—Reports Earnings of 19 Cents per Diluted Share, Including 89
Cents per Share Expense for Pension Termination—
SANTA ANA, Calif.--(BUSINESS WIRE)--
First American Financial Corporation (NYSE: FAF), a leading global
provider of title insurance, settlement services and risk solutions for
real estate transactions, today announced financial results for the
third quarter ended Sept. 30, 2017.
Current Quarter Highlights
-
Pension termination completed resulting in a $152.4 million expense,
or 89 cents per diluted share
-
Total revenue of $1.5 billion, up 1 percent compared with last year
-
Title Insurance and Services segment pretax margin of 13.0 percent
-
Purchase revenues up 10 percent compared with last year
-
Average revenue per order up 7 percent
-
Closed orders per day up 5 percent
-
Commercial revenues of $175.5 million, up 6 percent compared with last
year
-
Title Insurance and Services segment loss provision rate of 4.0 percent
-
Specialty Insurance segment total revenues up 8 percent, with a pretax
margin of 5.2 percent
-
Debt-to-capital ratio of 18.2 percent as of Sept. 30, 2017
-
Title-related acquisitions closed totaling $87.3 million
-
Cash flow from operations of $220.9 million
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|
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Selected Financial Information
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|
|
($ in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
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|
|
2017
|
|
|
2016
|
|
Total revenue
|
|
$
|
1,519.6
|
|
|
$
|
1,508.3
|
|
Income before taxes
|
|
|
18.0
|
|
|
166.9
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
21.4
|
|
|
$
|
107.3
|
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Net income per diluted share
|
|
|
0.19
|
|
|
0.96
|
|
|
|
|
|
|
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Total revenue for the third quarter of 2017 was $1.5 billion, an
increase of 1 percent relative to the third quarter of 2016. Net income
in the current quarter was $21.4 million, or 19 cents per diluted share,
compared with net income of $107.3 million, or 96 cents per diluted
share, in the third quarter of 2016. The current quarter results include
an expense of $152.4 million, or 89 cents per diluted share, for the
completion of the company’s pension plan termination. Net realized
investment losses in the current quarter were $7.0 million, or 4 cents
per diluted share, compared with net realized gains of $9.5 million, or
6 cents per diluted share, in the third quarter of last year. In
addition, this quarter’s effective tax rate of negative 17.9 percent
includes a benefit of $8.1 million, or 7 cents per diluted share,
primarily related to certain settlements with taxing authorities and tax
benefits recorded in connection with the termination of the pension plan.
“In the third quarter, our company continued to deliver strong operating
results,” said Dennis J. Gilmore, chief executive officer at First
American Financial Corporation. “We are seeing sustained growth in our
purchase business, with revenues up 10 percent this quarter, and the
positive momentum in our commercial business continued, with revenues up
6 percent from last year. The refinance market, while down sharply from
last year, is currently stable and we have adjusted our cost structure
to match the lower order volumes. During the quarter, we also saw
additional benefit from growth in investment income driven by the
increase in short-term interest rates.
“Noteworthy acquisitions this quarter included the purchase of a leading
title agency in Nevada and the buyout of our majority joint venture
partner in a title information company.
“The recent hurricanes and wildfires resulted in extreme hardships for
many people, including a number of First American’s employees and
customers. While our immediate focus was on helping our impacted
employees and providing them with the resources they needed, I’m proud
of how hard our people worked to get our operations back up and running,
allowing us to quickly resume service to our customers. We ultimately
expect the company’s financial results will not be significantly
impacted.
“As we enter the fourth quarter, we are optimistic given the expected
seasonal strength in our commercial business and the continued growth of
the purchase market.”
