Share $ 4.09 $ 4.18 $ 3.12
Weighted Average Shares Outstanding-Diluted 2,620,916 2,624,473 2,597,979
* Eliminated in consolidation
See notes to condensed financial statements.

SCHEDULE II
INVESTORS TITLE COMPANY (PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
2004 2003 2002

Operating Activities:
  Net income $ 10,719,166 $ 10,965,014 $ 8,108,842
   Adjustments to reconcile net income to net cash provided
     by operating activities:
         Equity in net earnings of subsidiaries (10,583,384 ) (10,850,843 ) (7,991,439 )
         Depreciation 73,452 70,944 72,467
         Amortization, net 5,719 10,601 11,977
         Net gain on disposals of property — — (532 )
         Net realized loss on sales of investments 12,500 — —
         Provision (benefit) for deferred income taxes 59,000 (12,000 ) (6,000 )
         (Increase) decrease in receivables 1,519,069 (1,446,089 ) 4,567
         Increase in income taxes receivable-current (796,461 ) (1,327,456 ) —
         (Increase) decrease in prepaid expenses (28,786 ) 2,714 32,884
         Increase (decrease) in accounts payable and accrued liabilities (5,357 ) 454,097 138,300
         Decrease in income taxes payable-current — (232,325 ) (157,772 )
            Net cash provided by (used in) operating activities 974,918 (2,365,343 ) 213,294
Investing Activities:
   Capital contribution to subsidiaries (1,783,000 ) (325,000 ) —
   Dividends received from subsidiaries 5,050,819 3,782,400 3,177,772
   Purchases of available-for-sale securities (19,518,900 ) (2,000,000 ) —
   Purchases of short term securities (1,012,182 ) — (3,599,095 )
   Purchases of and net earnings from other investments — (486,000 ) (385,195 )
   Proceeds from sales and maturities of available-for-sale securities 13,267,500 250,000 597,962
   Proceeds from sales of short term securities 2,494,742 1,486,879 —
   Proceeds from sales and distributions from other investments 9,187 42,072 —
   Purchases of property (50,326 ) (105,048 ) (8,157 )
   Proceeds from sales of property — — 10,000
   Net change in pending trades 1,027,929 — —
            Net cash provided by (used in) investing activities (514,231 ) 2,645,303 (206,713 )

Financing Activities:
   Dividends paid (net dividends paid to subsidiary of $53,936 in          2004 and $42,278 in 2003) (374,425 ) (300,411 ) (300,557 )
         Net cash used in financing activities (374,425 ) (300,411 ) (300,557 )

Net Increase (Decrease) in Cash and Cash Equivalents 86,262 (20,451 ) (293,976 )
Cash and Cash Equivalents, Beginning of Year 121,587 142,038 436,014
Cash and Cash Equivalents, End of Year $ 207,849 $ 121,587 $ 142,038

Supplemental Disclosures:
Cash Paid During the Year For:
   Income Taxes $ 781,000 $ 1,639,000 $ 218,000
See notes to condensed financial statements.

