If one or more of the variables or assumptions used changed such that the Company’s recorded loss ratio, or loss provision as a percentage of net title premiums, increased or decreased three loss ratio percentage points, the impact on after-tax income for the year ended December 31, 2013, would be as follows. Company management believes that using a sensitivity of three loss percentage points for the loss ratio provides a reasonable benchmark for analysis of the calendar year loss provision of the Company based on historical loss ratios by year.
Net Premiums and Title Orders: Net premiums written increased 11.3% in 2013 to $113,886,266 compared with $102,331,102 in 2012 and increased 25.5% in 2012 compared with $81,529,333 in 2011. The volume of title orders increased 0.2% in 2013 to 240,639 compared with 240,233 in 2012 and increased 17.6% in 2012 compared with 204,230 in 2011. The increase in net premiums written and title orders in 2013 compared with 2012 is primarily attributable to an increase in purchase transactions. Purchase transactions typically have higher premium rates than refinance transactions. The increase in net premiums written and title orders in 2012 from 2011 was attributable to widespread volume increases across multiple markets, as overall mortgage activity increased substantially for both refinancing and purchasing transactions. Additionally, new industry-wide premium charges and rate increases for certain markets also contributed to the increase in premiums.
Title claims are typically reported and paid within the first several years of policy issuance. The provision for claims reflects actual payments of claims, net of recovery amounts, plus adjustments to the specific and incurred but not reported claims reserves, the latter of which are actuarially determined based on historical claims experience. Actual payments of claims, net of recoveries, were $3,146,404, $4,990,115 and $3,545,127 in 2013, 2012 and 2011, respectively.
The Company reported net income attributable to the Company of $14,708,210, $11,102,496 and $6,933,936, or $7.08, $5.24 and $3.20 per share on a diluted basis in 2013 , 2012 and 2011, respectively. Contributing to the increase in net income attributable to the Company in 2013, total revenues for 2013 increased 9.7% compared with 2012, while expenses increased 5.8% compared with 2012. The increase in revenues and expenses in 2013 primarily related to higher premiums and commissions, associated with higher levels of purchase transactions and increased home values. Additionally, the benefit for claims contributed to net income attributable to the Company. Total revenues increased 26.9% in 2012 compared with 2011, while expenses increased 21.9% compared with 2011. The increases in both revenues and expenses in 2012 was attributable to widespread volume increases across multiple markets, as overall mortgage activity increased substantially, as well as new industry-wide premium charges and rate increases for certain markets.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Reclassification - Certain 2012 and 2011 amounts in the accompanying unaudited Consolidated Financial Statements have been reclassified to conform to the 2013 classifications. These reclassifications had no effect on stockholders’ equity or net income as previously reported.
The Company has designated approximately $47,405,000 and $44,829,000 of retained earnings as of December 31, 2013 and 2012, respectively, as appropriated to reflect the required statutory premium and supplemental reserves. See Note 8 for the tax treatment of the statutory premium reserve.
Regulation. The Company’s title insurance and trust subsidiaries are regulated by various federal, state and local governmental agencies and are subject to various audits and inquiries. It is the opinion of management based on its present expectations that these audits and inquiries will not have a material impact on the Company’s consolidated financial condition or operations.