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<SEC-DOCUMENT>0001169232-04-002017.txt : 20040330
<SEC-HEADER>0001169232-04-002017.hdr.sgml : 20040330
<ACCEPTANCE-DATETIME>20040330170840
ACCESSION NUMBER:		0001169232-04-002017
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		10
CONFORMED PERIOD OF REPORT:	20031231
FILED AS OF DATE:		20040330

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-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-11774
		FILM NUMBER:		04702320

	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-K
<SEQUENCE>1
<FILENAME>d59105_10-k.txt
<DESCRIPTION>ANNUAL REPORT
<TEXT>

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

                                    FORM 10-K

                          |X| ANNUAL REPORT PURSUANT TO
                           SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   for the fiscal year ended December 31, 2003

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

                         Commission file number 0-11774

                             INVESTORS TITLE COMPANY
             (Exact name of registrant as specified in its charter)

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


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

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

                           Common Stock, no par value

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

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

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

      The aggregate market value of the common shares held by non-affiliates was
$56,480,945 based on the closing sales price on the NASDAQ National Market
System on the last business day of the registrant's most recently completed
second fiscal quarter (June 30, 2003).

      As of March 19, 2004, there were 2,855,744 common shares of the registrant
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

      Portions of Investors Title Company's Annual Report to Shareholders for
the fiscal year ended December 31, 2003 are incorporated by reference in Parts
I, II and IV hereof and portions of Investors Title Company's definitive proxy
statement for the Annual Meeting of Shareholders to be held on May 19, 2004 are
incorporated by reference in Part III hereof.

<PAGE>

SAFE HARBOR STATEMENT

      This Annual Report on Form 10-K, as well as information included in future
filings by the Company with the Securities and Exchange Commission and
information contained in written material, press releases and oral statements
issued by or on behalf of the Company, contains, or may contain, forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 that reflect management's current outlook for future periods. These
statements may be identified by the use of words such as "plan," "expect,"
"aim," "believe," "project," "anticipate," "intend," "estimate," "will,"
"should," "could" and other expressions that indicate future events and trends.
All statements that address expectations or projections about the future,
including statements about the Company's strategy for growth, product and
service development, market position, claims, expenditures and financial
results, are forward-looking statements. Forward-looking statements are based on
certain assumptions and expectations of future events that are subject to risks
and uncertainties. Actual future results and trends may differ materially from
historical results or those projected in any such forward-looking statements
depending on a variety of factors, including, but not limited to, the following:
(1) the demand for title insurance will vary due to factors such as 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) losses from claims may be
greater than anticipated such that reserves for possible claims are inadequate;
(3) unanticipated adverse changes in securities markets could result in material
losses on the Company's investments; and (4) the Company's dependence 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.

<PAGE>

                    INVESTORS TITLE COMPANY AND SUBSIDIARIES

                                      INDEX

<TABLE>
<S>          <C>                                                                                                           <C>
PART I
ITEM 1.      BUSINESS.......................................................................................................4
ITEM 2.      PROPERTIES....................................................................................................12
ITEM 3.      LEGAL PROCEEDINGS.............................................................................................12
ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........................................................12
ITEM 4A.     EXECUTIVE OFFICERS OF THE COMPANY.............................................................................12

PART II
ITEM 5.      MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.........................................13
ITEM 6.      SELECTED FINANCIAL DATA.......................................................................................13
ITEM 7.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.........................13
ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....................................................14
ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...................................................................14
ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE..........................14
ITEM 9A.     CONTROLS AND PROCEDURES.......................................................................................14

PART III
ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............................................................15
ITEM 11.     EXECUTIVE COMPENSATION........................................................................................15
ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS................15
ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................................................15
ITEM 14.     PRINCIPAL ACCOUNTANT FEES AND SERVICES........................................................................15

PART IV
ITEM 15.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K..............................................16

SIGNATURES.................................................................................................................17
</TABLE>


<PAGE>

                                     PART I

ITEM 1.     BUSINESS

GENERAL

      Investors Title Company (the "Company") is a holding company that was
incorporated in the State of North Carolina in February 1973. The Company became
operational on June 24, 1976, when it acquired Investors Title Insurance Company
("ITIC") as a wholly owned subsidiary under a plan of exchange of shares of
common stock. On September 30, 1983, the Company acquired Northeast Investors
Title Insurance Company ("NE-ITIC"), formerly Investors Title Insurance Company
of South Carolina, as a wholly owned subsidiary under a plan of exchange of
shares of common stock. Investors Capital Management Company ("ICMC"), a wholly
owned subsidiary of the Company, was organized on October 17, 2003. The
Company's most recent subsidiary, Investors Trust Company ("Investors Trust"),
was granted a trust charter by the North Carolina Banking Commissioner on
February 17, 2004.

      The Company's executive offices are located at 121 North Columbia Street,
Chapel Hill, North Carolina 27514. The Company's telephone number is (919)
968-2200, its facsimile number is (919) 968-2235, and its Internet address is
www.invtitle.com. The Company makes available free of charge on its Internet
website its annual report on Form 10-K, its quarterly reports on Form 10-Q, its
current reports on Form 8-K, and all amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 as soon as reasonably practicable after such materials are electronically
filed with or furnished to the Securities and Exchange Commission.

      The Company engages primarily in three lines of business. The main
business activity is the issuance of title insurance through ITIC and NE-ITIC.
The second line of business provides tax-free exchange services through its
subsidiaries, Investors Title Exchange Corporation and Investors Title
Accommodation Corporation. The Company has also recently entered into a third
line of business, which it added to supplement its traditional lines of
business, providing investment management and trust services to individuals,
trusts and other entities. See Management's Discussion and Analysis of Financial
Condition and Results of Operations and Note 13 of Notes to Consolidated
Financial Statements in the 2003 Annual Report to Shareholders incorporated by
reference in this Form 10-K Annual Report for additional information related to
the Company's operating segments.

      Title Insurance

      Through its two wholly owned subsidiaries, ITIC and NE-ITIC, the Company
underwrites land title insurance for owners and mortgagees as a primary insurer
and as a reinsurer for other title insurance companies. Title insurance protects
against loss or damage resulting from defects that affect the title to real
property. The commitment and policies issued are the standard American Land
Title Association approved forms.

      There are two basic types of title insurance policies - one for the
mortgage lender and one for the real estate owner. A lender often requires
property owners to purchase title insurance to protect its position as a holder
of a mortgage loan, but the lender's title insurance policy does not protect the


                                       4
<PAGE>

property owner. The property owner needs to purchase an owner's title insurance
policy to protect his investment.

      When real property is conveyed from one party to another, occasionally
there is a hidden defect in the title or a mistake in a prior deed, will or
mortgage that may give a third party a legal claim against such property. If a
claim is made against real property, title insurance provides a corporate
guarantee against insured defects, pays all legal expenses to eliminate any
title defects, pays any claims arising from errors in title examination and
recording, and pays any losses arising from hidden defects in title and defects
that are not of record. Title insurance provides an assurance that the insurance
holder's ownership and use of such property will be defended promptly against
claims, at no cost, whether or not the claim is valid.

      A title defect is one of any number of things that could jeopardize the
property owner's interest. It could be an unsatisfied mortgage, lien, judgment
or other unrecorded claim against the property. It could arise through
easements, use restrictions or other existing covenants, or it could be a hidden
risk. Title insurance generally protects against four kinds of hidden risks --
errors in the public records such as incorrect information in deeds and
mortgages regarding names, signatures and legal descriptions; judgments, liens
and mortgages or any other claims against the property or the seller which
become the new owner's responsibility after closing, such as unpaid taxes,
assessments and other debts to creditors; claims to ownership by the spouse of a
former owner or by the "missing heir" of a deceased owner who did not receive
his share of the estate; and invalid deeds or other transfers by sellers who did
not actually own the property or by previous owners who were minors or not
mentally competent.

      ITIC was incorporated in the State of North Carolina on January 28, 1972,
and became licensed to write title insurance in the State of North Carolina on
February 1, 1972. At present, ITIC mainly writes land title insurance both as a
primary insurer and as a reinsurer throughout the eastern and midwestern United
States. ITIC is the leading title insurer of North Carolina property and has
held this position of most premiums written for twenty years based on amounts
reported to the North Carolina Department of Insurance. ITIC writes title
insurance through issuing agents or branch offices in the District of Columbia
and the States of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana,
Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri,
Nebraska, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina,
Tennessee, Virginia, West Virginia and Wisconsin. In addition to the states in
which ITIC currently writes title insurance, it is also licensed to write title
insurance in the States of Arizona, Colorado, Connecticut, Delaware, Idaho,
Kansas, Maine, Massachusetts, Montana, Nevada, North Dakota, Oklahoma, Rhode
Island, Texas, Utah, Vermont and Wyoming. Agents issue policies for ITIC and may
provide other services such as search and settlement services.

      NE-ITIC was incorporated in the State of South Carolina on February 23,
1973, and became licensed to write title insurance in that state on November 1,
1973. It currently writes title insurance as a primary insurer and as a
reinsurer in the State of New York. NE-ITIC is also licensed to write title
insurance in North Carolina and South Carolina.

      Each state license authorizing ITIC or NE-ITIC to write title insurance
must be renewed annually. These licenses are necessary for the companies to
operate as a title insurer in each state in


                                       5
<PAGE>

which they are held and the loss of a license in any state by either company
would prevent the company from issuing title insurance in that state.

      In the State of North Carolina, ITIC issues title insurance commitments
and policies through its home office and its 27 branch offices that are located
throughout North Carolina.

      In the ordinary course of business, ITIC and NE-ITIC reinsure certain
risks with other title insurers for the purpose of limiting their exposure. They
also assume reinsurance for certain risks of other title insurers for which they
receive additional income. For the last three years, reinsurance activities
accounted for less than 1% of total premium volume.

      As of December 31, 2003, ITIC had a risk retention limit of $2,750,000,
meaning that it assumed primary risks up to $2,750,000. It then reinsured the
next $250,000 of risk with NE-ITIC, and all risks above $3,000,000 were
reinsured with an unrelated reinsurer.

      As of December 31, 2003, NE-ITIC had a risk retention limit of $250,000,
meaning that it assumed primary risks up to $250,000. It then reinsured the next
$2,750,000 of risk with ITIC, and all amounts above $3,000,000 were reinsured
with an unrelated reinsurer.

      Both ITIC's and NE-ITIC's risk retention limits are self-imposed and are
more conservative than state insurance regulations require. ITIC's self-imposed
retention of $2,750,000 is only 17.2% of its statutorily permitted retention of
$16,019,023. NE-ITIC's self-imposed retention of $250,000 is only 13.3% of its
statutorily permitted retention of $1,882,469.

      ITIC has been recognized by two independent Fannie Mae-approved actuarial
firms, Demotech, Inc. and LACE Financial Corporation, with rating categories of
"A Double Prime" and "A." NE-ITIC's financial stability also has been recognized
by Demotech, Inc. and LACE Financial Corporation with rating categories of "A
Prime" and "A+." According to Demotech, title insurance underwriters earning a
financial stability rating of A" (A Double Prime) or A' (A Prime) possess
unsurpassed financial stability related to maintaining positive surplus as
regards policyholders, regardless of the severity of a general economic downturn
or deterioration in the title insurance cycle. A LACE rating of "A+" or "A"
indicates that a title insurance company has a strong overall financial
condition that will allow it to meet its future claims and that, generally, the
company has good operating earnings, is well capitalized and has adequate
reserves.

      Exchange Services

      In 1988, the Company established Investors Title Exchange Corporation, a
wholly owned subsidiary ("ITEC"), to provide services in connection with
tax-free exchanges of like-kind property. ITEC acts as an intermediary in
tax-free exchanges of property held for productive use in a trade or business or
for investments, and its income is derived from fees for handling exchange
transactions.

      The Company established South Carolina Document Preparation Company
("SCDPC") as a wholly owned subsidiary in 1994. In the first quarter of 2001,
SCDPC changed its name to Investors Title Accommodation Corporation ("ITAC") and
began serving as an exchange accommodation titleholder, offering a vehicle for
accomplishing a reverse exchange when a taxpayer must acquire replacement
property before selling the relinquished property.


                                       6
<PAGE>

      Investment Management and Trust Services

      The Company organized ICMC, a wholly owned subsidiary, as a North Carolina
corporation on October 17, 2003. ICMC is currently licensed as an investment
adviser in North Carolina and South Carolina. Investors Trust, also a wholly
owned subsidiary of the Company, received its North Carolina trust charter on
February 17, 2004. The Company anticipates that ICMC and Investors Trust will
work together to provide investment management and trust services to
individuals, companies, banks and trusts. These subsidiaries did not have any
significant activities in 2003, and are not currently a reportable segment for
which financial information is presented in the financial statements and there
is no assurance that this business will be successful.

OPERATIONS OF SUBSIDIARIES

      For a description of net premiums written geographically, refer to
Management's Discussion and Analysis of Financial Condition and Results of
Operations. See Note 13 of Notes to Consolidated Financial Statements in the
2003 Annual Report to Shareholders incorporated by reference in this Form 10-K
Annual Report for additional information related to the Company's operating
segments.

      Title Insurance

      ITIC and NE-ITIC offer primary title insurance coverage to owners and
mortgagees of real estate and reinsurance of title insurance risks to other
title insurance companies. Title insurance premiums written reflect a one-time
premium payment, with no recurring premiums. Premiums are recorded and policies
or commitments are issued upon receipt of final certificates or preliminary
reports with respect to titles. Title insurance commissions earned by the
Company's agents are recognized as expense concurrently with premium
recognition.

      Exchange Services

      ITEC and ITAC provide services in connection with tax-free exchanges.

SEASONALITY

      Title Insurance

      Title insurance premiums are closely related to the level of real estate
activity and the average price of real estate sales. The availability of funds
to finance purchases directly affects real estate sales. Other factors include
consumer confidence, economic conditions, supply and demand, mortgage interest
rates and family income levels. Historically, the first quarter has the least
real estate activity because fewer real estate transactions occur, while the
remaining quarters are more active. Refinance activity is generally less
seasonal, but it is subject to interest rate volatility. Fluctuations in
mortgage interest rates can cause shifts in real estate activity outside of the
normal seasonal pattern.


                                       7
<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 27 branch offices. In South Carolina and Michigan, ITIC operates
through a branch office and issuing agents located conveniently to customers
throughout the state. ITIC also writes title insurance policies through issuing
agents in the District of Columbia and the States of Alabama, Arkansas, Florida,
Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Minnesota,
Mississippi, Missouri, Nebraska, New Jersey, North Carolina, Ohio, Pennsylvania,
Tennessee, Virginia, West Virginia and Wisconsin.

      NE-ITIC currently operates through agency offices in the State of New
York.

      ITIC and NE-ITIC strive to provide superior service to their customers and
consider this an important factor in attracting and retaining customers. Branch
and corporate personnel strive to develop new business and agency relationships
to increase market share and ITIC's Commercial Services Division provides
services to commercial clients. The Company's marketing efforts are also
enhanced through advertising in various periodicals.

      Exchange Services

      Marketing of exchange services offered by ITEC and ITAC has been
increasingly incorporated into the marketing of the core title products offered
by ITIC and NE-ITIC. The Commercial Services Division of ITIC also markets the
services offered by ITEC and ITAC to its clients.

CUSTOMERS

      The Company is not dependent upon any single customer or a few customers,
and the loss of any single customer would not have a material adverse effect on
the Company.

INSURED RISK ON POLICIES IN FORCE

      Generally, the amount of the insured risk on a title insurance policy is
equal to the lesser of the purchase price of the insured property or the fair
market value of the property. In the event that a claim is made against the
property, the insurer is also responsible for paying all legal expenses in
connection with defending the insured party and eliminating any title defects
affecting the property. The insurer may, however, choose to pay the policy
limits to the insured, at which time the insurer's duty to defend the claim is
satisfied.


                                       8
<PAGE>

      At any given time, the insurer's actual financial risk is only a portion
of the aggregate insured risk of all policies in force. The reduction in risk
results in part from the reissuance of title insurance policies by other
underwriters when the property is conveyed or refinanced. An owner's policy is
effective only as long as the insured has an ownership interest in the property
or has liability under warranties of title. Furthermore, the coverage on a
lender's title insurance policy is reduced and eventually terminated as the loan
it secures is paid. Due to the variability of these factors, the aggregate
contingent liability of the Company and its subsidiaries cannot be determined
with any precision.

ENVIRONMENTAL MATTERS

      The title insurance policies ITIC and NE-ITIC currently issue exclude
liability for environmental risks and contamination. Although policies issued
prior to 1992 may not specifically exclude such environmental risks, they
generally do not provide affirmative coverage for such risks. As a result, the
Company does not anticipate that it or its subsidiaries will incur any
significant expenses related to environmental claims.

      In connection with effecting tax-free exchanges of like-kind property,
ITEC and ITAC may temporarily hold title to property pursuant to an
accommodation titleholder agreement. In such situations, the person or entity
for which title is being held must execute an indemnification agreement pursuant
to which it agrees to indemnify ITEC or ITAC, as appropriate, for any
environmental or other claims which may arise as a result of the arrangement.

REGULATIONS

      Title Insurance

      The Company is an insurance holding company and therefore it is subject to
regulation in the states in which its insurance subsidiaries do business. These
regulations, among other things, require insurance holding companies to register
and file certain reports and require prior regulatory approval of the payment of
dividends and other intercompany transfers.

      Title insurance companies are extensively regulated under applicable state
laws. All states have requirements for admission to do business as an insurance
company, including minimum levels of capital and surplus. State regulatory
authorities monitor the stability and service of insurance companies and possess
broad powers with respect to the licensing of title insurers and agents, rates,
investments, policy forms, financial reporting, reserve requirements, and
dividend restrictions, as well as examinations and audits of title insurers. The
Company's two insurance subsidiaries are subject to examination at any time by
the insurance regulators in the states where they are licensed.

      Proposals to change the laws and regulations governing insurance holding
companies and the title insurance industry are often introduced in Congress, in
the state legislatures and before the various insurance regulatory agencies. The
Company regularly monitors such proposals and legislation, although the
likelihood and timing of them and the impact they may have on the Company and
its subsidiaries cannot be determined at this time.


                                       9
<PAGE>

      ITIC is domiciled in North Carolina and is subject to North Carolina
insurance regulations. The North Carolina Department of Insurance typically
schedules financial examinations every five years. ITIC was last examined by the
North Carolina Department of Insurance for the period January 1, 1995 through
December 31, 1999. No material deficiencies were noted in the report.

      ITIC is also subject to an annual financial examination by the Illinois
Department of Insurance. On September 11, 2003, the Illinois Department of
Insurance completed its examination of ITIC for the period July 1, 2002 through
June 30, 2003. No material deficiencies were noted in the report.

      NE-ITIC is domiciled in South Carolina and subject to South Carolina
insurance regulations. The South Carolina Department of Insurance periodically
schedules financial examinations. NE-ITIC was examined by the South Carolina
Department of Insurance for the period January 1, 1998 through December 31,
2000. No material deficiencies were noted in the report.

      In addition to financial examinations, ITIC and NE-ITIC are subject to
market conduct examinations by the North Carolina Department of Insurance and
the South Carolina Department of Insurance, respectively. These audits examine
domiciled state activity. ITIC's last market conduct examination commenced on
April 19, 1999 for the period January 1, 1996 through December 31, 1998, with no
material deficiencies noted. NE-ITIC's last market conduct examination coincided
with its financial examination, which commenced on November 19, 2001 for the
period January 1, 1998 through December 31, 2000. No material deficiencies were
noted for NE-ITIC by the market conduct examiners.

      Both ITIC and NE-ITIC meet the statutory premium reserve requirements and
the minimum capital and surplus requirements of the states in which they are
licensed.

      Exchange Services

      Intermediary services are not federally regulated and neither ITEC nor
ITAC operate in any states that regulate this industry.

COMPETITION

      Title Insurance

      ITIC currently operates primarily in Michigan, North Carolina,
Pennsylvania, South Carolina, Tennessee and Virginia and NE-ITIC currently
operates in New York. ITIC's and NE-ITIC's major competitors, which together
comprise a majority of the title insurance market on a national level, are
Chicago Title Insurance Company, Commonwealth Land Title Insurance Company,
Fidelity National Title Insurance Company, First American Title Insurance
Company, Lawyers Title Insurance Corporation, Old Republic National Title
Insurance Company and Stewart Title Guaranty Company. Key factors that affect
competition in the title insurance industry are price, expertise, timeliness and
quality of service and the financial strength and size of the insurer. Title
insurance underwriters also compete for agents based upon the ratio of premium
splits between the underwriter and the agent.

      In addition, there are numerous industry-related regulations and statutes
that set out conditions and requirements to conduct business. Changes to or the
removal of such regulations and statutes


                                       10
<PAGE>

could result in additional competition from alternative title insurance products
or new entrants into the industry that could materially affect the Company's
business operations and financial condition.

