—Reports Earnings of $1.96 per Diluted Share for the Fourth Quarter—
—Includes $1.01 per Share Net Benefit Related to Tax Reform—
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
fourth quarter and year ended Dec. 31, 2017.
Current Quarter Highlights
-
Total revenue of $1.5 billion, down 2 percent compared with last year
-
Closed title orders down 19 percent, driven by a 41 percent
decline in refinance orders
-
Average revenue per order up 23 percent, driven by the shift in
the mix to higher-premium purchase and commercial transactions
-
Title Insurance and Services segment pretax margin of 12.2 percent
-
Commercial revenues of $196.2 million, up 6 percent compared with last
year
-
Specialty Insurance segment pretax margin of 9.2 percent
-
Property and casualty loss rate of 108.1 percent impacted by
California wildfires
-
Debt-to-capital ratio of 17.4 percent as of Dec. 31, 2017
-
Net tax benefit of $114.1 million, or $1.01 per diluted share, related
to tax reform
Full Year 2017 Highlights
-
Total revenue of $5.8 billion, up 4 percent compared with last year
-
Title Insurance and Services segment pretax margin of 12.1 percent
-
Closed acquisitions totaling $91 million
-
Completed termination of pension plan, resulting in annualized savings
of $22 million
-
Raised common stock dividend 12 percent to an annual rate of $1.52 per
share
-
Cash flow from operations of $632.1 million, up 29 percent from last
year
-
Return on equity of 13.0 percent
Selected Financial Information
($ in millions, except per
share data)
|
|
|
|
|
|
Three Months Ended
|
|
|
Full Year Ended
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
|
Total revenue
|
|
|
$
|
1,481.3
|
|
$
|
1,504.3
|
|
|
$
|
5,772.4
|
|
$
|
5,575.8
|
|
|
|
Income before taxes
|
|
|
|
159.3
|
|
|
81.5
|
|
|
|
445.3
|
|
|
477.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
221.1
|
|
$
|
81.0
|
|
|
$
|
423.0
|
|
$
|
343.0
|
|
|
|
Net income per diluted share
|
|
|
|
1.96
|
|
|
0.73
|
|
|
|
3.76
|
|
|
3.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue for the fourth quarter of 2017 was $1.5 billion, a decline
of 2 percent relative to the fourth quarter of 2016. Net income in the
current quarter was $221.1 million, or $1.96 per diluted share, compared
with net income of $81.0 million, or 73 cents per diluted share, in the
fourth quarter of 2016.
This quarter’s effective tax rate of negative 38.5 percent includes a
net benefit of $114.1 million, or $1.01 per diluted share, primarily due
to the re-measurement of net deferred tax liabilities as a result of
recent tax reform legislation.
Total revenue for the full year of 2017 was $5.8 billion, an increase of
4 percent relative to the prior year. Net income was $423.0 million, or
$3.76 per diluted share, compared with net income of $343.0 million, or
$3.09 per diluted share, in 2016.
“The company had strong results in 2017, achieving earnings per share of
$3.76 and a return on equity of 13 percent,” said Dennis J. Gilmore,
chief executive officer at First American Financial Corporation. “Total
revenue grew 4 percent, primarily driven by strength in our purchase and
commercial businesses, which offset the sharp drop in refinance
transactions. We continued to manage the company at a high level of
efficiency, enabling us to deliver a pretax margin of 12.1 percent in
our title segment.
“In 2018, we will maintain our efforts to develop innovative solutions
for our customers and acquire companies that strengthen our core
business. In addition, we believe the company will continue to benefit
from the ongoing improvement in housing and the general economy. We will
remain focused on operating efficiently and strategically deploying our
capital in ways that create shareholder value.”