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Title Insurance and Services
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($ in millions, except average revenue per order)
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Three Months Ended
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September 30,
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|
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|
2017
|
|
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2016
|
|
|
Total revenues
|
|
$
|
1,397.3
|
|
|
$
|
1,395.7
|
|
|
|
|
|
|
|
|
|
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Income before taxes
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$
|
181.2
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|
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$
|
188.7
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Pretax margin
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13.0
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%
|
|
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13.5
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%
|
|
|
|
|
|
|
|
|
|
|
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Direct open orders
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|
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278,300
|
|
|
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364,900
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Direct closed orders
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|
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214,300
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|
|
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268,400
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|
|
|
|
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U.S. Commercial
|
|
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Total revenues
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$
|
175.5
|
|
|
$
|
165.9
|
|
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Open orders
|
|
|
31,200
|
|
|
|
31,500
|
|
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Closed orders
|
|
|
19,400
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|
|
|
20,300
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Average revenue per order
|
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$
|
9,000
|
|
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$
|
8,200
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Total revenues for the Title Insurance and Services segment during the
third quarter were $1.4 billion, essentially flat compared with the same
quarter of 2016. Direct premiums and escrow fees were down 1 percent
compared with the third quarter of 2016, driven by a 20 percent decline
in the number of direct title orders closed that was largely offset by a
24 percent increase in the average revenue per direct title order. The
growth in the average revenue per direct title order to $2,298 was
primarily attributable to the shift in the order mix to higher-premium
residential purchase and commercial transactions, higher average revenue
per order from commercial transactions, and higher residential real
estate values. Agent premiums were up 1 percent in the current quarter
compared with last year, largely reflecting the normal reporting lag of
approximately one quarter.
Information and other revenues were $199.3 million this quarter, an
increase of $11.3 million, or 6 percent, compared with the same quarter
of last year. This increase was driven by a $23.6 million impact from
recent acquisitions, partially offset by lower revenues from the
company’s default and mortgage-related information products, which
largely resulted from the decline in overall market activity.
Investment income was $37.9 million in the third quarter, up $8.9
million, or 31 percent, primarily due to the increase in short-term
interest rates that drove higher interest income in our tax-deferred
property exchange business and our floating rate mortgage-backed
securities portfolio. In addition, investment income benefited from an
increase in average invested balances in our debt securities portfolio.
Net realized investment losses totaled $7.2 million in the current
quarter, compared with gains of $8.4 million in the third quarter of
2016.
Personnel costs were $421.8 million in the third quarter, an increase of
$12.5 million, or 3 percent, compared with the same quarter of 2016. The
increase was driven by a $17.4 million impact from recent acquisitions
and $9.0 million in out-of-period personnel expenses, partially offset
by $13.9 million in lower costs across a number of categories, including
temporary labor costs and overtime.
Other operating expenses were $196.5 million in the third quarter, down
$1.7 million, or 1 percent, compared with the third quarter of 2016. An
increase of $10.5 million from recent acquisitions was more than offset
by $12.2 million in expense reductions, primarily due to lower
production-related expense from the decline in order volume and lower
software, legal and bad debt expense compared with last year.
The provision for policy losses and other claims was $46.7 million in
the third quarter, or 4.0 percent of title premiums and escrow fees,
compared with a 5.5 percent loss provision rate in the third quarter of
2016. The current quarter rate reflects an ultimate loss rate of 4.0
percent for the current policy year and no change in the loss reserve
estimates for prior policy years.
Depreciation and amortization expense was $34.4 million in the third
quarter, an increase of $11.4 million, or 49 percent, compared with the
same period last year. The increase was primarily attributable to a $4.7
million title plant write-off and higher amortization expense associated
with internally developed technology and purchased software licenses.
Pretax income for the Title Insurance and Services segment was $181.2
million in the third quarter, compared with $188.7 million in the third
quarter of 2016. Pretax margin was 13.0 percent in the current quarter,
including a 40 basis point margin impact from net realized investment
losses, compared with 13.5 percent last year, which included a 50 basis
point margin impact for net realized gains.