      Exchange Services

      Competition for ITEC and ITAC comes from other title insurance companies
as well as some major banks that offer exchange services. Key elements that
affect competition are price, expertise, timeliness and quality of service and
the financial strength and size of the company. Exchange services are not a
regulated industry; therefore, there is no market data available regarding the
Company's market position in this industry.

      The exchange segment is dependent upon current Internal Revenue Service
("IRS") regulations that provide taxpayers a safe harbor by using a qualified
intermediary to structure tax-free exchanges of property and using an exchange
accommodation titleholder to hold property in reverse exchange transactions.
Changes to current IRS regulations could materially affect the Company's
operations.

INVESTMENTS

      The Company and its subsidiaries derive a substantial portion of their
income from investments in bonds (municipal and corporate) and equity
securities. The investment policy is designed to maintain a high quality
portfolio and maximize income. Some state laws impose restrictions upon the
types and amounts of investments that can be made by the Company's insurance
subsidiaries.

      See Note 3 of Notes to Consolidated Financial Statements in the 2003
Annual Report to Shareholders incorporated by reference in this Form 10-K Annual
Report for the major categories of investments, earnings by investment
categories, scheduled maturities, amortized cost, and market values of
investment securities.

EMPLOYEES

      The Company has no paid employees. Officers of the Company are full-time
paid employees of ITIC, which had 216 full-time employees and 13 part-time
employees as of December 31, 2003. In addition, NE-ITIC had one full-time paid
employee and ICMC had three full-time paid employees as of December 31, 2003.

      None of the employees of the Company or its subsidiaries are subject to a
collective bargaining agreement. Management considers its relationship with its
employees to be favorable.

INTELLECTUAL PROPERTY

      The Company has registered two service marks with the United States Patent
and Trademark Office (the "USPTO"). The first mark was registered with the USPTO
on August 29, 2000 and the second mark was registered on September 12, 2000. In
addition, ITIC registered a service mark with the USPTO on February 3, 1987. In
the Company's opinion, the loss of these registrations would not materially
affect its business or the business of its subsidiaries.


                                       11
<PAGE>

ADDITIONAL INFORMATION

      The Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K and amendments to those reports filed with or
furnished to the Securities and Exchange Commission pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 are available on the Company's
website (www.invtitle.com) as soon as reasonably practicable after the Company
electronically files such material with, or furnishes it to, the Securities and
Exchange Commission.

ITEM 2.     PROPERTIES

      The Company owns two adjacent office buildings and property located on the
corner of North Columbia and West Rosemary Streets in Chapel Hill, North
Carolina, which serves as the Company's corporate headquarters. The main
building contains approximately 23,000 square feet and has on-site parking
facilities. The Company's principal subsidiary, ITIC, leases office space in 33
locations throughout North Carolina, South Carolina, Michigan, Nebraska and
Tennessee. NE-ITIC leases office space in one location in New York. Each of the
office facilities occupied by the Company and its subsidiaries are in good
condition and adequate for present operations, although the Company may look at
additional space in Chapel Hill in 2004 in order to meet its future needs.

ITEM 3.     LEGAL PROCEEDINGS

      The Company and its subsidiaries are involved in various legal proceedings
that are incidental to their business. In the Company's opinion, based on the
present status of these proceedings, any potential liability of the Company or
its subsidiaries with respect to these legal proceedings will not, in the
aggregate, be material to the Company's consolidated financial condition or
operations.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 2003.

ITEM 4A.    EXECUTIVE OFFICERS OF THE COMPANY

      Following is information regarding the executive officers of the Company
as of March 19, 2004. Each officer is appointed at the annual meeting of the
Board of Directors to serve until the next annual meeting of the Board or until
his or her respective successor has been elected and qualified.

<TABLE>
<CAPTION>
Name                                Age              Position with Registrant
- ----                                ---              ------------------------
<S>                                 <C>              <C>
J. Allen Fine                       69               Chief Executive Officer and Chairman of the Board

James A. Fine, Jr                   41               President, Treasurer, Chief Financial Officer and Director

W. Morris Fine                      37               Executive Vice President, Secretary and Director
</TABLE>


                                       12
<PAGE>

J. Allen Fine has been Chief Executive Officer and Chairman of the Board of the
Company since its incorporation in 1973. Mr. Fine also served as President of
the Company until May 1997. Mr. Fine is the father of James A. Fine, Jr.,
President, Treasurer and Director of the Company, and W. Morris Fine, Executive
Vice President, Secretary and Director of the Company.

James A. Fine, Jr. was named Vice President of the Company in 1987. In 1997, Mr.
Fine was named President and Treasurer and appointed as a Director of the
Company. James A. Fine, Jr. is the son of J. Allen Fine, Chief Executive Officer
and Chairman of the Board of the Company, and the brother of W. Morris Fine,
Executive Vice President, Secretary and Director of the Company.

W. Morris Fine was named Vice President of the Company in 1992. In 1993, Mr.
Fine was named Treasurer of the Company and served in that capacity until 1997.
In 1997, Mr. Fine was named Executive Vice President and Secretary of the
Company. In 1999, he was appointed as a Director of the Company. W. Morris Fine
is the son of J. Allen Fine, Chief Executive Officer and Chairman of the Board
of the Company, and the brother of James A. Fine, Jr., President, Treasurer and
Director of the Company.


                                     PART II

ITEM 5.     MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
            MATTERS

      The high and low sales prices for the Company's common stock, as reported
on the NASDAQ National Market System, and the dividends paid per common share
for each quarter in the last two fiscal years are set forth under the caption
"Common Stock Data" in the 2003 Annual Report to Shareholders and are
incorporated by reference in this Form 10-K Annual Report. For a discussion of
factors that may limit the Company's ability to pay dividends on its common
stock, refer to the subsection of Management's Discussion and Analysis of
Financial Condition and Results of Operations entitled "Liquidity and Capital
Resources" in the 2003 Annual Report to Shareholders, incorporated by reference
in this Form 10-K Annual Report.

ITEM 6.     SELECTED FINANCIAL DATA

      The selected financial data for the last five fiscal years of the Company
and its subsidiaries is set forth under the caption "Financial Highlights" in
the 2003 Annual Report to Shareholders and is incorporated by reference in this
Form 10-K Annual Report. The information should be read in conjunction with the
Consolidated Financial Statements, Notes to Consolidated Financial Statements
and Management's Discussion and Analysis of Financial Condition and Results of
Operations in the 2003 Annual Report to Shareholders, which are incorporated by
reference in this Form 10-K Annual Report.

ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS

      Management's Discussion and Analysis of Financial Condition and Results of
Operations in the 2003 Annual Report to Shareholders is incorporated by
reference in this Form 10-K Annual Report.


                                       13
<PAGE>

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The subsection entitled "Quantitative and Qualitative Disclosures about
Market Risk" in Management's Discussion and Analysis of Financial Condition and
Results of Operations in the 2003 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 2003 Annual Report
to Shareholders are incorporated by reference in this Form 10-K Annual Report.

      The financial statements meeting the requirements of Regulation S-X are
attached hereto as Schedules I, II, III, IV and V.

      The supplementary financial information set forth in the section entitled
"Selected Quarterly Financial Data" in Management's Discussion and Analysis of
Financial Condition and Results of Operations in the 2003 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.

ITEM 9A.    CONTROLS AND PROCEDURES

      The Company's disclosure controls and procedures are designed to ensure
that information required to be disclosed by the Company in the reports that it
files or submits under the Securities Exchange Act of 1934 (the "Act") was
recorded, processed, summarized and reported within the time periods specified
by the Securities and Exchange Commission's rules and forms. An evaluation was
performed under the supervision and with the participation of the Company's
management, including its Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures pursuant to Rule 13a-14(c) under the Act. Based on that
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures were effective
as of December 31, 2003. In reaching this conclusion, the Company's Chief
Executive Officer and Chief Financial Officer determined that the Company's
disclosure controls and procedures were effective in ensuring that such
information was accumulated and communicated to the Company's management as
appropriate to allow timely decisions regarding required disclosure.

      There was no change in the Company's internal control over financial
reporting identified in connection with the above-referenced evaluation that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.


                                       14
<PAGE>

                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      Information pertaining to Directors of the Company under the heading
"Election of Directors" in the Company's definitive Proxy Statement for the
Annual Meeting of Shareholders to be held on May 19, 2004 is incorporated by
reference in this Form 10-K Annual Report. Other information with respect to
executive officers is contained in Part I - Item 4(a) under the caption
"Executive Officers of the Company".

      The Company has adopted a written Code of Business Conduct and Ethics that
applies to all officers, directors and employees of the Company and its
subsidiaries. The Code of Business Conduct and Ethics can be found on the
Company's website at www.invtitle.com. The Company intends to make all required
disclosures concerning any amendments to, or waivers from, the Code of Business
Conduct and Ethics on its website. A copy of the Code of Business Conduct and
Ethics has also been attached to this Annual Report on Form 10-K as Exhibit 14.

ITEM 11.    EXECUTIVE COMPENSATION

      Information set forth under the headings "Executive Compensation" and
"Compensation Committee Interlocks and Insider Participation" in the Company's
definitive Proxy Statement relating to the Annual Meeting of Shareholders to be
held on May 19, 2004 is incorporated by reference in this Form 10-K Annual
Report.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
            RELATED STOCKHOLDER MATTERS

      Information pertaining to securities ownership of certain beneficial
owners and management under the heading "Stock Ownership of Executive Officers
and Certain Beneficial Owners" in the Company's definitive Proxy Statement
relating to the Annual Meeting of Shareholders to be held on May 19, 2004 is
incorporated by reference in this Form 10-K Annual Report.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Information set forth under the heading "Executive Employment Agreements"
in the Company's definitive Proxy Statement relating to the Annual Meeting of
Shareholders to be held on May 19, 2004 is incorporated by reference in this
Form 10-K Annual Report

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

      Information pertaining to principal accountant fees and services under the
heading "Independent Auditor Fees" in the Company's definitive Proxy Statement
relating to the Annual Meeting of Shareholders to be held on May 19, 2004 is
incorporated by reference in this Form 10-K Annual Report.


                                       15
<PAGE>

                                     PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) Financial Statements.

       The following financial statements in the 2003 Annual Report to
Shareholders are hereby incorporated by reference in this Form 10-K Annual
Report:

       Consolidated Balance Sheets as of December 31, 2003 and 2002
       Consolidated Statements of Income for the Years Ended December 31,
          2003, 2002 and 2001
       Consolidated Statements of Stockholders' Equity for the Years Ended
          December 31, 2003, 2002 and 2001
       Consolidated Statements of Comprehensive Income for the Years Ended
          December 31, 2003, 2002 and 2001
       Consolidated Statements of Cash Flows for the Years Ended
          December 31, 2003, 2002 and 2001
       Notes to Consolidated Financial Statements
       Report of Independent Auditors

(a)(2) Financial Statement Schedules.

      Following is a list of financial statement schedules filed as part of this
Form 10-K Annual Report:

<TABLE>
<CAPTION>
      Schedule Number      Description
      ---------------      -----------
<S>                        <C>
      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
</TABLE>

All other schedules are omitted, as the required information either is not
applicable, is not required, or is presented in the consolidated financial
statements or the notes thereto.

(a)(3) Exhibits.

       The exhibits filed as a part of this report and incorporated herein by
reference to other documents are listed in the Index to Exhibits to this Annual
Report on Form 10-K.

(b)    Reports on Form 8-K.

       On October 29, 2003, the Company furnished a report on Form 8-K that
reported under Item 12 that, on October 29, 2003, the Company released earnings
for the quarter ended September 30, 2003.


                                       16
<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 (Principal Executive Officer)


March 30, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated on the 30th day of March, 2004.

/s/ J. Allen Fine                               /s/ James R. Morton
- -----------------                               -------------------
J. Allen Fine, Chairman of the Board            James R. Morton, Director
and Chief Executive Officer
(Principal Executive Officer)


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


/s/ W. Morris Fine                              /s/ H. Joe King, Jr.
- ------------------                              --------------------
W. Morris Fine, Executive Vice President,       H. Joe King, Jr., Director
Secretary and Director


/s/ David L.  Francis                           /s/William J. Kennedy III
- --------------------                            -------------------------
David L. Francis, Director                      William J. Kennedy III, Director


/s/Loren B. Harrell, Jr.
- ------------------------
Loren B. Harrell, Jr., Director



                                       17
<PAGE>

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

                    INVESTORS TITLE COMPANY AND SUBSIDIARIES
       SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES
                             As of December 31, 2003

<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                                                $31,946,705          $34,007,562         $33,842,046
     Public utilities                                                 199,547              224,832             224,832
     All other corporate bonds                                     18,465,006           19,476,895          19,476,895
  Short-term investments                                            9,741,387            9,741,387           9,741,387
  Certificates of deposit                                           1,044,677            1,044,677           1,044,677
                                                             -----------------    -----------------    ----------------
      Total fixed maturities                                       61,397,322           64,495,353          64,329,837
                                                             -----------------    -----------------    ----------------

Equity Securities:
  Common Stocks:
      Public utilities                                                186,529              445,084             445,084
      Banks, trust and insurance companies                            291,442            1,104,113           1,104,113
      Industrial, miscellaneous and all other                       1,857,844            2,808,158           2,808,158
  Nonredeemable preferred stock                                     8,953,190            9,199,430           9,199,430
  Redeemable preferred stock                                        1,000,000            1,000,000           1,000,000
                                                             -----------------    -----------------    ----------------
      Total equity securities                                      12,289,005           14,556,785          14,556,785
                                                             -----------------    -----------------    ----------------

Other Investments                                                     955,561                                  955,561
                                                             -----------------                         ----------------
Total investments per the consolidated balance sheet             $ 74,641,888                             $ 79,842,183
                                                             =================                         ================
</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.

<PAGE>

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

                    INVESTORS TITLE COMPANY (PARENT COMPANY)
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                 BALANCE SHEETS
                        AS OF DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                               2003                   2002

<S>                                                                         <C>                   <C>
Assets
  Cash and cash equivalents                                                 $   121,587           $   142,038
  Investments in equity securities                                            2,030,000                30,000
  Investments in fixed maturities,available-for-sale                          3,268,225             5,036,231
  Other investments                                                             829,123               385,195
  Investments in affiliated companies                                        52,597,051            45,334,102
  Other receivables                                                           1,756,867               310,778
  Deferred income taxes, net                                                     62,046                43,067
  Income taxes receivable                                                     1,327,456                    --
  Prepaid expenses and other assets                                              16,927                19,641
  Property, net                                                               2,108,948             2,074,844
                                                                            -----------           -----------

Total Assets                                                                $64,118,230           $53,375,896
                                                                            ===========           ===========

Liabilities and Stockholders' Equity
Liabilities:
  Accounts payable and accrued liabilities                                  $   929,484           $   475,387
  Income taxes payable                                                               --               232,325
                                                                            -----------           -----------
    Total liabilities                                                           929,484               707,712
                                                                            -----------           -----------

Stockholders' Equity:
  Class A Junior Participating preferred stock - no par value
    (shares authorized 100,000; no shares issued)                                    --                    --
  Common stock-no par (shares authorized,
    10,000,000; 2,855,744 and 2,855,744 shares issued and
    2,503,923 and 2,515,804 shares outstanding 2003 and
    2002, respectively)                                                               1                     1
  Retained earnings                                                          59,756,927            49,613,044
  Accumulated other comprehensive income
     (net of deferred taxes: 2003:  $1,768,477; 2002: $1,574,431)             3,431,818             3,055,139
                                                                            -----------           -----------
    Total stockholders' equity                                               63,188,746            52,668,184
                                                                            -----------           -----------

Total Liabilities and Stockholders' Equity                                  $64,118,230           $53,375,896
                                                                            ===========           ===========
</TABLE>


See notes to condensed financial statements.

<PAGE>

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

                    INVESTORS TITLE COMPANY (PARENT COMPANY)
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                              STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001


<TABLE>
<CAPTION>
                                                                 2003                2002                  2001

<S>                                                        <C>                    <C>                   <C>
Revenues:
Investment income-interest and dividends                   $    96,952            $   91,619            $   96,624
Rental income                                                  503,031               516,018               510,132
Miscellaneous income                                            11,000                 5,017                 1,000
                                                           -----------            ----------            ----------
     Total                                                     610,983               612,654               607,756
                                                           -----------            ----------            ----------
Operating Expenses:
Office occupancy and operations                                242,861               247,244               170,445
Business development                                            31,098                24,077                21,928
Taxes-other than payroll and income                             65,461                61,107                65,917
Professional fees                                               52,758                63,490                30,191
Other expenses                                                  47,635                45,332                43,215
                                                           -----------            ----------            ----------
     Total                                                     439,813               441,250               331,696
                                                           -----------            ----------            ----------

Equity in Net Income of Affiliated Cos.*                    10,850,844             7,991,438             5,850,938
                                                           -----------            ----------            ----------
Income Before Income Taxes                                  11,022,014             8,162,842             6,126,998
                                                           -----------            ----------            ----------
Provision for Income Taxes                                      57,000                54,000               118,000
                                                           -----------            ----------            ----------
Net Income                                                 $10,965,014            $8,108,842            $6,008,998
                                                           ===========            ==========            ==========
Basic Earnings per Common Share                            $      4.38            $     3.22            $     2.35
                                                           ===========            ==========            ==========
Weighted Average Shares Outstanding-Basic                    2,503,659             2,517,328             2,554,204
                                                           ===========            ==========            ==========
Diluted Earnings Per Common Share                          $      4.18            $     3.12            $     2.31
                                                           ===========            ==========            ==========
Weighted Average Shares Outstanding-Diluted                  2,624,473             2,597,979             2,599,714
                                                           ===========            ==========            ==========
</TABLE>

* Eliminated in consolidation


See notes to condensed financial statements.

<PAGE>

                                                                     SCHEDULE II

                    INVESTORS TITLE COMPANY (PARENT COMPANY)
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                                  2003              2002             2001
<S>                                                                           <C>               <C>              <C>
Operating Activities:
  Net income                                                                  $ 10,965,014      $ 8,108,842      $ 6,008,998
   Adjustments to reconcile net income to net cash provided
     by operating activities:
         Equity in net earnings of subsidiaries                                (10,850,843)      (7,991,439)      (5,850,938)
         Depreciation                                                               70,944           72,467           76,206
         Amortization, net                                                          10,601           11,977               --
         Net gain on disposals of property                                              --             (532)              --
         Benefit for deferred income taxes                                         (12,000)          (6,000)         (11,400)
         (Increase) decrease in receivables                                     (1,446,089)           4,567         (203,869)
         (Increase) decrease in income taxes receivable-current                 (1,327,456)              --          404,548
         (Increase) decrease in prepaid expenses                                     2,714           32,884          (40,598)
         Increase in accounts payable and accrued liabilities                      454,097          138,300          193,821
         Increase (decrease) in income taxes payable-current                      (232,325)        (157,772)         390,097
                                                                              ------------          -------          -------
            Net cash provided by operating activities                           (2,365,343)         213,294          966,865
                                                                              ------------          -------          -------

Investing Activities:
   Capital contribution to subsidiaries                                           (325,000)              --               --
   Dividends received from subsidiaries                                          3,782,400        3,177,772          900,000
   Purchases of available-for-sale securities                                           --       (3,599,095)      (2,009,015)
   Proceeds from available-for-sale securities                                   1,736,879          597,962          661,397
   Purchases of held-at-cost securities                                           (486,000)        (385,195)              --
   Proceeds from held-at-cost securities                                            42,072               --               --
   Purchases of equity securities                                               (2,000,000)              --               --
   Proceeds from the sale of equity securities                                          --               --           45,000
   Purchases of furniture and equipment                                           (105,048)          (8,157)         (11,075)
   Proceeds from the sale of furniture and equiment                                     --           10,000               --
                                                                              ------------          -------          -------
      Net cash used in investing activities                                      2,645,303         (206,713)        (413,693)
                                                                              ------------          -------          -------

Financing Activities:
   Dividends paid (net dividends paid to subsidiary of $42,278 in 2003
      and $42,132 in 2002)                                                        (300,411)        (300,557)        (342,689)
                                                                              -------------         -------          -------
      Net cash used in financing activities                                       (300,411)        (300,557)        (342,689)
                                                                              -------------         -------          -------

Net Increase (Decrease) in Cash and Cash Equivalents                               (20,451)        (293,976)         210,483
Cash and Cash Equivalents, Beginning of Year                                       142,038          436,014          225,531
                                                                              -------------         -------          -------
Cash and Cash Equivalents, End of Year                                        $    121,587      $   142,038      $   436,014
                                                                              ============      ===========      ===========


Supplemental Disclosures:
Cash Paid (Refunded) During the Year For:
   Income Taxes                                                               $  1,638,949      $   217,772      $  (109,359)
                                                                              ============      ===========      ===========
</TABLE>

See notes to condensed financial statements.

