First American Financial Corporation (NYSE: FAF), a leading global
provider of title insurance and settlement services for residential and
commercial real estate transactions, today announced financial results
for the second quarter ended June 30, 2013.
Current Quarter Highlights
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Total revenues up 18 percent compared with last year
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Title Insurance and Services segment pretax margin of 6.1 percent
-
Adjusted pretax title margin of 13.4 percent, excluding $89.0
million reserve strengthening, or 730 basis points, primarily due
to domestic lender claims for policy years 2004-2008
-
Title order mix continues to shift toward higher-premium resale
transactions
-
Resale open orders per day up 19 percent compared with last year
-
Refinance open orders per day down 9 percent compared with last
year
-
Commercial division revenues of $133.0 million, up 35 percent compared
with last year
-
Specialty Insurance segment total revenues up 6 percent, with a pretax
margin of 8.7 percent
-
Cash flow from operations of $209.3 million
-
Repurchased 1.6 million common shares for $35.6 million in June and
July
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Selected Financial Information
($ in millions, except per share data)
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For the Three Months Ended
June 30
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2013
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2012
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Total revenues
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$
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1,288.5
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$
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1,089.8
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Income before taxes
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59.2
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112.3
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Net income
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$
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34.7
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$
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73.0
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Net income per diluted share
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0.31
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0.68
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Total revenues for the second quarter of 2013 were $1.3 billion, an
increase of 18 percent relative to the second quarter of 2012. Net
income in the current quarter was $34.7 million, or 31 cents per diluted
share, compared with net income of $73.0 million, or 68 cents per
diluted share, in the second quarter of 2012. The current quarter
results include an $89.0 million reserve strengthening, or 48 cents per
diluted share net of tax. The current quarter results also include net
realized investment gains of $4.5 million, or 2 cents per diluted share,
compared with net realized investment gains of $11.6 million, or 6 cents
per diluted share, in the second quarter of 2012.
“Our business gained momentum in the second quarter as the housing
market continued to improve,” said Dennis J. Gilmore, chief executive
officer for First American Financial Corporation. “Strength in our title
insurance segment drove revenue up 18 percent. Our commercial division’s
performance was particularly strong, with revenues up 35 percent
compared with last year.
“Year to date, our paid title claims are down 8 percent as compared with
the prior year and our most recent policy years continue to perform
well, with ultimate loss rates below historical averages. While claims
from our legacy policy years have generally declined, they are not
falling at the pace that we expected and, as a result, we strengthened
our reserves in the quarter. Although the reserve strengthening impacted
our otherwise strong results, it does not alter our long-term outlook
for the business.
“The strong spring selling season has continued into summer, with resale
orders in July remaining at the peak levels of May and June. On the
refinance side, the surge in mortgage rates beginning in May impacted
transaction activity with orders declining sharply through the end of
June, but leveling out thus far in July.
“In June and July, we repurchased 1.6 million common shares at an
average price of $21.92 for a total of $36 million. We purchased these
shares based on our strong capital position and the long-term value we
see in our stock relative to other investment opportunities.”
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Title Insurance and Services
($ in millions, except average revenue per order)
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For the Three Months Ended
June 30
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2013
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2012
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Total revenues
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$
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1,205.0
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$
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1,012.0
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Income before taxes
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$
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73.0
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$
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118.4
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Pretax margin
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6.1
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%
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11.7
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%
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Direct open orders
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421,500
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411,200
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Direct closed orders
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321,300
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289,300
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Commercial*
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Total revenues
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$
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133.0
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$
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98.2
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Open orders
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23,600
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19,100
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Closed orders
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11,800
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12,100
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Average revenue per order
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$
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10,200
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$
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7,100
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* Includes commercial activity from the National Commercial
Services division only.
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Total revenues for the Title Insurance and Services segment were $1.2
billion, a 19 percent increase from the same quarter of 2012. Direct
premiums and escrow fees were up 21 percent from the second quarter of
2012, driven by an 11 percent increase in the number of direct title
orders closed in the quarter and a 9 percent increase in the revenue per
direct title order to $1,593. The increase in revenue per direct title
order was primarily attributable to higher real estate prices and an
increase in the number of large commercial deals that closed in the
quarter. Agent premiums were up 24 percent in the current quarter, which
is consistent with the increase in direct premiums during the previous
quarter, reflecting the typical reporting lag of approximately one
quarter.
