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<SEC-DOCUMENT>0000898430-01-001160.txt : 20010409
<SEC-HEADER>0000898430-01-001160.hdr.sgml : 20010409
ACCESSION NUMBER:		0000898430-01-001160
CONFORMED SUBMISSION TYPE:	10-K405
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20001231
FILED AS OF DATE:		20010402

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INVESTORS TITLE CO
		CENTRAL INDEX KEY:			0000720858
		STANDARD INDUSTRIAL CLASSIFICATION:	TITLE INSURANCE [6361]
		IRS NUMBER:				561110199
		STATE OF INCORPORATION:			NC
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K405
		SEC ACT:		
		SEC FILE NUMBER:	000-11774
		FILM NUMBER:		1589386

	BUSINESS ADDRESS:	
		STREET 1:		121 N COLUMBIA ST
		STREET 2:		P O DRAWER 2687
		CITY:			CHAPEL HILL
		STATE:			NC
		ZIP:			27514
		BUSINESS PHONE:		9199682200

	MAIL ADDRESS:	
		STREET 1:		121 NORTH COLUMBIA STREET
		CITY:			CHAPEL HILL
		STATE:			NC
		ZIP:			27514
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM 10-K
<TEXT>

<PAGE>

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

                                   FORM 10-K
(Mark One)
 [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934
                  For the fiscal year ended December 31, 2000

 [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934
           For the transition period from ______________ to ________.

                        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
                   (Address of principal executive offices)

      Registrant's telephone number, including area code: (919) 968-2200

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

        Common Stock, no par value                        None
        (Title of each class)         (Name of the exchange on which registered)

  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 X   No
                                             ----

  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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 the Form 10-K or any amendment to this
Form 10-K. Yes  X   No
              ----

On March 7, 2001 the aggregate market value of the voting and nonvoting common
equity held by nonaffiliates of the registrant was $29,659,355.

On March 7, 2001 the number of common shares outstanding was 2,570,583.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Documents                                           Form 10-K Reference
     ---------                                           -------------------
     Portions of Annual Report to Shareholders           Part I,  Items 1 and 2
     for fiscal year ended December 31, 2000             Part II, Items 5 - 8
                                                         Part IV, Item 14
     Portions of Proxy Statement (in connection with     Part III, Items 10 - 13
     Annual Meeting to be held on May 16, 2001)

                                       1
<PAGE>

                                    PART I
ITEM 1.  BUSINESS

GENERAL
- -------

     Investors Title Company ("the Company") is a holding company which was
incorporated in the State of North Carolina on February 13, 1973. The Company
became operational June 24, 1976 when it acquired as a wholly owned subsidiary
Investors Title Insurance Company, a North Carolina corporation ("ITIC"), under
a plan of exchange of shares of common stock. On September 30, 1983, the Company
acquired as a wholly owned subsidiary Northeast Investors Title Insurance
Company ("NE-ITIC"), formerly Investors Title Insurance Company of South
Carolina, a South Carolina corporation, under a plan of exchange of shares of
common stock. In 1988, the Company established Investors Title Exchange
Corporation, a wholly owned subsidiary ("ITEC.") In 1994, the Company
established South Carolina Document Preparation Company, a wholly owned
subsidiary ("SCDP.") In the first quarter of 2001, SCDP was renamed Investors
Title Accommodation Corporation ("ITAC.") The Company's executive offices are at
121 North Columbia Street, Chapel Hill, North Carolina 27514. The Company's
telephone number is (919) 968-2200.

     The Company engages primarily in two segments of business. The main
business activity is the issuance of title insurance through two title insurance
subsidiaries, ITIC and NE-ITIC. The second segment provides tax-free exchange
services through the Company's two subsidiaries, ITEC and ITAC. See Management's
Discussion and Analysis of Financial Condition and Results of Operations and
Note 13 of Notes to Consolidated Financial Statements in the 2000 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 title insurance 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.

     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. Since that date it has primarily written land title insurance
as a primary insurer and as a reinsurer in the States of North Carolina and
South Carolina. ITIC is the leading title insurer of North Carolina property and
has held this position for seventeen years. In addition, the Company writes
title insurance through issuing agents or branch offices in the States of
Alabama, Arkansas, Florida, Georgia, Indiana, Kentucky, Maryland, Michigan,
Minnesota, Mississippi, Nebraska, Ohio, Pennsylvania, Tennessee, Virginia, West
Virginia and Wisconsin. Agents issue policies for ITIC and may also perform
other services such as acting as escrow agents.

     ITIC is also licensed to write title insurance in the District of Columbia
and the States of Arizona, Colorado, Connecticut, Delaware, Idaho, Illinois,
Kansas, Louisiana, Maine, Massachusetts, Missouri, Montana, Nevada, New Jersey,
North Dakota, Oklahoma, Rhode Island, Texas, Utah, Vermont and Wyoming.

                                       2
<PAGE>

     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.

     Title insurance guarantees owners, mortgagees, and others with a lawful
interest in real property against loss by reason of encumbrances and defective
title to such property.  The commitments and policies issued are the standard
American Land Title Association approved forms.  Title insurance policies do not
insure against future risks.  Most other types of insurance protect against
losses and events in the future.

     In the State of North Carolina, title insurance commitments and policies
are issued by the home office and branch offices. ITIC has 28 branch offices in
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 and 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.

     ITIC currently assumes primary risks up to $1,500,000, reinsures the next
$250,000 of risk with NE-ITIC, and all risks above $1,750,000 are then reinsured
with a non-related reinsurer.

     NE-ITIC currently assumes primary risks up to $250,000, reinsures the next
$1,500,000 of risk with ITIC, and reinsures all amounts above $1,750,000 with a
non-related reinsurer.

     Both ITIC and NE-ITIC have self-imposed risk retention limits that are more
conservative than state insurance regulations require.  ITIC's self-imposed
retention of $1,500,000 is only 14.7% of its statutorily permitted retention of
$10,191,492.  NE-ITIC's self-imposed retention of $250,000 is only 17.2% of its
statutorily permitted retention of $1,455,844.

     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-

                                       3
<PAGE>

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.

     In the first quarter of 2001, South Carolina Document Preparation Company,
a wholly owned subsidiary, changed its name to Investors Title Accommodation
Corporation ("ITAC"). ITAC serves as exchange accommodation titleholder,
offering a vehicle for accomplishing a reverse exchange when a taxpayer must
acquire replacement property before selling the relinquished property.

OPERATIONS OF SUBSIDIARIES
- --------------------------

     For a description of Net Premiums Written geographically, refer to the
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the 2000 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 are for a one-time
initial payment, with no recurring premiums. See Note 13 of Notes to
Consolidated Financial Statements in the 2000 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 2000 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, while the remaining quarters are more active. Fluctuations
in mortgage interest rates can cause shifts in real estate activity outside of
the normal seasonal pattern.

                                       4
<PAGE>

     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 office and
28 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 Alabama, Arkansas,
Florida, Georgia, Indiana, Kentucky, Maryland, Michigan, Minnesota, Mississippi,
Nebraska, 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 relationships to increase
market share. The Company's marketing efforts are also enhanced through
advertising.

     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. A Commercial Services Division was established in the first
quarter of 2001 in order to better service commercial clients. ITEC and ITAC are
also promoted through the marketing efforts of this division.

CUSTOMERS
- ---------

     The segments are not dependent upon any single customer, the loss of which
could have a material effect on the Company.

RESERVES
- --------

     The reserves for claims for financial reporting purposes are established
based on criteria discussed in Notes 1 and 6 of Notes to Consolidated Financial
Statements in the 2000 Annual

                                       5
<PAGE>

Report to Shareholders incorporated by reference in this Form 10-K Annual
Report.

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, 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 subject to North Carolina state
insurance regulations. Financial examinations are scheduled every five years by
the North Carolina Department of Insurance. ITIC is currently being examined for
the period January 1, 1995 through December 31, 1999. Typically, a report is
issued six months following the completion of an examination.

     NE-ITIC is domiciled in South Carolina and subject to South Carolina state
insurance regulations. Financial examinations are scheduled periodically by the
South Carolina Department of Insurance.  NE-ITIC was last examined by the South
Carolina Department of Insurance commencing on June 22, 1998 for the period
January 1, 1994 through December 31, 1997 with no material deficiencies noted.

     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 the financial
examination, which commenced on June 22, 1998 for the period January 1, 1994
through December 31, 1997. 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.  For years prior
to 1999, ITIC reserved an amount equal to 10% of current year premiums written
and reduced such amounts annually by 5%. For years after 1998, 10% of direct
premiums written plus premiums for reinsurance assumed less premiums for
reinsurance ceded is reserved and reduced annually, 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. A $1.50
for each risk assumed under a

                                       6
<PAGE>

policy or commitment plus one-eightieth of one percent of the face amount of
each commitment or policy, reduced by that portion of the reserve established 15
years earlier are accumulated in a statutory premium reserve for years up to
1985. In subsequent years, the addition to the reserve is calculated in the same
manner but is reduced annually by 5%.

     These statutory premium reserve additions are not charged to operations for
financial reporting purposes and changes in the statutory premium reserve have
no effect on net income of the Company or its subsidiaries for financial
reporting purposes.

     The Company is an insurance holding company, and is also 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 including, in some instances, the payment of shareholders' dividends
by the insurance subsidiaries. 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, 2000, ITIC reported $25,478,730 of capital and surplus, and
net income of $3,195,801; and NE-ITIC reported $2,911,687 of capital and
surplus, and net income of $9,589.

     ITIC and NE-ITIC both 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, South
Carolina 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.

Exchange Services
- -----------------

     Competition for ITEC and ITAC comes from other title insurance companies as
well as

                                       7
<PAGE>

some major banks that offer exchange services.

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 certain 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 2000 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. NE-ITIC had two full-time paid employees
as of December 31, 2000. Officers of the Company are full-time paid employees of
ITIC, which had 165 full-time employees and 14 part-time employees as of
December 31, 2000.

TRADEMARK
- ---------

     The Company's subsidiary, ITIC, registered its logo with the U.S. Patent-
Trademark Office in February, 1987.  The loss of said registration, in the
Company's opinion, would not materially affect its business.


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 31 locations throughout North Carolina, South Carolina,
Michigan and Virginia. NE-ITIC leases office space in 2 locations in New York.
These properties are used by the title insurance and exchange services segments.

     The Company also owns several parcels and one building adjacent to the
Company's facility.

     See Note 9 of Notes to Consolidated Financial Statements in the 2000 Annual
Report to Shareholders incorporated by reference in this Form 10-K Annual Report
for the amounts of

                                       8
<PAGE>

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 litigation on a number of
claims which arise in the normal course of business, none of which, in the
opinion of management are expected to have a material adverse effect on the
Company's consolidated financial position.

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, 2000.

ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY

IDENTIFICATION OF EXECUTIVE OFFICERS
- ------------------------------------

     The following table sets forth the executive officers of the Company as of
December 31, 2000.  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.


                               Position with                  Officer
Name                  Age      Registrant                     Since
- ----                  ---      ----------                     -----

J. Allen Fine         66       Chairman,                      1973
                               Director and
                               CEO

James A. Fine, Jr.    38       President, Director            1987
                               and Treasurer

W. Morris Fine        34       Executive Vice                 1992
                               President, Director
                               and Secretary

Elizabeth P. Bryan    40       Vice President                 1987
                               and Assistant Secretary

L. Dawn Martin        35       Vice President                 1993
                               and Assistant Secretary

                                       9
<PAGE>

     J. Allen Fine, Chief Executive Officer and Chairman of the Board of
Directors, 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.

     The business experience of the Executive Officers of the Company is set
forth below:

J. Allen Fine has been Chief Executive Officer and Chairman of the Board of the
- -------------
Company since its incorporation.  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 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 brother of James A. Fine, Jr., President, Treasurer and Director of
the Company.

Elizabeth P. Bryan joined the Company in 1985 as Controller and in 1987, she was
- ------------------
named Vice President of the Company.

L. Dawn Martin joined the Company in 1991 and in 1993, she was named Vice
- --------------
President 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 common stock on NASDAQ and the
dividends paid per common share for each quarter in the last two fiscal years
are indicated under "Shareholder Information" in the 2000 Annual Report to
Shareholders incorporated by reference in this Form 10-K Annual Report.

                                       10
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

     The selected financial data for the five years ended December 31, 2000
under the caption "Financial Highlights" is in the 2000 Annual Report to
Shareholders incorporated by reference in this Form 10-K Annual Report.  The
information should be read in conjunction with the Consolidated Financial
Statements and Notes to Consolidated Financial Statements and the Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
2000 Annual Report to Shareholders 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 2000 Annual Report to Shareholders is incorporated by
reference in this Form 10-K Annual Report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Management's Discussion and Analysis of Quantitative and Qualitative
Disclosures about Market Risk in the 2000 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 2000 Annual Report
to Shareholders are incorporated by reference in this Form 10-K Annual Report.

     The financial statement schedules meeting the requirements of Regulation S-
X are shown as Schedules I, II, III, IV and V.

     The supplementary financial information (Selected Quarterly Financial Data)
in the 2000 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
<PAGE>

                                   PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

IDENTIFICATION OF DIRECTORS
- ---------------------------

     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 16, 2001 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 pertaining to executive compensation under the heading
"Executive Compensation" in the Company's definitive Proxy Statement relating to
the Annual Meeting of Shareholders to be held on May 16, 2001 is incorporated by
reference in this Form 10-K Annual Report.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     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 16, 2001 is incorporated
by reference in this Form 10-K Annual Report.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information pertaining to certain relationships and related transactions
under the heading "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 16, 2001 is incorporated by reference in this
Form 10-K Annual Report.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A) The following documents are filed as part of this report:
- -------------------------------------------------------------

                                       12
<PAGE>

1. Financial Statements
- -----------------------
     The following financial statements in the 2000 Annual Report to
Shareholders are hereby incorporated by reference in this Form 10-K Annual
Report:

     Report of Independent Accountants
     Consolidated Balance Sheets as of December 31, 2000 and 1999
     Consolidated Statements of Income for the Years Ended December 31, 2000,
          1999 and 1998
     Consolidated Statements of Stockholders' Equity for the Years Ended
          December 31, 2000, 1999 and 1998
     Consolidated Statements of Comprehensive Income for the Years Ended
          December 31, 2000, 1999 and 1998
     Consolidated Statements of Cash Flows for the Years Ended December 31,
          2000, 1999 and 1998
     Notes to Consolidated Financial Statements

2. Financial Statement Schedules
- --------------------------------

The following is a list of financial statement schedules filed as part of this
report on Form 10-K Annual Report:

Investors Title Company and Subsidiaries:

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 is not applicable
or required, or the information is presented in the consolidated financial
statements or the notes thereto.

3. Exhibits
- -----------

Exhibit                                               Incorporation by
Number          Description                           Reference to
- ------          -----------                           ------------

(3)(i)          Articles of Incorporation             Exhibit 1 to Form 10,
                                                      dated June 12, 1984

                                       13
<PAGE>

Exhibit                                               Incorporation by
Number          Description                           Reference to
- ------          -----------                           ------------

(3)(ii)         Bylaws - Restated and                 Included herewith
                Amended
                through February 12, 2001

Management contract of compensatory plan or
arrangement (Exhibits (10)(i) -(10)(xiii)

(10)(i)         1988 Incentive Stock Option Plan      Exhibit 10 to Form 10-K
                                                      for the year ended
                                                      December 31, 1989

(10)(ii)        1993 Incentive Stock Option Plan      Exhibit 10 to Form 10-K
                                                      for the year ended
                                                      December 31, 1993

(10)(iii)       1993 Incentive Stock Option Plan-     Exhibit 10 to Form 10-K
                W. Morris Fine                        for the year ended
                                                      December 31, 1993

(10)(iv)        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)(v)         Form of Incentive Stock               Exhibit 10(v) to Form 10-K
                Option Agreement under 1993           for the year ended
                Incentive Stock Option Plans          December 31, 1994


 (10)(vi)       Form of Amendment dated               Exhibit 10(vi) to Form
                November 8, 1994 to Stock Option      10-Q for the quarter ended
                Agreement dated as of November 13,    March 31, 1995
                1989

(10)(vii)       Form of Stock Option Agreement        Exhibit 10(vii) to Form
                dated November 13, 1989               10-Q for the quarter ended
                                                      March 31, 1995

(10)(viii)      1997 Stock Option and Restricted      Exhibit 10(viii) to Form
                Stock Plan                            10-K for the year ended
                                                      December 31, 1996


                                       14
<PAGE>

Exhibit                                               Incorporation by
Number          Description                           Reference to
- ------          -----------                           ------------

(10)(ix)        Form of Nonqualified Stock            Exhibit 10(ix) to Form
                Option Agreement to Non-employee      10-Q for the quarter ended
                Directors dated May 13, 1997 under    June 30, 1997
                the 1997 Stock Option and Restricted
                Stock Plan

(10)(x)         Form of Nonqualified Stock Option     Exhibit 10(x) to Form
                Agreement under 1997 Stock Option     10-K for the year ended
                and Restricted Stock Plan             December 31, 1997

(10)(xi)        Form of Incentive Stock               Exhibit 10(xi) to Form
                Option Agreement under 1997 Stock     10-K for the year ended
                Option and Restricted Stock Plan      December 31, 1997

(10)(xii)       Form of Amendment to Incentive        Exhibit 10(xii) to Form
                Stock Option Agreement between        10-Q for the quarter
                Investors Title Company and James     ended 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

(10)(xiii)      2001 Stock Option and Restricted      Included herewith
                Stock Plan

(13)            Portions of 2000 Annual               Included herewith
                Report to Shareholders
                incorporated by reference
                in this report as set forth
                in Parts I and II hereof.

(21)            Subsidiaries of Registrant            Included herewith

(23)            Consent of Independent Auditors       Included herewith

(B) Reports on Form 8-K
       No reports were filed on Form 8-K for the fourth quarter of 2000.