<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 were as follows:

<TABLE>
<CAPTION>
      Subsidiaries                                                  2003              2002            2001
      ------------------------------------------------------------------------------------------------------
<S>                                                            <C>               <C>               <C>
      Investors Title Insurance Company, net  *                $ 3,307,400       $ 2,857,772       $ 350,000

      Investors Title Exchange Corporation                         175,000           160,000         550,000

      Investors Title Accommodation Corporation                    100,000           100,000               -

      Investors Title Management Services, Inc.                    200,000            60,000               -
                                                       -----------------------------------------------------

                                                               $ 3,782,400       $ 3,177,772       $ 900,000
                                                       =====================================================
</TABLE>

*Total dividends of $3,349,678 and $2,899,904 paid to the Parent Company in 2003
and 2002, respectively, netted with dividends of $42,278 and $42,132 received
from the Parent in 2003 and 2002, respectively.

<PAGE>

                                                                    SCHEDULE III

                    INVESTORS TITLE COMPANY AND SUBSIDIARIES
                       SUPPLEMENTARY INSURANCE INFORMATION
              For the Years Ended December 31, 2003, 2002 and 2001

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
                                            Future
                                            Policy                      Other
                                           Benefits,                   Policy
                            Deferred        Losses,                    Claims
                             Policy         Claims                       and                            Net
                          Acquisition      and Loss      Unearned     Benefits        Premium        Investment
        Segment               Cost         Expenses      Premiums      Payable        Revenue          Income
- ------------------------------------------------------------------------------------------------------------------
<S>                          <C>          <C>             <C>            <C>           <C>             <C>
Year Ended
December 31, 2003
Title Insurance                   ---      $ 30,031,000         ---      $ 726,191     $ 83,927,312    $ 2,589,228
Exchange Services                 ---               ---         ---            ---              ---          2,818
All Other                         ---               ---         ---            ---              ---         99,641
                         -----------------------------------------------------------------------------------------
                                  ---      $ 30,031,000         ---      $ 726,191     $ 83,927,312    $ 2,691,687
                         =========================================================================================

Year Ended
December 31, 2002
Title Insurance                   ---      $ 25,630,000         ---      $ 401,040     $ 67,298,617    $ 2,706,886
Exchange Services                 ---               ---         ---            ---              ---          6,115
All Other                         ---               ---         ---            ---              ---         93,807
                         -----------------------------------------------------------------------------------------
                                  ---      $ 25,630,000         ---      $ 401,040     $ 67,298,617    $ 2,806,808
                         =========================================================================================

Year Ended
December 31, 2001
Title Insurance                   ---      $ 21,460,000         ---      $ 281,961     $ 58,800,545    $ 2,626,053
Exchange Services                 ---               ---         ---            ---              ---         16,245
All Other                         ---               ---         ---            ---              ---         97,982
                         -----------------------------------------------------------------------------------------
                                  ---      $ 21,460,000         ---      $ 281,961     $ 58,800,545    $ 2,740,280
                         =========================================================================================

<CAPTION>
- ---------------------------------------------------------------------------------------
                            Benefits       Amortization
                            Claims,        of Deferred
                           Losses and        Policy            Other
                           Settlement      Acquisition       Operating       Premiums
        Segment             Expenses          Costs          Expenses         Written
- ---------------------------------------------------------------------------------------
<S>                       <C>              <C>            <C>                 <C>
Year Ended
December 31, 2003
Title Insurance           $ 9,292,739              ---    $ 63,495,050         N/A
Exchange Services                 ---              ---         495,119         N/A
All Other                         ---              ---       1,375,949         N/A
                         ---------------------------------------------
                          $ 9,292,739              ---    $ 65,366,118
                         =============================================

Year Ended
December 31, 2002
Title Insurance           $ 6,871,822              ---     $ 52,772,681        N/A
Exchange Services                 ---              ---          441,386        N/A
All Other                         ---              ---        1,097,609        N/A
                         ----------------------------------------------
                          $ 6,871,822              ---     $ 54,311,676
                         ==============================================

Year Ended
December 31, 2001
Title Insurance           $ 6,786,263              ---     $ 46,769,615        N/A
Exchange Services                 ---              ---          433,810        N/A
All Other                         ---              ---        1,063,759        N/A
                         ----------------------------------------------
                          $ 6,786,263              ---     $ 48,267,184
                         ==============================================
</TABLE>

<PAGE>

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

                    INVESTORS TITLE COMPANY AND SUBSIDIARIES
                                   REINSURANCE
              For the Years Ended December 31, 2003, 2002 and 2001

<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, 2003
Title Insurance                     $84,359,310          $438,229          $ 6,231          $83,927,312             0.01%

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

YEAR ENDED
DECEMBER 31, 2001
Title Insurance                     $59,119,379          $340,228          $21,394          $58,800,545             0.04%
</TABLE>


<PAGE>

                                                                      SCHEDULE V
                                                                      ----------

                    INVESTORS TITLE COMPANY AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS
              For the Years Ended December 31, 2003, 2002 and 2001

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
                             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>
2003
Premiums Receivable
Valuation Provision          $ 1,800,000             $5,477,324                $       --        $(4,803,324)       $ 2,474,000

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


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

Reserves for
Claims                       $21,460,000             $6,871,822                $       --        $(2,701,822)       $25,630,000


2001
Premiums Receivable
Valuation Provision          $   725,000             $3,484,380                $       --        $(2,804,380)       $ 1,405,000

Reserves for
Claims                       $17,944,665             $6,786,263                $       --        $(3,270,928)       $21,460,000
</TABLE>



*Cancelled premiums and change in allowance for bad debts

*Payments of claims, net of recoveries


<PAGE>

                                INDEX TO EXHIBITS


Exhibit
Number         Description
- ------         -----------

3(i)           Articles of Incorporation dated January 22, 1973, incorporated by
               reference to Exhibit 1 to Form 10 dated June 12, 1984

3(ii)          Bylaws - Restated and Amended as of May 21, 2003

4              Rights Agreement, dated as of November 12, 2002, between
               Investors Title Company and Central Carolina Bank, a division of
               National Bank of Commerce, incorporated by reference to Exhibit 1
               to Form 8-A filed November 15, 2002

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

10(ii)         Form of Incentive Stock Option Agreement under 1993 Incentive
               Stock Option Plan, incorporated by reference to Exhibit 10(v) to
               Form 10-K for the year ended December 31, 1994

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

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

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

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

10(vii)        Form of Amendment to Incentive Stock Option Agreement between
               Investors Title Company and James Allen Fine, James Allen Fine,
               Jr., William Morris Fine, George Abbitt Snead, Ralph Nichols
               Strayhorn, III and Raeford Wilder Wall, Jr., respectively,
               incorporated by reference to Exhibit 10(xii) to Form 10-Q for the
               quarter ended June 30, 2000

10(viii)       2001 Stock Option and Restricted Stock Plan, incorporated by
               reference to Exhibit 10(xiii) to Form 10-K for the year ended
               December 31, 2000

10(ix)         Form of Employment Agreement dated November 17, 2003 with each of
               J. Allen Fine, James A. Fine, Jr. and W. Morris Fine


<PAGE>

13             Portions of 2003 Annual Report to Shareholders incorporated by
               reference in this report as set forth in Parts I, II and IV
               hereof

14             Code of Business Conduct and Ethics

21             Subsidiaries of Registrant

23             Independent Auditors Consent and Report on Schedules

31(i)          Certification of Chief Executive Officer pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002

31(ii)         Certification of Chief Financial Officer pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002

32             Certification of Chief Executive Officer and Chief Financial
               Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.(II)
<SEQUENCE>4
<FILENAME>d59105_ex3-ii.txt
<DESCRIPTION>BYLAWS - RESTATED AND AMENDED
<TEXT>
                                                                   Exhibit 3(ii)
                                                                   -------------

                                     BY-LAWS
                                       OF
                             INVESTORS TITLE COMPANY

                    RESTATED AND AMENDED THROUGH MAY 21, 2003


                                   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, then 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 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

<PAGE>

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.

            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.

<PAGE>

            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. 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

<PAGE>

exists for such removal shall be adopted by the affirmative vote of seventy-five
percent (75%) of the entire Board of Directors.

            Section 5. 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 director; 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 6. 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 7. Compensation: The Board of Directors may compensate
directors for their services.

            Section 8. 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.

            Section 9. Indemnification: Any person who at any time serves or has
served as a director of the corporation, or who, while serving as a director of
the corporation, serves or has served, at the request of the corporation, as a
director, officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or as a trustee or
administrator under an employee benefit plan, shall have a right to be
indemnified by the corporation to the fullest extent permitted by law against
(a) all expenses, including but not limited to attorneys' fees, the costs of any
investigation, experts and similar expenses incurred by him in connection with
any threatened, pending, or completed civil, criminal, administrative,
investigative, or arbitrative action, suit or proceeding (and any appeal
therein), whether or not brought by or on behalf of the corporation, seeking to
hold him liable by reason of the fact that he is or was acting in such capacity,
and (b) all payments made by him in satisfaction of any judgment, money decree,
fine (including an excise tax assessed with respect to an employee benefit
plan), penalty, or settlement for which he may have become liable in any such
action, suit or proceeding.

            The Board of Directors of the corporation shall take all such action
as may be necessary and appropriate to authorize the corporation to pay the
indemnification required by this bylaw.

            To the fullest extent from time to time permitted by law, the
Company agrees to pay as incurred all the expenses, including but not limited to
attorneys' fees and expenses of any person indemnified hereunder, incurred in
defending any action, proceeding, suit or investigation and in advance of the
final disposition of such action, proceeding, suit or investigation.

            Any person who at any time after the adoption of this bylaw serves
or has served in the aforesaid capacity for or on behalf of the corporation
shall be deemed to be doing or to have

<PAGE>

done so in reliance upon, and as consideration for, the right of indemnification
provided herein. Such right shall inure to the benefit of the legal
representatives of any such person and shall not be exclusive of any other
rights to which such person may be entitled apart from the provision of this
bylaw.


                                   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.

            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.

<PAGE>

            Section 7. 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. Chief Executive Officer: The Chief Executive Officer
shall be the principal executive and administrative 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. At
the request of the Chairman of the Board, or in case of his absence or inability
to act, the Chief Executive Officer may act in his place. He shall sign, with
any other proper officer, any deeds, 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. The Chief Executive Officer shall
perform all duties incident to his office and such other duties as may be
prescribed by the Board of Directors from time to time.

            Section 6. President: The President shall be a principal
administrative officer of the Corporation and, subject to the control of the
Chief Executive Officer, shall assist the Chief Executive Officer in supervising
and controlling the management of the Corporation in accordance with these
by-laws.

            At the request of the Chief Executive Officer, or in case of his
absence or inability to act, the President may act in his place. Furthermore, at
the request of the Chairman of the

<PAGE>

Board, or in case of the absence or inability to act of both the Chairman of the
Board and the Chief Executive Officer, the President may act in the Chairman's
place. He shall sign, with any other proper officer, certificates for shares of
the Corporation and any deeds, 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. The President shall perform all duties
incident to his office and such other duties as may be prescribed by the Board
of Directors from time to time.

            Section 7. 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, subject to the restrictions applicable to such office. In
addition, they shall perform such other duties and have such other powers as the
Board of Directors shall prescribe.

            Section 8. 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 9. 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 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 10. 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.

<PAGE>

                                   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
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.

<PAGE>

            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 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.

<PAGE>

            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
<SEQUENCE>5
<FILENAME>d59105_ex10-ix.txt
<DESCRIPTION>EXHIBIT 10.(IX)
<TEXT>
                                                                  Exhibit 10(ix)
                                                                  --------------


                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT ("Agreement") effective as of November 17, 2003
(the "Effective Date"), is between Investors Title Insurance Company, a North
Carolina corporation (the "Company"), and J. Allen Fine ("Executive").

                                    RECITALS:

      WHEREAS, Executive is presently the Chief Executive Officer of the Company
and has made and is expected to continue to make major contributions to the
profitability, growth and financial strength of the Company; and

      WHEREAS, the Company desired to secure the services of the Executive for
the future;

      NOW, THEREFORE, in consideration of the mutual covenants contained herein
the parties hereto agree as follows:

      1. Employment. The Company shall employ Executive, and Executive accepts
continued employment with the Company, upon the terms and conditions set forth
in this Agreement. The term of this Agreement shall be for a period of five (5)
years beginning on the date hereof, and shall on the first day of each calendar
month, unless either party gives written notice to the other party at least
thirty (30) days prior to such date of intent not to extend this Agreement, be
extended one (1) additional month so that at all times the term of this
Agreement shall be for a period of five (5) years unless earlier terminated as
provided in paragraph 4 hereof (the "Employment Period").

      2. Position and Duties.

      (a) During the Employment Period, Executive shall serve as the Chief
Executive Officer of the Company or in such other similar position as the
Executive and the Board shall agree upon and, subject to the management of the
business and affairs of the Company at the direction of the Board of Directors
of the Company (the "Board"), shall have the normal duties, responsibilities and
authority of an executive serving in such position.

      (b) Executive shall report to the Board.

      (c) During the Employment Period, Executive shall devote his best efforts
and his full business time and attention (except for participation in charitable
and civic endeavors and management of Executive's personal investments and
business interests, provided such activities do not have more than a de minimis
effect on Executive's performance of his duties under this Agreement) to the
business and affairs of the Company, its parent, subsidiaries and affiliates.
Executive shall perform his duties and responsibilities to the best of his
abilities in a diligent, trustworthy, businesslike and efficient manner.

<PAGE>

      (d) Executive shall perform his duties and responsibilities principally in
the Chapel Hill, North Carolina area and shall not be required to travel outside
that area any more extensively than Executive has done in the recent past in the
ordinary course of the business of the Company.

      3. Compensation and Benefits.

      (a) Salary. The Company agrees to pay Executive a salary during the
Employment Period in installments based on the Company's practices as may be in
effect from time to time. Executive's initial salary shall be at the rate of Two
Hundred Fifty-Two Thousand Dollars ($252,000) per year, as may be increased from
time to time (the "Base Salary"), provided, however, that if there is a Change
in Control (as hereafter defined), the Executive's Base Salary as then in effect
shall double effective at the time the Change in Control becomes effective.
Executive's Base Salary shall be reviewed by the Compensation Committee of the
Board (the "Compensation Committee") and shall be increased, but not decreased,
from time to time at least in an amount as shall be substantially consistent
with increases in base salary generally awarded in the ordinary course of
business to other peer executives of the Company and its affiliated companies.
As used in this Agreement, the term "affiliated companies" shall include any
company controlled by, controlling or under common control with the Company.

      (b) Bonuses. Executive will be entitled to such cash bonuses as the Board
may determine, in its sole discretion, from time to time ("Bonus Compensation").

      (c) Expense Reimbursement. The Company shall reimburse Executive for all
reasonable expenses incurred by Executive during the Employment Period in the
course of performing his duties under this Agreement that are consistent with
the Company's policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the Company's requirements
applicable generally with respect to reporting and documentation of such
expenses.

      (d) Nonqualified Executive Retirement Plan. During the Employment Period
and within ten (10) days after each calendar quarter, the Company shall make a
contribution on the Executive's behalf to a Nonqualified Executive Retirement
Plan in an amount equal to twenty-two percent (22%) of the Executive's Base
Salary and Bonus Compensation paid during such calendar quarter. If the
Employment Period is terminated, for any reason whatsoever, prior to a
contribution being made for twenty (20) calendar quarters, then in such event
the Company shall make a lump sum contribution to the plan equal to the number
of calendar quarters less than twenty (20), using as a base for determining such
amount twenty two percent (22%) of the Executive's Base Salary and Bonus
Compensation for the twelve (12) months preceding the termination of employment.

      (e) Compensation for Serving on Board. Executive shall be entitled to no
extra compensation for serving on the Company's or its affiliated companies'
Boards of Directors.

      (f) Vacation and Sick Leave. Executive shall be entitled annually to
thirty (30) days of paid vacation and to unlimited sick leave, provided the
Employment Period is subject to termination


                                       2
<PAGE>

for disability as provided under paragraph 4(b). The vacation leave shall be
cumulative; provided, however, that Executive shall not be compensated for any
unused vacation leave.

      (g) Other Benefits. Executive shall be entitled during the Employment
Period to participate, on the same basis as other executives of the Company, in
such other benefits for which substantially all of the executives of the Company
are from time to time generally eligible, as determined from time to time by the
Board.

      4. Employment Period.

      (a) The Employment Period shall continue until terminated as provided in
subsection (b) below.

      (b) The Employment Period shall end upon the first to occur of any of the
following events:

            (i) Executive's death;

            (ii) the Company's termination of Executive's employment on account
      of Executive's having become unable (as determined by the Board in good
      faith) to perform regularly Executive's duties hereunder by reason of
      illness or incapacity for a period of more than one hundred eighty (180)
      consecutive days ("Termination for Disability");

            (iii) the Company's termination of Executive's employment for Cause
      ("Termination for Cause");

            (iv) the Company's termination of Executive's employment other than
      pursuant to subsections (b)(ii) or (iii) above ("Termination without
      Cause") by means of advance written notice of at least sixty (60) days.

            (v) Executive's termination of his employment for Good Reason by
      means of advance written notice to the Company at least thirty (30) days
      prior to the effective date of such termination ("Termination by Executive
      for Good Reason");

            (vi) Executive's retirement at any time following his 70th birthday,
      upon written notice to the Company of at least six (6) months
      ("Retirement");

            (vii) Executive's termination of his employment within thirty (30)
      days following a Change in Control by written notice to the Company.

      (c) For purposes of this Agreement, "Cause" shall mean:

            (i) the Executive's conviction of, or plea of guilty or nolo
      contendere to, any crime involving dishonesty or moral turpitude;


                                       3
<PAGE>

            (ii) the commission by Executive of a fraud against the Company or
      any of its parent, subsidiaries or affiliates for which he is convicted;

            (iii) gross negligence or willful misconduct by Executive with
      respect to the Company or any of its parent, subsidiaries or affiliates
      which causes material detriment to the Company or any of its parent,
      subsidiaries or affiliates;

            (iv) the falsification or manipulation of any records of the Company
      or any of its parent, subsidiaries or affiliates;

            (v) repudiation of this Agreement by Executive or Executive's
      abandonment of employment with the Company or any of its parent,
      subsidiaries or affiliates;

            (vi) breach by Executive of any of the agreements in paragraphs 6
      and 7 hereof prior to the end of the Employment Period;

            (vii) failure or refusal of Executive to perform his duties with the
      Company or any of its parent, subsidiaries or affiliates or to implement
      or follow the policies or directions of the Board within thirty (30) days
      after a written demand for performance is delivered to Executive by the
      Board that specifically identifies the manner in which the Board believes
      that Executive has not performed his duties or failed to implement or
      follow the policies or directions of the Board.

      (d) For purposes of this Agreement,

            (i) "Good Reason" shall mean any breach by the Company of this
      Agreement that is material and that is not cured within thirty (30) days
      after written notice thereof to the Company from Executive;

            (ii) "Change in Control" shall be deemed to have occurred upon the
      occurrence of any of the following events:


                  (A) Any "person" (as such term is used in Sections 13(d) and
            14(d)(2) of the Securities Exchange Act of 1934, as amended (the
            "Exchange Act")), other than Executive or his affiliates or
            immediate family members, is or becomes the "beneficial owner" (as
            defined in Rule l3d-3 under the Exchange Act), directly or
            indirectly, of securities of the Company, or its parent, Investors
            Title Company, representing 50% or more of the combined voting power
            of the Company's or Investors Title Company's outstanding securities
            then entitled ordinarily (and apart from rights accruing under
            special circumstances) to vote for the election of directors; or


                                       4
<PAGE>

                  (B) Individuals who are "Continuing Directors" (as hereinafter
            defined) of Investors Title Company cease for any reason to
            constitute at least a majority of its Board of Directors; or

                  (C) A sale of more than 50% of the assets (measured in terms
            of monetary value) of the Company or Investors Title Company is
            consummated; or

                  (D) Any merger, consolidation, or like business combination or
            reorganization of the Company or Investors Title Company is
            consummated that results in the occurrence of any event described in
            subparagraph (A), (B) or (C) above.

            (iii) "Continuing Directors" shall mean:

                  (A) the directors of Investors Title Company in office on the
            date of this Agreement; or

                  (B) any successor to any such director (and any additional
            director) who after the date of this Agreement (i) was nominated or
            selected by a majority of the Continuing Directors in the office at
            the time of his or her nomination or selection and (ii) who is not
            an "affiliate" or "associate" (as defined in Regulation 12B under
            the Exchange Act) of any person who is the beneficial owner,
            directly or indirectly, of securities representing 50% or more of
            the combined voting power of the Company's outstanding securities
            then entitled ordinarily to vote for the election of directors.