Information and other revenues were $171.1 million this quarter, up 2
percent compared with the same quarter of last year. The increase was
primarily due to higher demand for the company’s residential and
commercial title information products, partially offset by lower demand
for title-related services in Canada.
Total investment income was $25.3 million in the second quarter, an
increase of $5.2 million from the second quarter of 2012. This increase
was primarily due to higher interest and dividends from the investment
portfolio and the impact of certain impairments that negatively affected
the second quarter of 2012, partly offset by lower net realized
investment gains in the current quarter.
Personnel costs were $340.0 million in the second quarter, an increase
of $40.7 million, or 14 percent, compared with the second quarter of
2012. This increase was primarily due to higher staffing levels required
to support the increase in order volume and higher incentive
compensation driven by the growth in revenues.
Other operating expenses were $216.2 million in the second quarter, up
$26.5 million, or 14 percent, compared with the second quarter of 2012.
The increase was primarily due to higher production-related expenses and
temporary labor costs driven by the increase in order volumes.
The provision for policy losses and other claims was $149.5 million in
the second quarter, or 14.8 percent of title premiums and escrow fees,
up $94.7 million compared with the same quarter of the prior year. The
current quarter rate of 14.8 percent reflects an ultimate loss rate of
5.8 percent for the current policy year and an $89.0 million net
increase in the loss reserve estimates for prior policy years. The
increase in loss reserve estimates for prior policy years reflects
claims development above expected levels, primarily attributable to
domestic lender policies from policy years 2004 through 2008.
Pretax income for the Title Insurance and Services segment was $73.0
million in the second quarter, compared with $118.4 million in the
second quarter of 2012. Pretax margin was 6.1 percent in the current
quarter, compared with 11.7 percent last year.
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Specialty Insurance
($ in millions)
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For the Three Months Ended
June 30
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2013
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2012
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Total revenues
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$
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84.0
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$
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79.6
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Income before taxes
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$
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7.3
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$
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13.3
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Pretax margin
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8.7
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%
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16.7
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%
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Total revenues for the Specialty Insurance segment were $84.0 million in
the second quarter of 2013, an increase of 6 percent compared with the
second quarter of 2012. The increase in revenues was driven by higher
premiums earned in both the home warranty and property and casualty
business lines, partially offset by lower net realized gains in the
current quarter. The overall loss rate in the Specialty Insurance
segment was 61 percent in the current quarter, above the 56 percent loss
rate in the prior year. Both business lines experienced higher losses in
the quarter, resulting in a pretax margin of 8.7 percent, down from 16.7
percent in the second quarter of 2012.
Teleconference/Webcast
First American’s second quarter 2013 results will be discussed in more
detail on Thursday, July 25, 2013, at 11 a.m. ET, via teleconference.
The toll-free dial-in number is (800) 619-2658. Callers from
outside the United States may dial (773) 756-4600. The passcode for the
event is “First American.”
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 July
31, 2013, by dialing (203) 369-3836. 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 and settlement services to the real estate
and mortgage industries, 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 revenues of $4.5 billion in 2012,
the company offers its products and services directly and through its
agents throughout the United States and abroad. 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
direct title insurance operations, which are posted approximately 12
days after the end of each month.
