in 2008 compared with 2007 and 7.0% in 2007 compared with 2006. The decrease in 2008 reflects the economic downturn. Of the Company’s 29 branch locations that underwrite title insurance policies, 27 are located in North Carolina, and as a result, branch premiums written primarily represent North Carolina business.
The Company’s investment policies have been designed to balance multiple investment goals, including, to assure a stable source of income from interest and dividends, protect capital, provide sufficient liquidity to meet insurance underwriting and other obligations as they become payable in the future and capital appreciation. Dispositions of equity securities at a realized gain or loss reflect such factors as industry sector allocation decisions, ongoing assessments of issuers’ business prospects and tax planning considerations. Additionally, the amount of net realized investment gains and losses are affected by assessments of securities’ valuation for other-than-temporary impairment. As a result of the interaction of these factors and considerations, net realized investment gains or losses can vary significantly from period to period. The Company generally intends to hold securities in unrealized loss positions until they mature or recover. However, the Company does sell securities under certain circumstances, such as when it has evidence of a significant deterioration in the issuer’s creditworthiness.
(Loss) Profit Margin: The Company’s title insurance profit margin varies according to a number of factors, including the volume and type of real estate activity. (Loss) profit margins for the title insurance segment were (1.4%), 8.6% and 12.7% in 2008, 2007 and 2006, respectively. The net margins for 2008 and 2007 were primarily affected by the increase in the provision for claims.
We have audited the accompanying consolidated balance sheets of Investors Title Company and Subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2008. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
Principles of Consolidation and Basis of Presentation-The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
Reclassification-Certain 2007 and 2006 amounts in the accompanying consolidated financial statements have been reclassified to conform to the 2008 classifications. These reclassifications had no effect on stockholders’ equity or net income as previously reported.
For the purpose of presentation in the Company’s statements of cash flows, cash equivalents are highly liquid instruments with original maturities of three months or less. The carrying amount of cash and cash equivalents is a reasonable estimate of fair value due to the short-term maturity of these instruments.
At December 31, 2008 and 2007, no valuation allowance was recorded. Based upon the Company’s historical results of operations, the existing financial condition of the Company and management’s assessment of all other available information, management believes that it is more likely than not that the benefit of these net deferred income tax assets will be realized.