      5. Post-Employment Period Payments.

      (a) If the Employment Period ends pursuant to paragraph 4 hereof for any
reason, Executive shall cease to have any rights to salary, options, expense
reimbursements or other benefits other than: (i) any salary which has accrued
but is unpaid and any reimbursable expenses which have been incurred but are
unpaid as of the end of the Employment Period, (ii) any option rights or plan
benefits which by their terms extend beyond termination of Executive's
employment (but only to the extent provided in any option theretofore granted to
Executive or any other benefit plan in which Executive has participated as an
employee of the Company), (iii) any benefits to which Executive is entitled
under Part 6 of Subtitle B of Title I of the Employee Retirement Income Security
Act of 1974, as amended ("COBRA"), and (iv) any other amount(s) payable pursuant
to the succeeding provisions of this paragraph 5.

      (b) If the Employment Period ends pursuant to paragraph 4 hereof on
account of Executive's death, Termination for Disability or Retirement, the
Executive or, in the event of death, his beneficiary (as identified to the
Company in writing) shall be entitled to receive the following: (i) payment of
the Executive's then current base salary for a period of three (3) years
following the termination date, payable on a monthly basis, (ii) three (3)
annual payments on the anniversary of the termination date, each in an amount
equal to the average of the Bonus Compensation paid to the


                                       5
<PAGE>

Executive during the three (3) years prior to Executive's death, Disability or
Retirement, (iii) continued participation by Executive and his spouse in the
Company's medical, dental and vision health plan, at the Company's expense,
until Executive dies or, if later, until his surviving spouse dies, (iv)
continued participation in the Company's life insurance plan until Executive
dies or becomes ineligible by reason of age, (v) continued participation by each
of Executive's dependent children in the Company's medical, dental and vision
health plan, at the Company's expense, until each child is no longer a
dependent, and (vi) immediate vesting of Executive's existing stock options.

      (c) If the Employment Period ends pursuant to paragraph 4 hereof on
account of Termination for Cause, the Company shall pay Executive an amount
equal to that amount Executive would have received as salary (based on
Executive's Base Salary then in effect) had the Employment Period remained in
effect until the later of the effective date of the Company's termination of
Executive's employment or the date thirty (30) days after the Company's notice
to Executive of such termination. The Company shall make no further payments to
Executive.

      (d) If the Employment Period ends pursuant to paragraph 4 hereof on
account of a Termination without Cause or a Termination by Executive for Good
Reason, the Executive shall be entitled to receive the following: (i) payment of
the Executive's then current Base Salary for a period of five (5) years
following the termination date, payable on a monthly basis, (ii) five (5) annual
payments on the anniversary of the termination date, each in an amount equal to
the average of the Bonus Compensation paid to the Executive during the three (3)
years prior to the termination date, (iii) a lump sum payment equal to the
present value of the amount the Company would have contributed or credited to
the Executive's retirement account and Nonqualified Executive Retirement Plan
during the first five (5) years following the termination date, (iv) continued
participation by Executive and his spouse in the Company's medical, dental and
vision health plan, at the Company's expense, until Executive dies or, if later,
until his surviving spouse dies, (v) continued participation by each of
Executive's dependent children in the Company's medical, dental and vision
health plan, at the Company's expense, until each child is no longer a
dependent, (vi) immediate vesting of Executive's existing stock options, and
(vii) continued participation in the Company's life insurance plan until
Executive dies or becomes ineligible by reason of age.

      (e) If the Executive terminates his employment because of a Change in
Control, the Executive shall be entitled to receive the following: (i) a lump
sum payment equal to 2.99 times the sum of the Executive's then current Base
Salary, (ii) a lump sum payment equal to 2.99 times the amount equal to the
average of the Bonus Compensation paid to the Executive during the three (3)
years prior to the termination date, (iii) continued participation by Executive
and his spouse in the Company's medical, dental and vision health plan, at the
Company's expense, until Executive dies or, if later, until his surviving spouse
dies, (iv) continued participation by each of Executive's dependent children in
the Company's medical, dental and vision health plan, at the Company's expense,
until each child is no longer a dependent, (v) immediate vesting of Executive's
existing stock options, and (iv) continued participation in the Company's life
insurance plan until Executive dies or becomes ineligible by reason of age. Upon
entitlement, all sums due hereunder will be payable in cash or by official bank
check within thirty (30) days following termination of the Executive's
employment. Notwithstanding anything to the contrary contained herein, in the
event that any portion of the payments or benefits received or to be received by
the Executive, together with


                                       6
<PAGE>

any other payments received by him, whether paid or payable pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the
Company or any other person or entity, would cause, either directly or
indirectly, an "excess parachute payment" to exist within the meaning of said
Section 280G of the Internal Revenue Code, the payments hereunder shall be
reduced until no portion of the payments would fail to be deductible by reason
of being an "excess parachute payment". In the event that any dispute arises as
to whether an "excess parachute payment" exists, the appropriate calculations
shall be made by the Company's regularly employed independent public auditors
and delivered to the Executive in writing within thirty (30) days following the
date for payment of such severance payment, and the Company will warrant to the
Executive the accuracy of the calculations and the information on which they are
based.

      (f) Executive shall not be required to mitigate the amount of any payment
or benefit provided for in this Agreement by seeking other employment or
otherwise.

      6. Confidential Information. Executive acknowledges that the information,
observations and data obtained by Executive while employed by the Company
pursuant to this Agreement, as well as those obtained by Executive while
employed by the Company or any of its subsidiaries or affiliates or any
predecessor thereof prior to the date of this Agreement, concerning the business
or affairs of the Company or any of its subsidiaries or affiliates or any
predecessor thereof (unless and except to the extent the foregoing become
generally known to and available for use by the public other than as a result of
Executive's acts or omissions to act, "Confidential Information") are the
property of the Company or such parent, subsidiary or affiliate. Therefore,
Executive agrees that during the Employment Period and thereafter Executive
shall not disclose any Confidential Information without the prior written
consent of the Board unless and except to the extent that such disclosure is (i)
made in the ordinary course of Executive's performance of Executive's duties
under this Agreement or (ii) required by any subpoena or other legal process (in
which event Executive will give the Company prompt notice of such subpoena or
other legal process in order to permit the Company to seek appropriate
protective orders), and that Executive shall not use any Confidential
Information for Executive's own account without the prior written consent of the
Board. Executive shall deliver to the Company at the termination of the
Employment Period, or at any other time the Company may reasonably request, all
memoranda, notes, plans, records, reports, computer tapes and software and other
documents and data (and copies thereof) relating to the Confidential
Information, or to the work product or the business of the Company or any of its
parent, subsidiaries or affiliates that Executive may then possess or have under
his control.

      7. Noncompetition; Nonsolicitation.

      (a) Executive acknowledges that in the course of his employment with the
Company pursuant to this Agreement, Executive will become familiar, and during
the course of Executive's employment by the Company or any of its parent,
subsidiaries or affiliates or any predecessor thereof prior to the date of this
Agreement, Executive has become familiar with trade secrets and customer lists
of and other confidential information concerning the Company and its parent,
subsidiaries and affiliates and predecessors thereof and that Executive's
services have been and will be of special, unique and extraordinary value to the
Company.


                                       7
<PAGE>

      (b) Executive agrees that during the Employment Period and, as a condition
to the receipt of payments as provided under paragraph 4, for a period of two
(2) years after termination of Executive's employment with the Company, in the
State of North Carolina Executive shall not in any manner, directly or
indirectly, through any person, firm or corporation, alone or as a member of a
partnership or as an officer, director, shareholder, investor or employee of or
in any other corporation or enterprise or otherwise, engage or be engaged in, or
assist any other person, firm, corporation or enterprise in engaging or being
engaged in, any business then actively being conducted by the Company or any of
its parent, subsidiaries or affiliates.

      (c) Executive further agrees that, during the Employment Period and, as a
condition to the receipt of payments as provided under paragraph 4, for a period
of two (2) years after termination of Executive's employment with the Company,
Executive shall not in any manner, directly or indirectly, induce or attempt to
induce any employee of the Company or of any of its parent, subsidiaries or
affiliates (other than his spouse, if applicable) to quit or abandon his or her
employ.

      (d) Nothing in this paragraph 7 shall prohibit Executive from being: (1) a
shareholder in a mutual fund or a diversified investment company or (ii) a
passive owner of not more than 5% of the outstanding equity securities of any
class of a corporation or other entity which is publicly traded, so long as
Executive has no active participation in the business of such corporation or
other entity.

      (e) In the event Executive violates any legally enforceable provision of
this Agreement as to which there is a specific time period during which
Executive is prohibited from taking certain actions or from engaging in certain
activities, as set forth in this Agreement, then, in such event, the violation
shall toll the running of such time period from the date of such violation until
the violation ceases.

      (f) Executive acknowledges that he has carefully considered the nature and
extent of the restrictions on him and the rights and remedies conferred on the
Company under this Agreement. Executive further acknowledges and agrees that the
same are reasonable in time and territory, are designed to eliminate competition
which would otherwise be unfair to the Company, do not stifle Executive's
inherent skill and experience, would not operate as a bar to Executive's sole
means of support, are fully required to protect the legitimate interests of the
Company and do not confer a benefit upon the Company disproportionate to
Executive's detriment.

      (g) If, at the time of enforcement of this paragraph, a court holds that
the restrictions stated herein are unreasonable under circumstances then
existing, the parties hereto agree that the maximum period, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or area and that the court shall be allowed to revise
the restrictions contained herein to cover the maximum period, scope and area
permitted by law.

      8. Enforcement. Because Executive's services are unique and because
Executive has access to Confidential Information and work product, the parties
hereto agree that the Company would be damaged irreparably in the event any of
the provisions of paragraph 7 hereof were not performed in accordance with their
specific terms or were otherwise breached and that money damages would be an
inadequate remedy for any such non-performance or breach. Therefore, the


                                       8
<PAGE>

Company or its successors or assigns shall be entitled, in addition to other
rights and remedies existing in their favor, to an injunction or injunctions to
prevent any breach or threatened breach of any of such provisions and to enforce
such provisions specifically (without posting a bond or other security).

      9. Consulting and Advice. During the time period that the Executive
receives post-employment payments under paragraph 5, other than by reason of
death or disability, the Executive agrees that when and as requested, he will
consult with the Company concerning policies, procedures and operations. The
requests by the Company for consultation shall be at reasonable times, with
appropriate notice, not more frequent than three (3) times a month, and may, at
Employee's election, be through telephone communication.

      10. Survival. Subject to any limits on applicability contained therein,
paragraphs 5, 6, 7 and 9 hereof shall survive and continue in full force in
accordance with their terms notwithstanding any termination of the Employment
Period.

      11. Notices. Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered, sent by reputable overnight carrier or
mailed by first class mail, return receipt requested. Any notice to Executive
will be delivered to the last home address on file with the Company and any
notice to the Company should be delivered to:

      Investors Title Insurance Company
      Attention: Secretary
      P. O. Drawer 2687
      Chapel Hill, NC 27515-2687

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered,
sent or mailed.

      12. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

      13. Complete Agreement. This Agreement embodies the complete agreement and
understanding between the parties with respect to the subject matter hereof and
effective as of its date supersedes and preempts any prior understandings,
agreements or representations by or between the parties, written or oral, which
may have related to the subject matter hereof in any way.


                                       9
<PAGE>

      14. Counterparts. This Agreement may be executed in separate counterparts,
each of which shall be deemed to be an original and both of which taken together
shall constitute one and the same agreement.

      15. Successors and Assigns. This Agreement shall bind and inure to the
benefit of and be enforceable by Executive, the Company and their respective
heirs, executors, personal representatives, successors and assigns, except that
neither party may assign any rights or delegate any obligations hereunder
without the prior written consent of the other party. Executive hereby consents
to the assignment by the Company of all of its rights and obligations hereunder
to any successor to the Company by merger or consolidation or purchase of all or
substantially all of the Company's assets, provided such transferee or successor
assumes the liabilities of the Company hereunder.

      16. Choice of Law. This Agreement shall be governed by the internal law,
and not the laws of conflicts, of the State of North Carolina.

      17. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.

      18. Mediation. If a dispute arises out of or relates to this Agreement, or
the breach thereof, and if the dispute cannot be settled through negotiation,
the parties agree to submit such controversy to mediation for resolution. The
parties may use the procedures set forth in the North Carolina General Statutes'
Rules Implementing Court Ordered Mediated Settlement Conferences, where and if
applicable. Provided, however, if any controversy between the parties is not
resolved by mediation within sixty (60) days after the date the controversy has
arisen (hereinafter "controversy date"), the parties shall settle such
controversy by arbitration in accordance with the terms of the Uniform
Arbitration Act, currently codified in North Carolina General Statute, Article
45A, ss.1-567.1, et seq., or any successor statutes thereto, and as provided in
Section 19 below.

      19. Arbitration. Any dispute or controversy arising under this Agreement
which is not resolved by mediation pursuant to Section 18 shall be determined
and settled by an independent disinterested person agreed upon by the parties to
the dispute. If the parties are unable to mutually agree upon an independent
arbitrator within thirty (30) days, then each party shall appoint an independent
arbitrator within thirty (30) days, and the said two (2) independent arbitrators
shall appoint a third independent arbitrator within thirty (30) days, and the
three (3) independent arbitrators will resolve the dispute in controversy by
majority vote in accordance with the terms of the Uniform Arbitration Act
currently codified in North Carolina General Statute, Article 45A, ss.1-567.1,
et seq. or any successor statutes. The expenses of arbitration shall be shared
equally by each party hereto, except that each party will pay the costs of his
own legal counsel and all other incidental expenses. The parties hereto agree to
be bound by the results of the arbitration. The place of arbitration shall be
Orange County, North Carolina.


                                       10
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date written below.

                                            INVESTORS TITLE INSURANCE COMPANY

                                            By:_________________________________

                                            Its  _______________________________

                                            Date:_____________________


                                            J. ALLEN FINE

                                            ____________________________________

                                            Date:_____________________



                                       11

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>6
<FILENAME>d59105_ex13.txt
<DESCRIPTION>ANNUAL REPORT
<TEXT>
                                   Exhibit 13

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 high and low sales prices reported on the NASDAQ National Market
System.

                                      2003                      2002
- --------------------------------------------------------------------------------
                                High         Low         High          Low
First Quarter                 $24.19       $18.00       $19.92       $15.24
Second Quarter                $31.00       $20.50       $20.90       $18.30
Third Quarter                 $31.50       $24.30       $20.20       $17.60
Fourth Quarter                $31.17       $29.55       $22.96       $17.67

The Company paid cash dividends of $.03 per share in each of the four quarters
during 2003 and 2002.

Market Makers for 2003

Davenport & Co. LLC
Knight Equity Markets LP
The Archipelago Exchange
Schwab Capital Markets
Alternate Display Facility
Goldman Sachs & Company
Boston Stock Exchange
The Brut ECN, LLC
Pacific American Securities

<TABLE>
<CAPTION>
Financial Highlights
For the Year                             2003             2002           2001             2000           1999
- --------------------------------------------------------------------------------------------------------------------
<S>                                   <C>            <C>              <C>             <C>            <C>
Net premiums written                 $ 83,927,312    $67,298,617      $58,800,545     $37,740,752    $43,819,565
Revenues                               90,829,871     72,852,340       63,792,445      42,279,768     47,366,559
Investment income                       2,691,687      2,806,808        2,740,280       2,528,143      2,175,671
Net income                             10,965,014      8,108,842        6,008,998       3,140,463      4,420,394
Per Share Data
- --------------------------------------------------------------------------------------------------------------------
Basic earnings per common share      $       4.38    $      3.22      $      2.35     $      1.21    $      1.59
Weighted average shares
  outstanding--Basic                    2,503,659      2,517,328        2,554,204       2,594,891      2,776,878
Diluted earnings per
  common share                       $       4.18    $      3.12      $      2.31     $      1.21    $      1.59
Weighted average shares
  outstanding--Diluted                  2,624,473      2,597,979        2,599,714       2,601,283      2,786,282
Cash dividends per share             $        .12    $       .12      $       .12     $       .12    $       .12
At Year End
- --------------------------------------------------------------------------------------------------------------------
Assets                               $100,471,811    $84,637,146      $70,219,700     $59,339,007    $55,156,564
Investments in securities              79,842,183     65,336,439       53,471,697      45,229,576     41,066,864
Stockholders' equity                   63,188,746     52,668,184       44,271,768      39,189,649     37,501,740
Book value/share                            25.24          20.93            17.59           15.27          13.70
Performance Ratios
- --------------------------------------------------------------------------------------------------------------------
Net income to:
  Average stockholders' equity              18.93%         16.73%           14.40%           8.19%         11.97%
  Total revenues (profit margin             12.07%         11.13%            9.42%           7.43%          9.33%
</TABLE>


<PAGE>

Investors Title Company and Subsidiaries

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 notes in this report.

Overview

     Title Insurance: Investors Title Company (the "Company") engages primarily
in two segments of business. Its main business activity is the issuance of title
insurance through two subsidiaries, Investors Title Insurance Company ("ITIC")
and Northeast Investors Title Insurance Company ("NE-ITIC"). Through ITIC and
NE-ITIC, the Company underwrites land title insurance for owners and mortgagees
as a primary insurer and as a reinsurer for other title insurance companies.
Title insurance protects against loss or damage resulting from defects that
affect the title to real property. The commitment and policies issued are the
standard American Land Title Association approved forms.

     There are two basic types of title insurance policies - one for the
mortgage lender and one for the real estate owner. A lender often requires
property owners to purchase title insurance to protect its position as a holder
of a mortgage loan, but the lender's title insurance policy does not protect the
property owner. The property owner has to purchase a separate owner's title
insurance policy to protect his investment. When real property is conveyed from
one party to another, occasionally there is a hidden defect in the title or a
mistake in a prior deed, will or mortgage that may give a third party a legal
claim against such property. If a claim is made against real property, title
insurance provides a corporate guarantee against insured defects, pays all legal
expenses to eliminate any title defects, pays any claims arising from errors in
title examination and recording, and pays any losses arising from hidden defects
in title and defects that are not of record. Title insurance provides an
assurance that the insurance holder's ownership and use of such property will be
defended promptly against claims, at no cost, whether or not the claim is valid.

      The Company's profitability in the land title insurance industry is
affected by a number of factors, including the cost and availability of mortgage
funds, the level of real estate and mortgage refinance activity, the cost of
real estate, employment levels, family income levels and general economic
conditions. Generally, real estate activity declines as a result of higher
interest rates or an economic downturn, thus leading to a corresponding decline
in title insurance premiums written and the revenues and profitability of the
Company. The cyclical nature of the land title insurance industry has
historically caused fluctuations in revenues and profitability and it is
expected to continue to do so in the future.

     Volume is also a key factor in the Company's profitability because the
Company has certain significant fixed costs such as personnel and occupancy
expenses associated with processing and issuing a title insurance policy. These
costs do not necessarily increase or decrease depending on the size and type of
the policy issued. Title insurance premiums are based on the face amount of the
policy; therefore, the Company typically makes a larger profit on policies with
a high face amount because, while the premium received from the policy
increases, the cost to issue the policy does not increase substantially.
Similarly, the cancellation of a policy order often negatively impacts the
Company's profitability since the fixed costs associated with processing the
policy are not offset by the receipt of a premium.

     Management is faced with the challenge of responding to revenue reductions
that are expected to occur in 2004 due to the anticipated continued decline in
refinancing activity. Operating results for the years ended 2002 and 2003,
therefore, should not be viewed as indicative of the Company's future operating
results. As always, the Company has been monitoring and carefully managing
operating expenses such as salaries, employees benefits and other operational
expenses in light of the expected decline in title insurance revenues.

     Exchange Services: The Company's second segment provides tax-free exchange
services through its subsidiaries, Investors Title Exchange Corporation ("ITEC")
and Investors Title Accommodation Corporation ("ITAC"). ITEC serves as a
qualified intermediary in ss.1031 like-kind exchanges of real or personal
property. In its role as qualified intermediary, ITEC coordinates the exchange
aspects of the real estate transaction with the closing agents. ITEC's duties
include drafting standard exchange documents, holding the exchange funds between
the sale of the old property and the purchase of the new property, and accepting
the formal identification of the replacement property within the required
identification period. ITAC serves as exchange accommodation titleholder in
reverse exchanges. As exchange accommodation titleholder, ITAC offers a vehicle
for accommodating a reverse exchange when the taxpayer must acquire replacement
property before selling the relinquished property.

     Factors that influence the title insurance industry will also generally
affect the exchange services industry.

     New Services: In 2003, the Company formed two new subsidiaries, Investors
Title Commercial Agency, LLC ("ITCA") and Investors Capital Management Company
("ICMC"), to supplement its traditional lines of business. ITCA will primarily
underwrite large commercial title insurance policies, thus providing the Company
with another vehicle for expanding its presence in the title insurance industry.
In conjunction with Investors Trust Company, which was chartered on February 17,
2004, ICMC will provide investment management and trust services to individuals,
companies, banks and trusts.

     Operating Results: In the first quarter of 2003, operating results
continued to be driven by low interest rates and ongoing strength in mortgage
lending. In response to lower interest rates, applications for mortgage
refinancing surged to unprecedented levels in the second quarter.