Title Insurance and Services
($ in millions, except
average revenue per order)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
|
Total revenues
|
|
|
$
|
1,356.0
|
|
|
$
|
1,384.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
$
|
165.6
|
|
|
$
|
150.1
|
|
|
|
|
Pretax margin
|
|
|
|
12.2
|
%
|
|
|
10.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct open orders
|
|
|
|
231,500
|
|
|
|
265,800
|
|
|
|
|
Direct closed orders
|
|
|
|
204,200
|
|
|
|
252,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Commercial
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
$
|
196.2
|
|
|
$
|
185.5
|
|
|
|
|
Open orders
|
|
|
|
30,300
|
|
|
|
30,000
|
|
|
|
|
Closed orders
|
|
|
|
20,600
|
|
|
|
21,100
|
|
|
|
|
Average revenue per order
|
|
|
$
|
9,500
|
|
|
$
|
8,800
|
|
|
|
|
|
|
|
|
|
|
Total revenues for the Title Insurance and Services segment during the
fourth quarter were $1.4 billion, down 2 percent compared with the same
quarter of 2016. Direct premiums and escrow fees were down 1 percent
compared with the fourth quarter of 2016, driven by a 19 percent decline
in the number of direct title orders closed that was largely offset by a
23 percent increase in the average revenue per direct title order. The
growth in the average revenue per direct title order to $2,411 was
primarily attributable to the shift in the order mix to higher-premium
residential purchase and commercial transactions. Agent premiums, which
are recorded on approximately a one-quarter lag relative to direct
premiums, were down 5 percent in the current quarter as compared with
last year.
Information and other revenues were $187.5 million this quarter, down 1
percent compared with the same quarter of last year. Higher revenues
from recent acquisitions were offset by lower revenues from the
company’s centralized lender business, largely due to the decline in
refinance activity.
Investment income was $38.3 million in the fourth quarter, up $8.9
million, or 30 percent, primarily due to the increase in short-term
interest rates that drove higher interest income in the company’s
investment portfolio and cash balances. Net realized investment losses
totaled $2.7 million in the current quarter, compared with losses of
$0.3 million in the fourth quarter of 2016.
Personnel costs were $414.2 million in the fourth quarter, a decrease of
$9.8 million, or 2 percent, compared with the same quarter of 2016. This
decline was primarily driven by lower temporary labor, overtime and
incentive compensation expenses, partially offset by personnel costs
associated with recent acquisitions.
Other operating expenses were $208.6 million in the fourth quarter, up
$3.3 million, or 2 percent, compared with the fourth quarter of 2016.
The increase was due to an $8.5 million write off of uncollectible
balances this quarter, partially offset by lower production-related
costs as a result of the decline in order volume.
The provision for policy losses and other claims was $45.3 million in
the fourth quarter, or 4.0 percent of title premiums and escrow fees,
compared with a 5.5 percent loss provision rate in the fourth 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 $30.1 million in the fourth
quarter, an increase of $3.5 million, or 13 percent, compared with the
same period last year. The increase was primarily attributable to higher
amortization expense associated with both internally developed and
purchased software.
Pretax income for the Title Insurance and Services segment was $165.6
million in the fourth quarter, compared with $150.1 million in the
fourth quarter of 2016. Pretax margin was 12.2 percent in the current
quarter, compared with 10.8 percent last year.
Specialty Insurance
($ in millions)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
|
Total revenues
|
|
|
$
|
121.1
|
|
|
$
|
118.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
$
|
11.1
|
|
|
$
|
21.3
|
|
|
|
|
Pretax margin
|
|
|
|
9.2
|
%
|
|
|
18.0
|
%
|
|
|
|
|
|
|
|
|
|
Total revenues for the Specialty Insurance segment were $121.1 million
in the fourth quarter of 2017, an increase of 2 percent compared with
the fourth quarter of 2016. The results from the home warranty business
benefited from both lower claim severity and frequency. The decline in
severity was primarily driven by operational improvements in claims
management processes. The company’s property and casualty business
experienced high claim losses in the quarter due to two separate
California wildfires, with losses exceeding our $5 million reinsurance
retention limit for each event. As a result, the overall loss ratio for
the segment increased to 63.5 percent this quarter, compared with 54.6
percent last year. The segment’s pretax margin in the current quarter
was 9.2 percent, compared with 18.0 percent in the fourth quarter of
last year.