                                       15
<PAGE>

                                  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: April 2, 2001
                                    -------------

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 on the 2nd day of April, 2001.
                         ---        -----  ----

/s/ J. Allen Fine
- ---------------------------------------
J. Allen Fine, Chairman and Chief
Executive Officer

/s/ James A. Fine, Jr.
- ---------------------------------------
James A. Fine, Jr., President, Treasurer and
Director (Principal Financial Officer)

/s/ Elizabeth P. Bryan
- ---------------------------------------
Elizabeth P. Bryan, Vice President and Asst.
Secretary (Principal Accounting Officer)

/s/ W. Morris Fine
- ---------------------------------------
W. Morris Fine, Executive Vice President
Secretary and Director

/s/ David L. Francis
- ---------------------------------------
David L. Francis, Director

_______________________________________
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


/s/ James R. Morton
- ---------------------------------------
James R. Morton, Director


/s/ Lillard H. Mount
- ---------------------------------------
Lillard H. Mount, Director


/s/ A. Scott Parker III
- ---------------------------------------
A. Scott Parker III, Director

                                       16
<PAGE>

                                                                      SCHEDULE I
                                                                      ----------

                    INVESTORS TITLE COMPANY AND SUBSIDIARIES
       SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES
                             As of December 31, 2000

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
                                                                                                                Amount at
                                                                                                               which shown
                                                                                                                  in the
Type of Investment                                               Cost(1)              Market Value          Balance Sheet (2)
- --------------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>                 <C>                   <C>
Fixed Maturities:
  Bonds:
    States, municipalities and political
      subdivisions                                                  $23,508,874            $24,261,976              $24,151,134
     Public utilities                                                   199,246                199,246                  199,246
     All other corporate bonds                                       11,528,439             11,636,470               11,636,470
  Certificates of deposit                                                98,982                 98,982                   98,982
                                                           --------------------    -------------------     --------------------
      Total fixed maturities                                         35,335,541             36,196,674               36,085,832
                                                           --------------------    -------------------     --------------------

Equity Securities:
  Common Stocks:
      Public utilities                                                  385,373                752,694                  752,694
      Banks, trust and insurance companies                              317,190              1,195,998                1,195,998
      Industrial, miscellaneous and all other                         1,078,687              2,295,389                2,295,389
  Nonredeemable preferred stocks                                        653,117                725,988                  725,988
                                                           --------------------    -------------------     --------------------
      Total equity securities                                         2,434,367              4,970,069                4,970,069
                                                           --------------------    -------------------     --------------------
Total investments per the consolidated balance sheet                 37,769,908                                      41,055,901
                                                           --------------------                            --------------------

Cash equivalents                                                      7,645,313                                       7,645,313
                                                           --------------------                            --------------------
      Total investments                                             $45,415,221                                     $48,701,214
                                                           ====================                            ====================
</TABLE>

(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.

                                      17
<PAGE>

                                                                  SCHEDULE II
                                                                  -----------
<TABLE>
<CAPTION>

                   INVESTORS TITLE COMPANY (PARENT COMPANY)
                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                BALANCE SHEETS
                       AS OF DECEMBER 31, 2000 AND 1999

                                                            2000            1999
<S>                                                      <C>             <C>
Assets
  Cash and cash equivalents                              $   886,928     $   579,058
  Investments in equity securities                            75,000          75,000
  Investments in affiliated companies                     37,977,363      35,013,379
  Income taxes receivable                                    404,548         847,084
  Other receivables                                          111,476         103,011
  Deferred income taxes, net                                  38,608          37,527
  Prepaid expenses and other assets                           11,927          20,197
  Property, net                                            2,213,753       2,251,883
                                                         -----------     -----------

Total Assets                                             $41,719,603     $38,927,139
                                                         ===========     ===========

Liabilities and Stockholders' Equity
Liabilities:
  Accounts payable and accrued liabilities               $   143,266     $   148,576
                                                         -----------     -----------

Stockholders' Equity:
  Common stock-no par (shares authorized,
    6,000,000; 2,855,744 and 2,855,744 shares issued and
    2,566,859 and 2,736,961 shares outstanding 2000 and
    1999, respectively)                                    1,650,350       1,650,350
  Retained earnings                                       39,925,987      37,128,213
                                                         -----------     -----------
    Total stockholders' equity                            41,576,337      38,778,563
                                                         -----------     -----------

Total Liabilities and Stockholders' Equity               $41,719,603     $38,927,139
                                                         ===========     ===========
</TABLE>

See notes to condensed financial statements.

                                      18
<PAGE>

                                                                     SCHEDULE II
                                                                     -----------

                   INVESTORS TITLE COMPANY (PARENT COMPANY)
                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                             STATEMENTS OF INCOME
             FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                       2000             1999             1998
<S>                                              <C>               <C>              <C>
Revenues:
Investment income-interest and dividends         $      74,105     $     103,349    $      76,390
Rental income                                          482,267           445,440          435,821
Miscellaneous income                                        45                70           23,014
                                                 -------------     -------------    -------------
     Total                                             556,417           548,859          535,225
                                                 -------------     -------------    -------------
Operating Expenses:
Office occupancy and operations                        148,750           161,061          138,475
Business development                                    14,116            13,886           13,234
Taxes-other than payroll and income                     66,948            46,117           48,569
Professional fees                                       40,311            30,398           22,269
Other expenses                                          48,939            44,599          105,857
                                                 -------------     -------------    -------------
     Total                                             319,064           296,061          328,404
                                                 -------------     -------------    -------------

Equity in Net Income of Affiliated Cos.*             2,988,984         4,241,630        5,311,677
                                                 -------------     -------------    -------------
Income Before Income Taxes                           3,226,337         4,494,428        5,518,498
                                                 -------------     -------------    -------------
Provision for Income Taxes                              85,874            74,034           58,989
                                                 -------------     -------------    -------------
Net Income                                       $   3,140,463     $   4,420,394    $   5,459,509
                                                 =============     =============    =============
Basic Earnings per Common Share                  $        1.21     $        1.59    $        1.95
                                                 =============     =============    =============
Weighted Average Shares Outstanding-Basic            2,594,891         2,776,878        2,806,267
                                                 =============     =============    =============
Diluted Earnings Per Common Share                $        1.21     $        1.59    $        1.92
                                                 =============     =============    =============
Weighted Average Shares Outstanding-Diluted          2,601,283         2,786,282        2,841,035
                                                 =============     =============    =============

</TABLE>
* Eliminated in consolidation

See notes to condensed financial statements.

                                      19

<PAGE>

                                                                     SCHEDULE II
                                                                     -----------

<TABLE>
<CAPTION>

                   INVESTORS TITLE COMPANY (PARENT COMPANY)
                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                           STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

                                                                        2000           1999           1998
<S>                                                                 <C>            <C>            <C>
Operating Activities:
  Net income                                                        $ 3,140,463    $ 4,420,394    $ 5,459,509
   Adjustments to reconcile net income to net cash provided
     by operating activities:
       Equity in net earnings of subsidiaries less dividends
         received of $625,000, $700,000 and $575,000 in 2000,
         1999 and 1998, respectively, plus $600,000 and
         $50,000 investment in subsidiary in 2000 and 1999,
         respectively                                                (2,963,984)    (3,591,630)    (4,736,677)
       Gain on disposal of property                                           -              -        (20,475)
       Depreciation                                                      72,517         60,608         57,573
       Provision (benefit) for deferred income taxes                     (1,081)        72,498        (15,454)
       (Increase) decrease in receivables                                (8,465)        (8,878)        21,906
       (Increase) decrease in income taxes receivable-current           442,536        324,464       (779,017)
       (Increase) decrease in prepaid expenses                            8,270        (17,774)        66,222
       Increase (decrease) in accounts payable and accrued
         liabilities                                                     (5,310)        28,750        (29,068)
                                                                    -----------    -----------    -----------
            Net cash provided by operating activities                   684,946      1,288,432         24,519
                                                                    -----------    -----------    -----------


Investing Activities:
   Purchase of land                                                           -       (325,000)             -
   Purchases of furniture and equipment and building                    (34,387)      (250,000)       (31,555)
   Proceeds from the disposal of property                                     -              -         22,475
                                                                    -----------    -----------    -----------
      Net cash used in investing activities                             (34,387)      (575,000)        (9,080)
                                                                    -----------    -----------    -----------


Financing Activities:
   Dividends paid                                                      (342,689)      (342,689)      (342,689)
                                                                    -----------    -----------    -----------
      Net cash used in financing activities                            (342,689)      (342,689)      (342,689)
                                                                    -----------    -----------    -----------


Net Increase (Decrease) in Cash and Cash Equivalents                    307,870        370,743       (327,250)
Cash and Cash Equivalents, Beginning of Year                            579,058        208,315        535,565
                                                                    -----------    -----------    -----------
Cash and Cash Equivalents, End of Year                              $   886,928    $   579,058    $   208,315
                                                                    ===========    ===========    ===========


Supplemental Disclosures:
Cash Paid (Refunded) During the Year For:
   Income Taxes                                                     $   490,592    $  (308,503)   $   853,460
                                                                    ===========    ===========    ===========
</TABLE>

See notes to condensed financial statements.

                                      20
<PAGE>

                                                                     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, Investors Title Insurance Company, were $350,000, $350,000 and
     $350,000 in 2000, 1999 and 1998, respectively. Cash dividends paid to
     Investors Title Company by its wholly owned subsidiary, Investors Title
     Exchange Corporation, were $275,000 $350,000 and $225,000 in 2000, 1999 and
     1998, respectively.

                                      21
<PAGE>

                                                                    SCHEDULE III
                                                                    ------------
<TABLE>
<CAPTION>

                                             INVESTORS TITLE COMPANY AND SUBSIDIARIES
                                                SUPPLEMENTARY INSURANCE INFORMATION
                                       For the Years Ended December 31, 2000, 1999 and 1998
- -----------------------------------------------------------------------------------------------------------------
                                        Future
                                        Policy                 Other
                                      Benefits,               Policy                                   Benefits
                         Deferred      Losses,                Claims                                    Claims,
                          Policy        Claims                  and           Net            Net      Losses and
                        Acquisition    and Loss    Unearned  Benefits       Premium      Investment   Settlement
Segment                    Cost        Expenses    Premiums   Payable       Revenue        Income      Expenses
- -----------------------------------------------------------------------------------------------------------------
<S>                   <C>           <C>            <C>       <C>           <C>           <C>          <C>
Year Ended
December 31, 2000
- -----------------
Title Insurance            ---       $17,944,665      ---     $222,748      $37,690,752   $2,436,561   $5,865,355
Exchange Services          ---               ---      ---          ---              ---       17,478          ---
All Other                  ---               ---      ---          ---              ---       74,104          ---
                       ------------------------------------------------------------------------------------------
                           ---       $17,944,665      ---     $222,748      $37,690,752   $2,528,143   $5,865,355
                       ==========================================================================================

Year Ended
December 31, 1999
- -----------------
Title Insurance            ---       $15,864,665      ---     $208,605      $43,819,565   $2,061,360   $6,026,064
Exchange Services          ---               ---      ---          ---              ---       10,962          ---
All Other                  ---               ---      ---          ---              ---      103,349          ---
                       ------------------------------------------------------------------------------------------
                           ---       $15,864,665      ---     $208,605      $43,819,565   $2,175,671   $6,026,064
                       ==========================================================================================

Year Ended
December 31, 1998
- -----------------
Title Insurance            ---       $13,362,665      ---     $ 84,598      $45,379,696   $1,746,041   $8,094,950
Exchange Services          ---               ---      ---          ---              ---       12,518          ---
All Other                  ---               ---      ---          ---              ---       76,390          ---
                       ------------------------------------------------------------------------------------------
                           ---       $13,362,665      ---     $ 84,598      $45,379,696   $1,834,949   $8,094,950
                       ==========================================================================================

<CAPTION>

                     Amortization
                     of Deferred
                       Policy            Other
                     Acqusition        Operating      Premiums
Segment                Costs           Expenses        Written
- ---------------------------------------------------------------
<S>                <C>               <C>           <C>
Year Ended
December 31, 2000
- -----------------
Title Insurance          ---           $31,060,289     N/A
Exchange Services        ---               225,330     N/A
All Other                ---               818,331     N/A
                     -----------------------------
                         ---           $32,103,950
                     =============================

Year Ended
December 31, 1999
- -----------------
Title Insurance          ---           $34,342,012     N/A
Exchange Services        ---               178,627     N/A
All Other                ---               358,462     N/A
                     -----------------------------
                         ---           $34,879,101
                     =============================

Year Ended
December 31, 1998
- -----------------
Title Insurance          ---           $32,219,955     N/A
Exchange Services        ---               137,444     N/A
All Other                ---               328,405     N/A
                      ----------------------------
                         ---           $32,685,804
                     =============================

</TABLE>

                                      22

<PAGE>

                                                                     SCHEDULE IV
                                                                     -----------

                   INVESTORS TITLE COMPANY AND SUBSIDIARIES
                                  REINSURANCE
             For the Years Ended December 31, 2000, 1999, and 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
                                                Ceded to     Assumed from                      Percentage of
                                  Gross          Other          Other            Net              Amount
                                  Amount       Companies      Companies         Amount        Assumed to Net
- ---------------------------------------------------------------------------------------------------------------------
<S>                           <C>             <C>             <C>               <C>           <C>
YEAR ENDED
DECEMBER 31, 2000
- -----------------
Title Insurance                  $38,020,917    $362,528       $32,363        $37,690,752          0.1%

YEAR ENDED
DECEMBER 31, 1999
- -----------------
Title Insurance                  $44,098,045    $325,212       $46,732        $43,819,565          0.1%

YEAR ENDED
DECEMBER 31, 1998
- -----------------
Title Insurance                  $45,618,518    $312,627       $73,805        $45,379,696          0.2%

</TABLE>

                                      23
<PAGE>

<TABLE>
<CAPTION>
                                                                                                                 SCHEDULE V
                                                                                                                 ----------
                                          INVESTORS TITLE COMPANY AND SUBSIDIARIES
                                             VALUATION AND QUALIFYING ACCOUNTS
                                    For the Years Ended December 31, 2000, 1999 and 1998
- ---------------------------------------------------------------------------------------------------------------------------

                            Balance at            Additions         Additions Charged
                            Beginning            Charged to             to Other            Deductions-       Balance at
Description                 of Period         Costs and Expenses   Accounts - Describe       describe*       End of Period
- ---------------------------------------------------------------------------------------------------------------------------
<S>                      <C>                 <C>                   <C>                      <C>              <C>
2000
- ----
Premiums Receivable
Valuation Provision          $   775,000          $2,269,190              $-              $(2,319,190)      $   725,000

Reserves for
Claims                       $15,864,665          $5,865,355              $-              $(3,785,355)      $17,944,665

1999
- ----
Premiums Receivable
Valuation Provision          $   775,000          $2,793,975              $-              $(2,793,975)      $   775,000

Impairment of
Building Plans               $   218,122          $        -              $-              $  (218,122)      $         -

Reserves for
Claims                       $13,362,665          $6,026,064              $-              $(3,524,064)      $15,864,665

Provision for
Equipment Disposal           $   280,000          $        -              $-              $  (280,000)      $         -

1998
- ----
Premiums Receivable
Valuation Provision          $   350,000          $2,106,316              $-              $(1,681,316)      $   775,000

Impairment of
Building Plans               $   150,000          $   68,122              $-              $         -       $   218,122

Reserves for
Claims                       $ 7,622,140          $8,094,950              $-              $(2,354,425)      $13,362,665

Provision for
Equipment Disposal           $         -          $  280,000              $-              $         -       $   280,000
</TABLE>

*Cancelled premiums and reduction to allowance for bad debts
*Wrote off building plans
*Payments of claims
*Disposed of impaired equipment

                                      24

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.II
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>BYLAWS OF INVESTORS TITLE COMPANY
<TEXT>

<PAGE>

                                                                   EXHIBIT 3(ii)

                                    BY-LAWS
                                      OF
                            INVESTORS TITLE COMPANY

                RESTATED AND AMENDED THROUGH FEBRUARY 12, 2001

                                  ARTICLE I.

                                   OFFICES:

          Section 1.  Principal Office:  The principal office of the Corporation
                      ----------------
shall be located at 121 North Columbia Street, Chapel Hill, North Carolina.

          Section 2.  Registered Office:  The registered office of the
                      -----------------
Corporation required by law to be maintained in the State of North Carolina may
be, but need not be, identical with the principal office.

          Section 3.  Other Offices:  The Corporation may have offices at such
                      -------------
other places, either within or without the State of North Carolina, as the Board
of Directors may from time to time determine, or as the affairs of the
Corporation may require.

                                  ARTICLE II.

                           MEETING OF SHAREHOLDERS:

          Section 1.  Place of Meetings:  All meetings of shareholders shall be
                      -----------------
held at the principal office of the Corporation, or at such other place, either
within or without the State of North Carolina, as shall be designated in the
notice of the meeting or agreed upon by a majority of the shareholders entitled
to vote thereat.

          Section 2.  Annual Meetings:  The annual meeting of shareholders
                      ---------------
shall be held on the third Wednesday in May of each year, if not a legal
holiday, but if a legal holiday, then on the next day following not a legal
holiday, for the purpose of electing directors of the Corporation and for the
transaction of such other business as may be properly brought before the
meeting.

          Section 3.  Substitute Annual Meeting:  If the annual meeting shall
                      -------------------------
not be held on the day designated by these by-laws, a substitute annual meeting
may be called in accordance with the provisions of Section 4 of this Article. A
meeting so called shall be designated and treated for all purposes as the annual
meeting.

          Section 4.  Special Meetings:  Special meetings of the shareholders
                      ----------------
may be called by any of the following: (a) by the Chairman of the Board of
Directors; (b) by the
<PAGE>

President of the Corporation; (c) by the Board of Directors upon the affirmative
vote of at least seventy-five percent (75%) of the entire Board of Directors; or
(d) by the shareholders upon written request of those persons holding of record
not less than eighty percent (80%) of the total voting power of the shares
entitled to vote thereon.

          Section 5.  Notice of Meetings:  Written or printed notice stating the
                      ------------------
time and place of the meeting shall be delivered no fewer than 10 nor more than
60 days before the date thereof, either personally or by mail, by or at the
direction of the President or the other person calling the meeting, to each
shareholder of record entitled to vote at such meeting and to each nonvoting
shareholder entitled to notice of the meeting. If the corporation is required by
law to give notice of proposed action to nonvoting shareholders and the action
is to be taken without a meeting pursuant to Section 9 of this Article, written
notice of such proposed action shall be delivered to such shareholders not less
than 10 days before such action is taken.

