First American Financial Reports Results for the Fourth Quarter and Full Year of 2023
- Earnings per diluted share of $0.33, or $0.69 per share on an adjusted basis for Q4 2023
- Total revenue of $1.4 billion, down 15 percent compared with last year
- Adjusted net income for 2023 was $398 million, or $3.80 per diluted share
- Total revenue for the full year 2023 was $6.0 billion, down 21 percent compared with the prior year
- Net investment losses for the full year 2023 were $206 million, or $1.46 per diluted share, compared with net investment losses of $516 million, or $3.63 per diluted share in 2022
Insights
The financial results released by First American Financial Corporation reflect a challenging quarter, primarily due to a cybersecurity incident that disrupted operations. A significant revenue decline of 15% year-over-year in the fourth quarter and 21% for the full year indicates a contraction in business activities, which could be of concern to investors and market analysts. The unchanged investment income in the Title Insurance and Services segment, despite lower average balances, suggests effective interest rate management, potentially offsetting some revenue losses.
The company's strategy to repurchase shares in a downturn could be interpreted as confidence in its intrinsic value, although this must be weighed against the potential need for liquidity in uncertain times. The debt-to-capital ratio, both including and excluding secured financings, provides insight into the company's leverage and financial stability, which is crucial for assessing risk in an investment decision.
While the Home Warranty segment shows resilience with a stable pretax margin, the significant drop in commercial revenues is a red flag that may indicate sector-specific challenges or broader economic headwinds. The effective tax rate benefit from R&D tax credits is a positive note, but it's a one-time adjustment that investors should not expect to recur regularly.
The cybersecurity incident mentioned as materially impacting First American Financial Corporation's fourth-quarter results is a critical aspect that requires attention. Cybersecurity incidents can have both immediate and long-term effects on a company's operations and reputation. The return to normal levels of title orders and product demand post-incident suggests management's effective crisis response; however, the long-term implications on client trust and potential regulatory scrutiny could pose ongoing risks.
Investors should consider the adequacy of the company's cybersecurity measures and the potential for future incidents. The cost of bolstering cybersecurity defenses and possible insurance premiums against such incidents could impact future profitability. Moreover, the incident highlights the importance of digital infrastructure resilience in the financial services industry, where trust and data integrity are paramount.
The broader real estate transaction services market, which First American Financial Corporation operates within, is sensitive to economic cycles and interest rate fluctuations. The reported decline in commercial revenues and the overall downturn in the company's financial performance could be symptomatic of a slowing real estate market. This may also reflect the impact of rising interest rates on mortgage activity and real estate transactions, which typically lead to reduced demand for title insurance and settlement services.
Investors should monitor industry trends, such as housing market data and interest rate forecasts, to better understand the potential trajectory of First American's business segments. The company's focus on digital transformation could be a strategic advantage in improving efficiency and customer experience, which may be crucial for sustaining growth amidst market contractions.
Current Quarter Highlights
- Results were materially impacted by the company's previously disclosed cybersecurity incident
-
Earnings per diluted share of
$0.33 $0.69 -
Total revenue of
$1.4 billion -
Adjusted total revenue of
$1.5 billion
-
Adjusted total revenue of
-
Title Insurance and Services segment investment income of
$132 million - Title Insurance and Services segment pretax margin of 4.5 percent, or 7.5 percent on an adjusted basis
-
Commercial revenues of
$172 million - Home Warranty segment pretax margin of 14.9 percent, or 19.9 percent on an adjusted basis
-
Debt-to-capital ratio of 28.6 percent, or 22.3 percent excluding secured financings payable of
$553 million -
Repurchased 328,863 shares for a total of
$17.7 million $53.85
Full Year Highlights
-
Earnings per diluted share of
$2.07 $3.80 -
Total revenue of
$6.0 billion -
Adjusted total revenue of
$6.2 billion
-
Adjusted total revenue of
-
Title Insurance and Services segment investment income of
$540 million - Title Insurance and Services segment pretax margin of 8.6 percent, or 9.9 percent on an adjusted basis
-
Commercial revenues of
$658 million - Home Warranty pretax margin of 13.0 percent, or 14.2 percent on an adjusted basis
-
Repurchased 1.3 million shares for a total of
$73 million $55.18 -
Raised the common stock dividend by 2 percent to an annual rate of
$2.12 - Named one of the 100 Best Companies to Work For by Great Places to Work® and Fortune Magazine for the eighth consecutive year
Selected Financial Information |
||||||||||||||||
|
||||||||||||||||
($ in millions, except per share data) |
||||||||||||||||
|
|
Three Months Ended |
|
|
Full Year Ended |
|
||||||||||
|
|
December 31, |
|
|
December 31, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Total revenue |
|
$ |
1,429.3 |
|
|
$ |
1,684.7 |
|
|
$ |
6,003.5 |
|
|
$ |
7,605.2 |
|
Income before taxes |
|
$ |
38.4 |
|
|
$ |
57.7 |
|
|
$ |
274.4 |
|
|
$ |
325.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
34.1 |
|
|
$ |
54.3 |
|
|
$ |
216.8 |
|
|
$ |
263.0 |
|
Net income per diluted share |
|
$ |
0.33 |
|
|
$ |
0.52 |
|
|
$ |
2.07 |
|
|
$ |
2.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted net income |
|
$ |
72.1 |
|
|
$ |
147.7 |
|
|
$ |
397.7 |
|
|
$ |
681.6 |
|
Adjusted net income per diluted share |
|
$ |
0.69 |
|
|
$ |
1.41 |
|
|
$ |
3.80 |
|
|
$ |
6.35 |
|
Total revenue for the fourth quarter of 2023 was
Total revenue for the full year 2023 was
“We were performing well in a challenging market ahead of the cybersecurity incident that occurred in late December,” said Ken DeGiorgio, chief executive officer at First American Financial Corporation. "We elected to take systems offline which materially impacted the company's operations and, consequently, our fourth quarter financial results. Our title orders and related product demand appear to have returned to normal levels, however. We expect no significant ongoing impact from the incident.
