How much is this stock worth? I think it's worth nearly $60 per share.
Break the Q2 balance sheet in two:
1. An operating business with a book value of about $4 per share and underwriting earnings of about $3/share. Value: about twelve times earnings, or $36/share. (That's assuming no future earnings growth ... actual growth has been 14% annually for 20 years.)
2. A pile of securities worth almost $22 per share, returning 80 or 90 cents per share after tax. (Mostly these are tax-free municipals anyhow.) Value: $22/share.
Comments The operating business is excellent, one of a kind. Earnings, book value, and book-value-plus-reserves ("float") have all grown at 14% annually for the past 20 years.
In contrast to the titans of the title insurance industry, ITIC reserves about 10% of premium revenue for losses. Very conservative. FNF and FAF reserve only about 5%.