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Specialty Insurance
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($ in millions)
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Three Months Ended
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|
September 30,
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|
|
|
|
2017
|
|
|
2016
|
|
|
Total revenues
|
|
$
|
118.5
|
|
|
$
|
109.8
|
|
|
|
|
|
|
|
|
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Income before taxes
|
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$
|
6.2
|
|
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$
|
1.8
|
|
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Pretax margin
|
|
|
5.2
|
%
|
|
|
1.6
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%
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|
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Total revenues for the Specialty Insurance segment were $118.5 million
in the third quarter of 2017, an increase of 8 percent compared with the
third quarter of 2016. The increase in revenues was driven by higher
premiums earned in the home warranty business line. The loss ratio in
the home warranty business declined significantly this quarter compared
with last year due to lower claim frequency and severity. The decrease
in claim severity was primarily due to operational improvements in our
claims management processes. In addition, both claim severity and
frequency benefited, to some extent, from favorable weather conditions
as compared with last year. Our property and casualty business
experienced high claim losses in the quarter due to higher claim
severity and frequency. However, the overall loss ratio for the segment
still declined to 65.2 percent compared with 69.0 percent last year. As
a result, the segment’s pretax margin in the current quarter was 5.2
percent, compared with 1.6 percent in the third quarter of last year.
Teleconference/Webcast
First American’s third quarter 2017 results will be discussed in more
detail on Thursday, Oct. 26, 2017, at 11 a.m. EDT, via teleconference.
The toll-free dial-in number is 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,
2017, by dialing 201-612-7415 and using the conference ID 13672053. 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 leading
provider of title insurance, settlement services and risk solutions for
real estate transactions that traces its heritage back to 1889. First
American also provides title plant management services; title and other
real property records and images; valuation products and services; home
warranty products; property and casualty insurance; and banking, trust
and investment advisory services. With total revenue of $5.6 billion in
2016, the company offers its products and services directly and through
its agents throughout the United States and abroad. In 2016 and again in
2017, First American was named to the Fortune 100 Best Companies
to Work For® list. 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
Certain statements made in this press release and the related
management commentary contain, and responses to investor questions may
contain, forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements can be identified by the fact that they do not relate
strictly to historical or current facts and may contain the words
“believe,” “anticipate,” “expect,” “intend,” “plan,” “predict,”
“estimate,” “project,” “will be,” “will continue,” “will likely result,”
or other similar words and phrases or future or conditional verbs such
as “will,” “may,” “might,” “should,” “would,” or “could.” These
forward-looking statements include, without limitation, statements
regarding future operations, performance, financial condition,
prospects, plans and strategies. These forward-looking statements are
based on current expectations and assumptions that may prove to be
incorrect. Risks and uncertainties exist that may cause results to
differ materially from those set forth in these forward-looking
statements. Factors that could cause the anticipated results to differ
from those described in the forward-looking statements include, without
limitation: interest rate fluctuations; changes in the performance of
the real estate markets; volatility in the capital markets; unfavorable
economic conditions; impairments in the company’s goodwill or other
intangible assets; failures at financial institutions where the company
deposits funds; changes in applicable laws and government regulations;
heightened scrutiny by legislators and regulators of the company’s title
insurance and services segment and certain other of the company’s
businesses; use of social media by the company and other parties;
regulation of title insurance rates; limitations on access to public
records and other data; changes in relationships with large mortgage
lenders and government-sponsored enterprises; changes in measures of the
strength of the company’s title insurance underwriters, including
ratings and statutory capital and surplus; losses in the company’s
investment portfolio; material variance between actual and expected
claims experience; defalcations, increased claims or other costs and
expenses attributable to the company’s use of title agents; any
inadequacy in the company’s risk management framework; systems damage,
failures, interruptions and intrusions or unauthorized data disclosures;
errors and fraud involving the transfer of funds; the company’s use of a
global workforce; inability of the company’s subsidiaries to pay
dividends or repay funds; inability to realize the benefits of, and
challenges arising from, the company’s acquisition strategy; and other
factors described in the company’s quarterly report on Form 10-Q for the
quarter ended June 30, 2017, as filed with the Securities and Exchange
Commission. The forward-looking statements speak only as of the date
they are made. The company does not undertake to update forward-looking
statements to reflect circumstances or events that occur after the date
the forward-looking statements are made.
