Investors Title Company (ITIC) issues residential and commercial title insurance, which protects property buyers from title defects that could affect the ownership of the property (e.g. prior unsatisfied mortgages, tax liens, assessments, inaccurate legal descriptions). I am writing this on 3/22/11, and the shares closed yesterday at $31.25, which represents a Price to Book of 0.68x, and a Price to Earnings of 11.24. This compares to 0.9x and 14.22 for First American Financial Corporation (FAF) and 0.92x and 8.69 for Fidelity National Financial (FNF), both of which are also engaged in title insurance (though, not exclusively so).
ITIC’s assets, like other insurers, are primarily liquid securities. The float provided by insurance premiums (Note: in title insurance, there is only the single premium paid up front, in relation to the value of the property) is invested by the company. Interestingly, in title insurance, the insurer’s risk of monetary loss is less than the total face value of policies written for two reasons.
For...