          If notice is mailed, such notice shall be effective when deposited in
the United States mail with postage thereon prepaid and correctly addressed to
the shareholder's address shown in the corporation's current record of
shareholders.

          In the case of an annual or substitute annual meeting, the notice of
meeting need not specifically state the business to be transacted thereat unless
it is a matter with respect to which specific notice to the shareholders is
expressly required by the provisions of the North Carolina Business Corporation
Act. In the case of a special meeting, the notice of meeting shall specifically
state the purpose or purposes for which the meeting is called.

          When a meeting is adjourned for more than 120 days after the date
fixed for the original meeting or if a new record date for the adjourned meeting
is fixed, notice of the adjourned meeting shall be given as in the case of an
original meeting. When a meeting is adjourned for 120 days or less and no new
record date for the adjourned meeting is fixed, it is not necessary to give
notice of the adjourned meeting other than by announcement at the meeting at
which the adjournment is taken.

          Section 6.  Voting Lists:  At least ten days before each meeting of
                      ------------
shareholders the Secretary of the Corporation shall prepare an alphabetical list
of the shareholders entitled to vote at such meetings, with the address of and
number of shares held by each, which list shall be kept on file at the
registered office of the Corporation for a period of ten days prior to such
meeting, and shall be subject to inspection by any shareholder at any time
during the usual business hours. This list shall also be provided and kept open
at the time and place of the meeting and shall be subject to inspection by any
shareholder during the whole time of the meeting.

          Section 7.  Quorum:  The holders of a majority of the shares entitled
                      ------
to vote, represented in person or by proxy, shall constitute a quorum at
meetings of shareholders. If there is no quorum at the opening of a meeting of
shareholders, such meeting may be adjourned from time to time by the vote of a
majority of the shares voting on the motion to adjourn; and, at any adjourned
meeting at which a quorum is present, any business may be transacted which might
have been transacted at the original meeting.
<PAGE>

          The shareholders at a meeting at which a quorum is present may
continue to do business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.

          Section 8.  Voting of Shares:    Each outstanding share having voting
                      ----------------
rights shall be entitled to one vote on each matter submitted to a vote at a
meeting of shareholders.

          Except in the election of directors, the vote of a majority of the
shares voted on any matter at a meeting of shareholders at which a quorum is
present shall be the act of the shareholders on that matter, unless the vote of
a greater number is required by law or by the charter or by-laws of this
Corporation.

          Voting on all matters shall be by voice or by a show of hands unless
the holders of one-tenth of the shares represented at the meeting shall, prior
to the voting on any matter, demand a ballot vote on that particular matter.

          Section 9.  Informal Action by Shareholders:  Any action which may be
                      -------------------------------
taken at a meeting of the shareholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the persons who would be entitled to vote upon such action at a meeting, and
filed with the Secretary of the Corporation to be kept in the Corporate Minute
Book.

                                 ARTICLE III.

                                   DIRECTORS

          Section 1.  General Powers:  The business and affairs of the
                      --------------
Corporation shall be managed by the Board of Directors or by such Executive
Committees as the Board may establish pursuant to these by-laws.

          Section 2.  Number, Term and Qualifications:  The number of Directors
                      -------------------------------
of the Corporation shall not be less than nine nor more than twelve as
determined, from time to time, by the shareholders. The Board shall be divided
into three classes, having staggered terms of three years each. Each director
shall hold office until his death, resignation, retirement, removal,
disqualification, or his successor is elected and qualified. Directors need not
be residents of the State of North Carolina or shareholders of the Corporation.

          Section 3.  Election of Directors:  Except as provided in Section 6 of
                      ---------------------
this Article, the directors shall be elected at the annual meeting of
shareholders; and those persons who receive the highest number of votes shall be
deemed to have been elected.

          Section 4.  Cumulative Voting:  Every shareholder entitled to vote at
                      -----------------
an election of Directors shall have the right to vote the number of shares
standing of record in his name for as many persons as there are Directors to be
elected and for whose election he has a right to vote, or to cumulate his vote
by giving one candidate as many votes as the number of such directors multiplied
by the number of his shares shall equal, or by distributing such votes on the
same principal among any number of such candidates. This right of cumulative
voting shall not be exercised unless some shareholder or proxy holder announces
in open meeting, before the
<PAGE>

voting for the Directors starts, his intention so to vote cumulatively; and if
such announcement is made, the chair shall declare that all shares entitled to
vote have the right to vote cumulatively and shall thereupon grant a recess of
not less than one nor more than four hours, as he shall determine, or of such
other period of time as is unanimously then agreed upon.

          Section 5.  Removal:  Neither the entire Board of Directors nor any
                      -------
individual director of the corporation shall be removed from office, with or
without cause, unless a meeting of the shareholders of the corporation is held
to act thereon and there is obtained the approval of a percentage of all votes
entitled to be cast thereon of at least eighty percent (80%); provided, however,
that if any such removal shall have been recommended to the shareholders of the
corporation by a resolution of the Board of Directors adopted by the affirmative
vote of seventy-five percent (75%) of the entire Board of Directors, then such
removal may be effected if a meeting of the shareholders of the corporation is
held to act thereon and there is obtained the approval of a percentage of all
votes entitled to be cast thereon equal to a majority of all votes entitled to
be cast thereon; provided, further, that any such removal may be effected
without a meeting or vote of the shareholders of the corporation if a resolution
determining that cause exists for such removal shall be adopted by the
affirmative vote of seventy-five percent (75%) of the entire Board of Directors.

          Section 6.  Vacancies:  A vacancy occurring in the Board of Directors
                      ---------
may be filled by a majority of the remaining directors, though less than a
quorum, or by the sole remaining Directors; but a vacancy created by an increase
in the authorized number of Directors shall be filled only by election at an
annual meeting or at a special meeting of shareholders called for that purpose.
The shareholders may elect a director at any time to fill any vacancy not filled
by the directors.

          Section 7.  Chairman:  There may be a Chairman of the Board of
                      --------
Directors elected by the directors from their number at any meeting of the
Board. The Chairman shall preside at all meetings of the Board of Directors and
perform such other duties as may be directed by the Board.

          Section 8.  Compensation:  The Board of Directors may compensate
                      ------------
directors for their services.

          Section 9:  Executive Committee:  The Board of Directors may, by
                      -------------------
resolution adopted by a majority of the number of directors fixed by these by-
laws, designate two or more directors to constitute an Executive Committee,
which committee to the extent provided in such resolution, shall have and may
exercise all of the authority of the Board of Directors in the management of the
Corporation.

                                  ARTICLE IV.

                             MEETING OF DIRECTORS

          Section 1.  Regular Meetings:  A regular meeting of the Board of
                      ----------------
Directors shall be held immediately after, and at the same place as, the annual
meeting of shareholders. In addition the Board of Directors may provide, by
resolution, the time and place, either within or without the State of North
Carolina, for the holding of additional regular meetings.
<PAGE>

          Section 2.  Special Meetings:  Special Meetings of the Board of
                      ----------------
Directors may be called by or at the request of the President or any two
directors. Such meetings may be held either within or without the State of North
Carolina.

          Section 3.  Notice of Meetings:    Regular meetings of the Board of
                      ------------------
Directors may be held without notice.

          The person or persons calling a special meeting of the Board of
Directors shall, at least two days before the meeting, give notice thereof by
the usual means of communication. Such notice need not specify the purpose for
which the meeting is called.

          Attendance by a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called.

          Section 4.  Quorum:  A majority of the directors fixed by these
                      ------
by-laws shall constitute a quorum for the transaction of business at any meeting
of the Board of Directors.

          Section 5.  Manner of Acting:  Except as otherwise provided in this
                      ----------------
section, the act of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors.

          The vote of a majority of the number of directors fixed by these by-
laws shall be required to adopt a resolution constituting an executive
committee. The vote of a majority of the directors then holding office shall be
required to adopt, amend or repeal a by-law, or to adopt a resolution dissolving
the corporation without action by the shareholders. Vacancies in the Board of
Directors may be filled as provided in Article III, Section 6 of these by-laws.

          Section 6.  Informal Action by Directors:  Action taken by a majority
                      ----------------------------
of the directors without a meeting is nevertheless Board action if written
consent to the action in question is signed by all the directors and filed with
the minutes of the proceedings.

          Section 7.  Secretary:  The Secretary shall keep accurate records of
                      ---------
the acts and proceedings of all meetings of shareholders and directors. He shall
give all notices required by law and by these by-laws. He shall have general
charge of the corporate books and records and of the corporate seal, and he
shall affix the corporate seal to any lawfully executed instrument requiring it.
He shall have general charge of the stock transfer books of the Corporation and
shall keep, at the registered or principal office of the Corporation, a record
of shareholders showing the name and address of each shareholder and the number
and class of the shares held by each. He shall sign such instruments as may
require his signature, and, in general, shall perform all duties incident to the
office of Secretary and such other duties as may be assigned to him from time to
time by the President or by the Board of Directors.

          Section 8.  Treasurer:  The Treasurer shall have custody of all funds
                      ---------
and securities belonging to the Corporation and shall receive, deposit or
disburse the same under the direction of the Board of Directors. He shall keep
full and accurate accounts of the finances of the Corporation in books
especially provided for that purpose; and he shall cause a true statement of its
assets and liabilities as of the close of each fiscal year and of the results of
its operations
<PAGE>

and of changes in surplus for such fiscal year, all in reasonable detail,
including particulars as to convertible securities then outstanding, to be made
and filed at the registered or principal office of the Corporation within four
months after the end of such fiscal year. The statement so filed shall be kept
available for inspection by any shareholder for a period of ten years; and the
Treasurer shall mail or otherwise deliver a copy of the latest such statement to
any shareholder upon his written request thereof. The Treasurer shall, in
general perform all duties incident to his office and such other duties as may
be assigned to him from time to time by the President or by the Board of
Directors.

          Section 9.  Assistant Secretaries and Treasurers:  The Assistant
                      ------------------------------------
Secretaries and Assistant Treasurers shall, in the absence or disability of the
Secretary or the Treasurer, respectively, perform the duties and exercise the
powers of those offices, and they shall, in general, perform such other duties
as shall be assigned to them by the Secretary or the Treasurer, respectively, or
by the President or the Board of Directors.

          Section 10. Bonds:  The Board of Directors may by resolution require
                      -----
any or all officers, agents and employees of the Corporation to give bond to the
Corporation, with sufficient sureties, conditioned on the faithful performance
of the duties of their respective offices or positions, and to comply with such
other conditions as may from time to time be required by the Board of Directors.

                                  ARTICLE V.

                                   OFFICERS

          Section 1.  Number:  The officers of the Corporation shall consist of
                      ------
a President, a Secretary, a Treasurer, and such Vice-Presidents, Assistant
Secretaries, Assistant Treasurers and other officers as the Board of Directors
may from time to time elect. Any two or more offices may be held by the same
person, except the offices of President and Secretary.

          Section 2.  Election and Term:  The officers of the Corporation shall
                      -----------------
be elected by the Board of Directors. Such elections may be held at any regular
or special meeting of the Board. Each officer shall hold office until his death,
resignation, retirement, removal, disqualification, or his successor is elected
and qualified.

          Section 3.  Removal:  Any officer or agent elected or appointed by the
                      -------
Board of Directors may be removed by the Board with or without cause; but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.

          Section 4.  Compensation:  The compensation of all officers of the
                      ------------
Corporation shall be fixed by the Board of Directors.

          Section 5.  President:  The President shall be the principal executive
                      ---------
officer of the Corporation and, subject to the control of the Board of
Directors, shall supervise and control the management of the Corporation in
accordance with these by-laws.

          He shall, when present, preside at all meetings of shareholders. He
shall sign, with any other proper officer, certificates for shares of the
Corporation and any deeds,
<PAGE>

mortgages, bonds, contracts, or other instruments which may be lawfully executed
on behalf of the Corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and execution thereof
shall be delegated by the Board of Directors to some other officer or agent;
and, in general, he shall perform all duties incident to the office of President
and such other duties as may be prescribed by the Board of Directors from time
to time.

          Section 6.  Vice-Presidents:  The Vice-Presidents in the order of
                      ---------------
their election, unless otherwise determined by the Board of Directors, shall, in
the absence or disability of the President, perform the duties and exercise the
powers of that office. In addition, they shall perform such other duties and
have such other powers as the Board of Directors shall prescribe.

                                  ARTICLE VI.

                         CONTRACTS, LOANS AND DEPOSITS

          Section 1.  Contracts:  The Board of Directors may authorize any
                      ---------
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument on behalf of the Corporation, and such authority may be
general or confined to specific instances.

          Section 2.  Loans:  No loans to or from the Corporation shall be
                      -----
contracted on behalf of the Corporation and no evidences of indebtedness shall
be issued in its name unless authorized by a resolution of the Board of
Directors.  Such authority may be general or confined to specific instances.

          Section 3.  Checks and Drafts:  All checks, drafts or other orders for
                      -----------------
the payment of money issued in the name of the Corporation shall be signed by
such officer or officers, agent or agents of the Corporation and in such manner
as shall from time to time be determined by resolution of the Board of
Directors.

          Section 4.  Deposits:  All funds of the Corporation not otherwise
                      --------
employed shall be deposited from time to time to the credit of the Corporation
in such depositories as the Board of Directors shall direct.

                                 ARTICLE VII.

                  CERTIFICATES FOR SHARES AND THEIR TRANSFER

          Section 1.  Certificates for Shares:  Certificates representing
                      -----------------------
shares of the Corporation shall be issued, in such form as the Board of
Directors shall determine, to every shareholder for the fully paid shares owned
by him. These certificates shall be signed by the President or any Vice-
President and the Secretary, Assistant Secretary, Treasurer or Assistant
Treasurer. They shall be consecutively numbered or otherwise identified; and the
name and address of the persons, corporations, firms or organizations to whom
they are issued, with the
<PAGE>

number of shares and date of issue, shall be entered on the stock transfer books
of the Corporation.

          Section 2.  Transfer of Shares:  Transfer of shares shall be made on
                      ------------------
the stock transfer books of the Corporation only upon surrender of the
certificates for the shares sought to be transferred by the record holder
thereof or by his duly authorized agent, transferee or legal representative. All
certificates surrendered for transfer shall be cancelled before new certificates
for the transferred shares shall be issued.

          Section 3.  Fixing Record Date.  For the purpose of determining the
                      ------------------
shareholders entitled to notice of a meeting of shareholders, to demand a
special meeting, to vote, to take any other action, or to receive a dividend
with respect to their shares, the Board of Directors may fix in advance a date
as the record date for any such determination of shareholders. Such record date
fixed by the Board of Directors under this Section shall not be more than 70
days before the meeting or action requiring a determination of shareholders.

          If no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to a dividend, the close of the business day before the first notice is
delivered to shareholders or the date on which the Board of Directors authorizes
the dividend, as the case may be, shall be the record date for such
determination of shareholders.

          When a determination of shareholders entitled to vote at any meeting
of shareholders has been made as provided in this Section, such determination
shall apply to any adjournment thereof unless the Board of Directors fixes a new
record date, which it must do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.

          Section 4.  Lost Certificates:  The Board of Directors may authorize
                      -----------------
the issuance of a new share certificate in place of a certificate claimed to
have been lost or destroyed, upon receipt of an affidavit of such fact from the
person claiming the loss or destruction. When authorizing such issuance of a new
certificate, the Board may require the claimant to give the Corporation a bond
in such sum as it may direct to indemnify the Corporation against loss from any
claim with respect to the certificate claimed to have been lost or destroyed; or
the Board may, by resolution reciting that the circumstances justify such
action, authorize the issuance of the new certificate without requiring such a
bond.

                                 ARTICLE VIII.

                              GENERAL PROVISIONS

          Section 1.  Dividends:  The Board of Directors may from time to time
                      ---------
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and by its charter.

          Section 2.  Seal:  The corporate seal of the Corporation shall consist
                      ----
of two concentric circles between which is the name of the Corporation and in
the center of which is
<PAGE>

inscribed SEAL; and such seal, as impressed on the margin hereof, is hereby
adopted as the corporate seal of the Corporation.

          Section 3.  Waiver of Notice:  Whenever any notice is required to be
                      ----------------
given to any shareholder or director under the provisions of the North Carolina
Business Corporation Act or under the provisions of the charter or by-laws of
this Corporation, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be equivalent to the giving of such notice.

          Section 4.  Fiscal Year:  Unless otherwise ordered by the Board of
                      -----------
Directors, the fiscal year of the Corporation shall be from January 1 to
December 31.

          Section 5.  Amendments:  Except as otherwise provided herein, these
                      ----------
by-laws may be amended or repealed and new by-laws may be adopted by the
affirmative vote of a majority of the directors then holding office at any
regular or special meeting of the Board of Directors.

          The Board of Directors shall have no power to adopt a by-law: (1)
requiring more than a majority of the voting shares for a quorum at a meeting of
shareholders or more than a majority of the votes cast to constitute action by
the shareholders, except where higher percentages are required by law; (2)
providing for the management of the Corporation otherwise than by the Board of
Directors or its Executive Committees; (3) increasing or decreasing the number
of directors; (4) classifying and staggering the election of directors. No by-
law adopted or amended by the shareholders shall be altered or repealed by the
Board of Directors.

          No provision of the by-laws may be amended, altered or repealed by the
shareholders of the corporation unless a meeting of the shareholders is held to
act thereon and there is obtained the approval of a percentage of all the votes
entitled to be cast on at least eighty percent (80%); provided, however, that
the approval of the majority of all the votes entitled to be cast shall be
sufficient to approve any such amendment, alteration or repeal that has been
favorably recommended to the shareholders by resolution adopted by the
affirmative vote of at least seventy-five percent (75%) of the entire Board of
Directors.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.XIII
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>2001 STOCK OPTION PLAN
<TEXT>

<PAGE>

                                                                EXHIBIT 10(xiii)

                            INVESTORS TITLE COMPANY

                 2001 STOCK OPTION AND RESTRICTED STOCK  PLAN

                                   ARTICLE I
                                   ---------
                              GENERAL PROVISIONS
                              ------------------

          Section 1.1  Purpose.  This 2001 Stock Option and Restricted Stock
                       -------
Plan (the "Plan") of Investor's Title Company and its subsidiaries (the
"Company") is intended to induce those persons who are in a position to
contribute materially to the success of the Company to remain with the Company,
to offer them rewards in recognition of their contributions to the Company and
to offer them incentives to continue to promote the Company's best interests.

