October 26, 2023, Santa Ana, Calif.
First American Financial Corporation (NYSE: FAF), a premier provider of title, settlement and risk solutions for real estate transactions and the leader in the digital transformation of its industry, today announced financial results for the third quarter ended Sept. 30, 2023.
Download the complete press release as a PDF(opens in a new tab/window)
Current Quarter Highlights
- Earnings per diluted share of ($0.02), or $1.22 per share on an adjusted basis
- Net investment losses of $164 million, or $1.17 per diluted share, primarily due to unrealized losses recognized in the venture portfolio and changes in the fair market value of equity securities
Selected Financial Information
($ in millions, except per share data)
|
|
|
Three Months Ended |
|
|||||
|
|
|
September 30, |
|
|||||
|
|
|
2023 |
|
|
2022 |
|
||
|
Total revenue |
|
$ |
1,481.2 |
|
|
$ |
1,824.3 |
|
|
Income/(loss) before taxes |
|
$ |
(1.7 |
) |
$ |
(3.2 |
) |
|
|
|
|
|
|
|
|
|
||
|
Net income/(loss) |
|
$ |
(1.7 |
) |
|
$ |
2.0 |
|
|
Net income/(loss) per diluted share |
|
$ |
(0.02 |
) |
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
||
|
Adjusted net income |
|
$ |
128.2 |
|
|
$ |
176.8 |
|
|
Adjusted net income per diluted share |
|
$ |
1.22 |
|
|
$ |
1.68 |
|
Total revenue for the third quarter of 2023 was $1.5 billion, down 19 percent compared with the third quarter of 2022. Net loss in the current quarter was $2 million, or 2 cents per diluted share, compared with net income of $2 million, or 2 cents per diluted share, in the third quarter of 2022. Net investment losses in the current quarter were $164 million, or $1.17 per diluted share, compared with net investment losses of $226 million, or $1.60 per diluted share, in the third quarter of last year. The net investment losses in both periods were primarily due to unrealized losses recognized in the company’s venture portfolio. Adjusted net income in the current quarter was $128 million, or $1.22 per diluted share, compared with $177 million, or $1.68 per diluted share, in the third quarter of last year.
“The rapid increase in interest rates to levels not seen in many years continues to produce challenging market conditions,” said Ken DeGiorgio, chief executive officer at First American Financial Corporation. “With housing affordability currently at its lowest point in over three decades, existing home sales this year have declined to the slowest annual pace since the global financial crisis. Moreover, sales volumes in the commercial market have reverted to pandemic-low levels, and are down approximately 50% from the peak year of 2021. Despite these historically difficult conditions, our continued focus on expense management and strong growth in net investment income enabled us to deliver a pretax title margin of 10.5 percent this quarter, or 12.0 percent on an adjusted basis.
“We expect that difficult market conditions will persist well into next year and continue to weigh on both our residential and commercial businesses. However, our financial discipline and strong balance sheet allow us to continue to invest in strategic initiatives that support long-term growth, while returning capital to shareholders. This quarter, we raised the common stock dividend and continued to repurchase shares, which we have accelerated in October.
“Given the importance of people to our business, I am pleased that First American has been named one of the Best Workplaces for Women by Great Place to Work® and Fortune magazine for the eighth consecutive year. This accomplishment is a tribute to our world-class culture and our workforce, approximately two-thirds of which are women.”
Title Insurance and Services
($ in millions, except average revenue per order)
|
|
|
Three Months Ended |
|
|||||
|
|
|
September 30, |
|
|||||
|
|
|
2023 |
|
|
2022 |
|
||
|
Total revenues |
|
$ |
1,524.4 |
|
|
$ |
1,883.0 |
|
|
|
|
|
|
|
|
|
||
|
Income before taxes |
|
$ |
160.3 |
|
|
$ |
184.6 |
|
|
Pretax margin |
|
|
10.5 |
% |
|
|
9.8 |
% |
|
Adjusted pretax margin |
|
|
12.0 |
% |
|
|
13.3 |
% |
|
|
|
|
|
|
|
|
||
|
Title open orders(1) |
|
|
157,300 |
|
|
|
206,200 |
|
|
Title closed orders(1) |
|
|
120,000 |
|
|
|
160,500 |
|
|
|
|
|
|
|
|
|
||
|
U.S. Commercial |
|
|
|
|
|
|
||
|
Total revenues |
|
$ |
159.8 |
|
|
$ |
260.2 |
|
|
Open orders |
|
|
25,200 |
|
|
|
30,900 |
|
|
Closed orders |
|
|
14,800 |
|
|
|
20,600 |
|
|
Average revenue per order |
|
$ |
10,800 |
|
|
$ |
12,600 |
|
|
(1) U.S. direct title insurance orders only. |
|
|
|
|
|
|
Total revenues for the Title Insurance and Services segment during the third quarter were $1.5 billion, down 19 percent compared with the same quarter of 2022. Direct premiums and escrow fees declined 25 percent compared with the third quarter of 2022, driven by a 25 percent decline in the number of direct title orders closed and a 2 percent decline in the average revenue per order closed. The average revenue per direct title order decreased to $3,653, primarily attributable to the impact of lower average revenue per order for commercial transactions. Agent premiums, which are recorded on approximately a one-quarter lag relative to direct premiums, declined 27 percent in the current quarter as compared with last year.