Teleconference/Webcast
First American’s fourth-quarter and year-end 2017 results will be
discussed in more detail on Thursday, Feb. 8, 2018, at 11 a.m. EST, 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 Feb.
22, 2018, by dialing 201-612-7415 and using the conference ID 13675613.
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 wealth management services. With total revenue of $5.8 billion in
2017, 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 September 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.
|
|
|
First American Financial Corporation
|
|
Summary of Consolidated Financial Results and Selected Information
|
|
(in thousands, except per share amounts and title orders,
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
|
2017
|
|
|
|
2016
|
|
Total revenues
|
|
|
$
|
1,481,323
|
|
|
$
|
1,504,257
|
|
|
|
$
|
5,772,363
|
|
|
$
|
5,575,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
$
|
159,335
|
|
|
$
|
81,451
|
|
|
|
$
|
445,331
|
|
|
$
|
477,581
|
|
Income taxes
|
|
|
|
(61,378
|
)
|
|
|
490
|
|
|
|
|
23,468
|
|
|
|
134,105
|
|
Net income
|
|
|
|
220,713
|
|
|
|
80,961
|
|
|
|
|
421,863
|
|
|
|
343,476
|
|
Less: Net (loss) income attributable to noncontrolling interests
|
|
|
|
(414
|
)
|
|
|
(62
|
)
|
|
|
|
(1,186
|
)
|
|
|
483
|
|
Net income attributable to the Company
|
|
|
$
|
221,127
|
|
|
$
|
81,023
|
|
|
|
$
|
423,049
|
|
|
$
|
342,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
1.98
|
|
|
$
|
0.73
|
|
|
|
$
|
3.79
|
|
|
$
|
3.10
|
|
Diluted
|
|
|
$
|
1.96
|
|
|
$
|
0.73
|
|
|
|
$
|
3.76
|
|
|
$
|
3.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share
|
|
|
$
|
0.38
|
|
|
$
|
0.34
|
|
|
|
$
|
1.44
|
|
|
$
|
1.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
111,904
|
|
|
|
110,740
|
|
|
|
|
111,668
|
|
|
|
110,548
|
|
Diluted
|
|
|
|
112,846
|
|
|
|
111,464
|
|
|
|
|
112,435
|
|
|
|
111,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Title Insurance Segment Information
|
|
|
|
|
|
|
|
|
|
|
|
Title orders opened(1)
|
|
|
|
231,500
|
|
|
|
265,800
|
|
|
|
|
1,069,000
|
|
|
|
1,281,400
|
|
Title orders closed(1)
|
|
|
|
204,200
|
|
|
|
252,700
|
|
|
|
|
823,700
|
|
|
|
958,400
|
|
Paid title claims
|
|
|
|
51,262
|
|
|
|
51,149
|
|
|
|
|
200,350
|
|
|
|
210,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) U.S. direct title insurance orders only.
