Title Insurance:  Profit margins for the title insurance segment were 6.02%, 8.39% and 10.48% in 2000, 1999 and 1998, respectively. The decrease in premiums written, an increase in the percentage of business received from agents and the fixed nature of certain operating expenses contributed to the decline in profit margins. Profit margins from agent business are typically lower than those from branch business since agent commissions are generally higher than the operating expenses incurred for direct business. In order to maintain and improve margins, the Company strives to identify opportunities to refine operating procedures and to implement programs designed to reduce expenses. Commissions decreased 9.2% and 2% in 2000 and 1999, respectively and increased 72.9% in 1998. Overall, commission expense as a percentage of agent premiums written has remained relatively constant for the last three years. Commission rates vary geographically and may be influenced by state regulations. 

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

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

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

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

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