Use of Non-GAAP Financial Measures
This news release and related management commentary contain certain
financial measures that are not presented in accordance with generally
accepted accounting principles (GAAP), including personnel and other
operating expense ratios, and success ratios. The company is presenting
these non-GAAP financial measures because they provide the company’s
management and investors with additional insight into the operational
efficiency and performance of the company relative to earlier periods
and relative to the company’s competitors. The company does not intend
for these non-GAAP financial measures to be a substitute for any GAAP
financial information. In this news release, these non-GAAP financial
measures have been presented with, and reconciled to, the most directly
comparable GAAP financial measures. Investors should use these non-GAAP
financial measures only in conjunction with the comparable GAAP
financial measures.
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First American Financial Corporation
|
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Summary of Consolidated Financial Results and Selected Information
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(in thousands, except per share amounts and title orders,
unaudited)
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|
|
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Three Months Ended
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Nine Months Ended
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September 30,
|
|
|
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Total revenues
|
|
$
|
1,519,568
|
|
|
$
|
1,508,344
|
|
|
$
|
4,291,040
|
|
|
$
|
4,071,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
$
|
17,962
|
|
|
$
|
166,931
|
|
|
$
|
285,996
|
|
|
$
|
396,130
|
|
Income taxes
|
|
|
(3,224
|
)
|
|
|
59,539
|
|
|
|
84,846
|
|
|
|
133,615
|
|
Net income
|
|
|
21,186
|
|
|
|
107,392
|
|
|
|
201,150
|
|
|
|
262,515
|
|
Less: Net (loss) income attributable to noncontrolling interests
|
|
|
(197
|
)
|
|
|
72
|
|
|
|
(772
|
)
|
|
|
545
|
|
Net income attributable to the Company
|
|
$
|
21,383
|
|
|
$
|
107,320
|
|
|
$
|
201,922
|
|
|
$
|
261,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.19
|
|
|
$
|
0.97
|
|
|
$
|
1.81
|
|
|
$
|
2.37
|
|
Diluted
|
|
$
|
0.19
|
|
|
$
|
0.96
|
|
|
$
|
1.80
|
|
|
$
|
2.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share
|
|
$
|
0.38
|
|
|
$
|
0.34
|
|
|
$
|
1.06
|
|
|
$
|
0.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
111,799
|
|
|
|
110,571
|
|
|
|
111,578
|
|
|
|
110,423
|
|
Diluted
|
|
|
112,575
|
|
|
|
111,251
|
|
|
|
112,254
|
|
|
|
111,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Title Insurance Segment Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title orders opened(1)
|
|
|
278,300
|
|
|
|
364,900
|
|
|
|
837,500
|
|
|
|
1,015,600
|
|
Title orders closed(1)
|
|
|
214,300
|
|
|
|
268,400
|
|
|
|
619,500
|
|
|
|
705,700
|
|
Paid title claims
|
|
|
50,317
|
|
|
|
48,151
|
|
|
|
149,088
|
|
|
|
159,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) U.S. direct title insurance orders only.
