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, 2006





o
      TRANSITION REPORT
      PURSUANT TO SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934


for
      the
      transition period from _____ to _____




Commission
      file number 0-11774





**INVESTORS
      TITLE COMPANY**


(Exact
      name of registrant as specified in its charter)





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




**121
      North Columbia Street**


**Chapel
      Hill, North Carolina 27514**


**(919)
      968-2200**


(Address
      and telephone number of principal executive office)




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


**Common
      Stock, no par value**





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


None





Indicate
      by check mark whether the registrant is a well-known seasoned issuer, as defined
      in Rule 405 of the Securities Act.


Yes
o No
x





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Exchange Act.


Yes
o No
x




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
      o





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





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the
      Exchange Act).


Large
      accelerated filer o Accelerated filer x Non-accelerated filer o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act).


Yes
o No
x





The
      aggregate market value of the common shares held by non-affiliates was
      $80,988,845 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, 2006).





As
      of
      March 7, 2007, there were 2,796,203 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, 2006 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 16, 2007 are incorporated
      by reference in Part III hereof.







**SAFE
      HARBOR FOR FORWARD-LOOKING STATEMENTS**




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," "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 share
      position, claims, expenditures, financial results and cash requirements, are
      forward-looking statements. Forward-looking statements are based on certain
      assumptions and expectations of future events that are subject to a number
      of
      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: the demand for title insurance will vary due to factors such as
      interest rate fluctuations, the availability of mortgage funds, the level of
      real estate transactions, mortgage refinance activity, the cost of real estate,
      consumer confidence, employment levels, family income levels and general
      economic conditions, changes to the insurance requirements of the participants
      in the secondary mortgage market; losses from claims may be greater than
      anticipated such that reserves for possible claims are inadequate; unanticipated
      adverse changes in securities markets, including interest rates, could result
      in
      material losses on the Company's investments; the Company's dependence on key
      management personnel, the loss of whom could have a material adverse affect
      on
      the Company's business; the Company’s ability to develop and offer products and
      services that meet changing industry standards in a timely and cost-effective
      manner; significant changes to applicable government regulations; state statutes
      require the Company’s insurance subsidiaries to maintain minimum levels of
      capital, surplus and reserves and restrict the amount of dividends that the
      insurance subsidiaries may pay to the Company without prior regulatory approval;
      and key accounting and information systems are concentrated in a few locations.
      For a description of factors that may cause actual results to differ materially
      from such forward-looking statements, see Item 1A, “Risk Factors” of this annual
      report on Form 10-K.





These
      and
      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.
      The Company does not undertake to update any forward-looking statements to
      reflect circumstances or events that occur after the date the forward-looking
      statements are made.





2


**INVESTORS
      TITLE COMPANY AND SUBSIDIARIES**





TABLE
      OF
      CONTENTS





PART
                IITEM
                1.
            BUSINESS
            4ITEM
                1A.
            RISK
                FACTORS
            13ITEM
                1B.
            UNRESOLVED
                STAFF COMMENTS
            17ITEM
                2.
            PROPERTIES
            18ITEM
                3.
            LEGAL
                PROCEEDINGS
            18ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            18PART
                IIITEM
                5.
            MARKET
                FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS
            20ITEM
                6.
            SELECTED
                FINANCIAL DATA
            21ITEM
                7.
            MANAGEMENT'S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS
            21ITEM
                7A.
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            21ITEM
                8.
            FINANCIAL
                STATEMENTS AND SUPPLEMENTARY DATA
            21ITEM
                9.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            21ITEM
                9A.
            CONTROLS
                AND PROCEDURES
            22ITEM
                9B.
            OTHER
                INFORMATION
            22PART
                IIIITEM
                10.
            DIRECTORS,
                EXECUTIVE OFFICERSAND
                CORPORATE GOVERNANCE
            23ITEM
                11.
            EXECUTIVE
                COMPENSATION
            23ITEM
                12.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS
            23ITEM
                13.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS,
                AND DIRECTOR INDEPENDENCE
            24ITEM
                14.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            24PART
                IVITEM
                15.
            EXHIBITS
                AND FINANCIAL STATEMENT SCHEDULES
            25SIGNATURES
            
            26





3


**PART
      I**




**ITEM
      1.**  **BUSINESS**





Investors
      Title Company (the "Company") is a holding company that operates through its
      subsidiaries and 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 and its facsimile number
      is (919) 968-2235.





GENERAL





The
      Company engages in several lines of business. The main business activity is
      the
      issuance of residential and commercial title insurance through ITIC and NE-ITIC.
      The second line of business provides tax-deferred exchange services through
      its
      subsidiaries, Investors Title Exchange Corporation (“ITEC”) and Investors Title
      Accommodation Corporation (“ITAC”). The Company has also entered into another
      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 Item 7. Management's Discussion and Analysis
      of
      Financial Condition and Results of Operations and Note 13 of Notes to
      Consolidated Financial Statements in the 2006 Annual Report to Shareholders
      incorporated by reference in this Form 10-K Annual Report for additional
      information related to the revenues, income and assets attributable 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. 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 protects against loss or damage resulting from title
      defects that affect real property. The commitment and policies issued are
      predominantly the standard American Land Title Association approved
      forms.





*Title
      Insurance Policies.* 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 needs to purchase an owner's title insurance policy to protect
      their investment. Title insurance policies are issued on the basis of a title
      report. The title report documents the current status of title to the property.




4





When
      real
      property is conveyed from one party to another, occasionally there is an
      undisclosed 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 indemnification against
      insured defects. The title insurer has the option to retain counsel and pay
      the
      legal expenses to eliminate or defend against any title defects, pay any third
      party claims arising from errors in title examination and recording or pay
      the
      insured’s actual losses, up to policy limits, arising from title risks as
      defined in the policy.





A
      title
      risk is one of any number of things that could jeopardize the property owner's
      or mortgagee’s interest in the property defined in the title policy. Such risks
      include title being vested in someone or some entity other than the insured,
      unmarketable title, lack of a right of access to the property, invalidity or
      unenforceability of the insured mortgage, or other defects, liens, or
      encumbrances against the property. Examples of the most common types of covered
      risks include defects arising from prior unsatisfied mortgages, tax liens or
      confirmed assessments, judgments against the property or encumbrances against
      the property arising through easements, restrictions or other existing
      covenants. Title insurance also generally protects against deeds or mortgages
      that contain inaccurate legal descriptions, that were forged or improperly
      acknowledged or delivered, that were executed by spouses without the other
      spouse’s signature or release of marital interest or that were conveyed by
      minors or incompetents.





*Geographic
      Operations.* 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 primarily writes land title insurance both as a primary
      insurer and, to a lesser extent, as a reinsurer throughout the eastern and
      midwestern United States. ITIC writes title insurance through issuing agents
      or
      directly through branch offices in the District of Columbia and the States
      of
      Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky,
      Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska,
      North
      Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia and West
      Virginia. In addition to the states in which ITIC currently writes title
      insurance, it is also licensed to write title insurance in 22 additional states.





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. The Company also has a branch office in South Carolina and
      Nebraska. Title policies are primarily issued through issuing agents in other
      states.





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 the
      District of Columbia and the States of Arkansas, Delaware, Florida, Georgia,
      Indiana, Kentucky, Maryland, Minnesota, Missouri, Nebraska, New Jersey, North
      Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia.





For
      a
      description of the level of net premiums written geographically by state, refer
      to Item 7. Management's Discussion and Analysis of Financial Condition and
      Results of Operations in the 2006 Annual Report of Shareholders incorporated
      by
      reference in this Form 10-K Annual Report.




5




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 which they are held.





*Reinsurance.* The
      Company assumes and cedes reinsurance with other insurance companies in the
      normal course of business. Reinsurance
      is a contractual arrangement whereby one insurer assumes some or all of the
      risk
      exposure written by another insurer. Ceded
      reinsurance is comprised of excess of loss treaties, which protects against
      losses over certain amounts.





In
      the
      ordinary course of business, ITIC and NE-ITIC reinsure certain risks with other
      title insurers for the purpose of limiting their risk exposure and to comply
      with state insurance regulations. 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.