Information and other revenues were $240 million during the quarter, down $39 million, or 14 percent, compared with last year. This decline was primarily due to reduced demand for the company’s data and property information products and post-close and document generation services.
Investment income was $142 million in the third quarter, up $37 million, or 35 percent, compared with the same quarter last year. The increase was primarily due to rising interest rates, which drove higher interest income from the company’s cash and investment portfolio, escrow balances and tax-deferred property exchange balances. The impact of higher interest rates was partly offset by lower average balances, primarily in the company’s escrow and tax-deferred exchange balances. Net investment losses totaled $16 million in the current quarter, compared with net investment losses of $67 million in the third quarter of 2022. Net investment losses in the current quarter were primarily due to the change in the fair value of marketable equity securities, compared with net investment losses in the third quarter of last year that were primarily due to losses on the sale of fixed-income securities in connection with the company’s tax planning efforts.
Personnel costs were $469 million in the third quarter, down $86 million, or 15 percent, compared with the same quarter of 2022. The decline in personnel costs was primarily due to lower incentive compensation as a result of the decline in revenue and profitability, and a decline in salary, payroll tax and employee benefit expense, driven by fewer employees. Severance expense in the current quarter totaled $4 million.
Other operating expenses were $243 million in the third quarter, a decrease of $41 million, or 14 percent, compared with the third quarter of 2022. The decrease was primarily attributable to lower production expense across several business units due to lower transaction volumes, and reduced discretionary expense.
The provision for policy losses and other claims was $35 million in the third quarter, or 3.0 percent of title premiums and escrow fees, down from the 4.0 percent loss provision rate in the prior year. The third quarter rate reflects an ultimate loss rate of 3.75 percent for the current policy year and a net decrease of $9 million in the loss reserve estimate for prior policy years.
Depreciation and amortization expense was $46 million in the third quarter, up $6 million, or 15 percent, compared with the same period last year, due to higher amortization of software.
Interest expense was $24 million in the current quarter, up $14 million, or 151 percent from last year primarily due to higher cost of funds on deposit balances at the company’s banking operations.
Pretax income for the Title Insurance and Services segment was $160 million in the third quarter, compared with $185 million in the third quarter of 2022. Pretax margin was 10.5 percent in the current quarter, compared with 9.8 percent last year. Adjusted pretax margin was 12.0 percent in the current period, compared with 13.3 percent last year.
Home Warranty
($ in millions)
|
|
|
Three Months Ended |
|
|||||
|
|
|
September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
|||
|
Total revenues |
|
$ |
108.2 |
|
$ |
104.9 |
|
|
|
|
|
|
|
|
|
|
||
|
Income before taxes |
|
$ |
9.4 |
|
|
$ |
4.2 |
|
|
Pretax margin |
|
|
8.7 |
% |
|
|
4.0 |
% |
|
Adjusted pretax margin |
|
|
9.3 |
% |
|
|
5.4 |
% |
Total revenues for the Home Warranty segment were $108 million in the third quarter, up 3 percent, compared with the third quarter of 2022. The segment posted pretax income of $9 million this quarter, compared with $4 million last year. The claim loss rate was 55.0 percent in the third quarter, compared with 58.9 percent last year, due to fewer claims and lower claim severity. Home Warranty’s pretax margin was 8.7 percent this quarter, compared with 4.0 percent last year. Adjusted pretax margin was 9.3 percent this quarter, compared with 5.4 percent last year.
Corporate
Net investment income was a loss of $4 million this quarter, primarily attributable to changes in the value of investments associated with the company’s deferred compensation program. This amount was largely offset by lower personnel expense reflecting returns on the plan participants’ investments.
Net investment losses were $147 million this quarter, compared with losses of $157 million last year, primarily due to unrealized losses recognized in the company’s venture portfolio in both periods.
Overall, the Corporate segment posted a pretax loss of $171 million in the third quarter.
Teleconference/Webcast
First American’s third quarter 2023 results will be discussed in more detail on Thursday, Oct. 26, 2023, at 11 a.m. EDT, via teleconference. The toll-free dial-in number is +1-877-407-8293. Callers from outside the United States may dial +1-201-689-8349.