          Section 1.2  Elements of the Plan.  The Plan provides for the grant of
                       --------------------
stock options pursuant to ARTICLE II of the Plan ("Options") and restricted
stock awards pursuant to ARTICLE III of the Plan ("Restricted Stock Awards").
Each Option granted pursuant to the Plan shall be designated as provided in
ARTICLE II as either an Incentive Stock Option or a Nonqualified Stock Option.
Incentive Stock Options granted under the Plan are intended to qualify as such
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and shall be construed and interpreted to comply with the requirements of that
section and any regulations promulgated thereunder.

          Section 1.3  Administration.  The Plan shall be administered by an
                       --------------
option committee (the "Committee") appointed by the Board of Directors of the
Company (the "Board"). The Committee shall be comprised of not less than two
members, all of whom must be persons who are both "Non-Employee Directors"
within the meaning of Rule 16b-3 as promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934 and "outside directors"
within the meaning of Section 162(m) of the Code and the regulations promulgated
thereunder. The Board from time to time may appoint members of the Committee in
substitution for or in addition to members previously appointed, and may fill
vacancies in the Committee, however caused. Any action by the Committee shall be
taken by majority vote at a meeting thereof called in accordance with procedures
adopted thereby, or by unanimous written consent of the Committee.

          Section 1.4  Authority of Committee.
                       ----------------------

          (a)  Subject to the other provisions of this Plan, the Committee shall
     have sole authority in its absolute discretion:  to grant Options and
     Restricted Stock Awards under the Plan; to determine the officers,
     employees and directors to whom Options and/or Restricted Stock Awards
     shall be granted under the Plan; to determine the number of

                                       1
<PAGE>

     shares subject to any Option or Restricted Stock Award under the Plan; to
     fix the option price and the duration of each Option; to establish
     corporate or individual performance or other vesting standards for Options
     or Restricted Stock Awards; to establish any other terms and conditions of
     Options and Restricted Stock Awards; and to accelerate the time at which
     any outstanding Option may be exercised or the time when restrictions and
     conditions on Restricted Stock Awards will lapse. The Board may also grant
     Options and/or Restricted Stock Awards from time to time to consultants who
     are not employees of the Company. No member of the Board or of the
     Committee shall be liable for any action or determination made in good
     faith with respect to the Plan or any Option or Restricted Stock Award
     granted thereunder. In addition, directors or former directors of the
     Company, including members or former members of the Committee, shall be
     entitled to indemnification by the Company to the extent permitted by
     applicable law and by the Company's Articles of Incorporation or Bylaws
     with respect to any liability or expense arising out of such person's
     participation in the administration of this Plan.

          (b)  Subject to the other provisions of this Plan, and with a view to
     effecting its purpose, the Committee shall have sole authority in its
     absolute discretion: to construe and interpret the Plan; to prescribe,
     amend, and rescind rules and regulations relating to the Plan; to make any
     other determinations relating to the Plan; and to do everything necessary
     or advisable to administer the Plan.

          (c)  All decisions, determinations, and interpretations made by the
     Committee shall be binding and conclusive on all optionees and holders of
     restricted stock and on their legal representatives, heirs and
     beneficiaries.

          Section 1.5  Shares Subject to the Plan: Reservation of Shares.  The
                       -------------------------------------------------
maximum aggregate number of shares of common stock of the Company available
pursuant to the Plan for the grant of Options and for Restricted Stock Awards,
subject to adjustments as provided in Section 1.7, shall be 250,000 shares of
the Company's common stock, no par value (the "Common Stock").  The aggregate
number of shares of Common Stock with respect to which Options and Restricted
Stock Awards under the Plan may be granted to any individual (including Options
and Restricted Stock Awards that are subsequently cancelled) shall not exceed an
aggregate of 50,000 shares of Common Stock.  If any Option granted pursuant to
the Plan expires or terminates for any reason before it has been exercised in
full, the unpurchased shares subject to that Option shall again be available for
the purposes of the Plan.  If any shares issued pursuant to a Restricted Stock
Award are forfeited, they shall again be available for the purposes of the Plan.
The Company shall at all times reserve and keep available such number of shares
of its Common Stock as shall be sufficient to satisfy the requirements of the
Plan.

          Section 1.6  Eligibility.  Options and Restricted Stock Awards may be
                       -----------
granted under the Plan to such key employees (including statutory employees
within the meaning of Section 3121(d) of the Code), officers, directors or
consultants of the Company or a subsidiary of the Company, whether or not
employees, as the Committee shall select from time to time in its discretion.
Incentive Stock Options, however, may be granted under the Plan only to key
employees of the Company or a subsidiary of the Company who qualify for the
grant of an Incentive Stock Option under Section 422 of the Code.

                                       2
<PAGE>

          Section 1.7  Adjustments.  If the shares of Common Stock of the
                       -----------
Company are increased, decreased, changed into or exchanged for a different
number or kind of shares or securities through merger, consolidation,
combination, exchange of shares, other reorganization, recapitalization,
reclassification, stock dividend, stock split or reverse stock split in which
the Company is the surviving entity, an appropriate and proportionate adjustment
shall be made in the maximum number and kind of shares as to which Options and
Restricted Stock Awards may be granted under this Plan.  A corresponding
adjustment changing the number or kind of shares allocated to unexercised
Options or unvested Restricted Stock Awards that shall have been granted prior
to any such change shall likewise be made.  Any such adjustment in outstanding
Options shall be made without change in the aggregate purchase price applicable
to the unexercised portion of any such Option, but with a corresponding
adjustment in the price for each share covered by the Option, and shall be made
in a manner as not to constitute a modification, within the meaning of Section
424(h) of the Code, of outstanding Incentive Stock Options.  In making any
adjustment pursuant to this Section 1.7, any fractional shares shall be
disregarded.

     In the event of a change in the Common Stock of the Company as presently
constituted, which is limited to a change of all of its authorized shares with
par value into the same number of shares with a different par value or without
par value, the shares resulting from any such change shall be deemed to be
Common Stock within the meaning of the Plan.

     The grant of an Option or a Restricted Stock Award under the Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure.

ARTICLE II
- ----------

STOCK OPTIONS
- -------------

          Section 2.1  Grant.  The Committee may cause the Company to grant
                       -----
Stock Options for the purchase of shares of Common Stock to eligible
participants under the Plan in such amounts as the Committee, in its sole
discretion shall determine.  Options granted pursuant to the Plan that are
intended to qualify as "incentive stock options" under Section 422 of the Code
shall be designated as such at the time of their grant and are referred to
herein as Incentive Stock Options.  Options not intended to qualify as Incentive
Stock Options are referred to herein as Nonqualified Stock Options and shall be
designated as such in the applicable option agreement.

          Section 2.2  Terms and Conditions of Options.  Options granted under
                       -------------------------------
the Plan shall be evidenced by written agreements ("option agreements") in such
form as the Committee may from time to time approve.  The terms and conditions
of Options granted under the Plan, including the satisfaction of corporate or
individual performance or other vesting standards, may differ one from another
as the Committee shall in its discretion determine, as long as all Options
granted under the Plan satisfy the terms and conditions applicable to Options
set forth in this Plan.

                                       3
<PAGE>

          (a)  Number of Shares; Designation.  Each Option shall state the
               -----------------------------
     number of shares of Common Stock to which it pertains and that it is either
     an Incentive Stock Option or a Nonqualified Stock Option.

          (b)  Option Price.  Each Option shall state the option price, which
               ------------
     shall not be less than the fair market value (as hereinafter defined) per
     share of the Common Stock at the time the option is granted (except that
     for Incentive Stock Options granted to any employee who owns more than 10%
     of the combined voting power of all classes of stock of the Company, the
     option price shall not be less than 110% of fair market value). For the
     purpose of the Plan, the "fair market value" per share of Common Stock on
     any date of reference shall be the Closing Price of the Common Stock
     referred to in clauses (i), (ii) or (iii) below, whichever appropriate, on
     the business day immediately preceding such date.  For this purpose, the
     Closing Price of the Common Stock on any business day shall be: (i) if the
     Common Stock is listed or admitted for trading on any United States
     national securities exchange, or if actual transactions are otherwise
     reported on the National Market System of the National Association of
     Securities Dealers Automated Quotation System ("NASDAQ") or other
     consolidated transaction reporting system, the last reported sale price of
     Common Stock on such exchange or reporting system on which the Common Stock
     is principally traded, as reported in any newspaper of general circulation;
     (ii) if clause (i) is not applicable and the Common Stock is otherwise
     quoted on NASDAQ, or any similar system of automated dissemination of
     quotations of securities prices in common use, the mean between the closing
     high bid and low asked quotations for the Common Stock on such system for
     such day; or (iii) if neither clause (i) nor (ii) is applicable, the mean
     between the high bid and low asked quotations for the Common Stock as
     reported by the National Quotation Bureau, Incorporated if at least two
     securities dealers have inserted both bid and asked quotations for Common
     Stock on at least five of the preceding ten days.  If neither clause (i)
     nor clauses (ii) or (iii) are applicable, "fair market value" per share of
     Common Stock shall be such value as shall be determined by the Committee in
     its sole discretion, unless the Committee shall identify a different method
     for determining fair market value in a fair and uniform manner.

          (c)  Exercise of Options.  Each Option shall be exercisable in one or
               -------------------
     more installments during its term, as provided in the applicable Option
     agreement, and the right to exercise may be cumulative.  No Option may be
     exercised for a fraction of a share of Common Stock.  Unless otherwise
     provided by the applicable Option agreement, the purchase price of any
     shares purchased shall be paid in full in cash or by cashier's check
     payable to the order of the Company, by surrender of shares of Common Stock
     held by the grantee for more than six months and having a value at the
     exercise date equal to the exercise price, or through a cashless exercise
     through a broker-dealer registered with the Securities and Exchange
     Commission, or by a combination of any of the foregoing.  If any portion of
     the purchase price is paid in shares of Common Stock, those shares shall be
     valued at their fair market value as of the day of delivery, as determined
     in accordance with Section 2.2(b).  No optionee, or optionee's executor,
     administrator, legatee, or distributee, shall be deemed to be a holder of
     any shares subject to an Option unless and until a stock certificate or
     certificates for such are issued to such person(s) under the terms of the
     Plan.  No adjustment shall be made for dividends (ordinary or
     extraordinary, whether in cash, securities or other property) or
     distributions or other rights for which the

                                       4
<PAGE>

     record date is prior to the date such stock certificate is issued, except
     as provided in Section 1.7. The exercise of Options under the Plan shall be
     subject to the withholding requirements as set forth in Section 4.2.

          (d)  Written Notice Required.  An Option granted pursuant to the terms
               ------------------------
     of this Plan shall be exercised when written notice of that exercise,
     stating the number of shares with respect to which the Option is being
     exercised, has been given to the Company at its principal office, from the
     person entitled to exercise the Option and full payment for the shares with
     respect to which the Option is exercised has been received by the Company.

          (e)  Options Not Transferable.  Options granted pursuant to this Plan
               ------------------------
     may not be sold, pledged, assigned or transferred in any manner other than
     by will or the laws of descent or distribution and may be exercised during
     the lifetime of an optionee only by that optionee.

          (f)  Duration of Options.  Each Option and all rights thereunder
               -------------------
     granted pursuant to the terms of this Plan shall expire on the date
     specified in the applicable option agreement, but in no event shall any
     Option expire later than ten (10) years from the date on which the Option
     is granted; provided, however, that any Incentive Stock Option granted to
     an employee who owns more than 10% of the combined voting power of all
     classes of stock of the Company may not be exercisable after the date five
     (5) years from the date the Option is granted.  In addition, each Option
     shall be subject to early termination as provided in this Plan or the
     applicable option agreement.

          (g)  Termination of Employment, Disability or Death.
               ----------------------------------------------

               (i)   If an optionee ceases to be employed by the Company, or any
          subsidiary corporation, for any reason other than death or disability,
          any Option granted to such optionee that is unexercised or still
          subject to any restrictions or conditions shall be terminated and
          forfeited, unless otherwise provided in the applicable option
          agreement.

               (ii)  If an optionee becomes disabled within the meaning of
          Section 22(e)(3) of the Code while employed by the Company, or any
          subsidiary corporation, any Option may be exercised at any time within
          three months after the date of termination of employment due to
          disability, unless a longer or shorter period is provided in the
          applicable option agreement.

               (iii) If an optionee dies while employed by the Company, or any
          subsidiary corporation, any Option shall expire one year after the
          date of death, unless a longer or shorter period of exercise is
          provided in the applicable option agreement.  During this period, the
          Option may be exercised, except as otherwise provided in the
          applicable option agreement, by the person or persons to whom the
          optionee's rights under the Option shall pass by will or by the laws
          of descent and distribution, but in no event may the Option be
          exercisable more than ten years from the date of grant.

                                       5
<PAGE>

               (iv) Unless otherwise provided in the applicable option
          agreement, any Option that may be exercised for a period following
          termination of the optionee's employment may be exercised only to the
          extent it was exercisable immediately before such termination and in
          no event after the Option would expire by its terms without regard to
          such termination.

               (v)  If a nonemployee director ceases to serve the Company in
          that capacity, the optionee's rights upon such termination shall be
          governed in the manner of a optionee's rights upon termination of
          employment as set forth above.

          (h)  Reorganizations.  If the Company shall be a party to any merger
               ---------------
     or consolidation in which it is not the surviving entity or pursuant to
     which the shareholders of the Company exchange their Common Stock for other
     securities or for cash in any acquisition transaction, or if the Company
     shall dissolve or liquidate or sell all or substantially all of its assets,
     or upon consummation of a tender offer approved by the Board, all Options
     outstanding under this Plan, unless otherwise provided in the applicable
     option agreement, shall terminate on the effective date of such merger,
     consolidation, dissolution, liquidation, sale or tender offer; provided,
     however, that prior to such effective date, the Committee may, in its
     discretion, either (i) make any or all outstanding Options immediately
     exercisable, (ii) authorize a payment to any optionee that approximates the
     economic benefit that he would realize if his option were exercised
     immediately before such effective date, (iii) authorize a payment in such
     other amount as it deems appropriate to compensate any optionee for the
     termination of his Option, or (iv) arrange for the granting of a substitute
     Option to any optionee.

          Section 2.3  Maximum Amount of Incentive Stock Options.  The maximum
                       -----------------------------------------
aggregate fair market value of Common Stock, determined as of the time the
Incentive Stock Option is granted, with respect to which Incentive Stock Options
are exercisable by an optionee for the first time during any calendar year,
under this Plan and all other incentive stock option plans of the Company and
any parent, subsidiary, and predecessor corporations, shall not exceed $100,000.
Any Option in excess of the foregoing limitation shall be deemed a Nonqualified
Stock Option to the extent of such excess.


ARTICLE III
- -----------

RESTRICTED STOCK AWARDS
- -----------------------

          Section 3.1  Grant of Restricted Shares.  The Committee may cause
                       --------------------------
the Company to grant Restricted Stock Awards to eligible participants under the
Plan in such amounts as the Committee, in its sole discretion, shall determine.
Restricted Stock Awards may be issued either alone or in addition to Options
granted under the Plan.

          Section 3.2  Agreement.  Each Restricted Stock Award shall be
                       ---------
evidenced by a written agreement in such form and containing such provisions not
inconsistent with the Plan as the Committee may from time to time approve.  Each
Restricted Stock Award shall be effective as of the date so stated in the
resolution of the Committee making the award.

                                       6
<PAGE>

          Section 3.3  Restrictions and Conditions.  Shares of Common Stock
                       ---------------------------
awarded under this ARTICLE III shall be subject to such restrictions and
conditions, if any, as may be imposed by the Committee at the time of making the
award.  Such restrictions and conditions may include, without limitation, the
satisfaction of specified performance criteria by the Company or by the grantee
of the Restricted Stock Award, or other vesting standards; provided, however,
that no award shall require any payment of cash consideration by the grantee.
Restrictions and conditions imposed on shares of Common Stock awarded under this
ARTICLE III may differ from one award to another as the Committee shall, in its
discretion, determine.  Any restrictions and conditions shall lapse, in whole or
in part, as provided in the agreement evidencing the Restricted Stock Award, but
must lapse, if at all, not later than ten (10) years from the date of the award.

     Shares with respect to which no restrictions or conditions are imposed and
shares with respect to which the restrictions and conditions imposed thereon
have lapsed are hereinafter referred to as "Unrestricted Shares."  Shares with
respect to which the restrictions and conditions imposed thereon have not lapsed
are hereinafter referred to as "Restricted Shares."

          Section 3.4  Rights as a Shareholder.  A holder of Unrestricted Shares
                       -----------------------
shall have all of the rights of a shareholder of the Company with respect
thereto and shall be entitled to receive a stock certificate evidencing such
Unrestricted Shares.  Such certificate shall be issued without legend, except to
the extent that a legend may be necessary for compliance with applicable
securities laws.

     A holder of Restricted Shares shall be the record owner thereof and shall,
subject to the restrictions and conditions, have all of the rights of a
shareholder with respect thereto, including, but not limited to, the right to
receive all dividends paid on the Common Stock (ordinary or extraordinary,
whether in cash, securities or other property) and the right to vote the
Restricted Shares; provided, however, that each stock certificate evidencing
Restricted Shares shall bear a conspicuous legend stating that the shares
evidenced thereby are subject to restrictions as to transferability as provided
in Section 3.6 and to such other restrictions and conditions as have been
imposed by the Committee, and each such certificate shall be deposited by the
Holder with the Company or its designee together with a stock power endorsed in
blank.