Forward-Looking Statements
Certain statements made in this press release and the related
management commentary and responses to investor questions, including but
not limited to those related to the outlook for the housing market and
its effects on the company; future refinance, purchase and commercial
volumes; the decline in refinance business being offset by future
strength in the company’s purchase and commercial businesses; focus on
organic growth in the core title business; and future title claims
experience and loss rates, are 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 may contain the words “believe,”
“anticipate,” “expect,” “plan,” “predict,” “estimate,” “project,” “will
be,” “will continue,” “will likely result,” or other similar words and
phrases. 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: 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 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; regulation of
title insurance rates; reform of government-sponsored mortgage
enterprises; limitations on access to public records and other data;
product migration; changes in relationships with large mortgage lenders;
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; expenses of and funding
obligations to the pension plan; 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;
systems interruptions and intrusions, wire transfer errors or
unauthorized data disclosures; inability to realize the benefits of the
company’s offshore strategy; inability of the company’s subsidiaries to
pay dividends or repay funds; and other factors described in the
company’s quarterly report on Form 10-Q for the quarter ended March 31,
2013, 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 an adjusted pretax
title margin and personnel and other operating expense 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)
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(unaudited)
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For the Three Months Ended
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For the Six Months Ended
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June 30
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June 30
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|
2013
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|
|
2012
|
|
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|
2013
|
|
|
|
2012
|
|
|
|
|
|
|
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|
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|
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Total revenues
|
|
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|
$
|
1,288,464
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|
|
|
$
|
1,089,833
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|
|
|
$
|
2,435,227
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|
|
|
$
|
2,056,596
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Income before income taxes
|
|
|
|
$
|
59,224
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|
|
|
$
|
112,290
|
|
|
|
$
|
118,816
|
|
|
|
$
|
163,840
|
Income tax expense
|
|
|
|
|
24,276
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|
|
|
|
38,773
|
|
|
|
|
47,636
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|
|
|
|
59,214
|
Net income
|
|
|
|
|
34,948
|
|
|
|
|
73,517
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|
|
|
|
71,180
|
|
|
|
|
104,626
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
|
276
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|
|
|
|
516
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|
|
|
|
330
|
|
|
|
|
332
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Net income attributable to the Company
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|
$
|
34,672
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|
|
|
$
|
73,001
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|
|
|
$
|
70,850
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|
|
|
$
|
104,294
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|
|
|
|
|
|
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|
|
|
|
|
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|
|
Net income per share attributable to stockholders:
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|
|
|
|
|
|
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|
|
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Basic
|
|
|
|
$
|
0.32
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|
|
|
$
|
0.69
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|
|
$
|
0.66
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|
|
|
$
|
0.98
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Diluted
|
|
|
|
$
|
0.31
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|
|
$
|
0.68
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|
|
|
$
|
0.64
|
|
|
|
$
|
0.97
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share
|
|
|
|
$
|
0.12
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|
|
$
|
0.08
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|
|
$
|
0.24
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|
|
|
$
|
0.16