SCHEDULE II
INVESTORS TITLE COMPANY (PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT ~~BALANCE SHEETS AS OF DECEMBER 31, 2002 AND 2001~~
~~2002 2001~~ Assets Cash and cash equivalents $ 142,038 $ 436,014 Investments in equity securities 30,000 30,000 Investments in fixed maturities, available-for-sale 5,036,231 2,025,748 Other investments 385,195 -- Investments in affiliated companies 47,741,967 42,928,301 Other receivables 310,778 315,345 Deferred income taxes, net 43,067 44,318 Prepaid expenses and other assets 19,641 52,525 Property, net 2,074,844 2,148,622 ----------- ----------- Total Assets $55,783,761 $47,980,873 =========== =========== Liabilities and Stockholders' Equity Liabilities: Accounts payable and accrued liabilities $ 475,387 $ 337,087 Income taxes payable 232,325 390,097 ----------- ----------- Total liabilities 707,712 727,184 ----------- ----------- Stockholders' Equity: Class A Junior Participating preferred stock - no par value (shares authorized 100,000; no shares issued) -- -- Common stock-no par (shares authorized, 10,000,000; 2,855,744 and 2,855,744 shares issued and 2,515,804 and 2,516,298 shares outstanding 2002 and 2001, respectively) 1,650,350 1,650,350 Retained earnings 53,400,579 45,592,295 Accumulated other comprehensive income (net of deferred taxes: 2002: $12,939, 2001: $5,689) 25,120 11,044 ----------- ----------- Total stockholders' equity 55,076,049 47,253,689 ----------- ----------- Total Liabilities and Stockholders' Equity $55,783,761 $47,980,873 =========== ===========
~~See notes to condensed financial statements.~~ SCHEDULE II INVESTORS TITLE COMPANY (PARENT COMPANY) CONDENSED FINANCIAL INFORMATION OF REGISTRANT STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
~~2002 2001 2000~~ Revenues: Investment income - interest and dividends $ 91,619 $ 96,624 $ 74,105 Rental income 516,018 510,132 482,267 Miscellaneous income 5,017 1,000 45 ---------- ---------- ---------- Total 612,654 607,756 556,417 ---------- ---------- ---------- Operating Expenses: Office occupancy and operations 247,244 170,445 148,750 Business development 24,077 21,928 14,116 Taxes - other than payroll and income 61,107 65,917 66,948 Professional fees 63,490 30,191 40,311 Other expenses 45,332 43,215 48,939 ---------- ---------- ---------- Total 441,250 331,696 319,064 ---------- ---------- ---------- Equity in Net Income of Affiliated Cos.* 7,991,438 5,850,938 2,988,984 ---------- ---------- ---------- Income Before Income Taxes 8,162,842 6,126,998 3,226,337 ---------- ---------- ---------- Provision for Income Taxes 54,000 118,000 85,874 ---------- ---------- ---------- Net Income $8,108,842 $6,008,998 $3,140,463 ========== ========== ========== Basic Earnings per Common Share $ 3.22 $ 2.35 $ 1.21 ========== ========== ========== Weighted Average Shares Outstanding-Basic 2,517,328 2,554,204 2,594,891 ========== ========== ========== Diluted Earnings Per Common Share $ 3.12 $ 2.31 $ 1.21 ========== ========== ========== Weighted Average Shares Outstanding-Diluted 2,597,979 2,599,714 2,601,283 ========== ========== ==========
* Eliminated in consolidation See notes to condensed financial statements. SCHEDULE II INVESTORS TITLE COMPANY (PARENT COMPANY) CONDENSED FINANCIAL INFORMATION OF REGISTRANT STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
~~2002 2001 2000~~ Operating Activities: Net income $ 8,108,842 $ 6,008,998 $ 3,140,463 Adjustments to reconcile net income to net cash provided by operating activities: Equity in net earnings of subsidiaries less net dividends received of $3,177,772, $900,000 and $625,000 in 2002, 2001 and 2000, respectively (4,813,666) (4,950,938) (2,363,984) Depreciation 72,467 76,206 72,517 Amortization, net 11,977 -- -- Net gain on disposals of property (532) -- -- Benefit for deferred income taxes (6,000) (11,400) (1,081) (Increase) decrease in receivables 4,567 (203,869) (8,465) Decrease in income taxes receivable-current -- 404,548 442,536 (Increase) decrease in prepaid expenses 32,884 (40,598) 8,270 Increase (decrease) in accounts payable and accrued liabilities 138,300 193,821 (5,310) Increase (decrease) in income taxes payable-current (157,772) 390,097 -- ----------- ----------- ----------- Net cash provided by operating activities 3,391,067 1,866,865 1,284,946 ----------- ----------- ----------- Investing Activities: Capital contribution to subsidiary -- -- (600,000) Purchases of available-for-sale securities (3,599,096) (382,526) (402,073) Proceeds from available-for-sale securities -- 661,397 -- Purchases of available-for-sale bonds -- (1,626,489) -- Proceeds from available-for-sale bonds 597,962 -- -- Purchases of held-at-cost securities (385,195) -- -- Proceeds from the sale of equity securities -- 45,000 -- Purchases of furniture and equipment (8,157) (11,075) (34,387) Proceeds from the sale of furniture and equiment 10,000 -- -- ----------- ----------- ----------- Net cash used in investing activities (3,384,486) (1,313,693) (1,036,460) ----------- ----------- ----------- Financing Activities: Dividends paid (net dividends paid to subsidiary of $42,132 in 2002) (300,557) (342,689) (342,689) ----------- ----------- ----------- Net cash used in financing activities (300,557) (342,689) (342,689) ----------- ----------- ----------- Net Increase (Decrease) in Cash and Cash Equivalents (293,976) 210,483 (94,203) Cash and Cash Equivalents, Beginning of Year 436,014 225,531 319,734 ----------- ----------- ----------- Cash and Cash Equivalents, End of Year $ 142,038 $ 436,014 $ 225,531 =========== =========== =========== Supplemental Disclosures: Cash Paid (Refunded) During the Year For: Income Taxes $ 217,772 $ (109,359) $ 490,592 =========== =========== ===========
~~See notes to condensed financial statements.~~ ~~SCHEDULE II INVESTORS TITLE COMPANY (PARENT COMPANY) CONDENSED FINANCIAL INFORMATION OF REGISTRANT~~
NOTES TO CONDENSED FINANCIAL STATEMENTS 1.
1.
The accompanying condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto of ~~Investors Title Company and Subsidiaries. 2. Cash dividends paid to Investors Title Company by its wholly owned subsidiaries were as follows:~~
~~Subsidiaries 2002 2001 2000 ---------- -------- --------~~ ~~Investors Title ~~Insurance~~ Company * $2,857,772 $350,000 $350,000 Northeastand Subsidiaries.~~
2.
Cash dividends paid to Investors Title ~~Insurance~~ Company -- -- -- Investors Title Exchange Corporation 160,000 550,000 275,000 Investors Title Accommodation Corporation 100,000 -- -- Investors Title Management Services, Inc. 60,000 -- -- ---------- -------- -------- $3,177,772 $900,000 $625,000 ========== ======== ======== by its wholly owned subsidiary were as follows:
Subsidiaries
2004
2003
2002