          Section 3.5  Forfeiture.  Unless otherwise provided in the applicable
                       ----------
Restricted Stock Award agreement, upon termination of the grantee's employment
with the Company or any of its subsidiaries for any reason whatsoever
(voluntarily or involuntarily, with or without cause), all Restricted Shares
then owned by him shall automatically and without any action on his part be
forfeited and transferred to the Company.

          Section 3.6  Transferability.  Restricted Shares held by a grantee
                       ---------------
shall not be subject to alienation, sale, transfer, assignment, pledge,
attachment or encumbrances of any kind, and any attempt to alienate, sell,
transfer, assign, pledge or otherwise encumber any Restricted Shares shall be
void.  In addition, the Company may impose such restrictions on the transfer of
Unrestricted Shares as it deems necessary or desirable to assure compliance with
all applicable federal and state securities laws.

                                       7
<PAGE>

          Section 3.7  Adjustments.  If there is a change in the Common Stock of
                       -----------
the Company as described in Section 1.7 of this Plan, any stock or other
securities or other property issued with respect to Restricted Shares shall be
subject to the same restrictions and conditions as are applicable to such
Restricted Shares, and the certificates or other evidence of such stock,
securities or other property, together with an appropriate stock power or power
of attorney, shall be delivered to the Company or its designee and held until
such time as the restrictions and conditions applicable thereto lapse or until
the stock, securities or other property is forfeited in accordance with the
provisions of this ARTICLE III.

     If the Company shall be a party to any merger or consolidation in which it
is not the surviving company or pursuant to which the shareholders of the
Company exchange their Common Stock for other securities or for cash in any
acquisition transaction, if the Company shall dissolve or liquidate or sell all
or substantially all of its assets, or upon consummation of a tender offer
approved by the Board, the Committee may, in its discretion, cause all
Restricted Stock Awards that are still subject to any restrictions and
conditions to become immediately vested in full on the effective date of any
such transaction, unless otherwise provided in the applicable agreement
evidencing such Restricted Stock Award.

ARTICLE IV
- ----------

MISCELLANEOUS PROVISIONS
- ------------------------

          Section 4.1  Tax Reimbursement Payments or Loans.  In view of the
                       -----------------------------------
federal and state income tax savings expected to be realized by the Company upon
exercise of a Nonqualified Stock Option or the lapse of restrictions and
conditions imposed upon Restricted Shares, the Committee may, in its discretion,
provide that the Company will make a cash payment or a loan or a combination
thereof to the grantee of a Nonqualified Stock Option or the recipient of a
Restricted Stock Award (or his personal representatives or heirs) for the
purpose of assisting such optionee or grantee in the payment of personal income
taxes arising from such exercise or lapse of restrictions and conditions.  The
basis for determining the amount and conditions of such cash payment or loan or
combination thereof and the terms and conditions of any such loan shall be
specified in the agreement pursuant to which the grant or award is made or may
be subsequently determined by the Committee.  The Committee, in its discretion,
may from time to time forgive any such loan in whole or in part.

          Section 4.2  Tax Withholding. No optionee shall be entitled to
                       ---------------
issuance of a stock certificate representing shares purchased upon exercise of a
Nonqualified Stock Option, and no grantee of a Restricted Stock Award shall be
entitled to issuance of a stock certificate evidencing Unrestricted Shares,
until such optionee or grantee has paid, or made arrangements for payment, to
the Company of an amount equal to the income and other taxes that the Company is
required to withhold from such person as a result of his exercise of a
Nonqualified Stock Option or his receipt of Unrestricted Shares.  In addition,
such amounts as the Company is required to withhold by reason of any tax
reimbursement payments made pursuant to Section 4.1 may be deducted from such
payments.

          Section 4.3  Employment.  Nothing in the Plan or in any Option or
                       ----------
Restricted Stock Award shall confer upon any eligible employee any right to
continued employment by the

                                       8
<PAGE>

Company or any subsidiary of the Company, or limit in any way the right of the
Company or any subsidiary of the Company at any time to terminate or alter the
terms of that employment.

          Section 4.4  Effective Date of Plan.  This Plan shall be effective
                       ----------------------
February 12, 2001, the date of adoption of the Plan by the Board of Directors of
the Company, subject to approval of the Plan by the shareholders of the Company
by the majority of the votes cast at a meeting at which a majority of the
Company's Common Stock is present either in person or by proxy held within 12
months of the date of adoption of the Plan by the Board.

          Section 4.5  Termination and Amendment of Plan.  The Plan may be
                       ---------------------------------
amended, revised or terminated at any time by the Board; provided, however, that
no amendment or revision shall, without the approval of the Company's
Shareholders, (a) increase the maximum aggregate number of shares subject to
this Plan, except as permitted under Section 1.7; (b) change the minimum
purchase price for shares subject to Options granted under the Plan; (c) extend
the maximum duration established under the Plan for any Option or for a
Restricted Stock Award; or (d) permit the granting of an Option or Restricted
Stock Award to anyone other than those individuals described in Section 1.6
hereof.  Unless sooner terminated, the Plan shall terminate on February 11,
2011.  No Option or Restricted Stock Award shall be granted under the Plan after
the Plan is terminated.

          Section 4.6  Prior Rights and Obligations.  No amendment, suspension,
                       ----------------------------
or termination of the Plan shall, without the consent of the person who has
received an Option or Restricted Stock Award, alter or impair any of that
person's rights or obligations under any Option or Restricted Stock Award
granted under the Plan prior to such amendment, suspension, or termination.

          Section 4.7  Securities Laws.  Shares of Common Stock issuable
                       ---------------
pursuant to this Plan may, at the option of the Company, be registered under
applicable federal and state securities laws, but the Company shall have no
obligation to undertake such registrations and may, in lieu thereof, issue
shares hereunder only pursuant to applicable exemptions from such registrations.
In the event that no such registrations are undertaken, the shares shall be
issued only to persons who qualify to receive such shares in accordance with the
exemption from registration on which the Company relies.  In connection with any
award of shares or the reissuance of certificates under the Plan, the Committee
may require appropriate representations from the recipient of such shares and
take such other action as the Committee may deem necessary, including but not
limited to placing restrictive legends on certificates evidencing such shares
and placing stop transfer instructions in the Company's stock transfer records,
or delivering such instructions to the Company's transfer agent, in order to
assure compliance with any such exemptions.  Notwithstanding any other provision
of the Plan, no shares will be issued pursuant to the Plan unless such shares
have been registered under all applicable federal and state securities laws or
unless, in the opinion of counsel satisfactory to the Company, exemptions from
such registrations are available.

                                       9
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>PORTIONS OF 2000 ANNUAL REPORT
<TEXT>

<PAGE>

                                  EXHIBIT 13

Investors Title Company and Subsidiaries
Financial Highlights
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
For the Year                                            2000          1999          1998          1997          1996
<S>                                              <C>           <C>           <C>           <C>           <C>
Net premiums written                             $37,690,752   $43,819,565   $45,379,696   $29,875,350   $21,111,155
- --------------------------------------------------------------------------------------------------------------------
Revenues                                          42,229,768    47,366,559    48,476,263    32,390,516    22,991,182
- --------------------------------------------------------------------------------------------------------------------
Investment income                                  2,528,143     2,175,671     1,834,949     1,628,188     1,352,932
- --------------------------------------------------------------------------------------------------------------------
Net income                                         3,140,463     4,420,394     5,459,509     4,530,382     3,843,537
- --------------------------------------------------------------------------------------------------------------------

Per Share Data
Basic earnings per common share                  $      1.21   $      1.59   $      1.95   $      1.63   $      1.39
- --------------------------------------------------------------------------------------------------------------------
Weighted average shares outstanding - Basic        2,594,891     2,776,878     2,806,267     2,782,449     2,772,286
- --------------------------------------------------------------------------------------------------------------------
Diluted earnings per common share                $      1.21   $      1.59   $      1.92   $      1.60   $      1.37
- --------------------------------------------------------------------------------------------------------------------
Weighted average shares outstanding - Diluted      2,601,283     2,786,282     2,841,035     2,826,730     2,813,001
- --------------------------------------------------------------------------------------------------------------------
Cash dividends per share                         $       .12   $       .12   $       .12   $       .12   $      .095

At Year End
Assets                                           $59,339,007   $55,156,564   $51,597,812   $41,293,007   $33,642,528
- --------------------------------------------------------------------------------------------------------------------
Investments in securities                         41,055,901    35,510,048    33,799,124    31,124,410    23,573,663
- --------------------------------------------------------------------------------------------------------------------
Stockholders' equity                              39,189,649    37,501,740    36,328,665    31,128,908    25,988,177
- --------------------------------------------------------------------------------------------------------------------
Book value/share                                       15.27         13.70         12.93         11.12          9.39
- --------------------------------------------------------------------------------------------------------------------

Performance Ratios
Net income to:
Average stockholders' equity                            8.19%        11.97%        16.19%        15.86%        15.95%
- --------------------------------------------------------------------------------------------------------------------
Total revenues (profit margin)                          7.44%         9.33%        11.26%        13.99%        16.72%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
of Financial Condition and Results of Operations
- --------------------------------------------------------------------------------


     The following discussion should be read in conjunction with the
consolidated financial statements and the related footnotes on pages 12-22 of
this report.

OVERVIEW
     Investors Title Company (the "Company") engages primarily in two segments
of business. The main business activity is the issuance of title insurance
through two title insurance subsidiaries, Investors Title Insurance Company
("ITIC") and Northeast Investors Title Insurance Company ("NE-ITIC"). Factors
which influence the land title business include mortgage interest rates, the
availability of mortgage funds, the level of real estate activity, the cost of
real estate, consumer confidence, the supply and demand of real estate,
inflation and general economic conditions.

     The Company's second segment provides tax-free exchange services through
its two subsidiaries, Investors Title Exchange Corporation ("ITEC") and
Investors Title Accommodation Corporation ("ITAC"). ITEC serves as a qualified
intermediary in (S)1031 like-kind exchanges of real or personal property. ITAC
serves as exchange accommodation titleholder in reverse exchanges.

     During the past three years, the overall economic environment coupled with
relatively low mortgage interest rates has favorably impacted the level of real
estate activity. In 1999 and 1998, these factors contributed to two consecutive
years of record levels of new and existing home sales. According to the Freddie
Mac Weekly Mortgage Rate Survey, the monthly average 30-year fixed mortgage
interest rates were reported to be 8.05%, 7.44% and 6.94% in 2000, 1999 and
1998, respectively. Based on data published by the Mortgage Bankers Association,
housing starts were 1.6 million, 1.67 million and 1.62 million in 2000, 1999
and 1998, respectively. New and existing home sales were 6.03 million, 6.1
million and 5.85 million in 2000, 1999 and 1998, respectively.

     During 1998, the monthly average 30-year fixed mortgage interest rates
started out at 7.1% and ended the year at 6.74%. The overall decline in interest
rates spurred an increase in real estate sales, which was a contributing factor
to the increase of $15,504,346 in the Company's 1998 net premiums written
compared with 1997 net premiums written.

     In 1999, the monthly average 30-year fixed mortgage interest rates climbed
steadily, starting the year at 6.74% and ending at 7.91%. The increase in
mortgage interest rates resulted in a slowdown in mortgage originations and a
dramatic decline in refinance activity. The higher level of interest rates and
resulting drop in refinance lending contributed substantially to the decrease of
$1,560,131 in premiums written in 1999 compared with 1998 premiums written.

     In January of 2000, the monthly average 30-year fixed mortgage interest
rate was 7.91%; it rose to 8.52% by May, and then began a steady decline to end
the year at 7.38%. The higher level of interest rates in the first half of the
year contributed to the decrease of $6,128,813 in premiums written in 2000
compared with 1999 premiums written. During the fourth quarter of 2000, premium
volume began to improve due to declining mortgage interest rates.

     Management cannot predict the future level of mortgage interest rates nor
the impact such rates will have on home sales, housing starts, mortgage lending
or other real estate activity. The Company strives to offset the cyclical nature
of the real estate market by increasing its market share. This effort includes
expanding into new markets primarily by continuing to develop agency
relationships, as well as improving market penetration with existing offices and
agents.

CREDIT RATING

     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 - unsurpassed financial stability" and "A - strong overall
financial condition."

     NE-ITIC's financial stability has been recognized by two Fannie Mae
approved actuarial firms,  Demotech, Inc. and Lace Financial Corporation, with
rating categories of "A Prime - unsurpassed financial stability" and "A - strong
overall financial condition."

RESULTS OF OPERATIONS
OPERATING REVENUES

     A summary by segment of the Company's operating revenues is as follows:

<TABLE>
<CAPTION>
                             2000                 1999                 1998
- ----------------------------------------------------------------------------------
<S>                   <C>          <C>     <C>          <C>     <C>          <C>
Title Insurance       $37,925,106  95.8%   $43,942,374  98.2%   $45,553,649  98.5%
Exchange Services       1,046,178   2.6%       723,854   1.6%       636,839   1.4%
All Other                 626,130   1.6%       106,265    .2%        52,216    .1%
- ----------------------------------------------------------------------------------
                      $39,597,414   100%   $44,772,493   100%   $46,242,704   100%
                      ===========          ===========          ===========
</TABLE>

Title Insurance: Net premiums written decreased 14% and 3% in 2000 and 1999,
respectively and increased 52% in 1998. The decline in sales in 2000 resulted
primarily from  increases in mortgage interest rates in the first half of the
year coupled with a dramatic decline in refinance activity. In 2000, the number
of policies and commitments issued declined to 196,836, a decrease of 23%
compared with 256,272 in 1999. In 1999, policies and commitments issued declined
by 24,979 policies, a decrease of 9% compared with 281,251 in 1998. The number
of policies and commitments issued increased by 97,014 in 1998, an increase of
53% compared with 184,237 in 1997.

                                       8
<PAGE>

     Shown below is a schedule of net premiums written for 2000, 1999 and 1998
in all states where our two insurance subsidiaries, Investors Title Insurance
Company and Northeast Investors Title Insurance Company, underwrite title
insurance:

<TABLE>
<CAPTION>
                                2000                      1999                 1998
                         ----------------------------------------------------------
<S>                      <C>                       <C>                  <C>
Alabama                  $         -               $     1,003          $         -
Arkansas                           -                         -               17,711
Florida                            -                         -               75,957
Georgia                      209,300                   499,194              715,560
Indiana                      400,488                   409,630              158,194
Kentucky                           -                     4,527                  252
Maryland                     525,177                   597,470              515,763
Michigan                   6,395,071                 6,760,538            9,145,165
Minnesota                    851,836                 1,693,036            1,044,599
Mississippi                   35,509                    22,537               37,479
Nebraska                   1,103,168                 1,135,924              791,121
New York                     770,082                   542,497              507,324
North Carolina            15,825,323                19,713,637           21,188,663
Ohio                          43,810                         -                    -
Pennsylvania                 962,331                    45,682                7,783
South Carolina             3,893,692                 5,016,808            3,940,872
Tennessee                  1,097,654                   607,047              219,649
Virginia                   4,772,838                 6,143,420            7,020,000
West Virginia              1,127,715                   895,745              232,426
Wisconsin                      6,923                     9,350                    -
                         -----------               -----------          -----------
  Direct Premiums         38,020,917                44,098,045           45,618,518
Reinsurance Income            32,363                    46,732               73,805
Reinsurance Ceded           (362,528)                 (325,212)            (312,627)
                         -----------               -----------          -----------
Net Premiums Written     $37,690,752               $43,819,565          $45,379,696
                         ===========               ===========          ===========
</TABLE>

     Branch net premiums written as a percentage of total net premiums written
were 42.2%, 45.2% and 46.9% in 2000, 1999 and 1998, respectively. Net premiums
written from branch operations decreased 19.8% in 2000 compared with 1999 and
decreased 6.9% in 1999 compared with 1998.

     Agency net premiums written as a percentage of total net premiums written
were 57.8%, 54.8% and 53.1% in 2000, 1999 and 1998, respectively. Net premiums
written from agency operations decreased 9.2% in 2000 compared with 1998. Net
premiums written from agency operations remained virtually flat in 1999 compared
with 1998.

Exchange Services: Operating revenues from exchange transactions increased
44.5%, 13.7% and 18.5% in 2000, 1999 and 1998, respectively.  The increase in
revenue for these exchange services resulted from ongoing marketing efforts and
the increased use of (S)1031 exchanges by taxpayers to defer capital gain taxes.
On September 15, 2000, the Internal Revenue Service issued Revenue Procedure
2000-37, which provides a safe harbor for reverse exchanges. The original safe
harbors, which established procedures to follow for standard exchange
transactions, excluded the more complicated reverse transactions. The Company
has dedicated a separate subsidiary to assist clients in structuring this type
of exchange.

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. Generally, the first
quarter has the least real estate activity, while the remaining quarters are
more active. Fluctuations in mortgage interest rates can cause shifts in real
estate activity outside of the normal seasonal pattern, especially as these
changes relate to refinance activity.

Exchange Services: Seasonal factors affecting the level of real estate activity
and the volume of title insurance premiums written will also affect the demand
for exchange services.

INVESTMENT INCOME

     Investments are an integral part of the Company's business. In formulating
its investment strategy, the Company has emphasized after-tax income.
Investments in marketable securities have increased from funds retained in the
Company. The investments are primarily in debt securities, and to a lesser
extent, equity securities. The effective maturity of the majority of the fixed
income investments is within 15 years.

     As new funds become available, they are invested in accordance with the
Company's investment policy and corporate goals. Securities purchased may
include a combination of taxable fixed income securities, tax-exempt securities
and equities. The Company strives to maintain a high quality investment
portfolio.

     Investment income increased 16.2%, 18.6% and 12.7% in 2000, 1999 and 1998,
respectively. These increases were primarily attributable to increases in the
average investment portfolio balances.