<PAGE>

The third quarter of 2003 saw mortgage interest rates increase, causing a
reduction in the demand for mortgage refinancing. In the fourth quarter, net
income and revenue were most significantly impacted by the dramatic decrease in
mortgage refinance volume from the levels set mid-year. Interest rates rose off
the lows set earlier in the year and refinance activity declined approximately
75% from the record pace of originations in the second quarter. Mortgage rates
remained historically low, however, and transaction activity in the residential
and commercial real estate markets remained generally healthy throughout 2003.
According to data published by Freddie Mac, the annual average thirty-year fixed
mortgage interest rates were reported to be 5.83%, 6.54% and 6.97% in 2003, 2002
and 2001, respectively.

     During 2003, the quarterly average thirty-year fixed mortgage interest
rates were 5.84%, 5.51%, 6.01% and 5.92% for the first, second, third and fourth
quarters, respectively. Low interest rates led to the increased affordability of
new and existing homes, setting new annual transaction records. Total
refinancing volume for 2003 was approximately $2.5 trillion, which was $1,050
billion more than the preceding year according to the Mortgage Bankers
Association of America. The level of mortgage refinancing and the number of
existing home sales are principal drivers of the Company's premiums written each
year.

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" and "A." NE-ITIC's financial stability also has been recognized
by Demotech, Inc. and LACE Financial Corporation with rating categories of "A
Prime" and "A+." According to Demotech, title insurance underwriters earning a
financial stability rating of A" (A Double Prime) or A' (A Prime) possess
unsurpassed financial stability related to maintaining positive surplus as
regards policyholders, regardless of the severity of a general economic downturn
or deterioration in the title insurance cycle. A LACE rating of "A+" or "A"
indicates that a title insurance company has a strong overall financial
condition that will allow it to meet its future claims and that, generally, the
company has good operating earnings, is well capitalized and has adequate
reserves. Since ITIC's and NE-ITIC's ratings are either at the highest rank or
next-to-highest rank, any increase in such ratings would have a negligible
impact on the business or finances of the Company. A significant decline in
these ratings may, among other things, lead to a decrease in the Company's stock
price, the loss of certain licenses ITIC and NE-ITIC need to operate as title
insurance companies in various states and the Company's ability to maintain
strong relationships with its customers and agents.

Results of Operations

Operating Revenues

     Operating revenues include premiums written and reinsurance assumed, net of
reinsurance ceded (net premiums written) plus fee income as well as gains and
losses on the disposal of fixed assets. Investment income is not included in
operating revenues for the purpose of this summary schedule. A summary by
segment of the Company's operating revenues is as follows:

<TABLE>
<CAPTION>
                                              2003                            2002                     2001
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>            <C>             <C>         <C>             <C>
Title insurance                      $85,505,899      97.3%         $68,144,235      97.7%      $59,135,041      96.9%
Exchange services                      1,245,234       1.4%             947,426       1.3%        1,018,353       1.7%
All other                              1,128,333       1.3%             674,570       1.0%          886,998       1.4%
- ----------------------------------------------------------------------------------------------------------------------------

                                     $87,879,466       100%         $69,766,231       100%      $61,040,392       100%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

Title Insurance

     Net Premiums: Net premiums written increased 24.7% in 2003 over 2002 and
14.5% in 2002 over 2001. The increase in premiums from 2002 to 2003 was due to
continued low mortgage interest rates, which led to continued strength in the
refinance market as well as expansion through agents into new markets and
greater penetration in existing markets. The increase in premiums in 2002 from
2001 resulted primarily from declining mortgage interest rates, which continued
to fuel mortgage refinance activity.

<PAGE>

     Shown below is a schedule of net premiums written for 2003, 2002 and 2001
in all states where Investors Title Insurance Company and Northeast Investors
Title Insurance Company currently underwrite title insurance:

State                       2003          2002          2001
- ----------------------------------------------------------------

Alabama                  $ 1,286,681   $ 654,345     $ 89,973
Arkansas                      21,523      58,455           --
District of Columbia           9,735       2,441           --
Florida                      392,602       1,745       10,530
Georgia                      135,226     125,580      315,776
Illinois                   1,219,212      57,758           --
Indiana                      320,191     296,471       13,157
Iowa                              --          --       31,770
Kentucky                   1,800,258   1,282,772      131,089
Louisiana                      2,786          --           --
Maryland                   1,707,678   1,428,140    1,029,820
Michigan                   7,230,906   9,492,665   11,896,021
Minnesota                  2,186,522   1,180,153    1,342,010
Mississippi                1,092,772   1,011,538      160,952
Missouri                     136,091          --           --
Nebraska                   1,777,174   1,348,139    1,250,365
New Jersey                    61,267      46,901           --
New York                   5,605,642   3,911,191    3,355,979
North Carolina            31,102,294  24,112,712   21,165,888
Ohio                         107,129      48,264       55,595
Pennsylvania               5,838,436   4,462,864    3,532,628
South Carolina             7,512,259   5,638,718    4,043,461
Tennessee                  3,686,677   3,239,109    2,504,488
Virginia                   9,101,185   7,577,229    6,846,847
West Virginia              2,025,557   1,638,306    1,314,724
Wisconsin                       (493)     10,776       28,306
- ----------------------------------------------------------------

  Direct Premiums         84,359,310  67,626,272   59,119,379
Reinsurance Assumed            6,231      20,740       21,394
Reinsurance Ceded           (438,229)   (348,395)    (340,228)
- ----------------------------------------------------------------

Net Premiums Written     $83,927,312 $67,298,617  $58,800,545
- ----------------------------------------------------------------


     ITIC delivers title insurance coverage through a home office, branch
offices, and issuing agents. In North Carolina, ITIC operates through a home
office and 27 branch offices. In South Carolina and Michigan, ITIC operates
through a branch office and issuing agents located conveniently to customers
throughout the state. ITIC also writes title insurance policies through issuing
agents in the District of Columbia and the States of Alabama, Arkansas, Florida,
Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Minnesota,
Mississippi, Missouri, Nebraska, New Jersey, North Carolina, Ohio, Pennsylvania,
Tennessee, Virginia, West Virginia and Wisconsin. NE-ITIC currently operates
through agents in the State of New York.

     Branch Office Net Premiums: Branch office net premiums written as a
percentage of total net premiums written were 37%, 36% and 36.1% in 2003, 2002
and 2001, respectively. Net premiums written from branch operations increased
28.2% in 2003 compared with 2002 and increased 14.2% in 2002 compared with 2001.
Of the Company's twenty-nine branch locations that underwrite title insurance
policies, twenty-seven are located in North Carolina and, as a result, branch
net premiums written primarily represent North Carolina business.

     Agency Net Premiums: Agency net premiums written as a percentage of total
net premiums written were 63%, 64% and 63.9% in 2003, 2002 and 2001,
respectively. Net premiums written from agency operations increased 22.7% in
2003 compared with 2002 and increased 14.6% in 2002 compared with 2001. In
addition to the favorable mortgage interest rate environment, the increase in
agency premiums is a reflection of a full year of operations in 2003 for several
agents of ITIC that commenced operations in the latter part of 2002. The
Company's agent development program has also contributed to the continuing
increases shown above, as new agencies were opened in Kentucky and North
Carolina and existing agents expanded their territory with the Company's
assistance. For the years ended December 31, 2003 and 2002, premiums written in
Michigan declined due to a decrease in the number of Michigan issuing agents.


<PAGE>

     Policies and Commitments: 397,638 policies and commitments were issued in
2003, which is an increase of 22% compared with 325,918 policies and commitments
issued in 2002. In 2002, the number of policies and commitments issued increased
by 11.5% compared with 292,328 issued in 2001.

Exchange Services

     Operating revenues from the Company's two subsidiaries that provide
tax-free exchange services (ITEC and ITAC) increased 31.4% from 2002 to 2003 and
decreased 7% from 2001 to 2002. The increase from 2002 to 2003 was primarily due
to increased demand for qualified intermediary services and an increase in the
average fee per transaction, and can also be attributed to more favorable
economic conditions and lower mortgage interest rates. Decreases in interest
income resulting from lower interest rates contributed to the reduction in 2002
operating revenues compared with 2001.

Seasonality

Title Insurance

     Title insurance premiums are closely related to the level of real estate
activity and the average price of real estate sales. The availability of funds
to finance purchases directly affects real estate sales. Other factors include
consumer confidence, economic conditions, supply and demand, mortgage interest
rates and family income levels. Historically, the first quarter has the least
real estate activity because fewer real estate transactions occur, while the
remaining quarters are more active. Refinance activity is generally less
seasonal, but it is subject to interest rate volatility. Fluctuations in
mortgage interest rates can cause shifts in real estate activity outside of the
normal seasonal pattern.

Exchange Services

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

Investment Income

     Investments are an integral part of the Company's business because the
Company's title insurance subsidiaries are required by statute to maintain
minimum levels of investments in order to protect the interests of
policyholders. 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 decreased 4.1% from 2002 to 2003 and increased 2.4% from
2001 to 2002. The decrease in 2003 was primarily due to the decline in interest
rates. The increase in 2002 was primarily attributable to an increase in the
average investment portfolio balance.

Expenses

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

<TABLE>
<CAPTION>
                                              2003                            2002                     2001
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>            <C>             <C>         <C>             <C>
Title insurance                      $72,787,789      97.5%         $59,644,502      97.5%      $53,555,878      97.3%
Exchange services                        495,119        .7%             441,386        .7%          433,811        .8%
All other                              1,375,949       1.8%           1,097,610       1.8%        1,063,758       1.9%
- ----------------------------------------------------------------------------------------------------------------------------

                                     $74,658,857       100%         $61,183,498       100%      $55,053,447       100%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

     On a combined basis, profit margins were 12.1%, 11.1% and 9.4% in 2003,
2002 and 2001, respectively. The increase of 24.7% in net premiums written
coupled with a smaller increase of only 22% in operating expenses contributed to
the increase in profit margins for 2003. Due to the fixed nature of certain
operating expenses and the increase in premium volume, profit margins improved
in 2003 and 2002.

Title Insurance

     Profit Margins: Profit margins for the title insurance segment were 11.7%,
10.8% and 8.8% in 2003, 2002 and 2001, respectively. The increase in premiums
written contributed to the improvements in the profit margin for 2003 and 2002.
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.


<PAGE>

     Commissions: Commissions increased 22.2% from 2002 to 2003 and increased
14% from 2001 to 2002 primarily due to increased premiums from agency
operations. Commission expense as a percentage of net premiums written by agents
was 74%, 74.3% and 74.7% for 2003, 2002 and 2001, respectively. Commission rates
vary geographically and may be influenced by state regulations.

     Provisions for Claims: The provision for claims as a percentage of net
premiums written was 11.1%, 10.2% and 11.5% in 2003, 2002 and 2001,
respectively. Loss provision rates are subject to variability and are reviewed
and adjusted as experience develops. The provision reflects actual payments of
claims, net of recovery amounts, plus adjustments to the specific and incurred
but not reported claims reserves, the latter of which are actuarially determined
based on historical claims experience. Payments of claims, net of recoveries,
were $4,891,739, $2,701,822 and $3,270,928 in 2003, 2002 and 2001, respectively.
Claims payments increased in 2003 generally due to the increase in policies
written. The lower amount of claims payments in 2002, when compared with 2003
and 2001, can be attributed to timing issues.

     Reserves for Claims: The Company has continued to strengthen its reserves
for claims. At December 31, 2003, the total reserves for claims were
$30,031,000. Of that total, $3,861,651 was reserved for specific claims, and
$26,169,349 was reserved for claims for which the Company had no notice. Because
of the uncertainty of future claims, changes in economic conditions, and the
fact that many claims do not materialize for several years, reserve estimates
are subject to variability. Declining economic conditions may result in an
increase in mechanics liens and defalcations, thus increasing the Company's
claims expenses. Management analyzes historical claims experience, mix of
business, geographic considerations, industry averages, and current economic
conditions in establishing loss provision rates. Claims reserves are reviewed as
to their reasonableness by independent actuaries annually. The Company's claims
reserves are consistent with the independent actuary's claims reserves.
Actuarial projections are compared with recorded reserves and any necessary
adjustments are included in current operations. There are no known claims that
are expected to have a materially adverse effect on the Company's financial
position or operating results.

     Salaries and Employee Benefits: On a consolidated basis, salaries and
employee benefits as a percentage of net premiums written were 18.6%, 18.7% and
18.3% in 2003, 2002 and 2001, respectively. The title insurance segment's total
salaries and employee benefits accounted for 93%, 93.5% and 92.8% of total
salaries for 2003, 2002 and 2001, respectively.

     Office Occupancy and Operations: Overall office occupancy and operations as
a percentage of net premiums was 6.1%, 7.1% and 8.4% in 2003, 2002 and 2001,
respectively. The decline in office occupancy and operations as a percentage of
net premiums written during 2003 and 2002 was partially due to a decrease in
depreciation expense of approximately $555,000 and $450,000, respectively,
compared with 2001 due to utilizing certain EDP equipment beyond their
depreciable lives. The title insurance segment's total office occupancy and
operations accounted for 93.7%, 92.9% and 95.2% in 2003, 2002 and 2001,
respectively.

     Premium and Retaliatory Taxes: Title insurance companies are generally not
subject to state income or franchise taxes. However, in most states they are
subject to premium and retaliatory taxes. Premium and retaliatory taxes as a
percentage of premiums written were 1.99%, 2.04% and 2.11% for the years ended
December 31, 2003, 2002 and 2001, respectively.

Exchange Services

     The exchange services segment's total operating expenses as a percentage of
the Company's total expenses were .7%, .7%, and .8% for 2003, 2002 and 2001,
respectively.


Income Taxes

     The provision for income taxes was 32.2%, 30.5% and 31.2% of income before
income taxes for the years ended December 31, 2003, 2002 and 2001, respectively.
The increase in the effective rate for the year ended December 31, 2003 was
primarily due to an increase in taxable income, which placed the Company in a
higher tax bracket, and a change in the ratio of tax-exempt investment income to
taxable income. Information regarding the components of the income tax expense
can be found in Note 8 to the Consolidated Financial Statements.

Net Income

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

<TABLE>
<CAPTION>
                                              2003                            2002                     2001
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>            <C>             <C>         <C>             <C>
Title insurance                      $10,320,860      94.1%         $7,706,961       95.0%      $5,429,494       90.3%
Exchange services                        462,933       4.2%            317,154        3.9%         370,787        6.2%
All other                                181,221       1.7%             84,727        1.1%         208,717        3.5%
- ----------------------------------------------------------------------------------------------------------------------------

                                     $10,965,014       100%         $8,108,842        100%      $6,008,998        100%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

     On a consolidated basis, the Company reported an increase in net income of
35.2% and 34.9% in 2003 and 2002, respectively. As in the prior year, the
increase in 2003 was primarily attributable to increased premium volume and
improved operating efficiencies associated with technology enhancements and
expense control procedures.

Title Insurance

     Net income for the title insurance segment increased 33.9% from 2002 to
2003 and increased 41.9% from 2001 to 2002. As in the prior year, the increase
in 2003 was primarily attributable to increased premium volume that resulted
from expanding markets through agents and greater penetration of existing
agents, as well as another year of reduced mortgage interest rates.

Exchange Services

     The exchange services segment saw a net income increase of 46% from 2002 to
2003 and a decrease of 14.5% from 2001 to 2002. Net income increased in 2003
primarily due to an increase in the volume of exchange transactions and an
increase in the average fee per exchange. A decrease in the average fee per
exchange, coupled with an increase in operating expenses (primarily related to
salaries and employee benefits), contributed to the reduction in 2002 net income
compared with 2001.


Related Party Transactions

     In November 2003, Investors Title Insurance Company ("ITIC"), a wholly
owned subsidiary of the Company, entered into employment agreements with the
Chief Executive Officer, Chief Financial Officer and the Chief Operating Officer
of ITIC. These individuals also serve as the Chief Executive Officer, President
and Executive Vice President, respectively, of the Company. The agreements
provide compensation and life, health, dental and vision benefits upon the
occurrence of specific events, including death, disability, retirement,
termination without cause or change in control. The agreements provide for
annual salaries to be fixed by the Board of Directors of ITIC and, among other
benefits, ITIC shall make quarterly contributions pursuant to a supplemental
executive retirement plan on behalf of each executive. The agreements also
prohibit each of these executives from competing with ITIC and its parent,
subsidiaries and affiliates in the State of North Carolina while employed by
ITIC and for a period of four years following termination of their employment.
The amount accrued for these plans at December 31, 2003 was $452,000 and was
calculated based on the terms of the contract.


Liquidity and Capital Resources

     Cash Flows : Cash flows provided by operating activities were $16,751,579,
$12,347,334 and $8,785,176 in 2003, 2002 and 2001, respectively. The increase in
2003 is primarily the result of the increase in net income and the accelerated
collection of accounts receivable compared with 2002.

     Payment of Dividends: As of December 31, 2003 and 2002, approximately
$53,477,000 and $46,730,000, respectively, of the consolidated stockholders'
equity represented 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
Company's ability to pay dividends and operating expenses is dependent on funds
received from the insurance subsidiaries, which are subject to regulation in the
states in which they do business. These regulations, among other things, require
prior regulatory approval of the payment of dividends and other intercompany
transfers. The Company believes, however, that amounts available for transfer
from the insurance subsidiaries are adequate to meet the Company's operating
needs.

     Purchase of Company Stock: On May 11, 1999, the Board of Directors of ITIC
approved ITIC's purchase of 200,000 shares of the Company's common stock.
Pursuant to this approval, ITIC purchased 200,000 shares at an average price of
$12.50 per share, including 25,766 shares purchased at an average purchase price
of $14.73 during 2001.

     On June 5, 2000, the Board of Directors of ITIC approved ITIC's purchase of
500,000 shares of the Company's common stock. Pursuant to this approval, ITIC
purchased 41,175 shares in the twelve months ended December 31, 2003, 19,134
shares in the twelve months ended December 31, 2002 and 32,184 shares in the
twelve months ended December 31, 2001 at an average per share price of $23.96,
$18.81 and $14.75, respectively.

     During the twelve months ended December 31, 2003, ITIC purchased common
stock for $986,479 and transferred common stock totaling $465,759 in
satisfaction of stock option exercises, stock bonuses and other stock transfers.
In 2003, retained earnings had a net increase of $10,143,883, after purchases
and issuances of common stock for compensation and options exercised reduced
retained earnings by $520,720.

     Liquidity: 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 or occurrence
that is 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.

     Capital Expenditures: During 2004, the Company has plans for various
capital improvement projects, including an upgrade of certain electronic data
processing systems. The Company anticipates capital expenditures in excess of
$500,000 in connection with these projects.

<PAGE>

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.

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 rebalance its existing asset portfolios or change the character of future
investments from time to time to manage its exposure to market risk within
defined tolerance ranges.

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, 2003, the Company
had approximately $65 million in fixed rate bonds and redeemable preferred
stocks. 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
$2.4 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,
2003, the Company had approximately $13.6 million in nonredeemable preferred and
common stocks. 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
$756,000. 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.


Critical Accounting Policies

     The Company's management makes various estimates when applying policies
affecting the preparation of the consolidated financial statements. Actual
results could differ from those estimates. Significant accounting policies of
the Company are discussed in Note 1 to the accompanying consolidated financial
statements. Following are those accounting policies considered critical to the
Company:

<PAGE>

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.

Reserves for Claims

     The total reserve for all reported and unreported losses the Company
incurred on its income statement through December 31, 2003 is represented by the
reserve for claims on the balance sheet. The Company's reserves for unpaid
losses and loss adjustment expenses are established using estimated amounts
required to settle claims for which notice has been received (reported) and the
amount estimated to be required to satisfy incurred claims of policyholders
which may be reported in the future (incurred but not reported claims).

     Because of the uncertainty of future claims, the effect of changes in
economic conditions, and the fact that many claims do not materialize for
several years, reserve estimates are subject to variability. Declining economic
conditions may result in an increase in mechanics liens and defalcations, thus
increasing the Company's claims expenses. Management analyzes historical claims
experience, mix of business, geographic considerations, industry averages and
current economic conditions in establishing loss provision rates. Claims
reserves are reviewed as to their reasonableness by independent actuaries
annually. The Company's claims reserves are consistent with the independent
actuary's claims reserves. Actuarial projections are compared with recorded
reserves and any necessary adjustments are included in current operations.

     Despite the variability of such estimates, management believes based on
historical claims experience and independent actuarial analysis that the
reserves are adequate to cover claim losses which might result from pending and
future claims. The Company continually reviews and adjusts its reserve estimates
to reflect its loss experience and any new information that becomes available.
Currently, there are no known claims that are expected to have a materially
adverse effect on the Company's financial position or operating results.

Investments in Securities

     Securities for which the Company has the intent and ability to hold to
maturity are classified as held-to-maturity and are 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. Other investments consist
primarily of investments in affiliates, which are accounted for under the equity
or cost method of accounting.