Investors Title Insurance Company, net *
$3,950,819
$3,307,400
$2,857,772
Investors Title Exchange Corporation
1,100,000
175,000
160,000
Investors Title Accommodation Corporation
-
100,000
100,000
Investors Title Management Services, Inc.
-
200,000
60,000

$ 5,050,819
$ 3,782,400
$ 3,177,772

*Total dividends of ~~$2,899,904~~$4,004,755 and $3,349,678 paid to the Parent Company in 2004 and 2003, respectively, netted with dividends of ~~$42,132~~$53,936 and $42,278 received from the ~~Parent.~~ Parent in 2004 and 2003, respectively.
~~SCHEDULE III INVESTORS TITLE COMPANY AND SUBSIDIARIES SUPPLEMENTARY INSURANCE INFORMATION~~
SCHEDULE III
INVESTORS TITLE COMPANY AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
For the Years ~~Ended December 31, 2002, 2001 and 2000~~
Future Policy Other Benefits, Policy Deferred Losses, Claims Policy Claims and Net Acquisition and Loss Unearned Benefits Premium Segment Cost Expenses Premiums Payable Revenue ----------- ----------- -------- --------- ----------- ~~Year~~ Ended December 31, 2004, 2003 and 2002 Title Insurance -- $25,630,000 -- $ 401,040 $67,693,617 Exchange Services -- -- -- -- -- All Other -- -- -- -- -- ----------- ----------- -------- --------- ----------- -- $25,630,000 -- $ 401,040 $67,693,617 =========== =========== ======== ========= =========== Year
Segment Deferred
Policy
Acquisition
Cost Future
Policy
Benefits,
Losses,
Claims
and Loss
Expenses Unearned
Premiums Other
Policy
Claims
and
Benefits
Payable Premium
Revenue Net
Investment
Income Benefits
Claims,
Losses and
Settlement
Expenses Amortization
of Deferred
Policy
Acquisition
Costs Other
Operating
Expenses Premiums
Written

