Investors Title (ITIC) 10-K 2004 FY Annual report

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:

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 are subject to a number of 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 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, 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 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 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.

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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.

9

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

14

(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 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 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 4(a) under the caption “Executive Officers of the 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

                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 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” 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 services under the heading “Independent Auditor Audit and 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 2003
	Consolidated Statements of Income for the Years Ended December 31, 2004, 2003 and 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 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 10-K.

18

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 16th day of 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 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
NOTES TO CONDENSED FINANCIAL STATEMENTS

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 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 $4,004,755 and $3,349,678 paid to the Parent Company in 2004 and 2003, respectively, netted with dividends of $53,936 and $42,278 received from the Parent in 2004 and 2003, respectively.

SCHEDULE III

INVESTORS TITLE COMPANY AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
For the Years Ended December 31, 2004, 2003 and 2002

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, 2004, 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, 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 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 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 Company 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, 1993

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, 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 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 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 Employment Agreement dated November 17, 2003 with each of J. Allen Fine, James A. Fine, Jr. and W. Morris Fine, incorporated by reference to Exhibit 10(ix) to Form 10-K for the year ended December 31, 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, 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, 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 Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002