EXPENSES
     A summary by segment of the Company's operating expenses is as follows:

<TABLE>

                             2000                 1999                 1998
- ----------------------------------------------------------------------------------
<S>                   <C>          <C>     <C>          <C>     <C>          <C>
Title Insurance       $36,925,644  97.3%   $40,368,076  98.7%   $40,314,905  98.9%
Exchange Services         225,330    .6%       178,627    .4%       137,444    .3%
All Other                 818,331   2.1%       358,462    .9%       328,405    .8%
- ----------------------------------------------------------------------------------
                      $37,969,305   100%   $40,905,165   100%   $40,780,754   100%
                      ===========          ===========          ===========
</TABLE>

     On a consolidated basis, profit margins were 7.44%, 9.33% and 11.26% in
2000, 1999 and 1998, respectively. The decrease of 14% in net premiums written
coupled with a smaller decrease of only 7% in operating expenses contributed to
the decline in profit margin for 2000. Expenses increased due to investments in
technology and costs associated with entering and supporting new market areas.

Title Insurance: Profit margins for the title insurance segment were 6.02%,
8.39% and 10.48% in 2000, 1999 and 1998, respectively. The decrease in premiums
written, an increase in the percentage of business received from agents and the
fixed nature of certain operating expenses contributed to the decline in profit
margins. Profit margins from agent business are typically lower than those from
branch business since agent commissions are generally higher than the operating
expenses incurred for direct business. In order to maintain and improve margins,
the Company strives to identify opportunities to refine operating procedures and
to implement programs designed to reduce  expenses.

     Commissions decreased 9.2% and 2% in 2000 and 1999, respectively and
increased 72.9% in 1998. Overall, commission expense as a percentage of agent
premiums written has remained relatively constant for the last three years.
Commission rates vary geographically and may be influenced by state regulations.

                                       9
<PAGE>

     The provision for claims as a percentage of net premiums written was 15.6%,
13.8% and 17.8% in 2000, 1999 and 1998, respectively. The change in the
provision reflects actual payments of claims, net of recovery amounts, plus
adjustments to the claims reserves, which are actuarially determined based on
historical claims experience. Payments of claims, net of recoveries, were
$3,785,355, $3,524,064 and $2,354,425 in 2000, 1999 and 1998, respectively.

     The Company has continued to strengthen its reserves for claims. At
December 31, 2000, the total reserves for claims were $17,944,665. Of that
total, $2,410,360 was reserved for specific claims, and $15,534,305 was reserved
for claims for which the Company had no notice. Management relies on actuarial
techniques to estimate future claims by analyzing historical claim payment
patterns. Claims reserves are reviewed and certified as to their adequacy by
independent actuaries annually. There are no known claims which are expected to
have a materially adverse effect on the Company's financial position.

     On a consolidated basis, salaries and employee benefits as a percentage of
net premiums written were 25.5%, 22.5% and 18.2% in 2000, 1999 and 1998,
respectively. These expenses have risen due to staff increases in the
information systems and business development areas. The title insurance
segment's total salaries and employee benefits accounted for 95%, 98% and 99% of
total salaries for 2000, 1999 and 1998, respectively. On a consolidated basis,
office occupancy and operations as a percentage of net premiums was 9.5%, 9.7%
and 7.1% in 2000, 1999 and 1998, respectively. The title insurance segment's
total office occupancy and operations accounted for 93.5%, 94.9% and 94.9% in
2000, 1999 and 1998, respectively.

     Premium and retaliatory taxes decreased 13% and 2.1% in 2000 and 1999,
respectively and increased 48.6% in 1998, in direct proportion to the
fluctuations in premium volume.

Exchange Services: The exchange services segment's total operating expenses as a
percentage of the Company's total expenses were .6%, .4% and .3% for 2000, 1999
and 1998, respectively. The increase in operating expenses was due to the growth
in revenues.

NET INCOME
 A summary by segment of the Company's net income is as follows:

<TABLE>
<CAPTION>


                            2000                1999                1998
- -------------------------------------------------------------------------------
<S>                  <C>          <C>    <C>          <C>    <C>          <C>
Title Insurance       $2,434,088  77.5%   $3,894,681  88.1%   $4,999,099  91.6%
Exchange Services        514,921  16.4%      340,263   7.7%      312,578   5.7%
All Other                191,454   6.1%      185,450   4.2%      147,832   2.7%
- -------------------------------------------------------------------------------
                      $3,140,463   100%   $4,420,394   100%   $5,459,509   100%
                      ==========          ==========          ==========
</TABLE>

     On a consolidated basis, the Company reported a decrease in net income of
29% and 19% in 2000 and 1999, respectively and an increase in net income of
20.5% in 1998. The decreases in 2000 and 1999 were primarily due to decreases in
net premiums written of 14% and 3.4%, partially offset by increases in net
income of the exchange services segment and increases in investment income. The
increase in 1998 was primarily attributable to increased revenues and improved
operating efficiencies resulting from expense control procedures.

Title Insurance: Net income for the title insurance segment decreased 37.5%,
22.1% and increased 16.8% in 2000, 1999 and 1998, respectively.  Decreases in
net premiums written, coupled with the fixed nature of certain operating
expenses contributed to the decreases in net income for 2000 and 1999.


Exchange Services: The exchange services segment saw net income increases of
51.3%, 8.9% and 21.8% in 2000, 1999 and 1998, respectively. The increased
marketing efforts of ITEC's and ITAC's services contributed to the growth in net
income.

LIQUIDITY AND CAPITAL RESOURCES

     Cash flows provided by operating activities were $7,135,956, $7,738,524 and
$8,887,438 in 2000, 1999 and 1998, respectively. The decrease in 2000 is
primarily the result of the decrease in net income compared with 1999.

     As of December 31, 2000, 1999 and 1998, approximately $36,792,000,
$33,322,000 and $31,219,000 respectively, of the consolidated stockholders'
equity represent net assets of the Company's subsidiaries that cannot be
transferred in the form of dividends, loans or advances to the parent company
under statutory regulations without prior insurance department approval. The
parent company's ability to pay dividends and operating expenses is dependent on
funds received from the insurance subsidiaries. The Company believes amounts
available for transfer from the insurance subsidiaries are adequate to meet the
parent company's operating needs.

     On December 9, 1996, the Board of Directors approved the repurchase by the
Company of up to 150,000 shares of the Company's common stock from time to time
at prevailing market prices. A portion of the repurchases is to avoid dilution
to existing shareholders as a result of issuances of stock in connection with
stock options and stock bonuses. Pursuant to this approval, the Company
repurchased all 150,000 shares at an average price of $19.37 per share including
6,211 shares purchased at an average purchase price of $17.58 during 2000,
99,645 shares at an average purchase price of $19.05 per share during 1999 and
22,010 shares at an average purchase price of $23.60 per share during 1998.

     On May 11, 1999 the Board of Directors approved the repurchase of an
additional 200,000 shares of the Company's common stock. Pursuant to this
approval, the Company repurchased 174,234 shares in the twelve months ended
December 31, 2000 at an average per share price of $12.18.

     On May 9, 2000 the Board of Directors approved the repurchase of an
additional 500,000 shares of the Company's common stock. As of March 29, 2001,
no shares have been repurchased pursuant to this approval.

     During the twelve months ended December 31, 2000, the Company repurchased
common stock for $2,230,797 and issued common stock totaling $142,680 in
satisfaction of stock option exercises, stock bonuses and other stock issuances.
In 2000, retained earnings had a net increase of $709,657, after repurchases and
issuances reduced retained earnings by $2,088,117.

     Management believes that funds generated from operations (primarily
underwriting and investment income) will enable the Company to adequately meet
its operating needs and is unaware of any trend likely to result in adverse
liquidity changes. In addition to operational liquidity, the Company maintains a
high degree of liquidity within its investment portfolio in the form of short-
term investments and other readily marketable securities.

QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK

     The Company's primary exposure to market risk relates to the impact of
adverse changes in interest rates and market prices of its investment portfolio.
Increases in interest rates diminish the value of fixed-income securities and
preferred stock and decreases in stock market values diminish the value of
common stocks held.

                                      10
<PAGE>

CORPORATE OVERSIGHT

     The Company generates substantial investable funds from its two insurance
subsidiaries. In formulating and implementing policies for investing new and
existing funds, the Company has emphasized maximizing total after-tax return on
capital and earnings while ensuring the safety of funds under management and
adequate liquidity. The Company's Board of Directors oversees investment risk
management processes. The Company seeks to invest premiums and other income to
create future cash flows that will fund future claims, employee benefits and
expenses, and earn stable margins across a wide variety of interest rate and
economic scenarios. The Board has established specific investment policies that
define the overall framework for managing market and other investment risks,
including the accountabilities and controls over these activities. The Company
may use the following tools to manage its exposure to market risk within defined
tolerance ranges: 1) rebalance its existing asset portfolios or 2) change the
character of future investments.

INTEREST RATE RISK

     Interest rate risk is the risk that the Company will incur economic losses
due to adverse changes in interest rates. This risk arises from the Company's
investments in interest sensitive debt securities. These securities are
primarily fixed-rate municipal bonds and corporate bonds. The Company does not
purchase such securities for trading purposes. At December 31, 2000, the Company
had approximately $36 million in fixed-rate bonds. The Company manages the
interest rate risk inherent in its assets by monitoring its liquidity needs and
by targeting a specific range for the portfolio's duration or weighted average
maturity.

     To determine the potential effect of interest rate risk on interest
sensitive assets, the Company calculates the effect of a 10% change in
prevailing interest rates ("rate shock") on the fair market value of these
securities considering stated interest rates and time to maturity. Based upon
the information and assumptions the Company uses in its calculation, management
estimates that a 10% immediate, parallel increase in prevailing interest rates
would decrease the net fair market value of its debt securities by approximately
$1.3 million. The selection of a 10% immediate parallel increase in prevailing
interest rates should not be construed as a prediction by the Company's
management of future market events, but rather, to illustrate the potential
impact of such an event. To the extent that actual results differ from the
assumptions utilized, the Company's rate shock measures could be significantly
impacted. Additionally, the Company's calculation assumes that the current
relationship between short-term and long-term interest rates (the term structure
of interest rates) will remain constant over time. As a result, these
calculations may not fully capture the impact of nonparallel changes in the term
structure of interest rates and/or large changes in interest rates.

EQUITY PRICE RISK

     Equity price risk is the risk that the Company will incur economic losses
due to adverse changes in a particular stock or stock index. At December 31,
2000, the Company had approximately $4.2 million in common stocks. By statutory
policy, the Company's maximum exposure to the equity market is limited to 20% of
the Company's statutorily admitted assets. Equity price risk is addressed in
part by varying the specific allocation of equity investments over time pursuant
to management's assessment of market and business conditions and ongoing
liquidity needs analysis. The Company's largest equity exposure is declines in
the S&P 500; its portfolio of equity instruments is similar to those that
comprise this index. Based upon the information and assumptions the Company used
in its calculation, management estimates that an immediate decrease in the S&P
500 of 10% would decrease the net fair value of the Company's assets identified
above by approximately $425,000. The selection of a 10% immediate decrease in
the S&P 500 should not be construed as a prediction by the Company's management
of future market events, but rather, to illustrate the potential impact of such
an event. Since this calculation is based on historical performance, projecting
future price volatility using this method involves an inherent assumption that
historical volatility and correlation relationships will remain stable.
Therefore, the results noted above may not reflect the Company's actual
experience if future volatility and correlation relationships differ from such
historical relationships.

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.


                                      11

<PAGE>

SELECTED QUARTERLY FINANCIAL DATA

<TABLE>
<CAPTION>
2000                                    March 31      June 30  September 30  December 31
<S>                                  <C>          <C>          <C>           <C>
Net premiums written                 $ 8,370,138  $10,065,032   $10,102,818   $9,152,764
- ----------------------------------------------------------------------------------------
Investment income                        591,791      576,317       624,205      735,830
- ----------------------------------------------------------------------------------------
Net income                               521,607      734,759     1,145,484      738,613
- ----------------------------------------------------------------------------------------
Basic earnings per common share              .20          .28           .44          .29
- ----------------------------------------------------------------------------------------
Diluted earnings per common share            .20          .28           .44          .29
- ----------------------------------------------------------------------------------------

1999
Net premiums written                 $10,694,237  $12,384,887   $11,258,080   $9,482,361
- ----------------------------------------------------------------------------------------
Investment income                        470,127      498,650       544,322      662,572
- ----------------------------------------------------------------------------------------
Net income                             1,176,318    1,472,027     1,303,516      468,533
- ----------------------------------------------------------------------------------------
Basic earnings per common share              .42          .53           .47          .17
- ----------------------------------------------------------------------------------------
Diluted earnings per common share            .42          .53           .47          .17
- ----------------------------------------------------------------------------------------
</TABLE>

Investors Title Company and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
as of December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                     2000           1999
                                                                                 -----------    -----------
<S>                                                                             <C>             <C>
Assets
  Cash and cash equivalents..................................................    $ 7,850,991    $ 7,554,297
  Investments in securities (Notes 2 and 3):
   Fixed maturities:
     Held-to-maturity, at amortized cost (fair value: 2000:
      $4,485,969; 1999: $4,446,988...........................................      4,375,127      4,565,871
     Available-for-sale, at fair value (amortized cost:
      2000: $30,960,414; 1999: $26,629,880)..................................     31,710,705     25,931,918
  Equity securities, at fair value (cost: 2000: $2,434,367;
   1999: $2,510,505).........................................................      4,970,069      5,012,259
                                                                                 -----------    -----------
       Total investments.....................................................     41,055,901     35,510,048

  Premiums receivable (less allowance for doubtful
   accounts: 2000: $725,000; 1999: $775,000).................................      3,023,304      3,292,001
  Accrued interest and dividends.............................................        616,652        521,624
  Prepaid expenses and other assets..........................................      1,091,416        930,981
  Property acquired in settlement of claims..................................        204,117        191,617
  Property, net (Note 4).....................................................      5,496,626      5,836,466
  Prepaid federal income taxes...............................................              -        705,437
  Deferred income taxes, net (Note 8)........................................              -        614,093
                                                                                 -----------    -----------
Total Assets (Note 13).......................................................    $59,339,007    $55,156,564
                                                                                 ===========    ===========
Liabilities and Stockholders' Equity
Liabilities:
  Reserves for claims (Note 6)...............................................    $17,944,665    $15,864,665
  Accounts payable and accrued liabilities...................................      1,918,034      1,560,936
  Commissions and reinsurance payables (Note 5)..............................        222,748        208,605
  Premium taxes payable......................................................              -         20,618
  Current income taxes payable...............................................         24,069              -
  Deferred income taxes, net (Note 8)........................................         39,842              -
                                                                                 -----------    -----------
     Total liabilities.......................................................     20,149,358     17,654,824
                                                                                 -----------    -----------

Commitments and Contingencies
  (Notes 5, 9 and 11)

Stockholders' Equity (Notes 2, 3, 7 and 12):
  Common stock-no par value (shares authorized 6,000,000;
   2,855,744 and 2,855,744 shares issued; and 2,566,859
   and 2,736,961 shares outstanding 2000 and 1999,
   respectively).............................................................              1              1
  Retained earnings..........................................................     37,021,270     36,311,613
  Accumulated other comprehensive income (net unrealized
   gain on investments) (net of deferred taxes: 2000:
   $1,117,615; 1999: $613,667) (Note 8)......................................      2,168,378      1,190,126
                                                                                 -----------    -----------
     Total stockholders' equity..............................................     39,189,649     37,501,740
                                                                                 -----------    -----------
Total Liabilities and Stockholders' Equity...................................    $59,339,007    $55,156,564
                                                                                 ===========    ===========
</TABLE>

See notes to consolidated financial statements.

                                      12
<PAGE>

Investors Title Company and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
for the Years Ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                                                    2000          1999          1998
                                                                                 -----------   -----------  ------------
<S>                                                                              <C>           <C>          <C>
Revenues:
  Underwriting income:
     Premiums written (Note 5)............................................       $38,053,280   $44,144,777  $ 45,692,323
      Less-premiums for reinsurance ceded (Note 5)........................           362,528       325,212       312,627
                                                                                 -----------   -----------  ------------
     Net premiums written.................................................        37,690,752    43,819,565    45,379,696
  Investment income-interest and dividends (Note 3).......................         2,528,143     2,175,671     1,834,949
  Net realized gain on sales of investments (Note 3)......................           104,211       418,395       398,610
  Other...................................................................         1,906,662       952,928       863,008
                                                                                 -----------   -----------  ------------
     Total................................................................        42,229,768    47,366,559    48,476,263
                                                                                 -----------   -----------  ------------

Operating Expenses:
  Commissions to agents...................................................        15,470,852    17,045,552    17,399,629
  Provision for claims (Note 6)...........................................         5,865,355     6,026,064     8,094,950
  Salaries, employee benefits and payroll taxes (Notes 7 and 10)..........         9,602,572     9,842,328     8,248,365
  Office occupancy and operations (Note 9)................................         3,568,760     4,238,753     3,241,118
  Business development....................................................         1,515,428     1,662,485     1,381,717
  Taxes, other than payroll and income....................................           309,098       265,467       262,995
  Premium and retaliatory taxes...........................................           750,697       862,414       880,885
  Professional fees.......................................................           749,047       782,331       391,971
  Provision for equipment disposal........................................                 -             -       280,000
  Other...................................................................           137,496       179,771       599,124
                                                                                 -----------   -----------  ------------
     Total................................................................        37,969,305    40,905,165    40,780,754
                                                                                 -----------   -----------  ------------

Income Before Income Taxes (Note 13)......................................         4,260,463     6,461,394     7,695,509
Provision For Income Taxes (Notes 8 and 13)...............................         1,120,000     2,041,000     2,236,000
                                                                                 -----------   -----------  ------------
Net Income (Notes 7 and 12)...............................................       $ 3,140,463   $ 4,420,394  $  5,459,509
                                                                                 ===========   ===========  ============
Basic Earnings per Common Share (Note 7)..................................       $      1.21   $      1.59  $       1.95
                                                                                 ===========   ===========  ============
Weighted Average Shares Outstanding - Basic...............................         2,594,891     2,776,878     2,806,267
                                                                                 ===========   ===========  ============
Diluted Earnings per Common Share (Note 7)................................       $      1.21   $      1.59  $       1.92
                                                                                 ===========   ===========  ============
Weighted Average Shares Outstanding - Diluted.............................         2,601,283     2,786,282     2,841,035
                                                                                 ===========   ===========  ============
</TABLE>

See notes to consolidated financial statements.