Year Ended
December 31, 2004
Title Insurance — $ 31,842,000 — $ 551,662 $ 71,775,157 $ 2,597,355 $ 7,984,339 — $ 53,456,152 N/A
Exchange Services — — — — — 7,821 — — 640,183 N/A
All Other — — — — — 147,662 — — 2,258,336 N/A

— $ 31,842,000 — $ 551,662 $ 71,775,157 $ 2,752,838 $ 7,984,339 — $ 56,354,671

Year Ended
December 31, 2003
Title Insurance — $ 30,031,000 — $ 726,191 $ 83,927,312 $ 2,589,228 $ 9,292,739 — $ 63,495,050 N/A
Exchange Services — — — — — 2,818 — — 495,119 N/A
All Other — — — — — 99,641 — — 1,375,949 N/A

— $ 30,031,000 — $ 726,191 $ 83,927,312 $ 2,691,687 $ 9,292,739 — $ 65,366,118

Year Ended
December 31, 2002
Title Insurance — $ 25,630,000 — $ 401,040 $ 67,298,617 $ 2,706,887 $ 6,871,822 — $ 52,772,680 N/A
Exchange Services — — — — — 6,114 — — 441,386 N/A
All Other — — — — — 93,807 — — 1,097,610 N/A

— $ 25,630,000 — $ 401,040 $ 67,298,617 $ 2,806,808 $ 6,871,822 — $ 54,311,676

SCHEDULE IV
INVESTORS TITLE COMPANY AND SUBSIDIARIES
REINSURANCE
For the Years Ended December 31, 2001 Title Insurance -- $21,460,000 -- $ 281,961 $59,480,545 Exchange Services -- -- -- -- -- All Other -- -- -- -- -- ----------- ----------- -------- --------- ----------- -- $21,460,000 -- $ 281,961 $59,480,545 =========== =========== ======== ========= =========== Year2004, 2003 and 2002
Gross
Amount Ceded to
Other
Companies Assumed from
Other
Companies Net
Amount Percentage of
Amount
Assumed to Net

YEAR ENDED
DECEMBER 31, 2004
Title Insurance $ 72,063,833 $ 294,639 $ 5,963 $ 71,775,157 0.01 %

YEAR ENDED
DECEMBER 31, 2003
Title Insurance $ 84,359,310 $ 438,229 $ 6,231 $ 83,927,312 0.01 %

YEAR ENDED
DECEMBER 31, 2002
Title Insurance $ 67,626,272 $ 348,395 $ 20,740 $ 67,298,617 0.03 %

SCHEDULE V
INVESTORS TITLE COMPANY AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 2000 Title Insurance -- $17,944,665 -- $ 222,748 $37,690,752 Exchange Services -- -- -- -- -- All Other -- -- -- -- -- ----------- ----------- -------- --------- ----------- -- $17,944,665 -- $ 222,748 $37,690,752 =========== =========== ======== ========= ===========
~~Benefits Amortization Claims,~~2004, 2003 and 2002
Description Balance at
Beginning
of Period Additions
Charged to
Costs and
Expenses Additions
Charged
to Other
Accounts -
Describe Deductions-
describe* Balance at
End of Period

2004
Premiums Receivable
Valuation Provision $ 2,474,000 $ 5,745,114 $ — $ (5,979,114 ) $ 2,240,000

Reserves for Claims $ 30,031,000 $ 7,984,339 $ — $ (6,173,339 ) $ 31,842,000

2003
Premiums Receivable
Valuation Provision $ 1,800,000 $ 5,477,324 $ — $ (4,803,324 ) $ 2,474,000

Reserves for Claims $ 25,630,000 $ 9,292,739 $ — $ (4,891,739 ) $ 30,031,000

2002
Premiums Receivable
Valuation Provision $ 1,405,000 $ 4,600,806 $ — $ (4,205,806 ) $ 1,800,000

Reserves for Claims $ 21,460,000 $ 6,871,822 $ — $ (2,701,822 ) $ 25,630,000
*Cancelled premiums and change in allowance for bad debts
*Payments of ~~Deferred Net Losses~~claims, net of recoveries