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|
|
First American Financial Corporation
|
|
Selected Balance Sheet Information
|
|
(in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Cash and cash equivalents
|
|
$
|
1,141,915
|
|
|
$
|
1,006,138
|
|
Investments
|
|
|
5,391,123
|
|
|
|
5,140,699
|
|
Goodwill and other intangible assets, net
|
|
|
1,220,590
|
|
|
|
1,096,315
|
|
Total assets
|
|
|
9,347,047
|
|
|
|
8,831,777
|
|
Reserve for claim losses
|
|
|
1,021,648
|
|
|
|
1,025,863
|
|
Notes and contracts payable
|
|
|
734,091
|
|
|
|
736,693
|
|
Total stockholders’ equity
|
|
$
|
3,293,894
|
|
|
$
|
3,008,179
|
|
|
|
|
First American Financial Corporation
|
|
|
Segment Information
|
|
|
(in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Title
|
|
|
Specialty
|
|
|
Corporate
|
|
|
September 30, 2017
|
|
Consolidated
|
|
|
Insurance
|
|
|
Insurance
|
|
|
(incl. Elims.)
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct premiums and escrow fees
|
|
$
|
651,104
|
|
|
$
|
538,063
|
|
|
$
|
113,041
|
|
|
$
|
—
|
|
|
Agent premiums
|
|
|
629,186
|
|
|
|
629,186
|
|
|
|
—
|
|
|
|
—
|
|
|
Information and other
|
|
|
201,819
|
|
|
|
199,271
|
|
|
|
2,814
|
|
|
|
(266
|
)
|
|
Net investment income
|
|
|
44,460
|
|
|
|
37,901
|
|
|
|
2,468
|
|
|
|
4,091
|
|
|
Net realized investment (losses) gains(1)
|
|
|
(7,001
|
)
|
|
|
(7,159
|
)
|
|
|
158
|
|
|
|
—
|
|
|
|
|
|
1,519,568
|
|
|
|
1,397,262
|
|
|
|
118,481
|
|
|
|
3,825
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs
|
|
|
599,380
|
|
|
|
421,849
|
|
|
|
18,478
|
|
|
|
159,053
|
|
|
Premiums retained by agents
|
|
|
497,911
|
|
|
|
497,911
|
|
|
|
—
|
|
|
|
—
|
|
|
Other operating expenses
|
|
|
218,959
|
|
|
|
196,455
|
|
|
|
16,537
|
|
|
|
5,967
|
|
|
Provision for policy losses and other claims
|
|
|
120,349
|
|
|
|
46,689
|
|
|
|
73,660
|
|
|
|
—
|
|
|
Depreciation and amortization
|
|
|
36,000
|
|
|
|
34,363
|
|
|
|
1,599
|
|
|
|
38
|
|
|
Premium taxes
|
|
|
19,900
|
|
|
|
17,871
|
|
|
|
2,029
|
|
|
|
—
|
|
|
Interest
|
|
|
9,107
|
|
|
|
925
|
|
|
|
—
|
|
|
|
8,182
|
|
|
|
|
|
1,501,606
|
|
|
|
1,216,063
|
|
|
|
112,303
|
|
|
|
173,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
17,962
|
|
|
$
|
181,199
|
|
|
$
|
6,178
|
|
|
$
|
(169,415
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Title
|
|
|
Specialty
|
|
|
Corporate
|
|
|
September 30, 2016
|
|
Consolidated
|
|
|
Insurance
|
|
|
Insurance
|
|
|
(incl. Elims.)