Deferred Tax Asset

     The Company recorded net deferred tax assets at December 31, 2003 and 2002
related primarily to reserves for claims, reserves for bad debt and employee
benefits. Based upon the Company's historical results of operations, the
existing financial condition of the Company and management's assessment of all
other available information, management believes that it is more likely than not
that the benefit of these assets will be realized.

Off-Balance Sheet Arrangements and Contractual Obligations

     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, through LLCs
that are wholly owned subsidiaries of ITAC, holds property for exchangers in
reverse exchange transactions. Cash and other assets held by the Company for
these purposes were approximately $105,862,000 and $63,642,000 as of December
31, 2003 and 2002, respectively. These amounts are not considered assets of the
Company and, therefore, are excluded from the accompanying consolidated balance
sheets.

     It is not the general practice of the Company to enter into off-balance
sheet arrangements nor is it the policy of the Company to issue guarantees to
third parties. Off-balance sheet arrangements are generally limited to the
future payments under noncancelable operating leases, payments made from claims
reserves, payments due under various agreements with third party service
providers, and obligations pursuant to certain executive employment agreements.

<PAGE>

     The following table summarizes our future estimated cash payments under
existing contractual obligations, including payments due by period:

<TABLE>
<CAPTION>
                                                                              Payments due by period
                                                                              ----------------------
                                                                Less than 1        1 - 3                         More than
     Contractual Obligations                        Total           year           years     3 - 5 years         5 years
     ---------------------------------------------------------------------------------------------------------------------
<S>                                               <C>              <C>          <C>           <C>
     Long-term Debt Obligations                            --              --           --            --               --
     Capital Lease Obligations                             --              --           --            --               --
     Operating Lease Obligations                  $   701,632      $  428,904   $  271,928    $      800               --
     Reserves for Claims                           30,031,000       3,542,293    7,440,844     6,455,927      $12,591,936
     Other Obligations                                316,966         295,299       21,667            --               --
     Executive Employment Agreements
     Obligations                                      452,000              --           --            --          452,000
                                                  -----------      ----------   ----------    ----------      -----------
     Total                                        $31,501,598      $4,266,496   $7,734,439    $6,456,727      $13,043,936
                                                  ===========      ==========   ==========    ==========      ===========
</TABLE>

Recent and Pending Accounting Standards

     FIN 45: Financial Accounting Standards Board ("FASB") Interpretation No.
45, Guarantor's Accounting and Disclosures Requirements for Guarantees,
including Indirect Guarantees of Indebtedness of Others became effective on
December 31, 2002. This Interpretation addresses the disclosure requirements for
guarantees and indemnification agreements entered into by the entity. The
implementation of this pronouncement did not have any effect on the Company's
financial statements. The Company has not entered into any recordable guarantees
since December 31, 2002.

     FIN 46: In January 2003, the FASB issued Interpretation No. 46,
Consolidation of Variable Interest Entities ("FIN 46"). FIN 46 amended
Accounting Research Bulletin 51, Consolidated Financial Statements, and
established standards for determining circumstances under which a variable
interest entity ("VIE") should be consolidated by its primary beneficiary. FIN
46 also requires disclosures about VIEs that the Company is not required to
consolidate but in which it has a significant variable interest. In December
2003, the FASB issued FIN 46-R, which not only included amendments to FIN 46,
but also required application of the interpretation to all affected entities no
later than March 31, 2004 for calendar-year reporting companies. Prior to FIN
46-R, however, companies were required to apply the interpretation to
special-purpose entities by December 31, 2003. The adoption of FIN 46-R as it
relates to special-purpose entities did not have any effect on the Company's
results of operations, financial position or liquidity, and the Company does not
expect a material impact upon its full adoption of the interpretation as of
March 31, 2004.

     SFAS 149: In April 2003, the FASB issued Statement of Financial Standards
("SFAS") No. 149, Amendment of Statement 133 on Derivative Instruments and
Hedging Activities. This statement amends and clarifies financial accounting and
reporting for derivative instruments and for hedging activities under SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 149
clarifies the conditions which a contract with an initial net investment meets
the characteristics of a derivative; clarifies when a derivative contains a
financial component; amends the definition of "an underlying" to conform it to
language used in FIN 45, Guarantor's Accounting and Disclosures Requirements for
Guarantees, including Indirect Guarantees of Indebtedness of Others; and amends
certain other existing pronouncements. This Statement is effective for contracts
entered into or modified by the Company after June 30, 2003. All provisions of
this Statement will be applied prospectively. The application of this Statement
did not have a material effect on the Company's results of operations or
financial position.

     SFAS 150: In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS
No. 150 establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. Many
of these instruments were previously classified as equity. SFAS No. 150 requires
that an issuer classify a financial instrument that is within its scope as a
liability, or as an asset in some circumstances. This Statement applies to three
types of freestanding financial instruments, other than outstanding shares. One
type is mandatorily redeemable shares, which the issuing company is obligated to
buy back in exchange for cash or assets; a second type includes put options and
forward purchase contracts that require or may require the issuer to buy back
some of its shares in exchange for cash or other assets; the third type is
obligations that can be settled with shares, the monetary value of which is
fixed, ties solely or predominantly to a variable such as a market index, or
varies inversely with the value of the issuers' shares. SFAS No. 150 does not
apply to features embedded in a financial instrument that is not a derivative in
its entirety. SFAS No. 150 is effective for financial instruments entered into
or modified after May 31, 2003, and otherwise is effective at the beginning of
the first interim period beginning after June 15, 2003. The adoption of this
Statement did not have a material impact on the Company's financial statements.

<PAGE>

<TABLE>
<CAPTION>
Selected Quarterly Financial Data

2003                                           March 31             June 30        September 30         December 31
- --------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                 <C>                 <C>                 <C>
Net premiums written                        $19,667,985         $23,322,629         $23,469,590         $17,467,108
Investment income                               674,578             679,857             666,399             670,853
Net income                                    2,608,561           3,087,452           2,963,799           2,305,202
Basic earnings per common share                    1.04                1.24                1.18                 .92
Diluted earnings per common share                  1.00                1.18                1.13                 .88


<CAPTION>
2002                                           March 31             June 30        September 30         December 31
- --------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                 <C>                 <C>                 <C>
Net premiums written                        $14,680,725         $14,871,197         $17,941,421         $19,805,274
Investment income                               669,038             692,781             680,991             763,998
Net income                                    1,547,179           1,700,998           2,146,025           2,714,640
Basic earnings per common share                     .61                 .68                 .85                1.08
Diluted earnings per common share                   .60                 .65                 .83                1.04
</TABLE>

<PAGE>

Investors Title Company and Subsidiaries

Consolidated Balance Sheets

<TABLE>
<CAPTION>
as of December 31,                                                                                            2003           2002
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                      <C>             <C>
Assets
  Cash and cash equivalents                                                                              $  5,125,356    $ 3,781,961
  Investments in securities (Notes 2 and 3):
    Fixed maturities:
      Held-to-maturity, at amortized cost (fair value: 2003: $3,691,546; 2002: $4,577,069)                  3,526,030      4,395,081
      Available-for-sale, at fair value (amortized cost: 2003: $57,871,292; 2002: $49,353,717)             60,803,807     52,491,648
    Equity securities, at fair value (cost: 2003: $12,289,005; 2002: $6,393,289)                           14,556,785      7,884,928
    Other investments                                                                                         955,561        564,782
- ------------------------------------------------------------------------------------------------------------------------------------
        Total investments                                                                                  79,842,183     65,336,439
  Premiums receivable (less allowance for doubtful accounts: 2003: $2,474,000; 2002: $1,800,000)            8,031,803      7,949,904
  Accrued interest and dividends                                                                              667,147        720,902
  Prepaid expenses and other assets                                                                           934,345      1,095,230
  Property acquired in settlement of claims                                                                   286,517        749,562
  Property, net (Note 4)                                                                                    4,099,243      4,109,885
  Deferred income taxes, net (Note 8)                                                                       1,485,217        893,263
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets                                                                                             $100,471,811    $84,637,146
====================================================================================================================================
Liabilities and Stockholders' Equity
Liabilities
  Reserves for claims (Note 6)                                                                           $ 30,031,000    $25,630,000
  Accounts payable and accrued liabilities                                                                  5,782,470      4,780,865
  Commissions and reinsurance payables (Note 5)                                                               726,191        401,040
  Premium taxes payable                                                                                       461,436        268,972
  Current income taxes payable                                                                                281,968        888,085
- ------------------------------------------------------------------------------------------------------------------------------------
  Total liabilities                                                                                        37,283,065     31,968,962
====================================================================================================================================
Commitments and Contingencies (Notes 5, 9, 10 and 11)
Stockholders' Equity (Notes 2, 3, 7, 12 and 14)
  Class A Junior Participating preferred stock (shares authorized 100,000; no shares issued)                       --             --
  Common stock-no par value (shares authorized 10,000,000; 2,855,744 and
    2,855,744 shares issued; and 2,503,923 and 2,515,804 shares outstanding
    2003 and 2002, respectively)                                                                                    1              1
  Retained earnings                                                                                        59,756,927     49,613,044
  Accumulated other comprehensive income (net unrealized gain on investments)
    (net of deferred taxes: 2003: $1,768,477; 2002: $1,574,431) (Note 8)                                    3,431,818      3,055,139
- ------------------------------------------------------------------------------------------------------------------------------------
    Total stockholders' equity                                                                             63,188,746     52,668,184
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity                                                               $100,471,811    $84,637,146
====================================================================================================================================
</TABLE>

See notes to consolidated financial statements.

<PAGE>

Investors Title Company and Subsidiaries

Consolidated Statements of Income

<TABLE>
<CAPTION>
for the Years Ended December 31,                                                2003             2002             2001
- ---------------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>               <C>               <C>
Revenues
  Underwriting income:
    Premiums written (Note 5)                                              $84,365,541       $67,647,012       $59,140,773
    Less--premiums for reinsurance ceded (Note 5)                              438,229           348,395           340,228
- ---------------------------------------------------------------------------------------------------------------------------
    Net premiums written                                                    83,927,312        67,298,617        58,800,545
  Investment income-interest and dividends (Note 3)                          2,691,687         2,806,808         2,740,280
  Net realized gain on sales of investments (Note 3)                           258,718           279,301            11,773
  Exchange services revenue                                                  1,245,234           947,426         1,018,353
  Other                                                                      2,706,920         1,520,188         1,221,494
- ---------------------------------------------------------------------------------------------------------------------------
    Total                                                                   90,829,871        72,852,340        63,792,445
- ---------------------------------------------------------------------------------------------------------------------------
Operating Expenses
  Commissions to agents                                                     39,113,544        32,006,188        28,074,489
  Provision for claims (Note 6)                                              9,292,739         6,871,822         6,786,263
  Salaries, employee benefits and payroll taxes (Notes 7 and 10)            15,644,097        12,591,736        10,747,424
  Office occupancy and operations (Note 9)                                   5,149,386         4,810,283         4,911,912
  Business development                                                       1,905,609         2,161,928         1,879,224
  Taxes, other than payroll and income                                         347,186           387,594           287,804
  Premium and retaliatory taxes                                              1,680,952         1,378,880         1,250,177
  Professional fees                                                          1,137,648           772,096           910,586
  Other                                                                        387,696           202,971           205,568
- ---------------------------------------------------------------------------------------------------------------------------
    Total                                                                   74,658,857        61,183,498        55,053,447
- ---------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes                                                  16,171,014        11,668,842         8,738,998
Provision for Income Taxes (Note 8)                                          5,206,000         3,560,000         2,730,000
- ---------------------------------------------------------------------------------------------------------------------------
Net Income                                                                 $10,965,014       $ 8,108,842       $ 6,008,998
- ---------------------------------------------------------------------------------------------------------------------------
Basic Earnings per Common Share (Note 7)                                   $      4.38       $      3.22       $      2.35
===========================================================================================================================
Weighted Average Shares Outstanding--Basic                                   2,503,659         2,517,328         2,554,204
===========================================================================================================================
Diluted Earnings per Common Share (Note 7)                                 $      4.18       $      3.12       $      2.31
===========================================================================================================================
Weighted Average Shares Outstanding--Diluted                                 2,624,473         2,597,979         2,599,714
===========================================================================================================================
</TABLE>

See notes to consolidated financial statements.

<PAGE>

Investors Title Company and Subsidiaries

Consolidated Statements of Stockholders' Equity

<TABLE>
<CAPTION>
                                                                                                    Accumulated
                                                                                                 Other Comprehensive
                                                                   Common Stock                      Income (Net          Total
                                                                   ------------        Retained    Unrealized Gain   Stockholders'
for the Years Ended December 31, 2003, 2002 and 2001            Shares      Amount     Earnings    on Investments)         Equity
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>          <C>      <C>                <C>           <C>
Balance,
  January 1, 2001                                              2,566,859    $   1    $ 37,021,270       $2,168,378    $39,189,649
  Net income                                                                            6,008,998                       6,008,998
  Dividends ($.12 per share)                                                             (342,689)                       (342,689)
  Shares of common stock repurchased                             (57,950)                (854,138)                       (854,138)
  Compensation expense related to stock options                    4,189                   61,472                          61,472
  Stock options exercised                                          3,200                   33,662                          33,662
  Net unrealized gain on investments                                                                       174,814        174,814
- -----------------------------------------------------------------------------------------------------------------------------------
Balance,
  December 31, 2001                                            2,516,298        1      41,928,575        2,343,192     44,271,768
  Net income                                                                            8,108,842                       8,108,842
  Dividends ($.12 per share)                                                             (300,557)                       (300,557)
  Shares of common stock repurchased                             (19,134)                (359,903)                       (359,903)
  Compensation expense related to stock options                    3,036                   56,757                          56,757
  Stock options exercised                                         15,604                  179,330                         179,330
  Net unrealized gain on investments                                                                       711,947        711,947
- -----------------------------------------------------------------------------------------------------------------------------------
Balance,
  December 31, 2002                                            2,515,804        1      49,613,044        3,055,139     52,668,184
  Net income                                                                           10,965,014                      10,965,014
  Dividends ($.12 per share)                                                             (300,411)                       (300,411)
  Shares of common stock repurchased                             (41,175)                (986,479)                       (986,479)
  Compensation expense related to stock options                    2,144                   51,224                          51,224
  Stock options exercised                                         27,150                  414,535                         414,535
  Net unrealized gain on investments                                                                       376,679        376,679
- -----------------------------------------------------------------------------------------------------------------------------------
 Balance,
   December 31, 2003                                           2,503,923    $   1    $ 59,756,927       $3,431,818    $63,188,746
===================================================================================================================================
</TABLE>

See notes to consolidated financial statements.

<PAGE>

Investors Title Company and Subsidiaries

Consolidated Statements of Comprehensive Income

<TABLE>
<CAPTION>
for the Years Ended December 31,                                                               2003          2002            2001
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>             <C>            <C>
Net income                                                                               $ 10,965,014    $ 8,108,842    $ 6,008,998
- -----------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income, before tax:
  Unrealized gains on investments arising during the year                                     829,443      1,358,009        276,642
  Less: reclassification adjustment for gains realized in net income                         (258,718)      (279,301)       (11,773)
- -----------------------------------------------------------------------------------------------------------------------------------
  Other comprehensive income, before tax                                                      570,725      1,078,708        264,869
- -----------------------------------------------------------------------------------------------------------------------------------
  Income tax expense related to unrealized gains on investments arising during the year       282,010        461,723         94,058
  Income tax expense related to reclassification adjustment for
    gains realized in net income                                                              (87,964)       (94,962)        (4,003)
- -----------------------------------------------------------------------------------------------------------------------------------
  Net income tax expense on other comprehensive income                                        194,046        366,761         90,055
- -----------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income                                                                    376,679        711,947        174,814
- -----------------------------------------------------------------------------------------------------------------------------------
Comprehensive income                                                                     $ 11,341,693    $ 8,820,789    $ 6,183,812
===================================================================================================================================
</TABLE>

See notes to consolidated financial statements.

<PAGE>

Investors Title Company and Subsidiaries
Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
for the Years Ended December 31,                                               2003                2002             2001
- --------------------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>               <C>               <C>
Operating Activities
Net income                                                                 $ 10,965,014      $  8,108,842      $  6,008,998
  Adjustments to reconcile net income to net cash provided by operating
    activities:
    Depreciation                                                                848,552           961,872         1,412,023
    Amortization, net                                                            26,409            25,022             1,818
    Issuance of common stock in payment of bonuses and fees                      51,224            56,757            61,472
    Provision for losses on premiums receivable                                 674,000           395,000           680,000
    Net gain on disposals of property                                            (4,791)          (15,485)          (22,263)
    Net realized gain on sales of investments                                  (258,718)         (279,301)          (11,773)
    Benefit for deferred income taxes                                          (786,000)         (906,000)         (483,921)
  Changes in assets and liabilities:
    Increase in receivables and other assets                                    (78,214)       (2,020,403)       (4,699,594)
    Increase in accounts payable and accrued liabilities                      1,001,605         1,080,770         1,782,061
    Increase in commissions and reinsurance payables                            325,151           119,079            59,213
    Increase (decrease) in premium taxes payable                                192,464           (98,083)          367,055
    Increase (decrease) in current income taxes payable                        (606,117)          749,264           114,752
    Provision for claims                                                      9,292,739         6,871,822         6,786,263
    Payments of claims, net of recoveries                                    (4,891,739)       (2,701,822)       (3,270,928)
- --------------------------------------------------------------------------------------------------------------------------------

  Net cash provided by operating activities                                  16,751,579        12,347,334         8,785,176
- --------------------------------------------------------------------------------------------------------------------------------
Investing Activities
  Purchases of available-for-sale securities                                (23,452,336)      (18,534,327)      (11,194,289)
  Purchases of held-to-maturity securities                                       (8,753)         (365,796)         (600,000)
  Purchases of other securities                                                (486,000)         (499,894)               --
  Proceeds from sales of available-for-sale securities                        9,241,279         7,987,511         2,555,417
  Proceeds from sales of held-to-maturity securities                            897,000           880,751         1,406,463
  Proceeds from other securities                                                106,100                --                --
  Purchases of property                                                        (894,238)         (691,968)         (392,157)
  Proceeds from disposals of property                                            61,119            69,551            65,168
- --------------------------------------------------------------------------------------------------------------------------------
      Net cash used in investing activities                                 (14,535,829)      (11,154,172)       (8,159,398)
- --------------------------------------------------------------------------------------------------------------------------------
Financing Activities
  Repurchases of common stock                                                  (986,479)         (359,903)         (854,138)
  Exercise of options                                                           414,535           179,330            33,662
  Dividends paid                                                               (300,411)         (300,557)         (342,689)
- --------------------------------------------------------------------------------------------------------------------------------
      Net cash used in financing activities                                    (872,355)         (481,130)       (1,163,165)
- --------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents                          1,343,395           712,032          (537,387)
Cash and Cash Equivalents, Beginning of Year                                  3,781,961         3,069,929         3,607,316
================================================================================================================================
Cash and Cash Equivalents, End of Year                                     $  5,125,356      $  3,781,961      $  3,069,929
================================================================================================================================
Supplemental Disclosures
Cash Paid During the Year for
  Income Taxes (net of refunds)                                            $  6,612,000      $  3,718,000      $  3,101,000
================================================================================================================================
</TABLE>


See notes to consolidated financial statements

<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 primarily through independent issuing agents in the
District of Columbia, Alabama, Arkansas, Florida, Georgia, Illinois, Indiana,
Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri,
Nebraska, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South
Carolina, Tennessee, Virginia, West Virginia and Wisconsin. The majority of the
Company's business is concentrated in Michigan, New York, North Carolina,
Pennsylvania, South Carolina, Tennessee and Virginia. Investors Title Exchange
Corporation ("ITEC") acts as an intermediary in tax-free exchanges of property
held for productive use in a trade or business or for investments, while
Investors Title Accommodation Corporation ("ITAC") serves as an exchange
accommodation titleholder, offering a vehicle for accomplishing a reverse
exchange when a taxpayer must acquire replacement property before selling the
relinquished property. Both ITEC and ITAC derive their income 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. The carrying amount of cash and cash equivalents is a reasonable
estimate of fair value due to the short-term maturity of these investments.

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. Other investments consist
primarily of investments in affiliates, which are accounted for under the equity
or cost method of accounting.

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. Maintenance and repairs are charged to operating
expenses and improvements are capitalized.

Reserves for Claims

     The total reserve for all reported and unreported losses the Company
incurred through December 31, 2003, is represented by the reserve for claims.
The Company's reserves for unpaid losses and loss adjustment expenses are
established using estimated amounts required to settle claims for which notice
has been received (reported) and the amount estimated to be required to satisfy
incurred claims of policyholders which may be reported in the future. Despite
the variability of such estimates, management believes that the reserves are
adequate to cover claim losses which might result from pending and future
claims. The Company continually reviews and adjusts its reserve estimates to
reflect its loss experience and any new information that becomes available.
Adjustments resulting from such reviews may be significant.

