Net realized investment gains/losses-Net realized investment gains totaled $9.8 million in 2004 and $35.7 million in 2003. Net realized investment losses totaled $18.9 million in 2002. The 2004 total included realized gains totaling $8.5 million relating to the issuance of shares by the Company’s publicly traded subsidiary, First Advantage Corporation. The 2003 total included the recognition of a previously deferred gain totaling $14.2 million relating to the sale of the Company’s Contour Software, Inc. subsidiary in the first quarter of 2001. Also included in the 2003 total was a $13.1 million realized gain associated with the merger of the Company’s Credit Online business with DealerTrack Holdings, Inc. The 2002 investment losses included a $13.6 million loss resulting from the write-down of WorldCom bonds; a $2.6 million loss associated with the sale of the Company’s subsidiary, FASTRAC Systems, Inc.; and $2.3 million of losses due to the restructuring of the 1031 tax-deferred exchange investment portfolio.
Financial Services. The Company’s title insurance segment comprised 97.0% of total salaries and other personnel costs for the Financial Services group. The title insurance segment (primarily direct operations) is labor intensive; accordingly, a major variable expense component is salaries and other personnel costs. This expense component is affected by two competing factors: the need to monitor personnel changes to match corresponding or anticipated new orders, and the need to provide quality service. In addition, this segment’s growth in operations that specialize in builder and lender title business has created ongoing fixed costs required to service accounts.
On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets” (SFAS 144). This standard requires that the Company test long-lived assets for impairment whenever there are recognized events or changes in circumstances that could affect the carrying value of the long-lived assets. In accordance with SFAS 144, management uses estimated expected future cash flows (undiscounted and excluding interest costs) to measure the recoverability of long-lived assets held and used. As of December 31, 2004 and 2003, no indications of impairment were identified. SFAS 144 also requires that long-lived assets classified as held for sale be carried at the lower of cost or market as of the date the criteria established by SFAS 144 have been met. As of December 31, 2004 and 2003, no long-lived assets were classified as held for sale.
The Company administers escrow and trust deposits as a service to its customers. Escrow deposits totaled $4.8 billion and $4.5 billion at December 31, 2004 and 2003, respectively, of which $337.4 million and $247.8 million were held at the Company’s trust and thrift division. The escrow deposits held at the Company’s trust and thrift division are included in the accompanying consolidated balance sheets, with $43.3 million and $54.3 million included in cash and cash equivalents and $294.1 million and $193.5 million included in debt securities at December 31, 2004 and 2003, respectively. The remaining escrow deposits were held at third party financial institutions. Trust deposits totaled $2.9 billion and $2.3 billion at December 31, 2004 and 2003, respectively, and were held at the Company’s trust division. Escrow deposits held at third party financial institutions and trust deposits are not considered assets of the Company and, therefore, are not included in the accompanying consolidated balance sheets. However, the Company remains contingently liable for the disposition of these assets.
Included in the domestic equities amount above are common shares of the Company with a market value of $14.3 million as of December 31, 2004. The Company expects to make cash contributions to its pension plans of approximately $29.9 million during 2005.
Each Right will entitle its holder to purchase, at the Right’s then-current exercise price, preferred share fractions (or other securities of the Company) having a value of twice the Right’s exercise price. This amounts to the right to buy preferred share fractions of the Company at half price. Rights owned by the party triggering the exercise of Rights will be void and, therefore, will not be exercisable.