                                      13
<PAGE>

Investors Title Company and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
for the Years Ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                                                                   Accumulated
                                                                                              Other Comprehensive
                                                                                                   Income (Net        Total
                                                         Common Stock            Retained       Unrealized Gain    Stockholders'
                                                      Shares       Amount        Earnings       on Investments)       Equity
                                                      ------       ------        --------       --------------        ------
<S>                                                  <C>         <C>            <C>            <C>                 <C>
Balance,
  January 1, 1998..................................  2,800,240   $   879,612     $ 27,933,688    $ 2,315,608       $31,128,908
  Net income.......................................                                 5,459,509                        5,459,509
  Dividends ($.12 per share).......................                                  (342,689)                        (342,689)
  Distributions of 8,883 shares
     of common stock (net of purchases)............      8,883      (147,159)                                         (147,159)
  Net unrealized gain on investments...............                                                  230,096           230,096
                                                     ---------   -----------     ------------    -----------       -----------
Balance,
  December 31, 1998................................  2,809,123       732,453       33,050,508      2,545,704        36,328,665
  Net income.......................................                                 4,420,394                        4,420,394
  Dividends ($.12 per share).......................                                  (342,689)                        (342,689)
  Purchases of 72,162 shares
     of common stock (net of distributions)........    (72,162)     (732,452)        (816,600)                      (1,549,052)
  Net unrealized gain on investments...............                                               (1,355,578)       (1,355,578)
                                                     ---------   -----------     ------------    -----------       -----------
Balance,
  December 31, 1999................................  2,736,961             1       36,311,613      1,190,126        37,501,740
  Net income.......................................                                 3,140,463                        3,140,463
  Dividends ($.12 per share).......................                                  (342,689)                        (342,689)
  Purchases of 170,102 shares
     of common stock (net of distributions)........   (170,102)                    (2,088,117)                      (2,088,117)
  Net unrealized gain on investments...............                                                  978,252           978,252
                                                     ---------   -----------     ------------    -----------       -----------
Balance,
  December 31, 2000................................  2,566,859   $         1     $ 37,021,270    $ 2,168,378       $39,189,649
                                                     =========   ===========     ============    ===========       ===========
</TABLE>

Investors Title Company and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
- --------------------------------------------------------------------------------
for the Years Ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                        2000             1999             1998
                                                    -----------      -----------     ------------
<S>                                                 <C>              <C>             <C>
Net income........................................  $ 3,140,463      $ 4,420,394     $  5,459,509
                                                    -----------      -----------     ------------
Other comprehensive income, before tax:
  Unrealized gain (loss) on investments
  arising during the year.........................    1,586,411       (1,635,511)         747,240
  Less: reclassification adjustment for gains
    realized in net income........................     (104,211)        (418,395)        (398,610)
                                                    -----------      -----------     ------------
  Other comprehensive income (loss), before
   tax............................................    1,482,200       (2,053,906)         348,630
  Income tax expense (benefit) related to
   unrealized gain (loss) on investments
   arising during the year........................      539,380         (556,074)         254,061
  Income tax expense related to
   reclassification adjustment for net
     gain realized in net income..................      (35,432)        (142,254)        (135,527)
                                                    -----------      -----------     ------------
  Net income tax expense
   (benefit) on other
   comprehensive income...........................      503,948         (698,328)         118,534
                                                    -----------      -----------     ------------
Other comprehensive income (loss).................      978,252       (1,355,578)         230,096
                                                    -----------      -----------     ------------
Comprehensive income..............................  $ 4,118,715      $ 3,064,816     $  5,689,605
                                                    ===========      ===========     ============
</TABLE>

See notes to consolidated financial statements.

                                      14
<PAGE>

Investors Title Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the Years Ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                                            2000          1999          1998
                                                                            ----          ----          ----
<S>                                                                      <C>           <C>          <C>
Operating Activities:
Net income.............................................................  $ 3,140,463   $ 4,420,394  $  5,459,509
  Adjustments to reconcile net income to net cash
       provided by operating activities:
    Depreciation.......................................................      794,689       470,843       393,026
    Amortization (accretion), net......................................       (1,312)       34,195        (4,141)
    Provision (benefit) for losses on premiums receivable..............      (50,000)            -       425,000
    Provision for equipment disposal...................................            -             -       280,000
    (Gain) loss on disposals of property...............................       (4,523)       45,216       (16,182)
    Net realized gain on sales of investments..........................     (104,211)     (418,395)     (398,610)
    Provision (benefit) for deferred income taxes......................      149,987         6,390    (1,238,097)
    Provision for claims...............................................    5,865,355     6,026,064     8,094,950
    Payments of claims, net of recoveries..............................   (3,785,355)   (3,524,064)   (2,354,425)
  Changes in assets and liabilities:
    (Increase) decrease in receivables and other assets................       50,734     1,421,796    (2,237,678)
    Increase in accounts payable and accrued liabilities...............      357,098       302,134       189,430
    Increase (decrease) in commissions and reinsurance payables........       14,143       124,007       (11,643)
    Increase (decrease) in premium taxes payable.......................      (20,618)     (257,269)      124,030
    Increase (decrease) in current income taxes payable................      729,506      (912,787)      182,269
                                                                         -----------   -----------  ------------
    Net cash provided by operating activities..........................    7,135,956     7,738,524     8,887,438
                                                                         -----------   -----------  ------------

Investing Activities:
  Purchases of available-for-sale securities...........................   (7,497,294)   (6,036,921)   (4,354,272)
  Purchases of held-to-maturity securities.............................            -      (100,986)   (1,025,057)
  Proceeds from sales of available-for-sale securities.................    3,347,164     1,948,391     2,880,022
  Proceeds from sales of held-to-maturity securities...................      192,000       808,886       575,974
  Purchases of property................................................     (484,151)   (3,077,730)   (1,187,008)
  Proceeds from disposals of property..................................       33,825        24,520        30,928
                                                                         -----------   -----------  ------------
    Net cash used in investing activities..............................   (4,408,456)   (6,433,840)   (3,079,413)
                                                                         -----------   -----------  ------------

Financing Activities:
  Repurchases of common stock, net.....................................   (2,103,947)   (1,706,271)     (374,845)
  Exercise of options..................................................       15,830       157,219       227,686
  Dividends paid.......................................................     (342,689)     (342,689)     (342,689)
                                                                         -----------   -----------  ------------
    Net cash used in financing activities..............................   (2,430,806)   (1,891,741)     (489,848)
                                                                         -----------   -----------  ------------

Net Increase (Decrease) in Cash and Cash Equivalents...................      296,694      (587,057)    5,318,177
Cash and Cash Equivalents, Beginning of Year...........................    7,554,297     8,141,354     2,823,177
                                                                         -----------   -----------  ------------
Cash and Cash Equivalents, End of Year.................................  $ 7,850,991   $ 7,554,297  $  8,141,354
                                                                         ===========   ===========  ============
Supplemental Disclosures:
  Cash Paid During the Year for:
    Income taxes (net of refunds)......................................  $   240,000   $ 2,947,000  $  3,293,000
                                                                         ===========   ===========  ============
</TABLE>

Noncash Financing Activities:
  Bonuses and fees totaling $126,850, $191,623 and $144,594 were paid for the
  twelve months ended December 31, 2000, 1999 and 1998 respectively, by issuance
  of the Company's common stock.

See notes to consolidated financial statements.

                                      15
<PAGE>

Investors Title Company and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Description of Business - Investors Title Company's ("the Company") two
     -----------------------
primary business segments are title insurance and exchange services. The
Company's title insurance segment, through its two subsidiaries, Investors Title
Insurance Company ("ITIC") and Northeast Investors Title Insurance Company ("NE-
ITIC"), is licensed to insure titles to residential, institutional, commercial
and industrial properties. The Company issues title insurance policies through
approved attorneys from underwriting offices in North Carolina and South
Carolina, and through independent issuing agents in Alabama, Arkansas, Florida,
Georgia, Indiana, Kentucky, Maryland, Michigan, Minnesota, Mississippi,
Nebraska, New York, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia,
West Virginia and Wisconsin. The majority of the Company's business is
concentrated in Michigan, North Carolina, South Carolina and Virginia. The
Company's exchange segment, through its two subsidiaries, Investors Title
Exchange Corporation ("ITEC") and Investors Title Accommodation Corporation
("ITAC"), acts as an intermediary in tax-free exchanges of property held for
productive use in a trade or business or for investments. ITEC's and ITAC's
income is derived from fees for handling exchange transactions.

     Principles of Consolidation and Basis of Presentation - The accompanying
     -----------------------------------------------------
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated.

     Significant Accounting Policies - The significant accounting policies of
     -------------------------------
the Company are summarized below:

Cash and Cash Equivalents

     For the purpose of presentation in the Company's statements of cash flows,
cash equivalents are highly liquid investments with original maturities of three
months or less.

Investments in Securities

     Securities for which the Company has the intent and ability to hold to
maturity are classified as held-to-maturity and reported at cost, adjusted for
amortization of premiums or accretion of discounts and other-than-temporary
declines in fair value. Securities held principally for resale in the near term
are classified as trading securities and recorded at fair values. Realized and
unrealized gains and losses on trading securities are included in other income.
Securities not classified as either trading or held-to-maturity are classified
as available-for-sale and reported at fair value, adjusted for other-than-
temporary declines in fair value, with unrealized gains and losses reported as
accumulated other comprehensive income. Fair values of all investments are based
on quoted market prices. Realized gains and losses are determined on the
specific identification method.

Property Acquired in Settlement of Claims

     Property acquired in settlement of claims is carried at estimated
realizable value. Adjustments to reported estimated realizable values and
realized gains or losses on dispositions are recorded as increases or decreases
in claim costs.

Property and Equipment

     Property and equipment are recorded at cost and are depreciated principally
under the straight-line method over the estimated useful lives (3 to 25 years)
of the respective assets.

Reserves for Claims

     The reserves for claims and the annual provision for claims are established
based on: (1) estimated amounts required to settle claims for which notice has
been received (reported) and (2) the amount estimated to be required to satisfy
incurred claims of policyholders which may be reported in the future. Claims and
losses paid are charged to the reserves for claims (see Note 6).

Deferred Income Taxes

     The Company provides for deferred income taxes (benefits) on temporary
differences between the financial statements' carrying values and the tax bases
of assets and liabilities.

Premiums Written and Commissions to Agents

     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.

Earnings Per Common Share

     The employee stock options discussed in Note 7 are considered outstanding
for the diluted earnings per common share calculation.

Comprehensive Income

     Effective January 1, 1998, the Company adopted the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income ("SFAS 130"). Adoption of this standard required the
Company to (a) classify items of other comprehensive income by their nature in
the financial statements and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of the balance sheet. The Company's other
comprehensive income is solely comprised of its unrealized holding gains on
available-for-sale securities.

                                      16
<PAGE>

Escrows and Trust Deposits

     As a service to its customers, the Company, through ITIC, administers
escrow and trust deposits representing earnest money received under real estate
contracts, undisbursed amounts received for settlement of mortgage loans and
indemnities against specific title risks. In administering tax-free exchanges,
ITEC serves as a qualified intermediary for exchanges, holding the net sales
proceeds from relinquished property to be used for purchase of replacement
property. ITAC serves as exchange accommodation titleholder and holds property
for exchangers in reverse exchange transactions. Cash and other assets held by
the Company for these purposes were approximately $35,748,000 and $33,783,000 as
of December 31, 2000 and 1999, respectively. These amounts are not considered
assets of the Company, and therefore, are excluded from the accompanying
consolidated balance sheets.

Accounting Change Implementation

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("SFAS 133"). This statement was amended by SFAS No. 137,
Deferral of the Effective Date of FASB Statement No. 133, and SFAS No. 138,
Accounting for Certain Derivative Instruments and Certain Hedging Activities.
SFAS 133, as amended, establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, (collectively referred to as derivatives) and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. SFAS 133 is required to be adopted by the Company on
January 1, 2001. The application of SFAS 133, as amended, is not expected to
have an effect on the Company's financial statements.

Use of Estimates and Assumptions

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

2.   STATUTORY RESTRICTIONS ON CONSOLIDATED STOCKHOLDERS' EQUITY AND INVESTMENTS

     The Company has designated approximately $18,942,000 and $17,740,000 of
retained earnings as of December 31, 2000 and 1999, respectively, as
appropriated to reflect the required statutory premium reserve. See Note 8 for
the tax treatment of the statutory premium reserve.

     As of December 31, 2000 and 1999, approximately $36,792,000 and $33,322,000
respectively, of consolidated stockholders' equity represents net assets of the
Company's insurance subsidiaries that cannot be transferred in the form of
dividends, loans or advances to the parent company under statutory regulations
without prior insurance department approval.

     Bonds and certificates of deposit totaling approximately $3,120,000 at
December 31, 2000 and 1999, are deposited with the insurance departments of the
states in which business is conducted. These investments are restricted as to
withdrawal as required by law.

3.   INVESTMENTS IN SECURITIES

     The aggregate fair value, gross unrealized holding gains, gross unrealized
holding losses and amortized cost for securities by major security type at
December 31 are as follows:

<TABLE>
<CAPTION>
                                                              Gross       Gross
                                               Amortized    Unrealized  Unrealized     Fair
                                                 Cost         Gains       Losses       Value
                                              -----------   ----------  ----------  ----------
<S>                                           <C>           <C>         <C>         <C>
December 31, 2000
- -----------------
Fixed maturities -
   Held-to-maturity, at amortized cost:
      Certificates of deposit...............  $    98,982   $        -  $        -  $   98,982
      Obligations of states and
        political subdivisions..............    4,276,145      120,759       9,917   4,386,987
                                              -----------   ----------  ----------  ----------
      Total.................................  $ 4,375,127   $  120,759  $    9,917  $4,485,969
                                              ===========   ==========  ==========  ==========

Fixed maturities -
   Available-for-sale, at fair value:
      Obligations of states and
       political subdivisions...............  $19,232,729   $  661,030  $   18,770  $19,874,989
      Corporate debt securities.............   11,727,685      177,434      69,403   11,835,716
                                              -----------   ----------  ----------  -----------
      Total.................................  $30,960,414   $  838,464  $   88,173  $31,710,705
                                              ===========   ==========  ==========  ===========

Equity securities, at fair value -
   Common stocks and nonredeemable
      preferred stocks......................  $ 2,434,367   $2,583,687  $   47,985  $ 4,970,069
                                              ===========   ==========  ==========  ===========
</TABLE>

                                      17
<PAGE>

INVESTMENTS IN SECURITIES (Continued)

<TABLE>
<CAPTION>
                                                                Gross          Gross
                                                Amortized      Unrealized     Unrealized       Fair
                                                  Cost           Gains          Losses        Value
                                               -----------    -----------     ----------   -----------
<S>                                            <C>            <C>             <C>          <C>
December 31, 1999
- -----------------
Fixed maturities -
  Held-to-maturity, at amortized cost:
     Certificates of deposit.................  $    98,982    $         -     $        -   $    98,982
     Obligations of states and
       political subdivisions................    4,466,889         48,784        167,667     4,348,006
                                               -----------    -----------     ----------   -----------
     Total...................................  $ 4,565,871    $    48,784     $  167,667   $ 4,446,988
                                               ===========    ===========     ==========   ===========

Fixed maturities -
  Available-for-sale, at fair value:
     Obligations of states and
       political subdivisions................  $21,604,961    $   188,372     $  798,879   $20,994,454
     Corporate debt securities...............    5,024,919          3,029         90,484     4,937,464
                                               -----------    -----------     ----------   -----------
     Total...................................  $26,629,880    $   191,401     $  889,363   $25,931,918
                                               ===========    ===========     ==========   ===========

Equity securities, at fair value
     Common stocks and nonredeemable
       preferred stocks......................  $ 2,510,505    $ 2,686,419     $  184,665   $ 5,012,259
                                               ===========    ===========     ==========   ===========
</TABLE>

The scheduled maturities of fixed maturities at December 31, 2000 are as
follows:

<TABLE>
<CAPTION>
                                                   Available-for-Sale             Held-to-Maturity
                                               --------------------------     ------------------------
                                                 Amortized        Fair        Amortized         Fair
                                                   Cost          Value          Cost           Value
                                               -----------    -----------     ----------   -----------
<S>                                            <C>            <C>             <C>          <C>
Due in one year or less......................  $ 1,826,953    $ 1,830,765     $   58,982   $    58,982
Due after one year through five years........    8,260,362      8,321,825        221,104       226,434
Due after five years through ten years.......   10,167,849     10,497,762      2,000,802     2,073,598
Due after ten years..........................   10,705,250     11,060,353      2,094,239     2,126,955
                                               -----------    -----------     ----------   -----------
   Total.....................................  $30,960,414    $31,710,705     $4,375,127   $ 4,485,969
                                               ===========    ===========     ==========   ===========
</TABLE>

Earnings on investments and net realized gains for the years ended December 31
are as follows:

<TABLE>
<CAPTION>
                                                                 2000           1999          1998
                                                              -----------     ----------   -----------
<S>                                                           <C>             <C>          <C>
Fixed maturities...........................................   $ 1,838,463     $1,571,121   $ 1,433,063
Equity securities..........................................       174,757        191,741       168,904
Invested cash and other short-term investments.............       497,653        401,060       212,652
Miscellaneous interest.....................................        17,270         11,749        20,330
Net realized gain..........................................       104,211        418,395       398,610
                                                              -----------     ----------   -----------
   Investment income.......................................   $ 2,632,354     $2,594,066   $ 2,233,559
                                                              ===========     ==========   ===========
</TABLE>

Gross realized gains and losses on sales of available-for-sale securities for
the years ended December 31 are summarized as follows:

<TABLE>
<CAPTION>
                                                                  2000           1999         1998
                                                              -----------     ----------   -----------
<S>                                                           <C>             <C>          <C>
Gross realized gains:
   Debt securities.........................................   $         -     $        -   $     3,133
   Obligations of states and political subdivisions........           280          8,509        12,192
   Common stocks and nonredeemable preferred stocks........       501,942        520,429       751,493
                                                              -----------     ----------   -----------
      Total................................................       502,222        528,938       766,818
                                                              -----------     ----------   -----------

Gross realized losses:
   Obligations of states and political subdivisions........      (147,659)          (563)       (3,983)
   Debt securities.........................................             -              -      (125,000)
   Common stocks and nonredeemable preferred stocks........      (250,352)      (109,980)     (239,225)
                                                              -----------     ----------   -----------
      Total................................................      (398,011)      (110,543)     (368,208)
                                                              -----------     ----------   -----------
   Net realized gain.......................................   $   104,211     $  418,395   $   398,610
                                                              ===========     ==========   ===========

4. PROPERTY

   Property and equipment and estimated useful lives at December 31 are
   summarized as follows:

                                                                                  2000        1999
                                                                              ----------   -----------
Land......................................................................    $1,107,582   $ 1,107,582
Office buildings and improvements (25 years)..............................     1,609,305     1,599,321
Furniture, fixtures and equipment (5 to 10 years).........................     4,652,915     4,335,523
Automobiles (3 years).....................................................       447,651       338,564
                                                                              ----------   -----------
      Total...............................................................     7,817,453     7,380,990
      Less accumulated depreciation.......................................    (2,320,827)   (1,544,524)
                                                                              ----------   -----------
      Property and equipment, net.........................................    $5,496,626   $ 5,836,466
                                                                              ==========   ===========
</TABLE>

                                      18
<PAGE>

5.   REINSURANCE

     The Company assumes and cedes reinsurance with other insurance companies in
the normal course of business. Premiums assumed and ceded were approximately
$32,000 and $363,000, respectively for 2000, $47,000 and $325,000, respectively
for 1999, and $74,000 and $313,000, respectively for 1998. Ceded reinsurance is
comprised of excess of loss treaties, which protects against losses over certain
amounts. In the event that the assuming insurance companies are unable to meet
their obligations under these contracts, the Company is contingently liable.