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
108,210
|
|
|
|
|
106,230
|
|
|
|
|
107,881
|
|
|
|
|
105,926
|
Diluted
|
|
|
|
|
110,311
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|
|
|
|
107,945
|
|
|
|
|
110,072
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|
|
|
|
107,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Title Information
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title orders opened
|
|
|
|
|
421,500
|
|
|
|
|
411,200
|
|
|
|
|
798,100
|
|
|
|
|
788,400
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title orders closed
|
|
|
|
|
321,300
|
|
|
|
|
289,300
|
|
|
|
|
612,700
|
|
|
|
|
550,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid title claims
|
|
|
|
$
|
69,148
|
|
|
|
$
|
71,850
|
|
|
|
$
|
140,485
|
|
|
|
$
|
152,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First American Financial Corporation
|
Selected Balance Sheet Information
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
861,835
|
|
|
|
|
|
|
|
|
|
|
$
|
627,208
|
Investment portfolio
|
|
|
|
|
3,145,223
|
|
|
|
|
|
|
|
|
|
|
|
3,113,560
|
Goodwill and other intangible assets
|
|
|
|
|
891,188
|
|
|
|
|
|
|
|
|
|
|
|
902,952
|
Total assets
|
|
|
|
|
6,302,979
|
|
|
|
|
|
|
|
|
|
|
|
6,050,847
|
Reserve for claim losses
|
|
|
|
|
1,054,450
|
|
|
|
|
|
|
|
|
|
|
|
976,462
|
Notes payable
|
|
|
|
|
314,779
|
|
|
|
|
|
|
|
|
|
|
|
229,760
|
Total stockholders' equity
|
|
|
|
$
|
2,342,220
|
|
|
|
|
|
|
|
|
|
|
$
|
2,348,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First American Financial Corporation
|
Segment Information
|
(in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
|
|
|
Title
|
|
|
|
Specialty
|
|
|
|
Corporate
|
June 30, 2013
|
|
|
|
Consolidated
|
|
|
|
Insurance
|
|
|
|
Insurance
|
|
|
|
(incl. Elims.)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct premiums and escrow fees
|
|
|
|
$
|
593,205
|
|
|
|
$
|
511,918
|
|
|
|
$
|
81,287
|
|
|
|
$
|
-
|
|
Agent premiums
|
|
|
|
|
496,730
|
|
|
|
|
496,730
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Information and other
|
|
|
|
|
171,522
|
|
|
|
|
171,104
|
|
|
|
|
424
|
|
|
|
|
(6
|
)
|
Investment income
|
|
|
|
|
22,485
|
|
|
|
|
21,599
|
|
|
|
|
1,787
|
|
|
|
|
(901
|
)
|
Net realized investment gains(1) |
|
|
|
|
4,522
|
|
|
|
|
3,696
|
|
|
|
|
525
|
|
|
|
|
301
|
|
|
|
|
|
|
1,288,464
|
|
|
|
|
1,205,047
|
|
|
|
|
84,023
|
|
|
|
|
(606
|
)
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs
|
|
|
|
|
364,767
|
|
|
|
|
340,046
|
|
|
|
|
14,905
|
|
|
|
|
9,816
|
|
Premiums retained by agents
|
|
|
|
|
396,024
|
|
|
|
|
396,024
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Other operating expenses
|
|
|
|
|
232,765
|
|
|
|
|
216,230
|
|
|
|
|
9,859
|
|
|
|
|
6,676
|
|
Provision for policy losses and other claims
|
|
|
|
|
198,766
|
|
|
|
|
149,534
|
|
|
|
|
49,232
|
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
|
|
18,192
|
|
|
|
|
16,260
|
|
|
|
|
1,209
|
|
|
|
|
723
|
|
Premium taxes
|
|
|
|
|
14,795
|
|
|
|
|
13,268
|
|
|
|
|
1,527
|
|
|
|
|
-
|
|
Interest
|
|
|
|
|
3,931
|
|
|
|
|
645
|
|
|
|
|
-
|
|
|
|
|
3,286
|
|
|
|
|
|
|
1,229,240
|
|
|
|
|
1,132,007
|
|
|
|
|
76,732
|
|
|
|
|
20,501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
|
$
|
59,224
|
|
|
|
$
|
73,040
|
|
|
|
$
|
7,291
|
|
|
|
$
|
(21,107
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
|
|
|
Title
|
|
|
|
Specialty
|
|
|
|
Corporate
|
June 30, 2012
|
|
|
|
Consolidated
|
|
|
|
Insurance
|
|
|
|
Insurance
|
|
|
|
(incl. Elims.)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct premiums and escrow fees
|
|
|
|
$
|
497,288
|
|
|
|
$
|
424,146
|
|
|
|
$
|
73,142
|
|
|
|
$
|
-
|
|
Agent premiums
|
|
|
|
|
400,361
|
|
|
|
|
400,361
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Information and other
|
|
|
|
|
167,827
|
|
|
|
|
167,411
|
|
|
|
|
418
|
|
|
|
|
(2
|
)
|
Investment income
|
|
|
|
|
12,789
|
|
|
|
|
12,283
|
|
|
|
|
2,231
|
|
|
|
|
(1,725
|
)
|
Net realized investment gains(1) |
|
|
|
|
11,568
|
|
|
|
|
7,771
|
|
|
|
|
3,797
|
|
|
|
|
-
|
|
|
|
|
|
|
1,089,833
|
|
|
|
|
1,011,972
|
|
|
|
|
79,588
|
|
|
|
|
(1,727
|
)
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs
|
|
|
|
|
322,043
|
|
|
|
|
299,348
|
|
|
|
|
13,717
|
|
|
|
|
8,978
|
|
Premiums retained by agents
|
|
|
|
|
321,348
|
|
|
|
|
321,348
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Other operating expenses
|
|
|
|
|
205,647
|
|
|
|
|
189,759
|
|
|
|
|
9,594
|
|
|
|
|
6,294
|
|
Provision for policy losses and other claims
|
|
|
|
|
95,389
|
|
|
|
|
54,820
|
|
|
|
|
40,569
|
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
|
|
18,456
|
|
|
|
|
16,669
|
|
|
|
|
1,116
|
|
|
|
|
671
|
|
Premium taxes
|
|
|
|
|
12,228
|
|
|
|
|
10,922
|
|
|
|
|
1,306
|
|
|
|
|
-
|
|
Interest
|
|
|
|
|
2,432
|
|
|
|
|
661
|
|
|
|
|
-
|
|
|
|
|
1,771
|
|
|
|
|
|
|
977,543
|
|
|
|
|
893,527
|
|
|
|
|
66,302
|
|
|
|
|
17,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
|
$
|
112,290
|
|
|
|
$
|
118,445
|
|
|
|
$
|
13,286
|
|
|
|
$
|
(19,441
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes other-than-temporary impairment (OTTI) losses recorded
in earnings.