INDEX TO EXHIBITS
Exhibit
Number Description
3(i) Articles of Incorporation dated January 22, 1973, incorporated by reference to Exhibit 1 to Form 10 dated June 12, 1984
3(ii) Bylaws – Restated and Policy Other Investment Settlement Acquisition Operating Premiums Segment Income Expenses Costs Expenses Written ----------- ---------- -------- ------------ ------- ~~~~Year Ended~~Amended as of May 21, 2003, incorporated by reference to Exhibit 3(ii) to Form 10-K for the year ended December 31, 2003~~
4                Rights Agreement, dated as of November 12, 2002, between Investors Title Insurance $ 2,706,886 $ 6,871,822 -- $ 53,167,680 N/A Exchange Services 6,115 -- -- 441,386 N/A All Other 93,807 -- -- 1,097,610 N/A ----------- ---------- -------- ------------ $ 2,806,808 $ 6,871,822 -- $ 54,706,676 =========== =========== ======== ============ Year EndedCompany and Central Carolina Bank, a division of National Bank of Commerce, incorporated by reference to Exhibit 1 to Form 8-A filed November 15, 2002
10(i)   1993 Incentive Stock Option Plan, incorporated by reference to Exhibit 10 to Form 10-K for the year ended December 31, 2001 Title Insurance $ 2,626,053 $ 6,786,263 -- $ 47,449,615 N/A Exchange Services 16,245 -- -- 433,811 N/A All Other 97,982 -- -- 1,063,758 N/A ----------- ---------- -------- ------------ $ 2,740,280 $ 6,786,263 -- $ 48,947,184 =========== =========== ======== ============ Year Ended1993
10(ii) Form of Incentive Stock Option Agreement under 1993 Incentive Stock Option Plan, incorporated by reference to Exhibit 10(v) to Form 10-K for the year ended December 31, ~~2000~~1994
10(iii) 1997 Stock Option and Restricted Stock Plan, incorporated by reference to Exhibit 10(viii) to Form 10-K for the year ended December 31, 1996
10(iv) Form of Nonqualified Stock Option Agreement to Non-employee Directors dated May 13, 1997 under the 1997 Stock Option and Restricted Stock Plan, incorporated by reference to Exhibit 10(ix) to Form 10-Q for the quarter ended June 30, 1997
10(v) Form of Nonqualified Stock Option Agreement under 1997 Stock Option and Restricted Stock Plan, incorporated by reference to Exhibit 10(x) to Form 10-K for the year ended December 31, 1997
10(vi) Form of Incentive Stock Option Agreement under 1997 Stock Option and Restricted Stock Plan, incorporated by reference to Exhibit 10(xi) to Form 10-K for the year ended December 31, 1997
10(vii) Form of Amendment to Incentive Stock Option Agreement between Investors Title Insurance $ 2,436,561 $ 5,865,355 -- $ 31,060,289 N/A Exchange Services 17,478 -- -- 225,330 N/A All Other 74,104 -- -- 818,331 N/A ----------- ---------- -------- ------------ $ 2,528,143 $ 5,865,355 -- $ 32,103,950 =========== =========== ======== ============
~~SCHEDULE IV INVESTORS TITLE COMPANY AND SUBSIDIARIES REINSURANCE For the Years Ended December 31, 2002, 2001 and 2000~~
~~Ceded~~Company and James Allen Fine, James Allen Fine, Jr., William Morris Fine, George Abbitt Snead, Ralph Nichols Strayhorn, III and Raeford Wilder Wall, Jr., respectively, incorporated by reference to ~~Assumed from Percentage~~Exhibit 10(xii) to Form 10-Q for the quarter ended June 30, 2000
10(viii) 2001 Stock Option and Restricted Stock Plan, incorporated by reference to Exhibit 10(xiii) to Form 10-K for the year ended December 31, 2000
10(ix) Form of ~~Gross Other Other Net Amount Amount Companies Companies Amount Assumed~~Employment Agreement dated November 17, 2003 with each of J. Allen Fine, James A. Fine, Jr. and W. Morris Fine, incorporated by reference to ~~Net ------ --------- --------- ------ --------------~~ ~~YEAR ENDED DECEMBER~~Exhibit 10(ix) to Form 10-K for the year ended December 31, ~~2002 Title Insurance $68,021,272 $ 348,395 $ 20,740 $67,693,617 0.03% YEAR ENDED DECEMBER~~2003