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct premiums and escrow fees
|
|
$
|
649,726
|
|
|
$
|
544,427
|
|
|
$
|
105,299
|
|
|
$
|
—
|
|
|
Agent premiums
|
|
|
625,953
|
|
|
|
625,953
|
|
|
|
—
|
|
|
|
—
|
|
|
Information and other
|
|
|
188,727
|
|
|
|
187,979
|
|
|
|
754
|
|
|
|
(6
|
)
|
|
Net investment income
|
|
|
34,422
|
|
|
|
28,986
|
|
|
|
2,595
|
|
|
|
2,841
|
|
|
Net realized investment gains(1)
|
|
|
9,516
|
|
|
|
8,382
|
|
|
|
1,134
|
|
|
|
—
|
|
|
|
|
|
1,508,344
|
|
|
|
1,395,727
|
|
|
|
109,782
|
|
|
|
2,835
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs
|
|
|
438,692
|
|
|
|
409,345
|
|
|
|
17,347
|
|
|
|
12,000
|
|
|
Premiums retained by agents
|
|
|
495,130
|
|
|
|
495,130
|
|
|
|
—
|
|
|
|
—
|
|
|
Other operating expenses
|
|
|
219,959
|
|
|
|
198,147
|
|
|
|
14,603
|
|
|
|
7,209
|
|
|
Provision for policy losses and other claims
|
|
|
137,015
|
|
|
|
64,352
|
|
|
|
72,663
|
|
|
|
—
|
|
|
Depreciation and amortization
|
|
|
24,491
|
|
|
|
22,994
|
|
|
|
1,401
|
|
|
|
96
|
|
|
Premium taxes
|
|
|
18,288
|
|
|
|
16,301
|
|
|
|
1,987
|
|
|
|
—
|
|
|
Interest
|
|
|
7,838
|
|
|
|
752
|
|
|
|
—
|
|
|
|
7,086
|
|
|
|
|
|
1,341,413
|
|
|
|
1,207,021
|
|
|
|
108,001
|
|
|
|
26,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
166,931
|
|
|
$
|
188,706
|
|
|
$
|
1,781
|
|
|
$
|
(23,556
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes impairment losses recorded in earnings, except for
impairments on investments accounted for under the equity method,
which are recorded in net investment income.
|
|
|
|
|
|
First American Financial Corporation
|
|
|
Segment Information
|
|
|
(in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
Title
|
|
|
Specialty
|
|
|
Corporate
|
|
|
September 30, 2017
|
|
Consolidated
|
|
|
Insurance
|
|
|
Insurance
|
|
|
(incl. Elims.)
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct premiums and escrow fees
|
|
$
|
1,819,193
|
|
|
$
|
1,492,258
|
|
|
$
|
326,935
|
|
|
$
|
—
|
|
|
Agent premiums
|
|
|
1,757,796
|
|
|
|
1,757,796
|
|
|
|
—
|
|
|
|
—
|
|
|
Information and other
|
|
|
586,179
|
|
|
|
578,549
|
|
|
|
8,427
|
|
|
|
(797
|
)
|
|
Net investment income
|
|
|
117,109
|
|
|
|
99,181
|
|
|
|
7,118
|
|
|
|
10,810
|
|
|
Net realized investment gains(1)
|
|
|
10,763
|
|
|
|
9,335
|
|
|
|
1,428
|
|
|
|
—
|
|
|
|
|
|
4,291,040
|
|
|
|
3,937,119
|
|
|
|
343,908
|
|
|
|
10,013
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs
|
|
|
1,458,928
|
|
|
|
1,222,277
|
|
|
|
53,632
|
|
|
|
183,019
|
|
|
Premiums retained by agents
|
|
|
1,387,608
|
|
|
|
1,387,608
|
|
|
|
—
|
|
|
|
—
|
|
|
Other operating expenses
|
|
|
649,182
|
|
|
|
579,431
|
|
|
|
50,588
|
|
|
|
19,163
|
|
|
Provision for policy losses and other claims
|
|
|
333,695
|
|
|
|
130,037
|
|
|
|
203,658
|
|
|
|
—
|
|
|
Depreciation and amortization
|
|
|
96,292
|
|
|
|
91,471
|
|
|
|
4,697
|
|
|
|
124
|
|
|
Premium taxes
|
|
|
52,527
|
|
|
|
46,973
|
|
|
|
5,554
|
|
|
|
—
|
|
|
Interest
|
|
|
26,812
|
|
|
|
2,576
|
|
|
|
—
|
|
|
|
24,236
|
|
|
|
|
|
4,005,044
|
|
|
|
3,460,373
|
|
|
|
318,129
|
|
|
|
226,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
285,996
|
|
|
$
|
476,746
|
|
|
$
|
25,779
|
|
|
$
|
(216,529
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
Title
|
|
|
Specialty
|
|
|
Corporate
|
|
|
September 30, 2016
|
|
Consolidated
|
|
|
Insurance
|
|
|
Insurance
|
|
|
(incl. Elims.)