|
|
|
|
First American Financial Corporation
|
Segment Information
|
(in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
|
|
|
|
|
Title
|
|
|
|
Specialty
|
|
|
|
Corporate
|
June 30, 2013
|
|
|
|
Consolidated
|
|
|
|
Insurance
|
|
|
|
Insurance
|
|
|
|
(incl. Elims.)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct premiums and escrow fees
|
|
|
|
$
|
1,071,056
|
|
|
|
$
|
911,902
|
|
|
|
$
|
159,154
|
|
|
|
$
|
-
|
|
Agent premiums
|
|
|
|
|
981,195
|
|
|
|
|
981,195
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Information and other
|
|
|
|
|
323,655
|
|
|
|
|
322,852
|
|
|
|
|
814
|
|
|
|
|
(11
|
)
|
Investment income
|
|
|
|
|
45,543
|
|
|
|
|
40,585
|
|
|
|
|
3,466
|
|
|
|
|
1,492
|
|
Net realized investment gains (1) |
|
|
|
|
13,778
|
|
|
|
|
11,092
|
|
|
|
|
2,100
|
|
|
|
|
586
|
|
|
|
|
|
|
2,435,227
|
|
|
|
|
2,267,626
|
|
|
|
|
165,534
|
|
|
|
|
2,067
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs
|
|
|
|
|
709,267
|
|
|
|
|
656,889
|
|
|
|
|
29,236
|
|
|
|
|
23,142
|
|
Premiums retained by agents
|
|
|
|
|
783,567
|
|
|
|
|
783,567
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Other operating expenses
|
|
|
|
|
438,111
|
|
|
|
|
404,843
|
|
|
|
|
20,078
|
|
|
|
|
13,190
|
|
Provision for policy losses and other claims
|
|
|
|
|
314,792
|
|
|
|
|
226,894
|
|
|
|
|
87,898
|
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
|
|
36,587
|
|
|
|
|
32,744
|
|
|
|
|
2,387
|
|
|
|
|
1,456
|
|
Premium taxes
|
|
|
|
|
26,912
|
|
|
|
|
24,172
|
|
|
|
|
2,740
|
|
|
|
|
-
|
|
Interest
|
|
|
|
|
7,175
|
|
|
|
|
1,209
|
|
|
|
|
-
|
|
|
|
|
5,966
|
|
|
|
|
|
|
2,316,411
|
|
|
|
|
2,130,318
|
|
|
|
|
142,339
|
|
|
|
|
43,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
|
$
|
118,816
|
|
|
|
$
|
137,308
|
|
|
|
$
|
23,195
|
|
|
|
$
|
(41,687
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
|
|
|
|
|
Title
|
|
|
|
Specialty
|
|
|
|
Corporate
|
June 30, 2012
|
|
|
|
Consolidated
|
|
|
|
Insurance
|
|
|
|
Insurance
|
|
|
|
(incl. Elims.)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct premiums and escrow fees
|
|
|
|
$
|
911,074
|
|
|
|
$
|
767,785
|
|
|
|
$
|
143,289
|
|
|
|
$
|
-
|
|
Agent premiums
|
|
|
|
|
777,347
|
|
|
|
|
777,347
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Information and other
|
|
|
|
|
323,587
|
|
|
|
|
322,700
|
|
|
|
|
893
|
|
|
|
|
(6
|
)
|
Investment income
|
|
|
|
|
33,923
|
|
|
|
|
29,604
|
|
|
|
|
4,696
|
|
|
|
|
(377
|
)
|
Net realized investment gains (1) |
|
|
|
|
10,665
|
|
|
|
|
5,757
|
|
|
|