The
      Company’s reinsurance policy is more restrictive than state regulators require.
      As of December 31, 2006, state insurance regulators set a maximum risk retention
      limit for ITIC. ITIC set its own risk retention limit at $2,750,000, meaning
      that it limited the net loss on 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 ceded to an unrelated reinsurer pursuant to an automatic
      treaty.





NE-ITIC
      set its risk retention limit at $250,000, meaning that it limited the net loss
      on 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 ceded to an unrelated reinsurer
      pursuant to an automatic treaty.





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 12.6% of its statutorily permitted retention
      of
      $21,860,422. NE-ITIC's self-imposed retention of $250,000 is only 9.4% of its
      statutorily permitted retention of $2,652,810.





*Ratings.* The
      Company’s title insurance subsidiaries are regularly assigned ratings by
      independent agencies to indicate their financial condition. 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 Double Prime"
      and "A+." According to Demotech, title insurance underwriters earning a
      financial stability rating of A'' (A Double 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.




6


Exchange
      Services





In
      1988,
      the Company established Investors Title Exchange Corporation, a wholly owned
      subsidiary ("ITEC"), to provide services in connection with tax-deferred
      exchanges of like-kind property pursuant to Section 1031 of the Internal Revenue
      Code. ITEC acts as an intermediary in tax-deferred 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 and interest earned on
      client deposits held by the Company. In February 2006, the IRS proposed new
      regulations which, if adopted, may negatively affect the ability of qualified
      intermediaries to retain a portion of the interest earned on exchange funds
      held
      during exchange transactions. If passed as proposed, these regulations would
      adversely impact the exchange services segment and the Company’s net income,
      since a significant portion of the exchange segment’s revenues are based
      on retaining a portion of the interest income earned on deposits held.
      Refer to Item 7. Management’s Discussion and Analysis of Financial Condition and
      Results of Operations in the 2006 Annual Report to Shareholders incorporated
      by
      reference in this Form 10-K Annual Report for additional information regarding
      IRS regulations.





Investors
      Title Accommodation Corporation ("ITAC") 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.





Investment
      Management and Trust Services





The
      Company organized ICMC, a wholly owned subsidiary, as a North Carolina
      corporation on October 17, 2003. Investors Trust, also a wholly owned subsidiary
      of the Company, received its North Carolina trust charter on February 17, 2004,
      from the North Carolina Commissioner of Banks. ICMC and Investors Trust work
      together to provide investment management and trust services to individuals,
      companies, banks and trusts. These subsidiaries are not currently a reportable
      segment for which financial information is presented in the financial statements
      and are included and reported in a category called All Other. There is no
      assurance that this business will be successful.





OPERATIONS
      OF SUBSIDIARIES





See
      Note
      13 of Notes to Consolidated Financial Statements in the 2006 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 issue title insurance coverage through its direct operations or through
      partially owned or independent title insurance agents. Title insurance premiums
      written reflect a one-time premium payment, with no recurring premiums.
      Generally, premiums are recorded and recognized as revenue at the time of
      closing of the related transaction as the earnings process is considered
      complete. Where the policy is issued through a title insurance agent, the agent
      retains a commission. Title insurance commissions earned by the Company's agents
      are recognized as expense concurrently with premium recognition. The percentage
      of the premium retained by agents varies by region to region and is sometimes
      regulated by the states.




7





For
      a
      description of the level of net premiums written by direct and agency
      operations, refer to Item 7. Management's Discussion and Analysis of Financial
      Condition and Results of Operations in the 2006 Annual Report to Shareholders
      incorporated by reference in this Form 10-K Annual Report.





Exchange
      Services





ITEC
      and
      ITAC provide customer services in connection with tax-deferred exchanges
      pursuant to Section 1031 of the Internal Revenue Code. Acting as a qualified
      intermediary, ITEC holds the proceeds from sales of relinquished properties
      until the acquisition of identified replacement properties occurs. ITAC
      facilitates tax-deferred reverse exchanges pursuant to IRS Revenue Procedure
      2000-37. These exchanges require ITAC, using funds borrowed on a non-recourse
      basis from the customer or their lender, to acquire the designated replacement
      property on behalf of the customer by taking temporary title to their property
      until after the disposition of identified relinquished property
      occurs.





SEASONALITY
      AND CYCLICALITY





Title
      Insurance





Real
      estate activity is cyclical in nature. 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 changes in mortgage interest rates,
      consumer confidence, economic conditions, supply and demand and family income
      levels. Historically, the winter months have 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
      also affect demand for new mortgage loans and 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.





MARKETING





Title
      Insurance





The
      Company markets its title insurance services to a broad range of customers
      in
      the residential and commercial market sectors of the real estate industry.
      ITIC
      delivers title insurance coverage through a home office, branch offices, and
      issuing agents. In North Carolina, ITIC issues policies primarily through a
      home
      office and 27 branch offices. The Company also has a branch office in South
      Carolina and Nebraska. ITIC also writes title insurance policies through issuing
      agents in the District of Columbia and the States of Alabama, Arkansas, Florida,
      Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan,
      Minnesota, Mississippi, Missouri, Nebraska, North Carolina, Ohio, Pennsylvania,
      South Carolina, Tennessee, Virginia and West Virginia. Issuing agents are
      typically real estate attorneys or subsidiaries of community and regional
      mortgage lending institutions, depending on local customs and regulations and
      the Company’s marketing strategy in a particular territory.




8





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
      general advertising in various trade and professional periodicals.





Exchange
      Services





Marketing
      of exchange services offered by ITEC and ITAC has been 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 or “face amount”of insurance 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.





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. The coverage on a lender's title
      insurance policy is reduced and eventually terminated as the mortgage loan
      it
      secures is paid. An owner's policy is effective as long as the insured has
      an
      ownership interest in the property or has liability under warranties of title.
      Due to the variability of these factors, the aggregate contingent liability
      on
      outstanding policies of the Company and its subsidiaries cannot be determined
      with any precision.





LOSSES
      AND RESERVES





While
      most other forms of insurance provide for the assumption of risk of loss arising
      out of unforeseen events, title insurance is based upon a process of loss
      avoidance. Losses on policies typically occur when a title defect is not
      discovered during the examination and settlement process and the occurrence
      of
      certain hidden risks which cannot be determined from an accurate search of
      public land records. The maximum amount of liability under a title insurance
      policy is generally the face amount of the policy plus the cost of defending
      the
      insured’s title against an adverse claim.




9





Reserves
      for claim losses are established based upon known claims, as well as losses
      incurred but not yet reported to the Company based upon historical experience
      and other factors. Title claims can often be complex, vary greatly in dollar
      amounts and are affected by economic and market conditions and may involve
      uncertainties as to ultimate exposure, and therefore, reserve estimates are
      subject to variability.





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-deferred 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.





REGULATION





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 distributions or 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 and establishing reserves.
      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, approving rate schedules and policy forms, financial reporting and
      accounting practices, defining the types and amounts of investments, 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. Other governmental authorities have the power to enforce state and
      federal laws to which the title insurance subsidiaries are subject, including
      the Real Estate Settlement Procedures Act (“RESPA”).





The
      National Association of Insurance Commissioners (the “NAIC”) has adopted an
      instruction requiring an annual certification of reserve adequacy by a qualified
      actuary. Because all of the states in which the Company’s title insurance
      subsidiaries are domiciled require adherence to NAIC filing procedures, each
      subsidiary must file an actuarial opinion with respect to the adequacy of its
      reserves.





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.




10





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, 2000 through December
      31, 2004. 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, 2000 through December 31, 2005. No material
      deficiencies were noted.