     Claims and losses paid are charged to the reserves for claims. Although
claims losses are typically paid in cash, occasionally claims are settled by
purchasing the interest of the insured or the claimant in the real property.
When this event occurs, the acquiring company carries assets at the lower of
cost or estimated realizable value, net of any indebtedness on the property.

<PAGE>

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 using currently enacted tax rates.

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.

Stock Options Disclosure

     The Company has adopted Employee Stock Option Purchase Plans (the "Plans")
under which options to purchase shares (not to exceed 650,000 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 the
intrinsic value method of Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, and related Interpretations in accounting for its
employee stock option 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>
                                                                                      2003               2002              2001
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                 <C>                <C>
Net income:
  As reported                                                                   $   10,965,014      $   8,108,842      $   6,008,998
  Deduct - Total stock-based compensation expense
           under fair value method for all awards, net of tax                          145,367            125,541            127,242
                                                                                --------------      -------------      -------------
 Pro forma                                                                      $   10,819,647      $   7,983,301      $   5,881,756
                                                                                ==============      =============      =============
Basic earnings per common share:
  As reported                                                                   $         4.38      $        3.22      $        2.35
  Pro forma                                                                               4.32               3.17               2.30
Diluted earnings per common share:
  As reported                                                                   $         4.18      $        3.12      $        2.31
  Pro forma                                                                               4.12               3.07               2.26
</TABLE>

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

<TABLE>
<CAPTION>
                                                                                   2003         2002         2001
- -----------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>          <C>         <C>
Exercise price equal to market price on date of grant:
  Weighted average exercise price                                                 $23.39       $19.40      $14.91
  Weighted average grant-date fair value                                           10.78         8.83        7.19
</TABLE>

     There are no stock options granted where the exercise price is different
than the market price on the date of grant.

     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 2003, 2002 and 2001, respectively: dividend yield
of .4%, .6% and .8%; expected volatility of 31%, 32% and 33%; risk-free interest
rates of approximately 4.3%, 3.9% and 5%; and expected lives of 10 years.

Comprehensive Income

     The Company's other comprehensive income is solely comprised of its
unrealized holding gains on available-for-sale securities.

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, through LLCs
that are wholly owned subsidiaries of ITAC, holds property for exchangers in
reverse exchange transactions. Cash and other assets held by the Company for
these purposes were approximately $105,862,000 and $63,642,000 as of December
31, 2003 and 2002, respectively. These amounts are not considered assets of the
Company and, therefore, are excluded from the accompanying consolidated balance
sheets.

<PAGE>

Recent and Pending Accounting Standards

      Financial Accounting Standards Board ("FASB") Interpretation No. 45,
Guarantor's Accounting and Disclosures Requirements for Guarantees, including
Indirect Guarantees of Indebtedness of Others became effective on December 31,
2002. This Interpretation addresses the disclosure requirements for guarantees
and indemnification agreements entered into by the entity. The implementation of
this pronouncement did not have any effect on the Company's financial
statements. The Company has not entered into any recordable guarantees since
December 31, 2002.

     In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities ("FIN 46"). FIN 46 amended Accounting Research
Bulletin 51, Consolidated Financial Statements, and established standards for
determining circumstances under which a variable interest entity ("VIE") should
be consolidated by its primary beneficiary. FIN 46 also requires disclosures
about VIEs that the Company is not required to consolidate but in which it has a
significant variable interest. In December 2003, the FASB issued FIN 46-R, which
not only included amendments to FIN 46, but also required application of the
interpretation to all affected entities no later than March 31, 2004 for
calendar-year reporting companies. Prior to FIN 46-R, however, companies were
required to apply the interpretation to special-purpose entities by December 31,
2003. The adoption of FIN 46-R as it relates to special-purpose entities did not
have any effect on the Company's results of operations, financial position or
liquidity, and the Company does not expect a material impact upon its full
adoption of the interpretation as of March 31, 2004.

     In April 2003, the FASB issued Statement of Financial Standards ("SFAS")
No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging
Activities. This statement amends and clarifies financial accounting and
reporting for derivative instruments and for hedging activities under SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 149
clarifies the conditions which a contract with an initial net investment meets
the characteristics of a derivative; clarifies when a derivative contains a
financial component; amends the definition of "an underlying" to conform it to
language used in FIN 45, Guarantor's Accounting and Disclosures Requirements for
Guarantees, including Indirect Guarantees of Indebtedness of Others; and amends
certain other existing pronouncements. This Statement is effective for contracts
entered into or modified by the Company after June 30, 2003. All provisions of
this Statement will be applied prospectively. The application of this Statement
did not have a material effect on the Company's results of operations or
financial position.

     In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity. SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. Many
of these instruments were previously classified as equity. SFAS No. 150 requires
that an issuer classify a financial instrument that is within its scope as a
liability, or as an asset in some circumstances. This Statement applies to three
types of freestanding financial instruments, other than outstanding shares. One
type is mandatorily redeemable shares, which the issuing company is obligated to
buy back in exchange for cash or assets; a second type includes put options and
forward purchase contracts that require or may require the issuer to buy back
some of its shares in exchange for cash or other assets; the third type is
obligations that can be settled with shares, the monetary value of which is
fixed, ties solely or predominantly to a variable such as a market index, or
varies inversely with the value of the issuers' shares. SFAS No. 150 does not
apply to features embedded in a financial instrument that is not a derivative in
its entirety. SFAS No. 150 is effective for financial instruments entered into
or modified after May 31, 2003, and otherwise is effective at the beginning of
the first interim period beginning after June 15, 2003. The adoption of this
Statement did not have a material impact on the Company's financial statements.

Use of Estimates and Assumptions

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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.

Reclassification

     Certain 2002 and 2001 amounts have been reclassified to conform to 2003
classifications.

2.   Statutory Restrictions on Consolidated Stockholders' Equity and Investments

     The Company has designated approximately $30,223,000 and $25,467,000 of
retained earnings as of December 31, 2003 and 2002, 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, 2003 and 2002, approximately $53,477,000 and
$46,730,000, respectively, of consolidated stockholders' equity represents 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.

     Bonds and certificates of deposit totaling approximately $3,235,000 and
$3,420,000 at December 31, 2003 and 2002, respectively, 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.

<PAGE>

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           Estimated
                                                             Amortized         Unrealized      Unrealized           Fair
                                                               Cost              Gains           Losses            Value
- ------------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>               <C>              <C>            <C>
 December 31, 2003
 Fixed maturities--
   Held-to-maturity, at amortized cost:
     Certificates of deposit                                 $ 1,044,677       $       --       $     --       $ 1,044,677
     Obligations of states and political subdivisions          2,481,353          165,850            334         2,646,869
- ------------------------------------------------------------------------------------------------------------------------------

     Total                                                   $ 3,526,030       $  165,850       $    334       $ 3,691,546
==============================================================================================================================

 Fixed maturities--
   Available-for-sale, at fair value:
     Obligations of states and political subdivisions        $29,465,352       $1,905,912       $ 10,571       $31,360,693
     Corporate debt securities                                18,664,553        1,037,174             --        19,701,727
     Other                                                     9,741,387               --             --         9,741,387
- ------------------------------------------------------------------------------------------------------------------------------

     Total                                                   $57,871,292       $2,943,086       $ 10,571       $60,803,807
==============================================================================================================================

 Equity securities, at fair value--
   Common stocks and nonredeemable preferred stocks          $11,289,005       $2,268,786       $  1,006        13,556,785

   Redeemable preferred stocks                                 1,000,000               --             --         1,000,000
- ------------------------------------------------------------------------------------------------------------------------------

    Total                                                    $12,289,005       $2,268,786       $  1,006       $14,556,785
==============================================================================================================================

December 31, 2002
Fixed maturities--
  Held-to-maturity, at amortized cost:
    Certificates of deposit                                  $ 1,035,924       $       --       $     --       $ 1,035,924
    Obligations of states and political subdivisions           3,359,157          184,417          2,429         3,541,145
- ------------------------------------------------------------------------------------------------------------------------------

    Total                                                    $ 4,395,081       $  184,417       $  2,429       $ 4,577,069
==============================================================================================================================

Fixed maturities--
  Available-for-sale, at fair value:
    Obligations of states and political subdivisions         $25,895,959       $1,879,795       $     --       $27,775,754
    Corporate debt securities                                 13,975,517        1,258,136             --        15,233,653
    Other                                                      9,482,241               --             --         9,482,241
- ------------------------------------------------------------------------------------------------------------------------------

    Total                                                    $49,353,717       $3,137,931       $     --       $52,491,648
==============================================================================================================================

Equity securities, at fair value--
  Common stocks and nonredeemable preferred stocks           $ 5,393,289       $1,665,624       $173,985       $ 6,884,928

  Redeemable preferred stocks                                  1,000,000               --             --         1,000,000
- ------------------------------------------------------------------------------------------------------------------------------

    Total                                                    $ 6,393,289       $1,665,624       $173,985       $ 7,884,928
==============================================================================================================================
</TABLE>

<PAGE>

     The scheduled maturities of fixed maturity securities at December 31, 2003
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                            $20,504,419         $20,601,743         $  854,677         $  854,677
Due after one year through five years               10,246,264          10,996,425            380,641            385,582
Due after five years through ten years              16,637,393          18,229,858            569,049            619,545
Due after ten years                                 10,483,216          10,975,781          1,721,663          1,831,742
- ------------------------------------------------------------------------------------------------------------------------

  Total                                            $57,871,292         $60,803,807         $3,526,030         $3,691,546
========================================================================================================================
</TABLE>


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

<TABLE>
<CAPTION>
                                                              2003                  2002                 2001
- ---------------------------------------------------------------------------------------------------------------
<S>                                                        <C>                  <C>                  <C>
Fixed maturities                                           $2,300,172           $2,397,307           $2,235,401
Equity securities                                             223,379              225,913              160,493
Invested cash and other short-term investments                158,775              166,298              293,729
Miscellaneous interest                                          9,361               17,290               50,657
Net realized gain                                             258,718              279,301               11,773
- ---------------------------------------------------------------------------------------------------------------

  Investment income                                        $2,950,405           $3,086,109           $2,752,053
===============================================================================================================
</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>
                                                                2003                  2002               2001
- ---------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                  <C>                  <C>
Gross realized gains:
  Obligations of states and political subdivisions           $ 117,600            $   5,909            $    323
  Debt securities of domestic corporations                          --                6,820                  --
  Common stocks and nonredeemable preferred stocks             253,753              405,449              79,766
- ---------------------------------------------------------------------------------------------------------------

    Total                                                      371,353              418,178              80,089
- ---------------------------------------------------------------------------------------------------------------

Gross realized losses:
  Obligations of states and political subdivisions              (2,464)              (7,672)               (155)
  Common stocks and nonredeemable preferred stocks            (110,171)            (131,205)            (68,161)
- ---------------------------------------------------------------------------------------------------------------

    Total                                                     (112,635)            (138,877)            (68,316)
- ---------------------------------------------------------------------------------------------------------------

  Net realized gain                                          $ 258,718            $ 279,301            $ 11,773
===============================================================================================================
</TABLE>


4.   Property and Equipment

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

<TABLE>
<CAPTION>
                                                                 2003                2002
- ---------------------------------------------------------------------------------------------
<S>                                                          <C>                  <C>
Land                                                         $ 1,107,582          $ 1,107,582
Title plant                                                      200,000              200,000
Office buildings and improvements (25 years)                   1,730,592            1,625,544
Furniture, fixtures and equipment (3 to 10 years)              5,657,659            5,205,145
Automobiles (3 years)                                            516,906              399,169
- ---------------------------------------------------------------------------------------------

    Total                                                      9,212,739            8,537,440
Less accumulated depreciation                                 (5,113,496)          (4,427,555)
- ---------------------------------------------------------------------------------------------

Property and equipment, net                                  $ 4,099,243          $ 4,109,885
=============================================================================================
</TABLE>


<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
$6,000 and $438,000, respectively, for 2003, $21,000 and $348,000, respectively,
for 2002, and $21,000 and $340,000, respectively, for 2001. Ceded reinsurance is
comprised of excess of loss treaties, which protects against losses over certain
amounts. The Company remains liable to the insured for claims under ceded
insurance policies in the event that the assuming insurance companies are unable
to meet their obligations under these contracts.

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>
                                                            2003                2002                   2001
- -----------------------------------------------------------------------------------------------------------------
<S>                                                    <C>                  <C>                   <C>
Balance, beginning of year                             $ 25,630,000         $ 21,460,000          $ 17,944,665
Provision related to:
   Current year                                          12,995,785            9,714,121             7,056,008
   Prior years                                           (3,703,046)          (2,842,299)             (269,745)

- -----------------------------------------------------------------------------------------------------------------
      Total provision charged to operations               9,292,739            6,871,822             6,786,263
- -----------------------------------------------------------------------------------------------------------------

Claims paid, net of recoveries, related to:
   Current year                                            (680,357)            (395,688)             (241,263)
   Prior years                                           (4,211,382)          (2,306,134)           (3,029,665)
- -----------------------------------------------------------------------------------------------------------------

      Total claims paid, net of recoveries               (4,891,739)          (2,701,822)           (3,270,928)
- -----------------------------------------------------------------------------------------------------------------

      Balance, end of year                             $ 30,031,000         $ 25,630,000          $ 21,460,000
=================================================================================================================
</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 650,000 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.

     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>
                                                   2003                            2002                          2001
- ----------------------------------------------------------------------------------------------------------------------------------
                                                              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             298,741        $   15.68     291,835        $    15.08     279,080        $   15.05
Granted                                       22,500            23.39      28,650             19.40      31,300            14.91
Exercised                                    (27,150)           15.27     (15,604)            11.49      (3,150)           10.53
Terminated                                   (29,200)           18.28      (6,140)            15.04     (15,395)           15.27
- ----------------------------------------------------------------------------------------------------------------------------------

Outstanding at end of year                   264,891        $   16.09     298,741        $    15.68     291,835        $   15.08
                                             =======                      =======                       =======

Options exercisable at year-end              157,851        $   15.18     145,156        $    15.22     126,145        $   14.81
                                             =======                      =======                       =======
</TABLE>

<PAGE>

     The following table summarizes information about fixed stock options
outstanding at December 31, 2003:

<TABLE>
<CAPTION>
                                              Options Outstanding at Year-End       Options Exercisable at Year-End
                                       ------------------------------------------   --------------------------------
                                                         Weighted
                                                          Average        Weighted                      Weighted
                                                         Remaining        Average                      Average
                                          Number        Contractual      Exercise          Number      Exercise
Range of Exercise Prices               Outstanding         Life            Price        Exercisable     Price
- --------------------------------------------------------------------------------------------------------------------
<C>                                       <C>                 <C>        <C>             <C>           <C>
$10.00 - $12.00                            64,865             4          $11.15           34,625       $11.06
 13.06 -  15.58                           120,400             2           13.32           92,640        13.14
 16.25 -  19.35                            12,340             8           18.23            2,590        18.13
 20.00 -  22.75                            27,446             8           21.17            6,966        21.01
 25.28 -  31.27                            39,840             5           28.35           21,030        28.61
- --------------------------------------------------------------------------------------------------------------------

$10.00-$31.27                             264,891             4          $16.09          157,851       $15.18
                                         ========                                       ========
</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 120,814,
80,651 and 45,510 for 2003, 2002 and 2001, respectively.

     Options to purchase 29,600, 69,386 and 57,626 shares of common stock were
outstanding during 2003, 2002 and 2001, 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

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

<TABLE>
<CAPTION>
                                                   2003               2002              2001
- -------------------------------------------------------------------------------------------------
<S>                                            <C>                <C>                 <C>
Current:
  Federal                                      $ 5,900,000        $ 4,425,000         $ 2,993,500
  State                                             92,000             41,000              61,500
- -------------------------------------------------------------------------------------------------

    Total                                        5,992,000          4,466,000           3,055,000
Deferred expense (benefit)                        (786,000)          (906,000)           (325,000)
- -------------------------------------------------------------------------------------------------

    Total                                      $ 5,206,000         $3,560,000         $ 2,730,000
=================================================================================================
</TABLE>

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

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

<TABLE>
<CAPTION>
                                                                                  2003                   2002
- --------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>                   <C>
Deferred income tax assets:
  Recorded reserves for claims net of statutory premium reserves               $1,795,692            $1,622,992
  Accrued benefits reserves                                                       577,368               374,255
  Reinsurance and commissions payable                                             111,767                64,497
  Bad debt reserve                                                                841,160               612,000
  Other                                                                           212,904                 6,994
- --------------------------------------------------------------------------------------------------------------------

    Total                                                                       3,538,891             2,680,738
- --------------------------------------------------------------------------------------------------------------------

Deferred income tax liabilities:
  Net unrealized gain on investments                                            1,768,477             1,574,431
  Excess of tax over book depreciation                                            237,974               152,739
  Discount accretion on tax-exempt obligations                                     27,768                33,849
  Other                                                                            19,455                26,456
- --------------------------------------------------------------------------------------------------------------------

    Total                                                                       2,053,674             1,787,475
- --------------------------------------------------------------------------------------------------------------------

Net deferred income tax assets                                                 $1,485,217            $  893,263
====================================================================================================================
</TABLE>

<PAGE>

     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>
                                                                         2003           2002              2001
- ----------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>             <C>              <C>
Anticipated income tax expense                                      $ 5,498,145     $ 3,967,406      $ 2,971,259
Increase (reduction) related to:
  State income taxes, net of the federal income tax benefit              55,625          25,740           47,413
  Tax exempt interest income (net of amortization)                     (441,763)       (461,300)        (466,408)
  Other, net                                                             93,993          28,154          177,736
- ----------------------------------------------------------------------------------------------------------------

Provision for income taxes                                          $ 5,206,000     $ 3,560,000      $ 2,730,000
================================================================================================================
</TABLE>

9. Leases

     The Company leases certain office facilities and equipment under operating
leases. Rent expense totaled approximately $635,000, $643,000 and $575,000 in
2003, 2002 and 2001, 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, 2003 are summarized as follows:

Year End:
2004                                                    $428,904
2005                                                     243,128
2006                                                      28,800
2007                                                         800
- ----------------------------------------------------------------

Total                                                   $701,632
================================================================


10.  Retirement and Other Postretirement Benefit Plans

     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 $40,000 annually per employee. All contributions
are deposited in Individual Retirement Accounts for participants. Contributions
under the plan were approximately $533,000, $475,000 and $416,000 for 2003, 2002
and 2001, respectively.

     On November 17, 2003, Investors Title Insurance Company entered into
employment agreements with key executives that provide for the continuation of
certain employee benefits upon retirement. The executive employee benefits
include health insurance, dental insurance, vision insurance and life insurance.
The plan is unfunded. The following sets forth the Executive Benefits Plan
funded status and amounts recognized on the balance sheet at December 31, 2003:

<TABLE>
<CAPTION>
          Executive Benefits Plan                                                       2003
<S>                                                                                   <C>
          Change in benefit obligation:
            Benefit obligation at beginning of year                                   $       --
            Service cost                                                                 (55,000)
            Interest cost                                                                     --
            Actuarial loss                                                                    --
            Benefits and expenses paid                                                        --
                                                                                      ----------
          Benefit obligation at end of year                                           $  (55,000)
                                                                                      ==========

          Amounts recognized in the consolidated balance sheet consist of:
            Accrued benefit liability                                                 $  (55,000)
            Accumulated other comprehensive income                                            --
                                                                                      ----------
          Net amounts recognized                                                      $  (55,000)
                                                                                      ==========

          Weighted average assumptions as of December 31
            Discount rate                                                                     6%
            Expected return on plan assets                                                   N/A
            Expected medical cost increase                                                 5-10%
</TABLE>

<PAGE>

     Net periodic pension cost for the Executive Retirement Plan for the year
ended December 31, 2003 includes the following:

                                                                        2003
          Service cost                                               $55,000
          Interest cost                                                    -
          Amortization of prior service cost                               -
          Amortization of unrecognized gains or losses                     -
                                                                  -----------
          Net periodic pension cost                                  $55,000
                                                                  ===========

11.  Commitments and Contingencies

     The Company and its subsidiaries are involved in various routine legal
proceedings that are incidental to their business. In the Company's opinion,
based on the present status of these proceedings, any potential liability of the
Company or its subsidiaries with respect to these legal proceedings, will not,
in the aggregate, be material to the Company's consolidated financial condition
or operations.

     In November 2003, Investors Title Insurance Company ("ITIC"), a wholly
owned subsidiary of the Company, entered into employment agreements with the
Chief Executive Officer, Chief Financial Officer and the Chief Operating Officer
of ITIC. These individuals also serve as the Chief Executive Officer, President
and Executive Vice President, respectively, of the Company. The agreements
provide compensation and life, health, dental and vision benefits upon the
occurrence of specific events, including death, disability, retirement,
termination without cause or change in control. The agreements provide for
annual salaries to be fixed by the Board of Directors of ITIC and, among other
benefits, within ten days after June 30, 2004, ITIC shall make a quarterly
contribution pursuant to a supplemental executive retirement plan on behalf of
each executive equal to 22% of the base salary and bonus paid to each during
such quarter. The agreements also prohibit each of these executives from
competing with ITIC and its parent, subsidiaries and affiliates in the State of
North Carolina while employed by ITIC and for a period of four years following
termination of their employment. The amount accrued for these plans at December
31, 2003 was $452,000, which includes post retirement compensation and health
benefits, and was calculated based on the terms of the contract.