|
|
|
|
|
|
First American Financial Corporation
|
|
Selected Balance Sheet Information
|
|
(in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
|
2017
|
|
|
|
2016
|
|
Cash and cash equivalents
|
|
|
$
|
1,387,226
|
|
|
$
|
1,006,138
|
|
Investments
|
|
|
|
5,378,303
|
|
|
|
5,140,699
|
|
Goodwill and other intangible assets, net
|
|
|
|
1,212,918
|
|
|
|
1,096,315
|
|
Total assets
|
|
|
|
9,573,222
|
|
|
|
8,831,777
|
|
Reserve for claim losses
|
|
|
|
1,028,933
|
|
|
|
1,025,863
|
|
Notes and contracts payable
|
|
|
|
732,810
|
|
|
|
736,693
|
|
Total stockholders’ equity
|
|
|
$
|
3,479,955
|
|
|
$
|
3,008,179
|
|
|
|
|
|
|
|
|
|
|
|
First American Financial Corporation
|
|
Segment Information
|
|
(in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Title
|
|
|
Specialty
|
|
|
Corporate
|
|
December 31, 2017
|
|
|
Consolidated
|
|
|
Insurance
|
|
|
Insurance
|
|
|
(incl. Elims.)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct premiums and escrow fees
|
|
|
$
|
642,661
|
|
|
$
|
530,126
|
|
|
|
$
|
112,535
|
|
|
$
|
—
|
|
|
Agent premiums
|
|
|
|
602,863
|
|
|
|
602,863
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Information and other
|
|
|
|
190,035
|
|
|
|
187,469
|
|
|
|
|
2,832
|
|
|
|
(266
|
)
|
|
Net investment income
|
|
|
|
45,293
|
|
|
|
38,258
|
|
|
|
|
2,595
|
|
|
|
4,440
|
|
|
Net realized investment gains (losses)(1)
|
|
|
|
471
|
|
|
|
(2,679
|
)
|
|
|
|
3,150
|
|
|
|
—
|
|
|
|
|
|
|
1,481,323
|
|
|
|
1,356,037
|
|
|
|
|
121,112
|
|
|
|
4,174
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs
|
|
|
|
439,623
|
|
|
|
414,206
|
|
|
|
|
17,973
|
|
|
|
7,444
|
|
|
Premiums retained by agents
|
|
|
|
475,748
|
|
|
|
475,748
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Other operating expenses
|
|
|
|
231,692
|
|
|
|
208,590
|
|
|
|
|
17,225
|
|
|
|
5,877
|
|
|
Provision for policy losses and other claims
|
|
|
|
116,715
|
|
|
|
45,285
|
|
|
|
|
71,430
|
|
|
|
—
|
|
|
Depreciation and amortization
|
|
|
|
31,761
|
|
|
|
30,068
|
|
|
|
|
1,655
|
|
|
|
38
|
|
|
Premium taxes
|
|
|
|
17,274
|
|
|
|
15,572
|
|
|
|
|
1,702
|
|
|
|
—
|
|
|
Interest
|
|
|
|
9,175
|
|
|
|
950
|
|
|
|
|
—
|
|
|
|
8,225
|
|
|
|
|
|
|
1,321,988
|
|
|
|
1,190,419
|
|
|
|
|
109,985
|
|
|
|
21,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
$
|
159,335
|
|
|
$
|
165,618
|
|
|
|
$
|
11,127
|
|
|
$
|
(17,410
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Title
|
|
|
Specialty
|
|
|
Corporate
|
|
December 31, 2016
|
|
|
Consolidated
|
|
|
Insurance
|
|
|
Insurance
|
|
|
(incl. Elims.)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct premiums and escrow fees
|
|
|
$
|
640,424
|
|
|
$
|
533,347
|
|
|
|
$
|
107,077
|
|
|
$
|
—
|
|
|