In
      addition to financial examinations, ITIC and NE-ITIC are subject to market
      conduct cap 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
      in
      May 2004 for the period January 1, 2001 through December 31, 2003, with no
      material deficiencies noted. NE-ITIC's last market conduct examination commenced
      in November 2001 for the period January 1, 1998 through December 31, 2000,
      with
      no material deficiencies noted 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 by any regulatory commissions, and neither
      ITEC nor ITAC operate in any states that regulate this industry. ITEC and ITAC
      both provide services to taxpayers pursuant to Internal Revenue Service (“IRS”)
      regulations that provide taxpayers a safe harbor by using a qualified
      intermediary to structure tax-deferred exchanges of property and using an
      exchange accommodation titleholder to hold property in reverse exchange
      transactions. Periodically, changes to the tax code provisions affecting
      like-kind exchanges are considered, which could possibly eliminate the need
      for
      the services the exchange segment provides. In 2006, the IRS proposed new
      regulations which, if adopted, may negatively affect the ability of qualified
      intermediaries to retain a portion of the interest earned on exchange funds
      held
      during exchange transactions. If passed as proposed, these regulations would
      materially adversely impact the exchange services segment and the Company’s net
      income, since the exchange segment’s revenues include a portion of the interest
      income earned on deposits held by the Company. A public hearing on the proposed
      regulations was held on June 6, 2006, but no official response has been issued
      by the IRS on whether or not they plan to finalize the regulations as proposed.




11


Investment
      Management and Trust Services





The
      investment management and trust services division is regulated by the North
      Carolina Commissioner of Banks. Investors Trust was last examined by the North
      Carolina Commissioner of Banks for the period ended December 31, 2005. No
      material deficiencies were noted in the Report of Examination.





COMPETITION





Title
      Insurance





The
      title
      insurance industry is highly competitive. ITIC currently operates primarily
      in
      Kentucky, North Carolina, Michigan, South Carolina, Tennessee, Virginia and
      West
      Virginia and NE-ITIC currently operates in New York. ITIC's and NE-ITIC's
      major competitors together comprise a majority of the title insurance market
      on
      a national level. The number and size of competing companies varies in the
      different geographic areas in which the Company conducts business. 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. Some title
      insurers currently have greater financial resources, larger distribution
      networks and more extensive computerized databases of property records and
      related information than the Company.





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 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 and agents, banks,
      attorneys, and other independently-owned qualified intermediaries 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.





INVESTMENT
      POLICIES





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. The
      Company manages its investment portfolio and does not utilize third party
      investment managers.





See
      Note
      3 of Notes to Consolidated Financial Statements in the 2006 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.




12


EMPLOYEES





The
      Company has no paid employees. Officers of the Company are full-time paid
      employees of ITIC. The Company’s subsidiaries had 229 full-time employees and 25
      part-time employees as of December 31, 2006. None of the employees are covered
      by any collective bargaining agreements. Management considers its relationship
      with its employees to be favorable.





ADDITIONAL
      INFORMATION





The
      Company’s internet address is www.invtitle.com, the contents of which are not
      and shall not be deemed a part of this document or any other U.S. Securities
      and
      Exchange filing. The Company makes available free of charge on its Internet
      website its annual reports 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 (“SEC”). The
      public may read any material it has filed with the SEC at the SEC’s Public
      Reference Room at 100 F. Street, N.E., Washington, D.C. 20549. The Investors
      section of the Company’s website also includes its corporate governance
      guidelines and code of ethics.




**ITEM
      1A. RISK FACTORS**





The
      risk
      factors listed in this section and other factors noted herein or incorporated
      by
      reference could cause actual results to differ materially from those contained
      in any forward-looking statements.





**The
      Company’s results of operations and financial condition are susceptible to the
      changing level of demand for title insurance which is based on the level of
      real
      estate activity, the volume of mortgage refinancing transactions, changes in
      the
      requirements of lenders and other participants in the market, and other
      potential factors.**





The
      demand for the Company’s title insurance and other real estate transaction
      products and services is dependent upon, among other things, the volume of
      commercial and residential real estate transactions and mortgage refinancing
      transactions. The volume of these transactions has historically been influenced
      by factors such as mortgage interest rates and the state of the overall economy.
      When mortgage interest rates are increasing or during an economic downturn
      or
      recession, real estate activity typically declines and the title insurance
      industry tends to experience lower revenues and profitability. The cyclical
      nature of the Company’s business has caused fluctuations in revenues and
      profitability in the past and is expected to do so in the future. Volume is
      a
      key factor in the Company’s profitability due to the existence of fixed costs
      such as personnel and occupancy expenses associated with the support of the
      issuance of title insurance policies and of general corporate operations. The
      volume of real estate transactions also depends in part upon the requirements
      of
      mortgage lenders and participants in the secondary mortgage market that title
      insurance policies be obtained on residential and commercial real property.





Home
      sales and mortgage lending are highly cyclical businesses. Historically, real
      estate transactions have produced seasonal revenue levels for title insurers,
      with residential real estate activity generally slower in the winter, when
      fewer
      families move or buy or sell homes. Therefore, the first calendar quarter is
      typically the weakest quarter in terms of revenue due to the generally low
      volume of home sales. Fluctuations in mortgage interest rates, as well as other
      economic factors, can cause shifts in real estate activity outside the normal
      seasonal pattern.




13





**Differences
      between actual claims experience and underwriting and reserving assumptions
      may
      adversely affect the Company’s financial results.**





The
      Company’s net income depends upon the extent to which its actual claims
      experience is consistent with the assumptions used in establishing reserves
      for
      claims. Reserves for claims are established based on estimates by an independent
      actuary of how much the Company will need to pay for reported as well as
      incurred, but not yet reported claims. In addition, management considers factors
      such as the Company’s historical claims experience, case reserve estimates on
      reported claims, large claims and other relevant factors in determining loss
      provision rates and the aggregate recorded expected liability for claims. Due
      to
      the nature of the underlying risks and the high degree of uncertainty associated
      with the determination of reserves for claims, the Company cannot determine
      precisely the amounts which it will ultimately pay to settle its claims. Such
      amounts may vary from the estimated amounts, particularly when those payments
      may not occur until well into the future. To the extent that actual claims
      experience is less favorable than the underlying assumptions used in
      establishing such liabilities, the Company could be required to increase
      reserves. Title claims can often be complex, vary greatly in dollar amounts
      and
      are affected by economic and market conditions and may involve uncertainties
      as
      to ultimate exposure, and therefore, reserve estimates are subject to
      variability.





**The
      Company’s insurance subsidiaries are subject to complex government
      regulations.**





The
      Company’s title insurance businesses are subject to extensive regulation by
      state insurance authorities in each state in which they operate. These
      regulations are primarily intended for the protection of policyholders. The
      nature and extent of these regulations typically involve, among other matters,
      licensing and renewal requirements and trade and marketing practices. These
      regulations may restrict the Company’s ability to implement rate increases or
      other actions that it may want to take to enhance its operating results or
      have
      a negative impact on its ability to generate revenue and earnings.





**Insurance
      regulations limit the ability of the Company’s insurance subsidiaries to pay
      dividends to it** .





The
      Company is an insurance holding company and has no substantial operations of
      its
      own. The Company’s ability to pay dividends and meet its obligations is
      dependent among other things on the ability of its subsidiaries to pay dividends
      or repay funds to it. The Company’s insurance subsidiaries are subject to
      insurance and other regulations that limit the amount of dividends, loans or
      advances to it based on the amount of adjusted unassigned surplus and net income
      and require these subsidiaries to maintain minimum amounts of capital, surplus
      and reserves. In general, dividends in excess of prescribed limits are deemed
      “extraordinary” and require prior insurance regulatory approval.





These
      dividend restrictions could limit the Company’s ability to pay dividends to its
      stockholders or grow its business. As of December 31, 2006, approximately
      $66,180,000 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. For further discussion of the regulation of
      dividend payments and other transactions between affiliates, see “Liquidity and
      Capital Resources” under Management’s Discussion and Analysis in Item 7 of this
      report.




14





**The
      Company’s non-insurance subsidiaries are also subject to state and federal
      regulations.**





Some
      of
      the Company’s other businesses operate within state and federal guidelines. Any
      changes in the applicable regulatory environment or changes in existing
      regulations could restrict its existing or future operations. Revenues from
      the
      Company’s exchange services segment are closely related to the level of real
      estate transactions, the tax rate on capital gains and other changes in the
      Internal Revenue Code. The Company’s revenues in future periods will continue to
      be subject to these and other factors which are beyond its control. In February
      2006, the IRS proposed new regulations which, if adopted, may negatively affect
      the ability of qualified intermediaries to retain interest earned on exchange
      funds they are holding. If passed as proposed, these regulations would
      materially adversely impact the exchange services segment and the Company’s net
      income, since a significant portion of the exchange segment’s revenues are based
      on retaining a portion of the interest income earned on deposits held by the
      Company.