The live audio webcast of the call will be available on First American’s website at www.firstam.com/investor. An audio replay of the conference call will be available through Nov. 9, 2023, by dialing +1-201-612-7415 and using the conference ID 13741673. An audio archive of the call will also be available on First American’s investor website.
About First American
First American Financial Corporation (NYSE: FAF) is a premier provider of title, settlement and risk solutions for real estate transactions. With its combination of financial strength and stability built over more than 130 years, innovative proprietary technologies, and unmatched data assets, the company is leading the digital transformation of its industry. First American also provides data products to the title industry and other third parties; valuation products and services; mortgage subservicing; home warranty products; banking, trust and wealth management services; and other related products and services. With total revenue of $7.6 billion in 2022, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2023, First American was named one of the 100 Best Companies to Work For by Great Place to Work® and Fortune Magazine for the eighth consecutive year and was named one of the 100 Best Workplaces for Innovators by Fast Company. More information about the company can be found at www.firstam.com.
Website Disclosure
First American posts information of interest to investors at www.firstam.com/investor. This includes opened and closed title insurance order counts for its U.S. direct title insurance operations, which are posted approximately 10 to 12 days after the end of each month.
Forward-Looking Statements
Use of Non-GAAP Financial Measures
|
First American Financial Corporation |
|
|||||||||||||||
|
Summary of Consolidated Financial Results and Selected Information |
|
|||||||||||||||
|
(in millions, except per share amounts and title orders, unaudited) |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
|
Total revenues |
|
$ |
1,481.2 |
|
|
$ |
1,824.3 |
|
|
$ |
4,574.2 |
|
|
$ |
5,920.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
(Loss) income before income taxes |
|
$ |
(1.7 |
) |
|
$ |
(3.2 |
) |
|
$ |
236.0 |
|
|
$ |
268.0 |
|
|
Income tax (benefit) expense |
|
|
(0.5 |
) |
|
|
(5.6 |
) |
|
|
54.8 |
|
|
|
57.3 |
|
|
Net (loss) income |
|
|
(1.2 |
) |
|
|
2.4 |
|
|
|
181.2 |
|
|
|
210.7 |
|
|
Less: Net income (loss) attributable to noncontrolling interests |
|
|
0.5 |
|
|
|
0.4 |
|
|
|
(1.5 |
) |
|
|
2.0 |
|
|
Net (loss) income attributable to the Company |
|
$ |
(1.7 |
) |
|
$ |
2.0 |
|
|
$ |
182.7 |
|
|
$ |
208.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net (loss) income per share attributable to stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
$ |
(0.02 |
) |
|
$ |
0.02 |
|
|
$ |
1.75 |
|
|
$ |
1.94 |
|
|
Diluted |
|
$ |
(0.02 |
) |
|
$ |
0.02 |
|
|
$ |
1.75 |
|
|
$ |
1.93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash dividends declared per share |
|
$ |
0.53 |
|
|
$ |
0.52 |
|
$ |
1.57 |
|
|
$ |
1.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
|
104.2 |
|
|
|
105.3 |
|
|
|
104.4 |
|
|
|
107.8 |
|
|
Diluted |
|
|
104.2 |
|
|
|
105.5 |
|
|
|
104.7 |
|
|
|
108.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Selected Title Insurance Segment Information |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Title orders opened(1) |
|
|
157,300 |
|
|
|
206,200 |
|
|
|
504,500 |
|
|
|
742,400 |
|
|
Title orders closed(1) |