10(x) Amended and Restated Employment Agreement dated June 1, 2004 with J. Allen Fine, incorporated by reference to Exhibit 10(x) to Form 10-Q for the quarter ended June 30, 2004
10(xi) Form of Amended and Restated Employment Agreement dated June 1, 2004 with each of James A. Fine, Jr. and W. Morris Fine, incorporated by reference to Exhibit 10(xi) to Form 10-Q for the quarter ended June 30, 2004
10(xii) Nonqualified Deferred Compensation Plan dated June 1, 2004, incorporated by reference to Exhibit 10(xii) to Form 10-Q for the quarter ended June 30, 2004
10(xiii) Nonqualified Supplemental Retirement Benefit Plan dated November 17, 2003, incorporated by reference to Exhibit 10(xiii) to Form 10-Q for the quarter ended June 30, 2004
10(xiv) Death Benefit Plan Agreement dated April 1, 2004 with J. Allen Fine, incorporated by reference to Exhibit 10(xiv) to Form 10-Q for the quarter ended June 30, 2004
10(xv) Death Benefit Plan Agreement dated May 19, 2004 with James A. Fine, Jr., incorporated by reference to Exhibit 10(xv) to Form 10-Q for the quarter ended June 30, 2004
13 Portions of 2004 Annual Report to Shareholders incorporated by reference in this report as set forth in Parts I, II and IV hereof
14 Code of Business Conduct and Ethics, incorporated by reference to Exhibit 14 to Form 10-K for the year ended December 31, ~~2001 Title Insurance $59,799,379 $ 340,228 $ 21,394 $59,480,545 0.04% YEAR ENDED DECEMBER~~2003
16 Letter regarding Change in Certifying Accountant, incorporated by reference to Exhibit 16 to Form 8-K dated September 24, 2004
21 Subsidiaries of Registrant, incorporated by reference to Exhibit 21 to Form 10-K for the year
ended December 31, ~~2000 Title Insurance $38,020,917 $ 362,528 $ 32,363 $37,690,752 0.09%~~
~~SCHEDULE V INVESTORS TITLE COMPANY AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS For the Years Ended December 31, 2002, 2001 and 2000~~
~~Balance at Additions Additions Charged Beginning Charged~~2003
23 (a) Consent of Dixon Hughes PLLC
23 (b) Consent of Deloitte & Touche LLP
31(i) Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31(ii) Certification of Chief Financial Officer pursuant to ~~Other Deductions- Balance at Description~~Section 302 of ~~Period Costs~~the Sarbanes-Oxley Act of 2002
32 Certification of Chief Executive Officer and ~~Expenses Accounts - Describe describe* End~~Chief Financial Officer pursuant to Section 906 of ~~Period --------- ------------------ ------------------- --------- -------------~~ the Sarbanes-Oxley Act of 2002 Premiums Receivable Valuation Provision $ 1,405,000 $ 4,600,806 $ -- $(4,205,806) $ 1,800,000 Reserves for Claims $21,460,000 $ 6,871,822 $ -- $(2,701,822) $25,630,000 2001 Premiums Receivable Valuation Provision $ 725,000 $ 3,484,380 $ -- $(2,804,380) $ 1,405,000 Reserves for Claims $17,944,665 $ 6,786,263 $ -- $(3,270,928) $21,460,000 2000 Premiums Receivable Valuation Provision $ 775,000 $ 2,219,190 $ -- $(2,269,190) $ 725,000 Reserves for Claims $15,864,665 $ 5,865,355 $ -- $(3,785,355) $17,944,665
*Cancelled premiums and change in allowance for bad debts *Payments of claims, net of recoveries