In
      addition, the investment management and trust services division is regulated
      by
      the North Carolina Commissioner of Banks.





**The
      performance of the Company’s investments depends on conditions that are outside
      its control.**





A
      majority of the Company’s investments consist of fixed-maturity securities.
      Changes in interest rates may have an adverse impact on the market value of
      the
      Company’s investment portfolio and its return on invested cash and could reduce
      the value of its investment portfolio and adversely affect its results of
      operations and financial condition. A smaller percentage of total investments
      are in equities. A change in general economic conditions, the stock market,
      or
      other external factors could adversely affect the value of these investments
      and, in turn, the Company’s results and financial condition.





**The
      Company may encounter difficulties managing growth or rapid technology changes,
      which could adversely affect its results.**





The
      Company has historically achieved revenue growth in part through a combination
      of developing related new products or services and increasing its market share
      for existing products. A portion of the Company’s growth may be in services or
      geographic areas with which management is less familiar than with its core
      business and geographic areas. The expansion of the Company’s business,
      particularly in new services or geographic areas, or significant changes in
      technology may subject it to associated risks, such as the diversion of
      management’s attention, lack of substantial experience in operating such
      businesses and a change in competitive position resulting from rapid technology
      changes.





**Competition
      in the Company’s business affects its revenues** .





The
      title
      insurance industry is highly competitive. Key factors that affect competition
      in
      the title insurance business are price, expertise, timeliness and quality of
      service and the financial strength and size of the insurer. Title companies
      compete for premiums by choosing various distribution channels which may include
      company-owned operations and issuing agency relationships with attorneys,
      lenders, realtors, builders and other settlement service providers. Title
      insurance underwriters compete for agents on the basis of service and commission
      levels. Some title insurers currently have greater financial resources, larger
      distribution networks and more extensive computerized databases of property
      records and related information than the Company. The number and size of
      competing companies varies in the different geographic areas in which we
      operate. Competition among the major providers of title insurance, new entrants
      to the industry or the introduction and acceptance of new alternatives to
      traditional title products by the marketplace could adversely affect the
      Company’s operations and financial condition.




15





**The
      Company’s success relies on its ability to attract and retain key personnel and
      agents.**





Competition
      for skilled and experienced personnel and agents in the Company’s industry is
      high. The Company may have difficulty hiring the necessary marketing and
      management personnel to support any future growth. The loss of any key employee
      or the failure of any key employee to perform in their current position could
      prevent the Company from realizing future growth. Also, the Company cannot
      provide assurance that it will succeed in attracting or retaining new agents.
      Its results of operations and financial condition could be adversely affected
      if
      it is unsuccessful in attracting and retaining agents.





**The
      Company may experience significant claims relating to its title insurance
      operations which would adversely affect its results.**





A
      significant component of the Company’s revenue arises from issuing title
      insurance policies which typically provides coverage for the real property
      mortgage lender and the buyer of the property. The Company also may be subject
      to a legal claim arising from the handling of escrow transactions. The
      occurrence of a significant title or escrow claim in any given period could
      have
      a material adverse effect on the Company’s financial condition and results of
      operations during that period.





**A
      downgrade or a potential downgrade in one of the Company’s financial strength
      ratings could result in a loss of business.**





The
      competitive positions of insurance companies, in general, have come to depend
      increasingly on independent ratings of their financial strength and
      claims-paying ability. A significant downgrade in the ratings of either of
      the
      Company’s policy-issuing subsidiaries could negatively impact its ability to
      compete for new business and retain existing business and 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 adversely affect
      results of operations.





**Regulatory
      and legal actions may result in financial losses and or harm to the Company’s
      reputation.**





The
      title
      insurance industry has recently been, and continues to be, under regulatory
      scrutiny in a number of states with respect to pricing practices, and possible
      Real Estate Settlement Procedures Act (“RESPA”) violations and unlawful rebating
      practices. The regulatory investigations have resulted in settlements and fines
      for other underwriters and could lead to industry-wide reductions in premium
      rates and escrow fees, the inability to get rate increases when necessary,
      as
      well as changes that could adversely affect the Company’s ability to compete for
      or retain business or raise the costs of additional regulatory compliance.
      The
      Department of Housing and Urban Development (HUD) is responsible for enforcing
      RESPA. While timing and content are uncertain, HUD continues to indicate that
      it
      would like to revise RESPA regulations which would result in changes to the
      existing industry regulatory framework that could have a material impact on
      the
      Company’s marketing and operations.





16





**The
      Company may experience losses resulting from regulatory noncompliance, fraud,
      defalcation or misconduct.**





Fraud,
      defalcation, regulatory noncompliance and other misconduct by the Company’s
      agents, approved attorneys and employees are risks inherent in the Company’s
      business. Agents or approved attorneys typically handle large sums of money
      in
      trust pursuant to the closing of real estate transactions and a misappropriation
      of funds by any of these parties could result in title claims.





**The
      Company relies upon North Carolina for about 50% of its title insurance
      premiums.**





North
      Carolina is the largest source of revenue for the title insurance segment and,
      in 2006, North Carolina-based premiums accounted for approximately 50% of
      premiums earned by the Company. A decrease in North Carolina business would
      negatively impact financial operations.





**Key
      accounting and information systems are concentrated in a few
      locations** **.**





The
      Company’s home office, accounting and technology operations are concentrated in
      North Carolina. These critical business operations are subject to interruption
      by natural disasters, fire, power shortages and other events beyond the
      Company’s control. A catastrophic event that results in the destruction or
      disruption of any of the Company’s critical business operations or systems could
      severely affect its ability to conduct normal business operations and, as a
      result, there could be a material and adverse effect on the Company’s business,
      operating results and financial condition.





**Provisions
      of the Company’s shareholder rights plan may make a takeover of our company
      difficult.**





The
      Company has a shareholders rights plan which could discourage transactions
      involving actual or potential changes of control, including transactions that
      otherwise could involve payment of a premium over prevailing market prices
      to
      the Company’s shareholders for their common shares.





**ITEM
      1B. UNRESOLVED STAFF COMMENTS**





None





17


**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
      serve 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 and Nebraska. 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. In November 2005, the Company purchased approximately 7,000
      square feet of additional office space in Chapel Hill, North Carolina that
      was
      previously leased for ITEC, ITAC, ITIC’s Commercial Services Division and ITIC’s
      Settlement Services Division.





**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 results of
      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, 2006.





**EXECUTIVE
      OFFICERS OF THE COMPANY** ****





Following
      is information regarding the executive officers of the Company as of February
      28, 2007. 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.




Name
            
            Age
            
            Position
                with RegistrantJ.
                Allen Fine
            
            72
            
            Chief
                Executive Officer and Chairman of the BoardJames
                A. Fine, Jr.
            
            44
            
            President,
                Treasurer, Chief Financial Officer, Chief Accounting Officer and
                DirectorW.
                Morris Fine
            
            40
            
            Executive
                Vice President, Secretary and
                Director




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.




18





James
      A. Fine, Jr. was
      named Vice President of the Company in 1987. In 1997, he was named President
      and
      Treasurer and appointed as a Director of the Company. He 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, he was named Treasurer
      of
      the Company and served in that capacity until 1997. In 1997, he 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.





19





**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, the dividends paid per common share for each quarter
      in
      the last two fiscal years and the approximate number of shareholders of record
      are set forth under the caption "Common Stock Data" in the 2006 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 Item 7. Management's
      Discussion and Analysis of Financial Condition and Results of Operations
      entitled "Liquidity and Capital Resources" in the 2006 Annual Report to
      Shareholders, incorporated by reference in this Form 10-K Annual Report. 
Additional information required by this item is incorporated by reference in
      the
      2006 Annual Report to Shareholders.