|
|
120,000 |
|
|
|
160,500 |
|
|
|
354,900 |
|
|
|
570,600 |
|
|
Paid title claims |
|
$ |
47.5 |
|
|
$ |
43.0 |
|
|
$ |
125.1 |
|
|
$ |
141.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
(1) U.S. direct title insurance orders only. |
|
|
|
|
|
|
|
|
|
|
|
|
|
First American Financial Corporation |
|
|||||||
|
Selected Consolidated Balance Sheet Information |
|
|||||||
|
(in millions, unaudited) |
|
|||||||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
September 30, |
|
|
December 31, |
|
||
|
|
|
2023 |
|
|
2022 |
|
||
|
Cash and cash equivalents |
|
$ |
1,579.1 |
|
|
$ |
1,223.5 |
|
|
Investments |
|
|
7,991.2 |
|
|
|
8,987.2 |
|
|
Goodwill and other intangible assets, net |
|
|
1,962.5 |
|
|
|
1,992.0 |
|
|
Total assets |
|
|
14,677.6 |
|
|
|
14,955.3 |
|
|
Reserve for claim losses |
|
|
1,299.5 |
|
|
|
1,325.3 |
|
|
Notes and contracts payable |
|
|
1,392.2 |
|
|
|
1,645.8 |
|
|
Total stockholders’ equity |
|
$ |
4,527.2 |
|
|
$ |
4,664.8 |
|
|
First American Financial Corporation |
|
|||||||||||||||
|
Segment Information |
|
|||||||||||||||
|
(in millions, unaudited) |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Three Months Ended |
|
|
|
|
Title |
|
|
Home |
|
|
Corporate |
|
||||
|
September 30, 2023 |
|
Consolidated |
|
|
Insurance |
|
|
Warranty |
|
|
(incl. Elims.) |
|
||||
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Direct premiums and escrow fees |
|
$ |
595.5 |
|
|
$ |
493.7 |
|
|
$ |
101.8 |
|
|
$ |
0.0 |
|
|
Agent premiums |
|
|
664.5 |
|
|
|
664.5 |
|
|
|
— |
|
|
|
— |
|
|
Information and other |
|
|
245.7 |
|
|
|
240.1 |
|
|
|
5.5 |
|
|
|
0.1 |
|
|
Net investment income |
|
|
139.1 |
|
|
|
141.7 |
|
|
|
1.6 |
|
|
|
(4.2 |
) |
|
Net investment losses |
|
|
(163.6 |
) |
|
|
(15.6 |
) |
|
|
(0.7 |
) |
|
|
(147.3 |
) |
|
|
|
|
1,481.2 |
|
|
|
1,524.4 |
|
|
|
108.2 |
|
|
|
(151.4 |
) |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Personnel costs |
|
|
485.8 |
|
|
|
468.5 |
|
|
|
19.6 |
|
|
|
(2.3 |
) |
|
Premiums retained by agents |
|
|
531.4 |
|
|
|
531.4 |
|
|
|
— |
|
|
|
— |
|
|
Other operating expenses |
|
|
273.8 |
|
|
|
243.2 |
|
|
|
20.9 |
|
|
|
9.7 |
|
|
Provision for policy losses and other claims |
|
|
91.1 |
|
|
|
34.8 |
|
|
|
55.9 |
|
|
|
0.4 |
|
|
Depreciation and amortization |
|
|
47.3 |
|
|
|
46.2 |
|
|
|
1.2 |
|
|
|
(0.1 |
) |
|
Premium taxes |
|
|
17.7 |
|
|
|
16.4 |
|
|
|
1.2 |
|
|
|
0.1 |
|
|
Interest |
|
|
35.8 |
|
|
|
23.6 |
|
|
|
— |
|
|
|
12.2 |
|
|
|
|
|
1,482.9 |
|
|
|
1,364.1 |
|
|
|
98.8 |
|
|
|
20.0 |
|
|
(Loss) income before income taxes |
|
$ |
(1.7 |
) |
|
$ |
160.3 |
|
|
$ |
9.4 |
|
|
$ |
(171.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Three Months Ended |
|
|
|
|
Title |
|
|
Home |
|
|
Corporate |
|
||||
|
September 30, 2022 |
|
Consolidated |
|
|
Insurance |
|
|
Warranty |
|
|
(incl. Elims.) |
|
||||
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Direct premiums and escrow fees |
|
$ |
757.8 |
|
|
$ |
655.7 |
|
|
$ |
102.2 |
|
|
$ |
(0.1 |
) |
|
Agent premiums |
|
|
909.7 |
|
|
|
909.7 |
|
|
|
— |
|
|
|
— |
|
|
Information and other |
|
|
282.3 |
|
|
|
279.4 |
|
|
|
2.9 |
|
|
|
(0.0 |
) |
|
Net investment income |
|
|
100.6 |
|
|
|
105.2 |
|
|
|
1.4 |
|
|
|
(6.0 |
) |
|
Net investment losses |
|
|
(226.1 |
) |
|
|
(67.0 |
) |
|
|
(1.6 |
) |
|
|
(157.5 |
) |
|
|
|
|
1,824.3 |
|
|
|
1,883.0 |
|
|
|
104.9 |
|
|
|
(163.6 |
) |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Personnel costs |
|
|
569.8 |
|
|
|
554.4 |
|
|
|
19.0 |