Agent premiums
|
|
|
|
632,640
|
|
|
|
632,640
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Information and other
|
|
|
|
197,415
|
|
|
|
188,938
|
|
|
|
|
8,483
|
|
|
|
(6
|
)
|
|
Net investment income
|
|
|
|
33,417
|
|
|
|
29,368
|
|
|
|
|
2,391
|
|
|
|
1,658
|
|
|
Net realized investment gains (losses)(1)
|
|
|
|
361
|
|
|
|
(287
|
)
|
|
|
|
648
|
|
|
|
—
|
|
|
|
|
|
|
1,504,257
|
|
|
|
1,384,006
|
|
|
|
|
118,599
|
|
|
|
1,652
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs
|
|
|
|
517,504
|
|
|
|
424,019
|
|
|
|
|
16,584
|
|
|
|
76,901
|
|
|
Premiums retained by agents
|
|
|
|
497,733
|
|
|
|
497,733
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Other operating expenses
|
|
|
|
230,846
|
|
|
|
205,247
|
|
|
|
|
19,047
|
|
|
|
6,552
|
|
|
Provision for policy losses and other claims
|
|
|
|
122,128
|
|
|
|
63,667
|
|
|
|
|
58,461
|
|
|
|
—
|
|
|
Depreciation and amortization
|
|
|
|
28,142
|
|
|
|
26,560
|
|
|
|
|
1,485
|
|
|
|
97
|
|
|
Premium taxes
|
|
|
|
17,666
|
|
|
|
15,976
|
|
|
|
|
1,690
|
|
|
|
—
|
|
|
Interest
|
|
|
|
8,787
|
|
|
|
749
|
|
|
|
|
—
|
|
|
|
8,038
|
|
|
|
|
|
|
1,422,806
|
|
|
|
1,233,951
|
|
|
|
|
97,267
|
|
|
|
91,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
$
|
81,451
|
|
|
$
|
150,055
|
|
|
|
$
|
21,332
|
|
|
$
|
(89,936
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
Title
|
|
|
Specialty
|
|
|
Corporate
|
|
December 31, 2017
|
|
|
Consolidated
|
|
|
Insurance
|
|
|
Insurance
|
|
|
(incl. Elims.)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct premiums and escrow fees
|
|
|
$
|
2,461,854
|
|
|
$
|
2,022,384
|
|
|
$
|
439,470
|
|
|
$
|
—
|
|
|
Agent premiums
|
|
|
|
2,360,659
|
|
|
|
2,360,659
|
|
|
|
—
|
|
|
|
—
|
|
|
Information and other
|
|
|
|
776,214
|
|
|
|
766,018
|
|
|
|
11,259
|
|
|
|
(1,063
|
)
|
|
Net investment income
|
|
|
|
162,402
|
|
|
|
137,439
|
|
|
|
9,713
|
|
|
|
15,250
|
|
|
Net realized investment gains(1)
|
|
|
|
11,234
|
|
|
|
6,656
|
|
|
|
4,578
|
|
|
|
—
|
|
|
|
|
|
|
5,772,363
|
|
|
|
5,293,156
|
|
|
|
465,020
|
|
|
|
14,187
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs
|
|
|
|
1,898,551
|
|
|
|
1,636,483
|
|
|
|
71,604
|
|
|
|
190,464
|
|
|
Premiums retained by agents
|
|
|
|
1,863,356
|
|
|
|
1,863,356
|
|
|
|
—
|
|
|
|
—
|
|
|
Other operating expenses
|
|
|
|
880,874
|
|
|
|
788,020
|
|
|
|
67,813
|
|
|
|
25,041
|
|
|
Provision for policy losses and other claims
|
|
|
|
450,410
|
|
|
|
175,322
|
|
|
|
275,088
|
|
|
|
—
|
|
|
Depreciation and amortization
|
|
|
|
128,053
|
|
|
|
121,540
|
|
|
|
6,351
|
|
|
|
162
|
|
|
Premium taxes
|
|
|
|
69,801
|
|
|
|
62,545
|
|
|
|
7,256
|
|
|
|
—
|
|
|
Interest
|
|
|
|
35,987
|
|
|
|
3,526
|
|
|
|
—
|
|
|
|
32,461