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct premiums and escrow fees
|
|
$
|
1,775,615
|
|
|
$
|
1,471,338
|
|
|
$
|
304,277
|
|
|
$
|
—
|
|
|
Agent premiums
|
|
|
1,653,990
|
|
|
|
1,653,990
|
|
|
|
—
|
|
|
|
—
|
|
|
Information and other
|
|
|
526,575
|
|
|
|
524,199
|
|
|
|
2,394
|
|
|
|
(18
|
)
|
|
Net investment income
|
|
|
92,717
|
|
|
|
81,389
|
|
|
|
7,085
|
|
|
|
4,243
|
|
|
Net realized investment gains(1)
|
|
|
22,692
|
|
|
|
19,202
|
|
|
|
3,490
|
|
|
|
—
|
|
|
|
|
|
4,071,589
|
|
|
|
3,750,118
|
|
|
|
317,246
|
|
|
|
4,225
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs
|
|
|
1,239,129
|
|
|
|
1,154,225
|
|
|
|
51,149
|
|
|
|
33,755
|
|
|
Premiums retained by agents
|
|
|
1,303,838
|
|
|
|
1,303,838
|
|
|
|
—
|
|
|
|
—
|
|
|
Other operating expenses
|
|
|
622,995
|
|
|
|
559,141
|
|
|
|
43,563
|
|
|
|
20,291
|
|
|
Provision for policy losses and other claims
|
|
|
366,473
|
|
|
|
171,994
|
|
|
|
194,479
|
|
|
|
—
|
|
|
Depreciation and amortization
|
|
|
70,905
|
|
|
|
66,510
|
|
|
|
4,107
|
|
|
|
288
|
|
|
Premium taxes
|
|
|
48,692
|
|
|
|
43,488
|
|
|
|
5,204
|
|
|
|
—
|
|
|
Interest
|
|
|
23,427
|
|
|
|
2,107
|
|
|
|
—
|
|
|
|
21,320
|
|
|
|
|
|
3,675,459
|
|
|
|
3,301,303
|
|
|
|
298,502
|
|
|
|
75,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
396,130
|
|
|
$
|
448,815
|
|
|
$
|
18,744
|
|
|
$
|
(71,429
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes impairment losses recorded in earnings, except for
impairments on investments accounted for under the equity method,
which are recorded in net investment income.
|
|
|
|
|
|
First American Financial Corporation
|
|
|
Expense and Success Ratio Reconciliation
|
|
|
Title Insurance and Services Segment
|
|
|
($ in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
Total revenues
|
|
$
|
1,397,262
|
|
|
$
|
1,395,727
|
|
|
$
|
3,937,119
|
|
|
$
|
3,750,118
|
|
|
Less: Net realized investment (losses) gains
|
|
|
(7,159
|
)
|
|
|
8,382
|
|
|
|
9,335
|
|
|
|
19,202
|
|
|
Net investment income
|
|
|
37,901
|
|
|
|
28,986
|
|
|
|
99,181
|
|
|
|
81,389
|
|
|
Premiums retained by agents
|
|
|
497,911
|
|
|
|
495,130
|
|
|
|
1,387,608
|
|
|
|
1,303,838
|
|
|
Net operating revenues
|
|
$
|
868,609
|
|
|
$
|
863,229
|
|
|
$
|
2,440,995
|
|
|
$
|
2,345,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel and other operating expenses
|
|
$
|
618,304
|
|
|
$
|
607,492
|
|
|
$
|
1,801,708
|
|
|
$
|
1,713,366
|
|
|
Ratio (% net operating revenues)
|
|
|
71.2
|
%
|
|
|
70.4
|
%
|
|
|
73.8
|
%
|
|
|
73.0
|
%
|
|
Ratio (% total revenues)
|
|
|
44.3
|