|
|
|
(3.6 |
) |
|
Premiums retained by agents |
|
|
724.8 |
|
|
|
724.8 |
|
|
|
— |
|
|
|
— |
|
|
Other operating expenses |
|
|
312.1 |
|
|
|
284.3 |
|
|
|
18.9 |
|
|
|
8.9 |
|
|
Provision for policy losses and other claims |
|
|
131.5 |
|
|
|
62.7 |
|
|
|
60.2 |
|
|
|
8.6 |
|
|
Depreciation and amortization |
|
|
41.4 |
|
|
|
40.2 |
|
|
|
1.4 |
|
|
|
(0.2 |
) |
|
Premium taxes |
|
|
23.9 |
|
|
|
22.6 |
|
|
|
1.2 |
|
|
|
0.1 |
|
|
Interest |
|
|
24.0 |
|
|
|
9.4 |
|
|
|
— |
|
|
|
14.6 |
|
|
|
|
|
1,827.5 |
|
|
|
1,698.4 |
|
|
|
100.7 |
|
|
|
28.4 |
|
|
(Loss) income before income taxes |
|
$ |
(3.2 |
) |
|
$ |
184.6 |
|
|
$ |
4.2 |
|
|
$ |
(192.0 |
) |
|
First American Financial Corporation |
|
|||||||||||||||
|
Segment Information |
|
|||||||||||||||
|
(in millions, unaudited) |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Nine Months Ended |
|
|
|
|
Title |
|
|
Home |
|
|
Corporate |
|
||||
|
September 30, 2023 |
|
Consolidated |
|
|
Insurance |
|
|
Warranty |
|
|
(incl. Elims.) |
|
||||
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Direct premiums and escrow fees |
|
$ |
1,713.0 |
|
|
$ |
1,416.1 |
|
|
$ |
296.9 |
|
|
$ |
0.0 |
|
|
Agent premiums |
|
|
1,879.6 |
|
|
|
1,879.6 |
|
|
|
— |
|
|
|
— |
|
|
Information and other |
|
|
722.9 |
|
|
|
706.0 |
|
|
|
16.9 |
|
|
|
(0.0 |
) |
|
Net investment income |
|
|
423.4 |
|
|
|
408.2 |
|
|
|
4.4 |
|
|
|
10.8 |
|
|
Net investment (losses) gains |
|
|
(164.7 |
) |
|
|
(6.2 |
) |
|
|
0.2 |
|
|
|
(158.7 |
) |
|
|
|
|
4,574.2 |
|
|
|
4,403.7 |
|
|
|
318.4 |
|
|
|
(147.9 |
) |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Personnel costs |
|
|
1,487.9 |
|
|
|
1,412.3 |
|
|
|
59.3 |
|
|
|
16.3 |
|
|
Premiums retained by agents |
|
|
1,496.8 |
|
|
|
1,496.8 |
|
|
|
— |
|
|
|
— |
|
|
Other operating expenses |
|
|
804.8 |
|
|
|
710.4 |
|
|
|
62.4 |
|
|
|
32.0 |
|
|
Provision for policy losses and other claims |
|
|
262.9 |
|
|
|
109.6 |
|
|
|
150.1 |
|
|
|
3.2 |
|
|
Depreciation and amortization |
|
|
138.9 |
|
|
|
135.2 |
|
|
|
3.6 |
|
|
|
0.1 |
|
|
Premium taxes |
|
|
47.7 |
|
|
|
44.2 |
|
|
|
3.4 |
|
|
|
0.1 |
|
|
Interest |
|
|
99.2 |
|
|
|
61.0 |
|
|
|
— |
|
|
|
38.2 |
|
|
|
|
|
4,338.2 |
|
|
|
3,969.5 |
|
|
|
278.8 |
|
|
|
89.9 |
|
|
Income (loss) before income taxes |
|
$ |
236.0 |
|
|
$ |
434.2 |
|
|
$ |
39.6 |
|
|
$ |
(237.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Nine Months Ended |
|
|
|
|
Title |
|
|
Home |
|
|
Corporate |
|
||||
|
September 30, 2022 |
|
Consolidated |
|
|
Insurance |
|
|
Warranty |
|
|
(incl. Elims.) |
|
||||
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Direct premiums and escrow fees |
|
$ |
2,428.5 |
|
|
$ |
2,114.4 |
|
|
$ |
305.4 |
|
|
$ |
8.7 |
|
|
Agent premiums |
|
|
2,794.7 |
|
|
|
2,794.7 |
|
|
|
— |
|
|
|
— |
|
|
Information and other |
|
|
900.5 |
|
|
|
887.8 |
|
|
|
8.4 |
|
|
|
4.3 |
|
|
Net investment income |
|
|
199.2 |
|
|
|
227.2 |
|
|
|
3.6 |
|
|
|
(31.6 |
) |
|
Net investment losses |
|
|
(402.4 |
) |
|
|
(90.0 |
) |
|
|
(6.7 |
) |
|
|
(305.7 |
) |
|
|
|
|
5,920.5 |
|
|
|
5,934.1 |
|
|
|
310.7 |
|
|
|
(324.3 |
) |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Personnel costs |
|
|
1,789.8 |
|
|
|
1,750.7 |
|
|
|
58.3 |
|
|
|
(19.2 |
) |
|
Premiums retained by agents |
|
|
2,230.8 |
|
|
|
2,230.8 |
|
|
|
— |
|
|
|
— |
|
|
Other operating expenses |
|
|
992.8 |
|
|
|
904.7 |
|
|
|
55.5 |
|
|
|
32.6 |
|
|
Provision for policy losses and other claims |
|
|
380.4 |
|
|
|
196.4 |
|
|
|
160.7 |
|
|
|
23.3 |