The
      following table provides information about purchases by the Company (and all
      affiliated purchasers) during the quarter ended December 31, 2006 of equity
      securities that are registered by the Company pursuant to Section 12 of the
      Exchange Act:





Issuer
      Purchases of Equity Securities




**Period**
            
            **Total
                Number of Shares****Purchased**
            
            **Average
                Price**
              ******Paid
                per Share**
            
            **Total
                Number of Shares Purchased as Part of Publicly****Announced
                Plan**
            
            **Maximum
                Number of Shares that May Yet Be Purchased Under the****Plan**Beginning
                of period
            
            
            
            
            
            
            
            
            
            
            
            349,11510/01/06
                - 10/31/06
            
            
            -
            
            
            -
            
            
            -
            
            
            349,11511/01/06
                - 11/30/06
            
            
            -
            
            
            -
            
            
            -
            
            
            349,11512/01/06
                - 12/31/06
            
            
            2,342
            
            $
            53.33
            
            
            2,342
            
            
            346,773Total:
            
            
            **2,342**
            
            **$**
            **53.33**
            
            
            **2,342**
            
            
            **346,773**






(1)
            For
                the quarter ended December 31, 2006, ITC purchased an aggregate of
                2,342
                shares of the Company’s common stock pursuant to the purchase plan (the
                “Plan”) that was publicly announced on June 5,
                2000.





(2)
            In
                2000, 2004 and 2005, the Board of Directors of ITIC and ITC approved
                the
                purchase by ITIC or ITC of up to an aggregate of 500,000 and 125,000
                shares of the Company’s common stock pursuant to the Plan. Unless
                terminated earlier by resolution of the Board of Directors, the Plan
                will
                expire when ITC has purchased all shares authorized for purchase
                thereunder.





(3)
            ITC
                intends to make further purchases under this
                Plan.




20




**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 2006
      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 2006 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
      2006 Annual Report to Shareholders is incorporated by reference in this Form
      10-K Annual Report.





**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 2006 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 2006 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 2006 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**





None.





21


**ITEM
      9A. CONTROLS AND PROCEDURES**





**DISCLOSURE
      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. 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, 2006. 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.





**INTERNAL
      CONTROL OVER FINANCIAL REPORTING**


(a)  Management’s
        report on internal control over financial reporting.
  The
        Company’s management report on internal financial reporting is set forth in the
        Company’s 2006 Annual Report under the heading Management’s Report on
        Internal Control over Financial Reporting and is incorporated
        herein by reference.
 
 (b)  Attestation
        report of the registered public accounting firm.
  The
        report of Dixon Hughes PLLC, the Company’s independent registered public
        accounting firm, on management’s assessment of the effectiveness of the
        Company’s internal control over financial reporting and the effectiveness of the
        Company’s internal control over financial reporting is set forth in the
        Company’s 2006 Annual Report under the heading Report of Independent
        Registered Public Accounting Firm on Internal Control and is incorporated
        herein by reference.




**CHANGES
      IN INTERNAL CONTROL OVER FINANCIAL REPORTING**





During
      the quarter ended December 31, 2006, there was no change in the Company's
      internal control over financial reporting that has materially affected, or
      is
      reasonably likely to materially affect, the Company's internal control over
      financial reporting.





**ITEM
      9B. OTHER INFORMATION**





There
      was
      no information required to be disclosed in a report on Form 8-K during the
      fourth quarter of the year that has not been reported.





22


**PART
      III**





**ITEM
      10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE
      REGISTRANT**




The
      information called for by this item is incorporated by reference to the material
      under the captions “Proposal Requiring Your Vote - Election of Directors,”
“Section 16(a) Beneficial Ownership Reporting Compliance,” “Corporate Governance
      - Board of Directors and Committees - the Audit Committee” and “Corporate
      Governance - Code of Business Conduct and Ethics” in the Company's
      definitive Proxy Statement for the Annual Meeting of Shareholders to be held
      on
      May 16, 2007. Other information with respect to the executive officers of
      the Company is included at the end of Part I of this Form 10-K
      Annual Report under the separate caption "Executive Officers of the
      Company."





**ITEM
      11. EXECUTIVE COMPENSATION**





The
      information called for by this item is set forth under the captions “Executive
      Compensation,” “Compensation of Directors,” “Corporate Governance - Compensation
      Committee Interlocks on Insider Participation” and “Compensation Committee
      Report” in the Company's definitive Proxy Statement relating to the Annual
      Meeting of Shareholders to be held on May 16, 2007 and 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**





The
      information pertaining to securities ownership of certain beneficial owners
      and
      management is set forth under the caption “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 16, 2007 and
      is
      incorporated by reference in this Form 10-K Annual Report.




23


The
      following table provides information about the Company’s compensation plans
      under which equity securities are authorized for issuance as of December 31,
      2006. The Company does not have any equity compensation plans that have not
      been
      approved by its shareholders.





**Plan
                Category**
            
            **Number
                of Securities to be Issued Upon Exercise of Outstanding Options,
                Warrants
                and Rights**
            
            **Weighted
                Average Price of Outstanding Options, Warrants and
                Rights**
            
            **Number
                of Securities Remaining Available for Future Issuance Under Equity
                Compensation Plans**Equity
                compensation plans approved by shareholders
            
            
            74,051
            
            $
            21.82
            
            
            238,470Equity
                compensation plans not approved by shareholders
            
            
            -
            
            
            -
            
            
            -Total
            
            
            74,051
            
            $
            21.82
            
            
            238,470




**ITEM
      13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS** **,
      AND DIRECTOR INDEPENDENCE**





The
      information called for by this item is set forth under the captions “Certain
      Relationships and Related Transactions” and “Corporate Governance — Independent
      Directors” set forth in the Company's definitive Proxy Statement relating to the
      Annual Meeting of Shareholders to be held on May 16, 2007 and is incorporated
      by
      reference in this Form 10-K Annual Report.





**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**





The
      information pertaining to principal accountant fees and services is set forth
      under the caption “Independent Registered Public Accounting Firm” in the
      Company's definitive Proxy Statement relating to the Annual Meeting of
      Shareholders to be held on May 16, 2007 is incorporated by reference in this
      Form 10-K Annual Report.





24


**PART
      IV**





**ITEM
      15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**




(a)(1) Financial
      Statements .





The
      following financial statements in the 2006 Annual Report to Shareholders are
      hereby incorporated by reference in this Form 10-K Annual
      Report:


Consolidated
                  Balance Sheets as of December 31, 2006 and 2005Consolidated
                  Statements of Income for the Years Ended December 31, 2006, 2005
                  and 2004Consolidated
                  Statements of Stockholders' Equity for the Years Ended December
                  31, 2006,
                  2005 and 2004Consolidated
                  Statements of Comprehensive Income for the Years Ended December
                  31, 2006,
                  2005 and 2004Consolidated
                  Statements of Cash Flows for the Years Ended December 31, 2006,
                  2005 and
                  2004Notes
                  to Consolidated Financial StatementsReport
                  of Independent Registered Public Accounting FirmManagement’s
                  Report on Internal Control over Financial ReportingReport
                  of Independent Registered Public Accounting Firm on Internal
                  Control
 
 (a)(2) Financial
        Statement Schedules .
 
 Following
        is a list of financial statement schedules filed as part of this Form 10-K
        Annual Report:
 
 Schedule
                  Number
              
              DescriptionI
              
              Summary
                  of Investments - Other Than Investments in Related
                  PartiesII
              
              Condensed
                  Financial Information of RegistrantIII
              
              Supplementary
                  Insurance InformationIV
              
              ReinsuranceV
              
              Valuation
                  and Qualifying Accounts
  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.




25


**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**
              (Registrant)By:
            /s/ J.
              Allen
              FineJ.
                Allen Fine, Chairman and Chief ExecutiveOfficer*(Principal
                Executive Officer)*




March
      9,
      2007





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 9th day of March, 2007.


/s/
                J. Allen Fine
            
            /s/
                James R. MortonJ.
                Allen Fine, Chairman of the Board and
              Chief
                Executive Officer
              *(Principal
                Executive Officer)*
            
            James
                R. Morton, Director/s/
                James A. Fine, Jr.
            