|
|
|
|
|
|
|
5,327,032
|
|
|
|
4,650,792
|
|
|
|
428,112
|
|
|
|
248,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
$
|
445,331
|
|
|
$
|
642,364
|
|
|
$
|
36,908
|
|
|
$
|
(233,941
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
Title
|
|
|
Specialty
|
|
|
Corporate
|
|
December 31, 2016
|
|
|
Consolidated
|
|
|
Insurance
|
|
|
Insurance
|
|
|
(incl. Elims.)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct premiums and escrow fees
|
|
|
$
|
2,416,039
|
|
|
$
|
2,004,686
|
|
|
$
|
411,353
|
|
|
$
|
—
|
|
|
Agent premiums
|
|
|
|
2,286,630
|
|
|
|
2,286,630
|
|
|
|
—
|
|
|
|
—
|
|
|
Information and other
|
|
|
|
723,990
|
|
|
|
713,137
|
|
|
|
10,877
|
|
|
|
(24
|
)
|
|
Net investment income
|
|
|
|
126,134
|
|
|
|
110,757
|
|
|
|
9,476
|
|
|
|
5,901
|
|
|
Net realized investment gains(1)
|
|
|
|
23,053
|
|
|
|
18,915
|
|
|
|
4,138
|
|
|
|
—
|
|
|
|
|
|
|
5,575,846
|
|
|
|
5,134,125
|
|
|
|
435,844
|
|
|
|
5,877
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs
|
|
|
|
1,756,633
|
|
|
|
1,578,244
|
|
|
|
67,733
|
|
|
|
110,656
|
|
|
Premiums retained by agents
|
|
|
|
1,801,571
|
|
|
|
1,801,571
|
|
|
|
—
|
|
|
|
—
|
|
|
Other operating expenses
|
|
|
|
853,841
|
|
|
|
764,388
|
|
|
|
62,610
|
|
|
|
26,843
|
|
|
Provision for policy losses and other claims
|
|
|
|
488,601
|
|
|
|
235,661
|
|
|
|
252,940
|
|
|
|
—
|
|
|
Depreciation and amortization
|
|
|
|
99,047
|
|
|
|
93,069
|
|
|
|
5,593
|
|
|
|
385
|
|
|
Premium taxes
|
|
|
|
66,358
|
|
|
|
59,464
|
|
|
|
6,894
|
|
|
|
—
|
|
|
Interest
|
|
|
|
32,214
|
|
|
|
2,856
|
|
|
|
—
|
|
|
|
29,358
|
|
|
|
|
|
|
5,098,265
|
|
|
|
4,535,253
|
|
|
|
395,770
|
|
|
|
167,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
$
|
477,581
|
|
|
$
|
598,872
|
|
|
$
|
40,074
|
|
|
$
|
(161,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
Total revenues
|
|
|
$
|
1,356,037
|
|
|
$
|
1,384,006
|
|
|
|
$
|
5,293,156
|
|
|
$
|
5,134,125
|
|
|
Less: Net realized investment (losses) gains
|
|
|
|
(2,679
|
)
|
|
|
(287
|
)
|
|
|
|
6,656
|
|
|
|
18,915
|
|
|
Net investment income
|
|
|
|
38,258
|
|
|
|
29,368
|
|
|
|
|
137,439
|
|
|
|
110,757
|
|
|
Premiums retained by agents
|
|
|
|
475,748
|
|
|
|
497,733
|
|
|
|
|
1,863,356
|
|
|
|
1,801,571
|
|
|
Net operating revenues
|
|
|
$
|
844,710
|
|
|
$
|
857,192
|
|
|
|
$
|
3,285,705
|
|
|
$
|
3,202,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel and other operating expenses
|
|
|
$
|
622,796
|
|
|
$
|
629,266
|
|
|
|
$
|
2,424,503
|
|
|
$
|
2,342,632
|
|
|
Ratio (% net operating revenues)
|
|
|
|
73.7
|
%
|
|
|
73.4
|
%
|
|
|
|
73.8
|
%
|
|
|
73.1
|
%
|
|
Ratio (% total revenues)
|
|
|
|
45.9
|
%
|
|
|
45.5
|
%
|
|
|
|
45.8
|
%
|
|
|