|
|
Depreciation and amortization |
|
|
124.0 |
|
|
|
120.2 |
|
|
|
3.8 |
|
|
|
(0.0 |
) |
|
Premium taxes |
|
|
71.3 |
|
|
|
67.8 |
|
|
|
3.4 |
|
|
|
0.1 |
|
|
Interest |
|
|
63.4 |
|
|
|
18.7 |
|
|
|
— |
|
|
|
44.7 |
|
|
|
|
|
5,652.5 |
|
|
|
5,289.3 |
|
|
|
281.7 |
|
|
|
81.5 |
|
|
Income (loss) before income taxes |
|
$ |
268.0 |
|
|
$ |
644.8 |
|
|
$ |
29.0 |
|
|
$ |
(405.8 |
) |
|
First American Financial Corporation |
|
|||||||||||||||
|
Reconciliation of Non-GAAP Financial Measures |
|
|||||||||||||||
|
(in millions, except margin and per share amounts, unaudited) |
|
|||||||||||||||
|
Consolidated |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total revenues |
|
$ |
1,481.2 |
|
|
$ |
1,824.3 |
|
|
$ |
4,574.2 |
|
|
$ |
5,920.5 |
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Less: Net investment losses |
|
|
(163.6 |
) |
|
|
(226.1 |
) |
|
|
(164.7 |
) |
|
|
(402.4 |
) |
|
Adjusted total revenues |
|
$ |
1,644.8 |
|
|
$ |
2,050.4 |
|
|
$ |
4,738.9 |
|
|
$ |
6,322.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Pretax (loss) income |
|
$ |
(1.7 |
) |
|
$ |
(3.2 |
) |
|
$ |
236.0 |
|
|
$ |
268.0 |
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Less: Net investment losses |
|
|
(163.6 |
) |
|
|
(226.1 |
) |
|
|
(164.7 |
) |
|
|
(402.4 |
) |
|
Plus: Purchase-related intangible amortization |
|
|
9.6 |
|
|
|
7.9 |
|
|
|
28.9 |
|
|
|
28.9 |
|
|
Adjusted pretax income |
|
$ |
171.5 |
|
|
$ |
230.8 |
|
|
$ |
429.6 |
|
|
$ |
699.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Pretax margin |
|
|
(0.1 |
)% |
|
|
(0.2 |
)% |
|
|
5.2 |
% |
|
|
4.5 |
% |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Less: Net investment losses |
|
|
(9.9 |
)% |
|
|
(11.1 |
)% |
|
|
(3.3 |
)% |
|
|
(6.1 |
)% |
|
Plus: Purchase-related intangible amortization |
|
|
0.6 |
% |
|
|
0.4 |
% |
|
|
0.6 |
% |
|
|
0.5 |
% |
|
Adjusted pretax margin |
|
|
10.4 |
% |
|
|
11.3 |
% |
|
|
9.1 |
% |
|
|
11.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net (loss) income |
|
$ |
(1.7 |
) |
|
$ |
2.0 |
|
|
$ |
182.7 |
|
|
$ |
208.7 |
|
|
Non-GAAP adjustments, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Less: Net investment (losses) gains |
|
|
(122.7 |
) |
|
|
(168.9 |
) |
|
|
(123.5 |
) |
|
|
(301.4 |
) |
|
Plus: Purchase-related intangible amortization |
|
|
7.2 |
|
|
|
5.9 |
|
|
|
21.7 |
|
|
|
21.6 |
|
|
Adjusted net income (loss) |
|
$ |
128.2 |
|
|
$ |
176.8 |
|
|
$ |
327.9 |
|
|
$ |
531.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Earnings per diluted share (EPS) |
|
$ |
(0.02 |
) |
|
$ |
0.02 |
|
|
$ |
1.75 |
|
|
$ |
1.93 |
|
|
Non-GAAP adjustments, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Less: Net investment (losses) gains |
|
$ |
(1.17 |
) |
|
|
(1.60 |
) |
|
|
(1.18 |
) |
|
|
(2.79 |
) |
|
Plus: Purchase-related intangible amortization |
|
$ |
0.07 |
|
|
|
0.06 |
|
|
|
0.21 |
|
|
|
0.20 |
|
|
Adjusted EPS |
|
$ |
1.22 |
|
|
$ |
1.68 |
|
|
$ |
3.14 |
|
|
$ |
4.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Purchase-related intangible amortization includes amortization of noncompete agreements, |
|
|||||||||||||||
|
customer relationships, and trademarks acquired in business combinations. |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Totals may not sum due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
First American Financial Corporation |
|
|||||||||||||||
|
Reconciliation of Non-GAAP Financial Measures |
|
|||||||||||||||
|
(in millions except margin, unaudited) |
|