%
|
|
|
43.5
|
%
|
|
|
45.8
|
%
|
|
|
45.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in net operating revenues
|
|
$
|
5,380
|
|
|
|
|
|
|
$
|
95,306
|
|
|
|
|
|
|
Change in personnel and other operating expenses
|
|
|
10,812
|
|
|
|
|
|
|
|
88,342
|
|
|
|
|
|
|
Success Ratio(1)
|
|
|
201
|
%
|
|
|
|
|
|
|
93
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q317
|
|
|
Q217
|
|
|
Q117
|
|
|
Q416
|
|
|
Q316
|
|
|
Open Orders per Day
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
|
|
|
2,156
|
|
|
|
2,313
|
|
|
|
1,977
|
|
|
|
1,623
|
|
|
|
2,110
|
|
|
Refinance
|
|
|
1,379
|
|
|
|
1,319
|
|
|
|
1,236
|
|
|
|
1,777
|
|
|
|
2,574
|
|
|
Refinance as % of residential orders
|
|
|
39
|
%
|
|
|
36
|
%
|
|
|
38
|
%
|
|
|
52
|
%
|
|
|
55
|
%
|
|
Commercial
|
|
|
495
|
|
|
|
506
|
|
|
|
507
|
|
|
|
484
|
|
|
|
492
|
|
|
Default and other
|
|
|
387
|
|
|
|
544
|
|
|
|
468
|
|
|
|
403
|
|
|
|
525
|
|
|
Total open orders per day
|
|
|
4,417
|
|
|
|
4,681
|
|
|
|
4,187
|
|
|
|
4,287
|
|
|
|
5,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed Orders per Day
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
|
|
|
1,724
|
|
|
|
1,718
|
|
|
|
1,298
|
|
|
|
1,504
|
|
|
|
1,645
|
|
|
Refinance
|
|
|
985
|
|
|
|
910
|
|
|
|
1030
|
|
|
|
1758
|
|
|
|
1714
|
|
|
Refinance as % of residential orders
|
|
|
36
|
%
|
|
|
35
|
%
|
|
|
44
|
%
|
|
|
54
|
%
|
|
|
51
|
%
|
|
Commercial
|
|
|
309
|
|
|
|
324
|
|
|
|
310
|
|
|
|
340
|
|
|
|
318
|
|
|
Default and other
|
|
|
384
|
|
|
|
390
|
|
|
|
448
|
|
|
|
475
|
|
|
|
518
|
|
|
Total closed orders per day
|
|
|
3,402
|
|
|
|
3,342
|
|
|
|
3,085
|
|
|
|
4,076
|
|
|
|
4,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Revenue per Order (ARPO)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
|
|
$
|
2,336
|
|
|
$
|
2,319
|
|
|
$
|
2,215
|
|
|
$
|
2,206
|
|
|
$
|
2,193
|
|
|
Refinance
|
|
|
928
|
|
|
|
907
|
|
|
|
912
|
|
|
|
899
|
|
|
|
880
|
|
|
Commercial
|
|
|
9,024
|
|
|
|
8,589
|
|
|
|
7,617
|
|
|
|
8,808
|
|
|
|
8,162
|
|
|
Default and other
|
|
|
230
|
|
|
|
201
|
|
|
|
238
|
|
|
|
199
|
|
|
|
170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ARPO
|
|
$
|
2,298
|
|
|
$
|
2,294
|
|
|
$
|
2,035
|
|
|
$
|
1,958
|
|
|
$
|
1,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Days
|
|
63
|
|
|
64
|
|
|
62
|
|
|
62
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) U.S. operations only.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals may not add due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20171026005421/en/
Source: First American Financial Corporation