            /s/
                A. Scott Parker IIIJames
                A. Fine, Jr., President, Treasurer and
              Director*(Principal
                Financial Officer and*
              *Principal
                Accounting Officer)*
            
            A.
                Scott Parker III, Director/s/
                W. Morris Fine
            
            /s/
                H. Joe King, Jr.W.
                Morris Fine, Executive Vice President,
              Secretary
                and Director
            
            H.
                Joe King, Jr., Director/s/
                David L. Francis
            
            /s/
                R. Horace JohnsonDavid
                L. Francis, Director
            
            R.
                Horace Johnson, Director/s/
                Loren B. Harrell, Jr.Loren
                B. Harrell, Jr., Director





26


**SCHEDULE
                  I****INVESTORS
                  TITLE COMPANY AND SUBSIDIARIES****SUMMARY
                  OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED
                  PARTIES****As
                  of December 31, 2006****Amount
                  at****which
                  shown****in
                  the****Type
                  of Investment**
              
              **Cost(1)**
              
              **Market
                  Value**
              
              **Balance
                  Sheet (2)****Fixed
                  Maturities:****Bonds:****States,
                  municipalities and political****subdivisions**
              
              $
              97,164,741
              
              $
              97,972,214
              
              $
              97,930,218**Public
                  utilities**
              
              
              199,918
              
              
              201,712
              
              
              201,712**All
                  other corporate bonds**
              
              
              4,810,783
              
              
              5,017,979
              
              
              5,017,979**Short-term
                  investments**
              
              
              4,098,503
              
              
              4,098,503
              
              
              4,098,503**Certificates
                  of deposit**
              
              
              362,408
              
              
              362,408
              
              
              362,408**Total
                  fixed maturities**
              
              
              106,636,353
              
              
              107,652,816
              
              
              107,610,820**Equity
                  Securities:****Common
                  Stocks:****Public
                  utilities**
              
              
              174,489
              
              
              256,841
              
              
              256,841**Banks,
                  trust and insurance companies**
              
              
              70,990
              
              
              498,360
              
              
              498,360**Industrial,
                  miscellaneous and all other**
              
              
              7,989,499
              
              
              11,126,897
              
              
              11,126,897**Nonredeemable
                  preferred stocks**
              
              
              418,025
              
              
              613,825
              
              
              613,825**Total
                  equity securities**
              
              
              8,653,003
              
              
              12,495,923
              
              
              12,495,923**Other
                  Investments**
              
              
              1,473,303
              
              
              
              
              
              1,473,303**Total
                  investments per the consolidated balance sheet**
              
              $
              116,762,659
              
              
              
              
              $
              121,580,046
 
 (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 bondsand
                  fair value for available-for-sale bonds. Equity securities are
                  shown at
                  fair value.
  
  
 **SCHEDULE
                  II****INVESTORS
                  TITLE COMPANY (PARENT COMPANY)****CONDENSED
                  FINANCIAL INFORMATION OF REGISTRANT****BALANCE
                  SHEETS****AS
                  OF DECEMBER 31, 2006 AND 2005**
  **2006**
              
              **2005****Assets**Cash
                  and cash equivalents
              
              $
              194,391
              
              $
              1,755,372Investments
                  in fixed maturities, available-for-sale
              
              
              19,951,713
              
              
              12,249,500Investments
                  in equity securities, available-for-sale
              
              
              127,750
              
              
              130,800Short
                  term investments
              
              
              1,464,032
              
              
              4,482Investments
                  in affiliated companies
              
              
              68,973,229
              
              
              65,072,364Other
                  investments
              
              
              703,296
              
              
              919,486Other
                  receivables
              
              
              410,018
              
              
              204,258Income
                  taxes receivable
              
              
              876,666
              
              
              1,233,462Accrued
                  interest, dividends, and other assets
              
              
              261,793
              
              
              108,201Property,
                  net
              
              
              3,151,099
              
              
              3,256,978Deferred
                  income taxes, net
              
              
              55,551
              
              
              -**Total
                  Assets**
              
              $
              96,169,538
              
              $
              84,934,903**Liabilities
                  and Stockholders' Equity****Liabilities:**Accounts
                  payable and accrued liabilities
              
              $
              893,875
              
              $
              633,407Deferred
                  income taxes, net
              
              
              -
              
              
              4,240Total
                  liabilities
              
              
              893,875
              
              
              637,647**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; 2,507,325and
                  2,549,434 shares issued and outstanding 2006 and 2005,respectively,
                  excluding 291,676 and 297,783 shares 2006 and2005,
                  respectively, of common stock held by the Company's
                  subsidiary)
              
              
              1
              
              
              1Retained
                  earnings
              
              
              92,134,608
              
              
              81,477,022Accumulated
                  other comprehensive income
              
              
              3,141,054
              
              
              2,820,233Total
                  stockholders' equity
              
              
              95,275,663
              
              
              84,297,256**Total
                  Liabilities and Stockholders' Equity**
              
              $
              96,169,538
              
              $
              84,934,903
 
  
  
 **SCHEDULE
                  II****INVESTORS
                  TITLE COMPANY (PARENT COMPANY)****CONDENSED
                  FINANCIAL INFORMATION OF REGISTRANT****STATEMENTS
                  OF INCOME****FOR
                  THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004****2006**
              
              **2005**
              
              **2004****Revenues:**Investment
                  income-interest and dividends
              
              $
              561,400
              
              $
              280,145
              
              $
              124,421Net
                  realized gain (loss) on sales of investments
              
              
              -
              
              
              18,464
              
              
              (12,500
              )Rental
                  income
              
              
              735,431
              
              
              553,222
              
              
              519,991Miscellaneous
                  income (loss)
              
              
              (115,883
              )
              
              70,147
              
              
              69,274Total
              
              
              1,180,948
              
              
              921,978
              
              
              701,186**Operating
                  Expenses:**Office
                  occupancy and operations
              
              
              349,645
              
              
              299,388
              
              
              285,903Business
                  development
              
              
              69,372
              
              
              51,110
              
              
              42,953Taxes-other
                  than payroll and income
              
              
              79,871
              
              
              90,004
              
              
              75,649Professional
                  fees
              
              
              141,501
              
              
              68,245
              
              
              60,161Other
                  expenses
              
              
              110,453
              
              
              78,304
              
              
              59,738Total
              
              
              750,842
              
              
              587,051
              
              
              524,404**Equity
                  in Net Income of Affiliated Cos.***
              
              
              12,710,328
              
              
              12,984,996
              
              
              10,583,384**Income
                  Before Income Taxes**
              
              
              13,140,434
              
              
              13,319,923
              
              
              10,760,166**Provision
                  (Benefit) for Income Taxes**
              
              
              (45,000
              )
              
              27,000
              
              
              41,000**Net
                  Income**
              
              $
              13,185,434
              
              $
              13,292,923
              
              $
              10,719,166**Basic
                  Earnings per Common Share**
              
              $
              5.22
              
              $
              5.19
              
              $
              4.29**Weighted
                  Average Shares Outstanding-Basic**
              
              
              2,527,927
              
              
              2,560,418
              
              
              2,496,711**Diluted
                  Earnings Per Common Share**
              
              $
              5.14
              
              $
              5.10
              
              $
              4.09**Weighted
                  Average Shares Outstanding-Diluted**
              
              
              2,564,216
              
              
              2,607,633
              
              
              2,620,916
  *
                  Eliminated in consolidationSee
                  notes to condensed financial statements.
 