|||||||||||||||
|
By Segment |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
|
Title Insurance and Services Segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total revenues |
|
$ |
1,524.4 |
|
|
$ |
1,883.0 |
|
|
$ |
4,403.7 |
|
|
$ |
5,934.1 |
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Less: Net investment losses |
|
|
(15.6 |
) |
|
|
(67.0 |
) |
|
|
(6.2 |
) |
|
|
(90.0 |
) |
|
Adjusted total revenues |
|
$ |
1,540.0 |
|
|
$ |
1,950.0 |
|
|
$ |
4,409.9 |
|
|
$ |
6,024.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Pretax income |
|
$ |
160.3 |
|
|
$ |
184.6 |
|
|
$ |
434.2 |
|
|
$ |
644.8 |
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Less: Net investment losses |
|
|
(15.6 |
) |
|
|
(67.0 |
) |
|
|
(6.2 |
) |
|
|
(90.0 |
) |
|
Plus: Purchase-related intangible amortization |
|
|
9.6 |
|
|
|
7.9 |
|
|
|
28.8 |
|
|
|
28.8 |
|
|
Adjusted pretax income |
|
$ |
185.5 |
|
|
$ |
259.5 |
|
|
$ |
469.2 |
|
|
$ |
763.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Pretax margin |
|
|
10.5 |
% |
|
|
9.8 |
% |
|
|
9.9 |
% |
|
|
10.9 |
% |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Less: Net investment losses |
|
|
(0.9 |
)% |
|
|
(3.1 |
)% |
|
|
(0.1 |
)% |
|
|
(1.3 |
)% |
|
Plus: Purchase-related intangible amortization |
|
|
0.6 |
% |
|
|
0.4 |
% |
|
|
0.6 |
% |
|
|
0.5 |
% |
|
Adjusted pretax margin |
|
|
12.0 |
% |
|
|
13.3 |
% |
|
|
10.6 |
% |
|
|
12.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Home Warranty Segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total revenues |
|
$ |
108.2 |
|
|
$ |
104.9 |
|
|
$ |
318.4 |
|
|
$ |
310.7 |
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Less: Net investment (losses) gains |
|
|
(0.7 |
) |
|
|
(1.6 |
) |
|
|
0.2 |
|
|
|
(6.7 |
) |
|
Adjusted total revenues |
|
$ |
108.9 |
|
|
$ |
106.5 |
|
|
$ |
318.2 |
|
|
$ |
317.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Pretax income |
|
$ |
9.4 |
|
|
$ |
4.2 |
|
|
$ |
39.6 |
|
|
$ |
29.0 |
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Less: Net investment (losses) gains |
|
|
(0.7 |
) |
|
|
(1.6 |
) |
|
|
0.2 |
|
|
|
(6.7 |
) |
|
Adjusted pretax income |
|
$ |
10.1 |
|
|
$ |
5.8 |
|
|
$ |
39.4 |
|
|
$ |
35.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Pretax margin |
|
|
8.7 |
% |
|
|
4.0 |
% |
|
|
12.4 |
% |
|
|
9.3 |
% |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Less: Net invesment losses |
|
|
(0.6 |
)% |
|
|
(1.4 |
)% |
|
|
— |
% |
|
|
(1.9 |
)% |
|
Adjusted pretax margin |
|
|
9.3 |
% |
|
|
5.4 |
% |
|
|
12.4 |
% |
|
|
11.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Purchase-related intangible amortization includes amortization of noncompete agreements, |
|
|||||||||||||||
|
customer relationships, and trademarks acquired in business combinations. |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Totals may not sum due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
First American Financial Corporation |
|
|||||||||||||||
|
Expense and Success Ratio Reconciliation |
|
|||||||||||||||
|
Title Insurance and Services Segment |
|
|||||||||||||||
|
($ in millions, unaudited) |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
|
Total revenues |
|
$ |
1,524.4 |
|
|
$ |
1,883.0 |
|
|
$ |
4,403.7 |
|
|
$ |
5,934.1 |
|
|
Less: Net investment losses |
|
|
(15.6 |
) |
|
|
(67.0 |
) |
|
|
(6.2 |
) |
|
|
(90.0 |
) |
|
Net investment income |
|
|
141.7 |
|
|
|
105.2 |
|
|
|
408.2 |
|
|
|
227.2 |
|
|
Premiums retained by agents |
|
|
531.4 |