45.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in net operating revenues
|
|
|
$
|
(12,482
|
)
|
|
|
|
|
$
|
82,823
|
|
|
|
|
Change in personnel and other operating expenses
|
|
|
|
(6,470
|
)
|
|
|
|
|
|
81,871
|
|
|
|
|
Success Ratio(1)
|
|
|
|
52
|
%
|
|
|
|
|
|
99
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q417
|
|
|
Q317
|
|
|
Q217
|
|
|
Q117
|
|
|
Q416
|
|
Open Orders per Day
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
|
|
|
|
1,686
|
|
|
|
|
2,156
|
|
|
|
|
2,313
|
|
|
|
|
1,977
|
|
|
|
|
1,623
|
|
|
Refinance
|
|
|
|
1,239
|
|
|
|
|
1,379
|
|
|
|
|
1,319
|
|
|
|
|
1,236
|
|
|
|
|
1,777
|
|
|
Refinance as % of residential orders
|
|
|
|
42
|
%
|
|
|
|
39
|
%
|
|
|
|
36
|
%
|
|
|
|
38
|
%
|
|
|
|
52
|
%
|
|
Commercial
|
|
|
|
489
|
|
|
|
|
495
|
|
|
|
|
506
|
|
|
|
|
507
|
|
|
|
|
484
|
|
|
Default and other
|
|
|
|
321
|
|
|
|
|
387
|
|
|
|
|
544
|
|
|
|
|
468
|
|
|
|
|
403
|
|
|
Total open orders per day
|
|
|
|
3,734
|
|
|
|
|
4,417
|
|
|
|
|
4,681
|
|
|
|
|
4,187
|
|
|
|
|
4,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed Orders per Day
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
|
|
|
|
1,550
|
|
|
|
|
1,724
|
|
|
|
|
1,718
|
|
|
|
|
1,298
|
|
|
|
|
1,504
|
|
|
Refinance
|
|
|
|
1,035
|
|
|
|
|
985
|
|
|
|
|
910
|
|
|
|
|
1,030
|
|
|
|
|
1,758
|
|
|
Refinance as % of residential orders
|
|
|
|
40
|
%
|
|
|
|
36
|
%
|
|
|
|
35
|
%
|
|
|
|
44
|
%
|
|
|
|
54
|
%
|
|
Commercial
|
|
|
|
333
|
|
|
|
|
309
|
|
|
|
|
324
|
|
|
|
|
310
|
|
|
|
|
340
|
|
|
Default and other
|
|
|
|
376
|
|
|
|
|
384
|
|
|
|
|
390
|
|
|
|
|
448
|
|
|
|
|
475
|
|
|
Total closed orders per day
|
|
|
|
3,294
|
|
|
|
|
3,402
|
|
|
|
|
3,342
|
|
|
|
|
3,085
|
|
|
|
|
4,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Revenue per Order (ARPO)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
|
|
|
$
|
2,389
|
|
|
|
$
|
2,336
|
|
|
|
$
|
2,319
|
|
|
|
$
|
2,215
|
|
|
|
$
|
2,206
|
|
|
Refinance
|
|
|
|
962
|
|
|
|
|
928
|
|
|
|
|
907
|
|
|
|
|
912
|
|
|
|
|
899
|
|
|
Commercial
|
|
|
|
9,508
|
|
|
|
|
9,024
|
|
|
|
|
8,589
|
|
|
|
|
7,617
|
|
|
|
|
8,808
|
|
|
Default and other
|
|
|
|
203
|
|
|
|
|
230
|
|
|
|
|
201
|
|
|
|
|
238
|
|
|
|
|
199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ARPO
|
|
|
$
|
2,411
|
|
|
|
$
|
2,298
|
|
|
|
$
|
2,294
|
|
|
|
$
|
2,035
|
|
|
|
$
|
1,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Days
|
|
|
|
62
|
|
|
|
|
63
|
|
|
|
|
64
|
|
|
|
|
62
|
|
|
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) U.S. operations only.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals may not add due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180208005433/en/
Source: First American Financial Corporation