6.   RESERVES FOR CLAIMS
     Changes in the reserves for claims for the years ended December 31 are
summarized as follows based on the year in which the policies were written:

<TABLE>
<CAPTION>
                                                   2000         1999           1998
                                               -----------   -----------   -----------
<S>                                            <C>           <C>           <C>
Balance, beginning of year...................  $15,864,665   $13,362,665   $ 7,622,140
Provision related to:
 Current year................................    5,832,040     6,651,832     4,868,576
 Prior years.................................       33,315      (625,768)    3,226,374
                                               -----------   -----------   -----------
  Total provision charged to operations......    5,865,355     6,026,064     8,094,950
                                               -----------   -----------   -----------
Claims paid, net of recoveries, related to:
 Current year................................     (413,129)   (1,142,117)     (280,079)
 Prior years.................................   (3,372,226)   (2,381,947)   (2,074,346)
                                               -----------   -----------   -----------
  Total claims paid, net of recoveries.......   (3,785,355)   (3,524,064)   (2,354,425)
                                               -----------   -----------   -----------

  Balance, end of year.......................  $17,944,665   $15,864,665   $13,362,665
                                               ===========   ===========   ===========
</TABLE>

In management's opinion, the reserves are adequate to cover claim losses which
might result from pending and possible claims.

7.   COMMON STOCK AND STOCK OPTIONS

     The Company has adopted Employee Stock Option Purchase Plans (the "Plans")
under which options to purchase shares (not to exceed 443,300 shares) of the
Company's stock may be granted to key employees of the Company at a price not
less than the market value on the date of grant. All options are exercisable at
10 to 20% per year beginning on the date of grant or one year from the date of
grant and generally expire in five to ten years. The Company applies Accounting
Principles Board Opinion No. 25 and related Interpretations in accounting for
its plans and, accordingly, no compensation cost has been recognized. Had
compensation cost for the Plans been determined based on the fair value at the
grant dates for awards under those plans consistent with the method of Financial
Accounting Standards Board Statement No. 123, Accounting for Stock-Based
Compensation, the Company's net income and earnings per share would have been
reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                 2000        1999       1998
                                                              ----------  ----------  ----------
<S>                                                           <C>         <C>         <C>
Net income:
 As reported...........................................       $3,140,463  $4,420,394  $5,459,509
 Pro forma.............................................        3,041,875   4,414,260   4,872,247
Basic earnings per common share:
 As reported...........................................       $     1.21  $     1.59  $     1.95
 Pro forma.............................................             1.17        1.59        1.74
Diluted earnings per common share:
 As reported...........................................       $     1.21  $     1.59  $     1.92
 Pro forma.............................................             1.17        1.58        1.72
</TABLE>

The estimated weighted average grant-date fair value of options granted for the
years ended December 31 are as follows:

<TABLE>
<CAPTION>
                                                                 2000        1999       1998
                                                              ----------  ----------  ----------
<S>                                                           <C>         <C>         <C>
Exercise price equal to market price on date of grant:
 Weighted average exercise price............................  $    12.07  $    20.30  $    25.62
 Weighted average grant-date fair value.....................        5.85        9.55       11.14
Exercise price greater than market price on date of grant:
 Weighted average exercise price............................  $        -  $        -  $    29.15
 Weighted average grant-date fair value.....................           -           -       10.70
</TABLE>

                                      19
<PAGE>

COMMON STOCK AND STOCK OPTIONS (Continued)

     The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 2000, 1999 and 1998, respectively: dividend yield
of .6%, .6% and .5%; expected volatility of 34%, 26% and 22%; risk-free interest
rates of approximately 5.5%, 6% and 5%; and expected lives of 5 to 10 years. A
summary of the status of the Company's plans as of December 31 and changes
during the years ended on those dates is presented below:

<TABLE>
<CAPTION>
                                                            2000                         1999                         1998
                                                ---------------------------   --------------------------   -------------------------
                                                                 Weighted-                    Weighted-                   Weighted-
                                                                  Average                      Average                     Average
                                                                 Exercise                     Exercise                    Exercise
                                                  Shares           Price        Shares          Price        Shares         Price
                                                -----------    ------------   -----------    -----------   -----------   -----------
<S>                                             <C>            <C>            <C>            <C>           <C>           <C>
Outstanding at beginning of year...........          82,320    $      22.74        96,524    $     19.93        80,319   $     11.29
Granted....................................         212,500           12.07         9,700          20.30        52,150         27.51
Exercised..................................          (2,060)           7.60       (17,774)          8.44       (24,985)         8.90
Terminated.................................         (13,680)          16.29        (6,130)         16.16       (10,960)        18.69
                                                -----------                   -----------                  -----------
Outstanding at end of year.................         279,080    $      15.05        82,320    $     22.74        96,524   $     19.93
                                                ===========                   ===========                  ===========
Options exercisable at year-end............         108,744    $      14.89        27,890    $     18.14        37,389   $     12.67
                                                ===========                   ===========                  ===========
</TABLE>

The following table summarizes information about fixed stock options outstanding
at December 31, 2000:

<TABLE>
<CAPTION>
                                    Options Outstanding at Year-End         Options Exercisable at Year-End
                               ------------------------------------------   -------------------------------
                                                Weighted-       Weighted-                         Weighted-
                                                 Average         Average                           Average
                                 Number         Remaining       Exercise      Number              Exercise
Range of Exercise Prices       Outstanding   Contractual Life    Price      Exercisable            Price
- ------------------------       -----------   ----------------   --------    -----------           --------
<S>                            <C>           <C>                <C>         <C>                   <C>
$  10.00  -  $  12.00              104,200                  7   $  11.09         27,460           $  11.01
   13.06  -     14.25              107,859                  5      13.09         52,288              13.08
   15.00  -     17.50               13,485                  2      15.18         12,531              15.04
   20.00  -     22.78               10,996                  8      20.98          2,628              21.16
   25.50  -     29.15               42,540                  7      28.18         13,837              28.05
                               -----------                                  -----------
$  10.00  -  $  29.15              279,080                  6   $  15.05        108,744           $  14.89
                               ===========                                  ===========
</TABLE>

     The employee stock options are considered outstanding for the diluted
earnings per common share calculation. The total increase in the weighted
average shares outstanding related to these equivalent shares was 6,392, 9,404
and 34,768 for 2000, 1999 and 1998, respectively.

     Options to purchase 174,880, 58,456 and 47,840 shares of common stock were
outstanding during 2000, 1999 and 1998, respectively, but were not included in
the computation of diluted earnings per share because the options' exercise
prices were greater than the average market price of the common shares.

8. INCOME TAXES
     At December 31, the approximate effect on each component of deferred income
taxes and liabilities is summarized as follows:

<TABLE>
<CAPTION>
                                                                                     2000           1999
                                                                                  ----------     ----------
<S>                                                                               <C>            <C>
Deferred income tax assets:
    Recorded reserves for claims net of statutory premium reserves............    $  983,404     $1,067,546
    Accrued vacation..........................................................       163,462        145,727
    Reinsurance payable.......................................................        75,012         28,998
    Bad debt reserve..........................................................       245,465        263,500
    Other.....................................................................        65,627         27,376
                                                                                  ----------     ----------
       Total..................................................................     1,532,970      1,533,147
                                                                                  ----------     ----------
Deferred income tax liabilities:
    Net unrealized gain on investments........................................     1,117,615        613,667
    Excess of tax over book depreciation......................................       343,227        260,452
    Discount accretion on tax-exempt obligations..............................        49,426         43,196
    Other.....................................................................        62,544          1,739
                                                                                  ----------     ----------
       Total..................................................................     1,572,812        919,054
                                                                                  ----------     ----------
Net deferred income tax assets (liabilities)...............................       $  (39,842)    $  614,093
                                                                                  ==========     ==========
</TABLE>

                                      20
<PAGE>

INCOME TAXES (Continued)


A reconciliation of income tax as computed for the years ended December 31 at
the U.S. federal statutory income tax rate (34%) to income tax expense follows:

<TABLE>
<CAPTION>
                                                                                                  2000        1999          1998
                                                                                              -----------  ----------   -----------
<S>                                                                                           <C>          <C>          <C>
Anticipated income tax expense.........................................................       $ 1,448,557  $2,196,874   $ 2,616,473
Increase (reduction) related to:
 State income taxes, net of the federal income tax benefit.............................            48,408      35,483        32,778
 Tax-exempt interest income (net of amortization)......................................          (466,041)   (477,926)     (461,731)
 Other, net............................................................................            89,076     286,569        48,480
                                                                                              -----------  ----------   -----------
Provision for income taxes.............................................................       $ 1,120,000  $2,041,000   $ 2,236,000
                                                                                              ===========  ==========   ===========
</TABLE>

The components of income tax expense for the years ended December 31 are
summarized as follows:

<TABLE>
<CAPTION>
                                                                                                 2000        1999          1998
                                                                                              -----------  ----------   -----------
<S>                                                                                           <C>          <C>          <C>
Current:
 Federal...............................................................................        $  889,038  $1,994,169   $ 3,421,954
 State.................................................................................            79,037      40,441        52,143
                                                                                              -----------  ----------   -----------
   Total...............................................................................           968,075   2,034,610     3,474,097
Deferred expense (benefit).............................................................           151,925       6,390    (1,238,097)
                                                                                              -----------  ----------   -----------
   Total...............................................................................        $1,120,000  $2,041,000   $ 2,236,000
                                                                                              ===========  ==========   ===========
</TABLE>

For state income tax purposes, ITIC and NE-ITIC must pay only a gross premium
tax.

9.   LEASES

     Rent expense totaled approximately $550,000, $509,000 and $460,000 in 2000,
1999 and 1998, respectively. The future minimum lease payments under operating
leases that have initial or remaining noncancelable lease terms in excess of one
year as of December 31, 2000 are summarized as follows:

<TABLE>
<CAPTION>
Year End:
<S>             <C>
  2001          $276,903
  2002           244,705
  2003           113,584
  2004            67,584
  2005            52,968
Thereafter             -
                --------
     Total      $755,744
                ========
</TABLE>

10.  EMPLOYEE BENEFIT PLAN

     After three years of service, employees are eligible to participate in a
Simplified Employee Pension Plan. Contributions, which are made at the
discretion of the Company, are based on the employee's salary, but in no case
will such contribution exceed $25,500 per employee. All contributions are
deposited in Individual Retirement Accounts for participants. Contributions
under the plan were approximately $393,000, $337,000 and $290,000 for 2000, 1999
and 1998, respectively.

11.  COMMITMENTS AND CONTINGENCIES

     The Company and its subsidiaries are involved in litigation on a number of
claims which arise in the normal course of business, none of which, in the
opinion of management, is expected to have a material adverse effect on the
Company's consolidated financial position.

12.  STATUTORY ACCOUNTING

     The consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America which
differ in some respects from statutory accounting practices prescribed or
permitted in the preparation of financial statements for submission to insurance
regulatory authorities.

     Stockholders' equity on a statutory basis was $32,504,251 and $30,463,866
as of December 31, 2000 and 1999, respectively. Net income on a statutory basis
was $3,911,764, $5,129,055, and $6,667,605 for the twelve months ended December
31, 2000, 1999 and 1998, respectively.

                                      21
<PAGE>

13. SEGMENT INFORMATION

  The Company's operations include two reportable segments: title insurance
services and tax-free exchange services.

  The title insurance segment issues title insurance policies through approved
attorneys from underwritting offices and through independent issuing agents.
Title insurance policies insure titles to residential, institutional, commercial
and industrial properties.

  The tax-free exchange segment acts as an intermediary in tax-free exchanges of
property held for productive use in a trade or business or for investments.
Revenues are derived from fees for handling exchange transactions.

  Provided below is selected financial information about the Company's
operations by segment for the three years ended December 31, 2000, 1999 and
1998:

<TABLE>
<CAPTION>
                                          Income        Provision
                          Operating       Before           For
                           Revenues    Income Taxes    Income Taxes    Assets
                         -----------  --------------  --------------  --------
<S>                      <C>          <C>             <C>            <C>
2000
- ----
Title Insurance.........  $37,925,106    $3,115,950     $  681,862   $55,299,670
Exchange Services.......    1,046,178       838,326        323,405       724,020
All Other...............      626,130       306,187        114,733     3,315,317
                          -----------    ----------     ----------   -----------
   Consolidated Total...  $39,597,414    $4,260,463     $1,120,000   $59,339,007
                          ===========    ==========     ==========   ===========
1999
- ----
Title Insurance.........  $43,942,374    $5,641,471     $1,746,790   $51,102,222
Exchange Services.......      723,854       556,189        215,926       270,436
All Other...............      106,265       263,734         78,284     3,783,906
                          -----------    ----------     ----------   -----------
   Consolidated Total...  $44,772,493    $6,461,394     $2,041,000   $55,156,564
                          ===========    ==========     ==========   ===========
1998
- ----
Title Insurance.........  $45,553,649    $6,976,775     $1,977,676   $49,217,421
Exchange Services.......      636,839       511,913        199,335       377,878
All Other...............       52,216       206,821         58,989     2,002,513
                          -----------    ----------     ----------   -----------
   Consolidated Total...  $46,242,704    $7,695,509     $2,236,000   $51,597,812
                          ===========    ==========     ==========   ===========
</TABLE>


REPORT OF INDEPENDENT ACCOUNTANTS

Investors Title Company and Subsidiaries:

  We have audited the accompanying consolidated balance sheets of Investors
Title Company (the "Company") and its subsidiaries as of December 31, 2000 and
1999, and the related consolidated statements of income, comprehensive income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 2000. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

  We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

  In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Investors Title Company and its
subsidiaries at December 31, 2000 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2000 in conformity with accounting principles generally accepted in the
United States of America.



/s/ Deloitte & Touche LLP


Raleigh, North Carolina
February 2, 2001

                                      22
<PAGE>

Shareholder Information
- --------------------------------------------------------------------------------

Common Stock Data

The common stock of the Company is traded under the symbol "ITIC" in the over-
the-counter market and is quoted on the National Market System of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"). The
Company has approximately 1,500 shareholders of record, including shareholders
whose shares are held in street name. The following table shows the 2000 and
1999 high and low sales prices reported on the NASDAQ National Market System.

<TABLE>
<CAPTION>
                                                         2000                      1999
                                                  ------------------       --------------------
                                                    High       Low           High         Low
                                                  --------   -------       --------     -------
          <S>                                     <C>        <C>           <C>          <C>
          First Quarter                           $18.125    $10.25        $23.00       $20.25
          Second Quarter                          $13.25     $ 9.813       $22.50       $15.375
          Third Quarter                           $13.00     $10.125       $19.625      $14.00
          Fourth Quarter                          $17.00     $10.016       $18.50       $13.75
</TABLE>

The Company paid cash dividends of $.03 per share in each of the four quarters
during 2000 and 1999.

Market Makers

Davenport & Co. of Virginia    Scott & Stringfellow    Sherwood Securities Corp.
Knight Securities L.P.         Spear, Leeds & Kellog

                                      23
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>SUBSIDIARIES OF REGISTRANT
<TEXT>

<PAGE>

                                                                      EXHIBIT 21

                          SUBSIDIARIES OF REGISTRANT

Name of                Percent     Names Under Which           State of
Subsidiary             Ownership   Subsidiaries Do Business    Incorporation
- ---------------------  ----------  -------------------------   --------------

Investors Title        100%        Investors Title Insurance   North Carolina
Insurance Company                  Company

Northeast Investors    100%        Northeast Investors Title   South Carolina
Title Insurance                    Insurance Company
Company

Investors Title        100%        Investors Title Exchange    North Carolina
Exchange Corporation               Corporation

Investors Title        100%        Investors Title             South Carolina
Accommodation                      Accommodation Corporation
Corporation

Investors Title        100%        Investors Title Management  North Carolina
Management                         Services, Inc.
Services, Inc.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>INDEPENDENT AUDITOR'S CONSENT
<TEXT>

<PAGE>

                                  EXHIBIT 23

             INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULES

We consent to the incorporation by reference in Registration Statement No.
333-33903 of Investors Title Company on Form S-8 of our report dated February 2,
2001, incorporated by reference in this Annual Report on Form 10-K of Investors
Title Company for the year ended December 31, 2000.

Our audits of the consolidated financial statements referred to in our
aforementioned report also included the financial statement schedules of
Investors Title Company, listed in Item 14. These financial statement schedules
are the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.

/s/ Deloitte & Touche LLP

Raleigh, North Carolina
February 2, 2001
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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