12.  Statutory Accounting

     The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles 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 $55,139,781 and $44,597,876
as of December 31, 2003 and 2002, respectively. Net income on a statutory basis
was $10,344,810, $8,466,841 and $5,348,071 for the twelve months ended December
31, 2003, 2002 and 2001, respectively. The Company's subsidiaries complied with
all applicable state insurance department requirements on December 31, 2003.

13.  Segment Information

     Consistent with SFAS No. 131, the Company has aggregated its operating
segments into two reportable segments: 1) title insurance services; and 2)
tax-free exchange services.

     The title insurance segment primarily issues title insurance policies
through approved attorneys from underwriting 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
and serves as exchange accommodation titleholder, holding property for
exchangers in reverse exchange transactions. Revenues are derived from fees for
handling exchange transactions.



<PAGE>


     Provided below is selected financial information about the Company's
operations by segment for the three years ended December 31, 2003, 2002 and
2001:

<TABLE>
<CAPTION>
                                                                Income             Provision
                                         Operating              Before                for
                                         Revenues            Income Taxes          Income Taxes            Assets
- ---------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                   <C>                   <C>                  <C>
 2003
 Title insurance                        $85,505,899           $15,107,860           $4,787,000           $ 90,854,755
 Exchange services                        1,245,234               752,933              290,000                626,771
 All other                                1,128,333               310,221              129,000              8,990,285
- ---------------------------------------------------------------------------------------------------------------------

   Consolidated total                   $87,879,466           $16,171,014           $5,206,000           $100,471,811
=====================================================================================================================

2002
Title insurance                         $68,144,235           $11,035,961           $3,329,000           $ 76,067,241
Exchange services                           947,426               512,154              195,000                386,419
All other                                   674,570               120,727               36,000              8,183,486
- ---------------------------------------------------------------------------------------------------------------------

  Consolidated total                    $69,766,231           $11,668,842           $3,560,000           $ 84,637,146
=====================================================================================================================

2001
Title insurance                         $59,135,041           $ 7,779,494           $2,350,000           $ 64,733,989
Exchange services                         1,018,353               600,787              230,000                367,844
All other                                   886,998               358,717              150,000              5,117,867
- ---------------------------------------------------------------------------------------------------------------------

  Consolidated total                    $61,040,392           $ 8,738,998           $2,730,000           $ 70,219,700
=====================================================================================================================
</TABLE>

14. Stockholders' Equity

     On November 12, 2002, the Company's Board of Directors amended the
Company's Articles of Incorporation, creating a series of Class A Junior
Participating Preferred Stock (the "Class A Preferred Stock"). There are
1,000,000 shares of Preferred Stock authorized and 100,000 of these shares have
been designated Series A Junior Participating Preferred Stock. The Class A
Junior Participating Preferred Stock is senior to common stock in dividends or
distributions of assets upon liquidations, dissolutions or winding up of the
Company. Dividends on the Class A Preferred Stock are cumulative and accrue from
the quarterly dividend payment date. Each share of Class A Preferred Stock
entitles the holder thereof to 100 votes on all matters submitted to a vote of
shareholders of the Company. These shares were reserved for issuance under the
Shareholder Rights Plan (the "Plan"), which was adopted on November 21, 2002, by
the Company's Board of Directors. Under the terms of the Plan, the Company's
common stock acquired by a person or a group buying 15% or more of the Company's
common stock would be diluted, except in transactions approved by the Board of
Directors.

     In connection with the Plan, the Company's Board of Directors declared a
dividend distribution of one right (a "Right") for each outstanding share of the
Company's common stock paid on December 16, 2002, to shareholders of record at
the close of business on December 2, 2002. Each Right entitles the registered
holder to purchase from the Company a unit (a "Unit") consisting of one
one-hundredth of a share of Class A Preferred Stock at a purchase price of $80
per Unit. Under the Plan, the Rights detach and become exercisable upon the
earlier of (a) ten (10) days following public announcement that a person or
group of affiliated or associated persons has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares of the
Company's common stock, or (b) ten (10) business days following the commencement
of, or first public announcement of the intent of a person or group to commence,
a tender offer or exchange offer that would result in a person or group
beneficially owning 15% or more of such outstanding shares of the Company's
common stock. The exercise price, the kind and the number of shares covered by
each right are subject to adjustment upon the occurrence of certain events
described in the Plan.

     If the Company is acquired in a merger or consolidation in which the
Company is not the surviving corporation, or the Company engages in a merger or
consolidation in which the Company is the surviving corporation and the
Company's common stock is changed or exchanged, or more than 50% of the
Company's assets or earning power is sold or transferred, the Rights entitle a
holder (other than the acquiring person or group) to buy, at the exercise price,
stock of the acquiring company having a market value equal to twice the exercise
price. Following an acquisition by such person or group of 50% or more of the
outstanding common stock, the Company's Board of Directors may exchange the
Rights (other than the Rights owned by such person or group), in whole or in
part, at an exchange ratio of one share of the Company's common stock, or one
one-hundredth of a share of Preferred Stock, per Right.

     The Rights expire on November 11, 2012 and are redeemable upon action by
the Board of Directors at a price of $0.01 per right at any time before they
become exercisable. Until the Rights become exercisable, they are evidenced only
by the common stock certificates and are transferred with and only with such
certificates.


<PAGE>

Report of Independent Auditors


Investors Title Company and Subsidiaries:

     We have audited the accompanying consolidated balance sheets of Investors
Title Company and its subsidiaries (the "Company") as of December 31, 2003 and
2002, 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, 2003. 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 the Company and its
subsidiaries at December 31, 2003 and 2002, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
2003 in conformity with accounting principles generally accepted in the United
States of America.


/s/ Deloitte & Touche LLP
Raleigh, North Carolina
March 25, 2004

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-14
<SEQUENCE>7
<FILENAME>d59105_ex14.txt
<DESCRIPTION>CODE OF BUSINESS CONDUCT AND ETHICS
<TEXT>

                                                                      Exhibit 14
                                                                      ----------

                       CODE OF BUSINESS CONDUCT AND ETHICS


      This Code of Business Conduct and Ethics covers a wide range of business
practices and procedures. It does not address every situation that may arise,
but it sets forth basic principles to guide you. We expect all of the employees,
directors, representatives and agents of Investors Title Company and its
subsidiaries (collectively, the "Company") to conduct themselves according to
this Code and to seek to avoid even the appearance of improper behavior.

      If a law conflicts with this Code, always comply with the law; however, if
a local custom or policy conflicts with this Code, you must comply with the
Code. If you have any questions about such a conflict, discuss the situation
with your supervisor.

      Anyone who violates this Code will be subject to disciplinary action up to
and including dismissal. If you are in or if you observe a situation that you
believe is or may lead to a violation of the Code, follow the guidelines set
forth in Section 14 below.

1.    Compliance with Laws, Rules and Regulations

      Obeying the law, both in letter and in spirit, is one of the foundations
on which the Company's ethical standards were built. We expect all of our
employees to obey the laws of the cities and states in which we do business.
Perceived pressures from supervisors and demands due to business conditions are
no excuse for violating the law. Seek advice from your supervisor or other
appropriate person if you have any questions about whether you are in compliance
with applicable laws and regulations.

2.    Conflicts of Interest

      A conflict of interest exists when a person's private interests interfere
with the Company's interests. For example, a conflict of interest may arise when
an employee, officer or director takes an action or has an interest that could
make it difficult for him to perform his job for the Company effectively and
objectively. A conflict of interest may also arise when an employee, officer or
director, or a member of his or her family, receives an improper personal
benefit as a result of his or her position with the Company.

         There is usually a conflict of interest when a Company employee also
works for a competitor, supplier or customer. To avoid such conflicts, employees
are prohibited from working for or serving as a director of any of our
competitors, suppliers or customers. You should try to avoid any business
connection, whether direct or indirect, with our competitors, suppliers and
customers unless such connection is made on the Company's behalf.

      The offer or acceptance of entertainment or gifts in a business setting
may also result in a conflict of interest, regardless of good intentions.
Company employees and their family members should not accept any gift or
entertainment in a business context unless (1) it is not a

<PAGE>

cash gift, (2) it is not excessive in value, (3) it is consistent with customary
business practices, (4) it cannot be construed as a bribe or payoff and (5) it
does not violate any laws or regulations. Furthermore, Company employees should
not offer any gift or entertainment in the business context if it could be
construed as a bribe or payoff, or if it is in violation of any laws or
regulations. If you are uncertain whether a gift or entertainment is
appropriate, discuss it with your supervisor.

      It is our policy that conflicts of interest are prohibited unless approved
by the Board of Directors. For more information, please refer to our Conflict of
Interest Policy.

3.    Insider Trading

      Employees may not trade in Company securities using knowledge obtained
from their jobs if the information has not been made public, as this is a
violation of United States securities laws. It is also illegal to "tip" others
who might make an investment decision based on inside knowledge that you
provided. You may not use non-public information to buy or sell stock or options
in the Company or its customers or suppliers. For more information, please refer
to our Insider Trading and Tipping Policy.

4.    Corporate Opportunities

      Employees, officers and directors owe a duty to the Company to act in its
best interests and advance its legitimate interests when the opportunity arises.
Employees, officers and directors may not take for themselves opportunities they
discover through the use of Company information, property or position without
the prior consent of the Board of Directors. Employees may not compete with the
Company, directly or indirectly, and they may not use Company property,
information or position to obtain an improper personal gain.

5.    Competition and Fair Dealing

      We seek to outperform our competitors and build long term relationships
with our customers through honesty, integrity and superior performance. All of
our advertising and marketing materials are truthful and accurate. Deliberately
misleading statements, false claims and the omission of material facts by our
employees are unacceptable.

      We only obtain business legally and ethically. Bribes and kickbacks are
not acceptable. Our employees may not use illegal or unethical means of
obtaining information about our competitors. Stealing proprietary information,
possessing trade secrets that were obtained without the owner's consent, and
inducing former or current employees of our competitors to make such disclosures
is strictly prohibited.

      To maintain our reputation, compliance with this policy is essential. If
you believe that you may have obtained confidential information or trade secrets
of another company by mistake, or have any questions about the legality of
methods of marketing or obtaining information, you should discuss the situation
with your supervisor immediately.


                                       2
<PAGE>


6.    Discrimination and Harassment

      The Company is firmly committed to providing equal opportunity in all
aspects of employment. Employment decisions are based on business reasons, such
as talent, qualifications and achievements, and will comply with local and
national employment laws. Our employees are expected to treat each other with
respect and fairness at all times. For more information, please refer to your
Employee Handbook.

7.    Health and Safety

      The Company strives to provide you with a safe and healthful working
environment and asks that you help maintain this environment by following safety
and health rules and practices. You should immediately report accidents,
injuries, and unsafe equipment, practices or conditions to a supervisor.

      Violence and threatening behavior are not permitted. In order to protect
the safety of our employees, customers and guests, every employee is expected to
report to work in condition to perform their duties and free from the influence
of illegal drugs or alcohol. The use of illegal drugs and alcohol in the
workplace will not be tolerated. For more information, please refer to your
Employee Handbook.

8.    Record-Keeping

      The Company requires honest and accurate record-keeping and information
reporting in order to make responsible business decisions. All financial records
and accounts must accurately reflect all transactions and events and conform to
applicable accounting principles and the Company's system of internal controls.
No false or artificial entries may be made and all payments made may be used
only for the purpose indicated in the supporting documentation.

      Many employees regularly use expense accounts and Company credit cards.
These must be documented and recorded accurately. If you are not sure whether an
expense is legitimate, ask your supervisor or the Accounting Department.

      All business records and communications should be clear, truthful and
accurate. Business records and communications often become public; therefore,
you should avoid exaggeration, colorful language, guesswork and derogatory
remarks or characterizations of people and companies. This applies to all
communications, including email, internal memos and formal reports. Records
should always be retained or destroyed according to the Company's record
retention policies. For more information, please refer to the Electronic
Communications and Software Policy.

9.    Confidentiality

      Employees may not disclose the Company's confidential information except
to another person with a legitimate business need to know or except as required
by applicable laws and regulations. Confidential information includes, but is
not limited to, business, marketing and


                                       3
<PAGE>

service plans, engineering ideas, designs, databases, records, salary
information, unpublished financial data and reports, and intellectual property
such as trade secrets, patents, trademarks and copyrights. We must protect
confidential customer and supplier information as carefully as we protect our
own by marking confidential information as such, keeping the information secure,
and limiting access to those who need to know in order to do their jobs. The
obligation to protect confidential information continues even after your
employment with the Company has ended. For more information, please refer to the
Confidentiality of Company Information policy and the Electronic Communications
and Software Policy.

10.   Protection and Use of Company Assets

      Employees have a responsibility to protect the Company's assets from
theft, carelessness and waste, as these have a direct negative impact on the
Company's profitability. Company equipment should not be used for non-Company
business, although incidental personal use is permitted. Any suspected incident
of theft or fraud should immediately be reported to a supervisor for
investigation.

11.   Payments to Government Personnel

      When dealing with governments in any capacity, we must take special care
to comply with all legal and contractual obligations. The U.S. Foreign Corrupt
Practices Act prohibits giving anything of value, directly or indirectly, to any
foreign government official or political candidate in order to obtain or retain
business. Furthermore, this Act prohibits anyone from making illegal payments to
government officials of any country.

12.   Waiver of the Code of Business Conduct and Ethics

      Only the Board of Directors or a committee of the Board of Directors may
waive the application of any part of this Code to an officer or director. Such a
waiver must be promptly disclosed pursuant to applicable laws and stock exchange
regulations.

13.   Reporting Illegal or Unethical Behavior

      We encourage you to talk to a supervisor about observed illegal or
unethical behavior and whenever you are in doubt about the best course of action
to take in a particular situation. The Company does not permit or tolerate any
kind of retaliation against employees for good faith reports of illegal
activities or ethical violations by others. Employees are expected to fully
cooperate in internal investigations of misconduct. For more information, please
refer to your Employee Handbook and the Employee Complaint Policy for Auditing
and Accounting Matters.


                                       4
<PAGE>

14.   Compliance Procedures

      In some situations, it is difficult to know whether the Code is being or
will be violated. Since we cannot anticipate every situation that may arise and
address it in this Code, the following guidelines will assist you in evaluating
whether the Code is being or will be violated:

      Make sure you have all of the facts. You should be as fully informed as
possible in order to make the right decision.

      Ask yourself whether what you are being asked to do seems unethical or
improper. This will enable you to focus on the issue you are facing and the
alternatives that are available to you. Remember to use your common sense. If
something seems to be unethical or improper, it probably is.

      Clarify your role and responsibility. In many situations, there is shared
responsibility. If your co-workers are informed about the situation, it may be
helpful to discuss it with them.

      Discuss the situation with your supervisor. Often, your supervisor will be
more knowledgeable about the issue and will appreciate being brought into the
decision-making process. Keep in mind that it is your supervisor's job to help
solve problems. If you do not feel comfortable speaking to your supervisor, talk
to another member of management.

      Ask first and act later. If you are unsure of what to do in a certain
situation, always seek guidance before you take action.

      Report violations in confidence and without fear of retaliation. If a
situation requires that your identity be kept a secret, your anonymity will be
protected. The Company does not permit or tolerate any kind of retaliation
against employees for good faith reports of illegal activities or ethical
violations by others.


                                       5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>8
<FILENAME>d59105_ex21.txt
<DESCRIPTION>SUBSIDIARIES OF REGISTRANT
<TEXT>

                                                                      Exhibit 21
                                                                      ----------


                           SUBSIDIARIES OF REGISTRANT

<TABLE>
<CAPTION>
Name of                             Percent          Names Under Which              State of
Subsidiary                          Ownership        Subsidiaries Do Business       Incorporation
- ----------                          ---------        ------------------------       -------------
<S>                                 <C>              <C>                            <C>
Investors Title Insurance           100%             Investors Title Insurance      North Carolina
Company                                              Company

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

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

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

Investors Title Management          100%             Investors Title Management     North Carolina
Services, Inc.                                       Services, Inc.

Investors Title Commercial          100%             Investors Title Commercial     North Carolina
Agency, LLC                                          Agency, LLC

Investors Capital Management        100%             Investors Capital              North Carolina
Company                                              Management Company

Investors Trust Company             100%             Investors Trust Company        North Carolina
</TABLE>





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>9
<FILENAME>d59105_ex23.txt
<DESCRIPTION>REPORT OF INDEPENDENT AUDITORS
<TEXT>

                                                                      Exhibit 23

INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULES

We consent to the use in Registration Statement No. 333-33903 of Investors Title
Company (the "Company") and Subsidiaries on Form S-8 of our report dated March
25, 2004, incorporated by reference in this Annual Report on Form 10-K of the
Company for the year ended December 31, 2003.

Our audits of the consolidated financial statements referred to in our
aforementioned report also included the financial statement schedules of the
Company, listed in Item 15. 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 statements
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
March 25, 2004

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>10
<FILENAME>d59105_ex31-1.txt
<DESCRIPTION>EXHIBIT 31(I)
<TEXT>
                                                                   Exhibit 31(i)
                                                                   -------------

                                  Certification

I, J. Allen Fine, certify that:

1.   I have reviewed this annual report on Form 10-K of Investors Title Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we
     have:

     a) designed such disclosure controls and procedures, or caused such
     disclosure controls and procedures to be designed under our supervision, to
     ensure that material information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others within those
     entities, particularly during the period in which this report is being
     prepared;

     b) {Reserved}

     c) evaluated the effectiveness of the registrant's disclosure controls and
     presented in this report our conclusions about the effectiveness of the
     disclosure controls and procedures, as of the end of the period covered by
     this report based on such evaluation; and

     d) disclosed in this report any change in the registrant's internal control
     over financial reporting that occurred during the registrant's most recent
     fiscal quarter that has materially affected, or is reasonably likely to
     materially affect the registrant's internal control over financial
     reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     a) all significant deficiencies and material weaknesses in the design or
     operation of internal control over financial reporting which are reasonably
     likely to adversely affect the registrant's ability to record, process,
     summarize and report financial information; and

     b) any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal control
     over financial reporting.

Date: March 30, 2004

/s/ J. Allen Fine
- -----------------
J. Allen Fine
Chief Executive Officer


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>11
<FILENAME>d59105_ex31-2.txt
<DESCRIPTION>EXHIBIT 31(II)
<TEXT>
                                                                  Exhibit 31(ii)
                                                                  --------------

                                  Certification

I, James A. Fine, Jr., certify that:

1.   I have reviewed this annual report on Form 10-K of Investors Title Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we
     have:

     a) designed such disclosure controls and procedures, or caused such
     disclosure controls and procedures to be designed under our supervision, to
     ensure that material information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others within those
     entities, particularly during the period in which this report is being
     prepared;

     b) {Reserved}

     c) evaluated the effectiveness of the registrant's disclosure controls and
     presented in this report our conclusions about the effectiveness of the
     disclosure controls and procedures, as of the end of the period covered by
     this report based on such evaluation; and

     d) disclosed in this report any change in the registrant's internal control
     over financial reporting that occurred during the registrant's most recent
     fiscal quarter that has materially affected, or is reasonably likely to
     materially affect the registrant's internal control over financial
     reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     a) all significant deficiencies and material weaknesses in the design or
     operation of internal control over financial reporting which are reasonably
     likely to adversely affect the registrant's ability to record, process,
     summarize and report financial information; and

     b) any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal control
     over financial reporting.

Date: March 30, 2004

/s/ James A. Fine, Jr.
- ----------------------
James A. Fine, Jr.
Chief Financial Officer



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>12
<FILENAME>d59105_ex32.txt
<DESCRIPTION>EXHIBIT 32
<TEXT>
                                                                      Exhibit 32
                                                                      ----------


                                  Certification
                         Pursuant to Section 906 of the
             Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of
            Section 1350, Chapter 63 of Title 18, United States Code)


      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a)
and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of
the undersigned officers of Investors Title Company, a North Carolina
corporation (the "Company"), does hereby certify that:

      The Annual Report on Form 10-K for the year ended December 31, 2003 (the
"Form 10-K") of the Company fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained
in the Form 10-K fairly presents, in all material respects, the financial
condition and results of operations of the Company.

Dated:   March 30, 2004               /s/ J. Allen Fine
                                      -----------------
                                      J. Allen Fine
                                      Chief Executive Officer


Dated:   March 30, 2004               /s/ James A. Fine, Jr.
                                      ----------------------
                                      James A. Fine, Jr.
                                      Chief Financial Officer


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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