|
4,908
|
|
|
|
|
-
|
|
|
|
|
|
|
2,056,596
|
|
|
|
|
1,903,193
|
|
|
|
|
153,786
|
|
|
|
|
(383
|
)
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs
|
|
|
|
|
627,322
|
|
|
|
|
576,925
|
|
|
|
|
27,380
|
|
|
|
|
23,017
|
|
Premiums retained by agents
|
|
|
|
|
623,512
|
|
|
|
|
623,512
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Other operating expenses
|
|
|
|
|
394,797
|
|
|
|
|
361,510
|
|
|
|
|
20,637
|
|
|
|
|
12,650
|
|
Provision for policy losses and other claims
|
|
|
|
|
182,067
|
|
|
|
|
107,000
|
|
|
|
|
75,067
|
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
|
|
36,515
|
|
|
|
|
33,002
|
|
|
|
|
2,172
|
|
|
|
|
1,341
|
|
Premium taxes
|
|
|
|
|
23,076
|
|
|
|
|
20,655
|
|
|
|
|
2,421
|
|
|
|
|
-
|
|
Interest
|
|
|
|
|
5,467
|
|
|
|
|
1,322
|
|
|
|
|
-
|
|
|
|
|
4,145
|
|
|
|
|
|
|
1,892,756
|
|
|
|
|
1,723,926
|
|
|
|
|
127,677
|
|
|
|
|
41,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
|
$
|
163,840
|
|
|
|
$
|
179,267
|
|
|
|
$
|
26,109
|
|
|
|
$
|
(41,536
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes other-than-temporary impairment (OTTI) losses recorded
in earnings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First American Financial Corporation
|
Expense Ratio Reconciliation
|
Title Insurance and Services Segment
|
($ in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
For the Six Months Ended
|
|
|
|
|
June 30
|
|
|
|
June 30
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
$
|
1,205,047
|
|
|
|
|
$
|
1,011,972
|
|
|
|
|
$
|
2,267,626
|
|
|
|
|
$
|
1,903,193
|
|
Less: Net realized investment gains(1)
|
|
|
|
|
3,696
|
|
|
|
|
|
7,771
|
|
|
|
|
|
11,092
|
|
|
|
|
|
5,757
|
|
Investment income
|
|
|
|
|
21,599
|
|
|
|
|
|
12,283
|
|
|
|
|
|
40,585
|
|
|
|
|
|
29,604
|
|
Premiums retained by agents
|
|
|
|
|
396,024
|
|
|
|
|
|
321,348
|
|
|
|
|
|
783,567
|
|
|
|
|
|
623,512
|
|
Net operating revenues
|
|
|
|
$
|
783,728
|
|
|
|
|
$
|
670,570
|
|
|
|
|
$
|
1,432,382
|
|
|
|
|
$
|
1,244,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel and other operating expenses
|
|
|
|
$
|
556,276
|
|
|
|
|
$
|
489,107
|
|
|
|
|
$
|
1,061,732
|
|
|
|
|
$
|
938,435
|
|
Ratio (% net operating revenues)
|
|
|
|
|
71.0
|
%
|
|
|
|
|
72.9
|
%
|
|
|
|
|
74.1
|
%
|
|
|
|
|
75.4
|
%
|
Ratio (% total revenues)
|
|
|
|
|
46.2
|
%
|
|
|
|
|
48.3
|
%
|
|
|
|
|
46.8
|
%
|
|
|
|
|
49.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes other-than-temporary impairment (OTTI) losses recorded
in earnings.
|
Copyright Business Wire 2013