  
  
 **SCHEDULE
                  II**
  **INVESTORS
                  TITLE COMPANY (PARENT COMPANY)****CONDENSED
                  FINANCIAL INFORMATION OF REGISTRANT****STATEMENTS
                  OF CASH FLOWS****FOR
                  THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004****2006**
              
              **2005**
              
              **2004****Operating
                  Activities:**Net
                  income
              
              $
              13,185,434
              
              $
              13,292,923
              
              $
              10,719,166Adjustments
                  to reconcile net income to net cash providedby
                  operating activities:Equity
                  in net earnings of subsidiaries
              
              
              (12,710,329
              )
              
              (12,984,996
              )
              
              (10,583,384
              )Depreciation
              
              
              124,030
              
              
              80,129
              
              
              73,452Amortization
                  (accretion), net
              
              
              (820
              )
              
              (1,391
              )
              
              5,719Issuance
                  of common stock in payment of bonuses and fees
              
              
              5,013
              
              
              -
              
              
              -Net
                  realized (gain) loss on sales of investments
              
              
              -
              
              
              (18,464
              )
              
              12,500Provision
                  (benefit) for deferred income taxes
              
              
              (55,000
              )
              
              33,000
              
              
              59,000(Increase)
                  decrease in receivables
              
              
              (205,760
              )
              
              33,540
              
              
              1,519,069(Increase)
                  decrease in income taxes receivable-current
              
              
              356,796
              
              
              890,455
              
              
              (796,461
              )Increase
                  in prepaid expenses
              
              
              (153,592
              )
              
              (62,488
              )
              
              (28,786
              )Increase
                  (decrease) in accounts payable and accrued liabilities
              
              
              260,468
              
              
              (290,719
              )
              
              (5,357
              )Net
                  cash provided by operating activities
              
              
              806,240
              
              
              971,989
              
              
              974,918**Investing
                  Activities:**Capital
                  contribution to subsidiaries
              
              
              (115,000
              )
              
              (1,178,000
              )
              
              (1,783,000
              )Return
                  of capital contributions from subsidiaries
              
              
              80,000
              
              
              -
              
              
              -Dividends
                  received from subsidiaries
              
              
              9,446,950
              
              
              7,291,120
              
              
              5,050,819Purchases
                  of available-for-sale securities
              
              
              (21,310,774
              )
              
              (9,435,060
              )
              
              (19,518,900
              )Purchases
                  of short-term securities
              
              
              (1,459,550
              )
              
              -
              
              
              (1,012,182
              )Purchases
                  of and net earnings from other investments
              
              
              -
              
              
              (150,000
              )
              
              -Proceeds
                  from sales and maturities of available-for-sale securities
              
              
              13,600,000
              
              
              6,024,040
              
              
              13,267,500Proceeds
                  from sales of short-term securities
              
              
              -
              
              
              1,007,700
              
              
              2,494,742Proceeds
                  from sales and distributions from other investments
              
              
              216,190
              
              
              68,915
              
              
              9,187Purchases
                  of property
              
              
              (18,151
              )
              
              (1,251,285
              )
              
              (50,326
              )Net
                  change in pending trades
              
              
              -
              
              
              (1,027,929
              )
              
              1,027,929Net
                  cash provided by (used in) investing activities
              
              
              439,665
              
              
              1,349,501
              
              
              (514,231
              )**Financing
                  Activities:**Retirement
                  of common stock
              
              
              (2,255,735
              )
              
              (363,765
              )
              
              -Exercise
                  of options
              
              
              55,272
              
              
              -
              
              
              -Dividends
                  paid (net dividends paid to subsidiary of $70,401, $46,717 and
                  $53,936in
                  2006, 2005 and 2004, respectively)
              
              
              (606,423
              )
              
              (410,202
              )
              
              (374,425
              )Net
                  cash used in financing activities
              
              
              (2,806,886
              )
              
              (773,967
              )
              
              (374,425
              )**Net
                  Increase (Decrease) in Cash and Cash Equivalents**
              
              
              (1,560,981
              )
              
              1,547,523
              
              
              86,262**Cash
                  and Cash Equivalents, Beginning of Year**
              
              
              1,755,372
              
              
              207,849
              
              
              121,587**Cash
                  and Cash Equivalents, End of Year**
              
              $
              194,391
              
              $
              1,755,372
              
              $
              207,849**Supplemental
                  Disclosures:****Cash
                  Paid During the Year For:**Income
                  Taxes
              
              $
              342,938
              
              $
              896,000
              
              $
              781,000Non
                  cash net unrealized gain/loss on investment
              
              $
              (12,431
              )
              $
              11,489
              
              $
              (80,263
              )
  See
                  notes to condensed financial statements.
 
  
  
 **SCHEDULE
                  II**
  **INVESTORS
                  TITLE COMPANY AND SUBSIDIARIES****CONDENSED
                  FINANCIAL INFORMATION OF REGISTRANT****NOTES
                  TO THE 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 subsidiaries
                  were as follows:
 
 Subsidiaries
              
              2006
              
              2005
              
              2004Investors
                  Title Insurance Company, net*
              
              $
              4,976,950
              
              $
              4,546,120
              
              $
              3,950,819Investors
                  Title Exchange Corporation
              
              
              4,125,000
              
              
              2,250,000
              
              
              1,100,000Investors
                  Title Accomodation Corporation
              
              
              170,000
              
              
              195,000
              
              
              -Investors
                  Title Management Services, Inc.
              
              
              60,000
              
              
              275,000
              
              
              -Investors
                  Title Commercial Agency
              
              
              115,000
              
              
              25,000
              
              
              -$
              9,446,950
              
              $
              7,291,120
              
              $
              5,050,819
  *
              Total
                  dividends of $5,047,351, $4,592,837 and $4,004,755 paid to the
                  Parent
                  Company in 2006, 2005 and 2004, respectively, netted with dividends
                  of
                  $70,401, $46,717 and $53,936 received from the Parent in 2006,
                  2005 and
                  2004, respectively.
 
  
  
 **SCHEDULE
                  III**
  **INVESTORS
                  TITLE COMPANY AND SUBSIDIARIES****SUPPLEMENTARY
                  INSURANCE INFORMATION****For
                  the Years Ended December 31, 2006, 2005 and
                  2004**
  **Future****Policy**
              
              
              
              **Other**
              
              
              
              
              
              **Benefits****Benefits,**
              
              
              
              **Policy**
              
              
              
              
              
              **Claims,**
              
              **Amortization****Deferred**
              
              **Losses,**
              
              
              
              **Claims**
              
              
              
              
              
              **Losses**
              
              **of
                  Deferred****Policy**
              
              **Claims**
              
              
              
              **and**
              
              
              
              **Net**
              
              **and**
              
              **Policy**
              
              **Other****Acquisition**
              
              **and
                  Loss**
              
              **Unearned**
              
              **Benefits**
              
              **Premium**
              
              **Investment**
              
              **Settlement**
              
              **Acquisition**
              
              **Operating**
              
              **Premiums****Segment**
              
              **Cost**
              
              **Expenses**
              
              **Premiums**
              
              **Payable**
              
              **Revenue**
              
              **Income**
              
              **Expenses**
              
              **Costs**
              
              **Expenses**
              
              **Written****Year
                  Ended****December
                  31, 2006****Title
                  Insurance**
              
              
              ---
              
              $
              36,906,000
              
              
              ---
              
              $
              470,468
              
              $
              70,196,467
              
              $
              3,688,966
              
              $
              7,405,211
              
              
              ---
              
              $
              55,557,492
              
              
              N/A**Exchange
                  Services**
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              18,138
              
              
              ---
              
              
              ---
              
              
              1,346,743
              
              
              N/A**All
                  Other**
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              619,231
              
              
              ---
              
              
              ---
              
              
              3,022,836
              
              
              N/A---
              
              $
              36,906,000
              
              
              ---
              
              $
              470,468
              
              $
              70,196,467
              
              $
              4,326,335
              
              $
              7,405,211
              
              
              ---
              
              $
              59,927,071**Year
                  Ended****December
                  31, 2005****Title
                  Insurance**
              
              
              ---
              
              $
              34,857,000
              
              
              ---
              
              $
              442,098
              
              $
              76,522,266
              
              $
              2,993,149
              
              $
              8,164,783
              
              
              ---
              
              $
              57,850,106
              
              
              N/A**Exchange
                  Services**
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              18,463
              
              
              ---
              
              
              ---
              
              
              907,414
              
              
              N/A**All
                  Other**
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              324,155
              
              
              ---
              
              
              ---
              
              
              2,358,652
              
              
              N/A---
              
              $
              34,857,000
              
              
              ---
              
              $
              442,098
              
              $
              76,522,266
              
              $
              3,335,767
              
              $
              8,164,783
              
              
              ---
              
              $
              61,116,172**Year
                  Ended****December
                  31, 2004****Title
                  Insurance**
              