|
|
|
724.8 |
|
|
|
1,496.8 |
|
|
|
2,230.8 |
|
|
Net operating revenues |
|
$ |
866.9 |
|
|
$ |
1,120.0 |
|
|
$ |
2,504.9 |
|
|
$ |
3,566.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Personnel and other operating expenses |
|
$ |
711.7 |
|
|
$ |
838.7 |
|
|
$ |
2,122.7 |
|
|
$ |
2,655.4 |
|
|
Ratio (% net operating revenues) |
|
|
82.1 |
% |
|
|
74.9 |
% |
|
|
84.7 |
% |
|
|
74.5 |
% |
|
Ratio (% total revenues) |
|
|
46.7 |
% |
|
|
44.5 |
% |
|
|
48.2 |
% |
|
|
44.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Change in net operating revenues |
|
$ |
(253.1 |
) |
|
|
|
|
$ |
(1,061.2 |
) |
|
|
|
||
|
Change in personnel and other operating expenses |
|
|
(127.0 |
) |
|
|
|
|
|
(532.7 |
) |
|
|
|
||
|
Success Ratio(1) |
|
|
50 |
% |
|
|
|
|
|
50 |
% |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
(1) Change in personnel and other operating expenses divided by change in net operating revenues. |
|
|
First American Financial Corporation |
|
|||||||||||||||||||
|
Supplemental Direct Title Insurance Order Information(1) |
|
|||||||||||||||||||
|
(unaudited) |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
Q323 |
|
|
Q223 |
|
|
Q123 |
|
|
Q422 |
|
|
Q322 |
|
|||||
|
Open Orders per Day |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Purchase |
|
|
1,461 |
|
|
|
1,584 |
|
|
|
1,459 |
|
|
|
1,168 |
|
|
|
1,685 |
|
|
Refinance |
|
|
356 |
|
|
|
355 |
|
|
|
349 |
|
|
|
363 |
|
|
|
517 |
|
|
Refinance as % of residential orders |
|
|
20 |
% |
|
|
18 |
% |
|
|
19 |
% |
|
|
24 |
% |
|
|
23 |
% |
|
Commercial |
|
|
399 |
|
|
|
402 |
|
|
|
412 |
|
|
|
391 |
|
|
|
482 |
|
|
Default and other |
|
|
280 |
|
|
|
387 |
|
|
|
564 |
|
|
|
546 |
|
|
|
538 |
|
|
Total open orders per day |
|
|
2,497 |
|
|
|
2,728 |
|
|
|
2,784 |
|
|
|
2,469 |
|
|
|
3,222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Closed Orders per Day |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Purchase |
|
|
1,141 |
|
|
|
1,171 |
|
|
|
936 |
|
|
|
1,081 |
|
|
|
1,371 |
|
|
Refinance |
|
|
280 |
|
|
|
279 |
|
|
|
248 |
|
|
|
337 |
|
|
|
463 |
|
|
Refinance as % of residential orders |
|
|
20 |
% |
|
|
19 |
% |
|
|
21 |
% |
|
|
24 |
% |
|
|
25 |
% |
|
Commercial |
|
|
236 |
|
|
|
239 |
|
|
|
241 |
|
|
|
293 |
|
|
|
322 |
|
|
Default and other |
|
|
249 |
|
|
|
315 |
|
|
|
294 |
|
|
|
310 |
|
|
|
351 |
|
|
Total closed orders per day |
|
|
1,905 |
|
|
|
2,005 |
|
|
|
1,719 |
|
|
|
2,021 |
|
|
|
2,508 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Average Revenue per Order (ARPO)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Purchase |
|
$ |
3,474 |
|
|
$ |
3,472 |
|
|
$ |
3,302 |
|
|
$ |
3,292 |
|
|
$ |
3,365 |
|
|
Refinance |
|
|
1,227 |
|
|
|
1,258 |
|
|
|
1,283 |
|
|
|
1,245 |
|
|
|
1,228 |
|
|
Commercial |
|
|
10,763 |
|
|
|
11,614 |
|
|
|
9,926 |
|
|
|
13,780 |
|
|
|
12,614 |
|
|
Default and other |
|
|
469 |
|
|
|
314 |
|
|
|
315 |
|
|
|
332 |
|
|
|
329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Total ARPO |
|
$ |
3,653 |
|
|
$ |
3,640 |
|
|
$ |
3,428 |
|
|
$ |
4,020 |
|
|
$ |
3,734 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Business Days |
|
|
63 |
|
|
|
64 |
|
|
|
62 |
|
|
|
62 |
|
|
|
64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
(1) U.S. operations only. |
|
|||||||||||||||||||
|
(2) Average revenue per order (ARPO) defined as direct premiums and escrow fees divided by closed title orders. |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Totals may not sum due to rounding. |
|
# # #