              
              ---
              
              $
              31,842,000
              
              
              ---
              
              $
              551,662
              
              $
              71,843,445
              
              $
              2,597,355
              
              $
              7,984,339
              
              
              ---
              
              $
              53,456,152
              
              
              N/A**Exchange
                  Services**
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              7,821
              
              
              ---
              
              
              ---
              
              
              640,183
              
              
              N/A**All
                  Other**
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              ---
              
              
              147,662
              
              
              ---
              
              
              ---
              
              
              2,258,336
              
              
              N/A---
              
              $
              31,842,000
              
              
              ---
              
              $
              551,662
              
              $
              71,843,445
              
              $
              2,752,838
              
              $
              7,984,339
              
              
              ---
              
              $
              56,354,671
 
  
 
 **SCHEDULE
                  IV****INVESTORS
                  TITLE COMPANY AND SUBSIDIARIES****REINSURANCE****For
                  the Years Ended December 31, 2006, 2005 and 2004**
  **Ceded
                  to**
              
              **Assumed
                  from**
              
              
              
              **Percentage
                  of****Gross**
              
              **Other**
              
              **Other**
              
              **Net**
              
              **Amount****Amount**
              
              **Companies**
              
              **Companies**
              
              **Amount**
              
              **Assumed
                  to Net****YEAR
                  ENDED****DECEMBER
                  31, 2006****Title
                  Insurance**
              
              $
              70,615,891
              
              $
              441,582
              
              $
              22,158
              
              $
              70,196,467
              
              
              0.03
              %**YEAR
                  ENDED****DECEMBER
                  31, 2005****Title
                  Insurance**
              
              $
              76,817,423
              
              $
              316,133
              
              $
              20,976
              
              $
              76,522,266
              
              
              0.03
              %**YEAR
                  ENDED****DECEMBER
                  31, 2004****Title
                  Insurance**
              
              $
              72,132,121
              
              $
              294,639
              
              $
              5,963
              
              $
              71,843,445
              
              
              0.01
              %
 
  
  **SCHEDULE
                  V**
  **INVESTORS
                  TITLE COMPANY AND SUBSIDIARIES****VALUATION
                  AND QUALIFYING ACCOUNTS****For
                  the Years Ended December 31, 2006, 2005 and 2004****Balance
                  at**
              
              **Additions**
                  **Charged
                    to**
              
              **Additions
                  Charged**
                **to
                    Other****Beginning**
              
              **Costs
                  and**
              
              **Accounts
                  -**
              
              **Deductions-**
              
              
              
              **Balance
                  at****Description**
              
              **of
                  Period**
              
              **Expenses**
              
              **Describe**
              
              **describe***
              
              
              
              **End
                  of Period****2006****Premiums
                  Receivable****Valuation
                  Provision**
              
              $
              2,444,000
              
              $
              4,927,691
              
              $
              -
              
              $
              (5,243,691
              )
              (a)
              
              $
              2,128,000**Reserves
                  for****Claims**
              
              $
              34,857,000
              
              $
              7,405,211
              
              $
              -
              
              $
              (5,356,211
              )
              (b)
              
              $
              36,906,000**2005****Premiums
                  Receivable****Valuation
                  Provision**
              
              $
              2,240,000
              
              $
              5,399,734
              
              $
              -
              
              $
              (5,195,734
              )
              (a)
              
              $
              2,444,000**Reserves
                  for****Claims**
              
              $
              31,842,000
              
              $
              8,164,783
              
              $
              -
              
              $
              (5,149,783
              )
              (b)
              
              $
              34,857,000**2004****Premiums
                  Receivable****Valuation
                  Provision**
              
              $
              2,474,000
              
              $
              5,745,114
              
              $
              -
              
              $
              (5,979,114
              )
              (a)
              
              $
              2,240,000**Reserves
                  for****Claims**
              
              $
              30,031,000
              
              $
              7,984,339
              
              $
              -
              
              $
              (6,173,339
              )
              (b)
              
              $
              31,842,000
 
 **(a)
                    Cancelled premiums****(b)
                    Payments of claims, net of recoveries**
 **INDEX
          TO EXHIBITS**
  Exhibit
                  Number
                
                Description3(i)
                
                Articles
                    of Incorporation dated January 22, 1973, incorporated by reference
                    to
                    Exhibit 1 to Form 10 dated June 12, 19843(ii)
                
                Bylaws
                    - Restated and Amended as of May 21, 2003, incorporated by reference
                    to
                    Exhibit 3(ii) to Form 10-K for the year ended December 31,
                    20034
                
                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,
                    200210(i)
                
                1997
                    Stock Option and Restricted Stock Plan, incorporated by reference
                    to
                    Exhibit 10(viii) to Form 10-K for the year ended December 31,
                    199610(ii)
                
                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, 199710(iii)
                
                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, 199710(iv)
                
                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, 199710(v)
                
                Form
                    of Amendment to Incentive Stock Option Agreement between Investors
                    Title
                    Company and George Abbitt Snead,  incorporated by reference to
                    Exhibit 10(xii) to Form 10-Q for the quarter ended June 30,
                    200010(vi)
                
                2001
                    Stock Option and Restricted Stock Plan, incorporated by reference
                    to
                    Exhibit 10(xiii) to Form 10-K for the year ended December 31,
                    200010(vii)
                
                Form
                    of Employment Agreement dated November 17, 2003 with each of
                    J. Allen
                    Fine, James A. Fine, Jr. and W. Morris Fine, incorporated by
                    reference to
                    Exhibit 10(ix) to Form 10-K for the year ended December 31,
                    200310(viii)
                
                Amended
                    and Restated Employment Agreement dated June 1, 2004 with J.
                    Allen Fine,
                    incorporated by reference to Exhibit 10(x) to Form 10-Q for the
                    quarter
                    ended June 30, 200410(ix)
                
                Form
                    of Amended and Restated Employment Agreement dated June 1, 2004
                    with each
                    of James A. Fine, Jr. and W. Morris Fine, incorporated by reference
                    to
                    Exhibit 10(xi) to Form 10-Q for the quarter ended June 30,
                      2004
  
  10(x)
                
                Nonqualified
                    Deferred Compensation Plan dated June 1, 2004, incorporated by
                    reference
                    to Exhibit 10(xii) to Form 10-Q for the quarter ended June 30,
                    200410(xi)
                
                Nonqualified
                    Supplemental Retirement Benefit Plan dated November 17, 2003,
                    incorporated
                    by reference to Exhibit 10(xiii) to Form 10-Q for the quarter
                    ended June
                    30, 200410(xii)
                
                Death
                    Benefit Plan Agreement dated April 1, 2004 with J. Allen Fine,
                    incorporated by reference to Exhibit 10(xiv) to Form 10-Q for
                    the quarter
                    ended June 30, 200410(xiii)
                
                Death
                    Benefit Plan Agreement dated May 19, 2004 with James A. Fine,
                    Jr.,
                    incorporated by reference to Exhibit 10(xv) to Form 10-Q for
                    the quarter
                    ended June 30, 200413
                
                Portions
                    of 2006 Annual Report to Shareholders incorporated by reference
                    in this
                    report as set forth in Parts I, II and IV hereof14
                
                Code
                    of Business Conduct and Ethics, incorporated by reference to
                    Exhibit 14 to
                    Form 10-K for the year ended December 31, 200316
                
                Letter
                    regarding Change in Certifying Accountant, incorporated by reference
                    to
                    Exhibit 16 to Form 8-K dated September 24, 200421
                
                Subsidiaries
                    of Registrant, incorporated by reference to Exhibit 21 to Form
                    10-K for
                    the year ended December 31, 200323
                
                Consent
                    of Dixon Hughes PLLC31(i)
                
                Certification
                    of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                    Act of 200231(ii)
                
                Certification
                    of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                    Act of 200232
                
                Certification
                    of Chief Executive Officer and Chief Financial Officer pursuant
                    to Section
                    906 of the Sarbanes-Oxley Act of
                    2002