“While difficult market conditions will likely persist this year, we do expect to benefit from modest growth in both our residential and commercial businesses, but this could change depending on the path of mortgage rates. We continue to run our business efficiently and maintain a strong balance sheet, which allows us to invest in strategic initiatives that support long-term growth, while returning capital to shareholders.
"We are grateful for the significant support provided by our agents and customers and other industry participants during our cybersecurity incident. I also appreciate the patience our customers demonstrated as we worked through the process of returning to normal operations.
"In addition, we have consistently highlighted the importance of our people to the success of our business. The incredible dedication and resilience they demonstrated in response to the cybersecurity incident underscores this principle. I greatly appreciate their tireless efforts to serve our customers and restore our systems."
Title Insurance and Services
($ in millions, except average revenue per order)
|
|
Three Months Ended |
|
|||||
|
|
December 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Total revenues |
|
$ |
1,321.1 |
|
|
$ |
1,612.8 |
|
|
|
|
|
|
|
|
||
Income before taxes |
|
$ |
59.8 |
|
|
$ |
112.6 |
|
Pretax margin |
|
|
4.5 |
% |
|
|
7.0 |
% |
Adjusted pretax margin |
|
|
7.5 |
% |
|
|
10.8 |
% |
|
|
|
|
|
|
|
||
Title open orders(1) |
|
|
124,600 |
|
|
|
153,100 |
|
Title closed orders(1) |
|
|
100,600 |
|
|
|
125,300 |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Total revenues |
|
$ |
171.6 |
|
|
$ |
250.6 |
|
Open orders |
|
|
21,600 |
|
|
|
24,300 |
|
Closed orders |
|
|
15,600 |
|
|
|
18,200 |
|
Average revenue per order |
|
$ |
11,000 |
|
|
$ |
13,800 |
|
(1) |
|
|||||||
Total revenues for the Title Insurance and Services segment during the fourth quarter were
Direct premiums and escrow fees declined 20 percent compared with the fourth quarter of 2022, driven by a 20 percent decline in the number of direct title orders closed in our domestic operations and a 3 percent decline in the average revenue per order closed. The average revenue per direct title order decreased to
Information and other revenues were
Investment income was
Personnel costs were
Other operating expenses were
The provision for policy losses and other claims was
Depreciation and amortization expense was
Interest expense was
Pretax income for the Title Insurance and Services segment was
Home Warranty
($ in millions)
|
|
Three Months Ended |
|
|||||
|
|
December 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Total revenues |
|
$ |
98.8 |
|
|
$ |
108.3 |
|
|
|
|
|
|
|
|
||
Income before taxes |
|
$ |
14.7 |
|
|
$ |
15.6 |
|
Pretax margin |
|
|
14.9 |
% |
|
|
14.4 |
% |
Adjusted pretax margin |
|
|
19.9 |
% |
|
|
18.8 |
% |
Total revenues for the Home Warranty segment were
Corporate
Net investment income was
Net investment losses were
Teleconference/Webcast
First American’s fourth quarter 2023 results will be discussed in more detail on Thursday, Feb. 8, 2024, at 11 a.m. EST, via teleconference. The toll-free dial-in number is +1-877-407-8293. Callers from outside
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, 2024, by dialing +1-201-612-7415 and using the conference ID 13743995. An audio archive of the call will also be available on First American’s investor website.
About First American
First American Financial Corporation (NYSE: FAF) is a premier provider of title, settlement and risk solutions for real estate transactions. With its combination of financial strength and stability built over more than 130 years, innovative proprietary technologies, and unmatched data assets, the company is leading the digital transformation of its industry. First American also provides data products to the title industry and other third parties; valuation products and services; mortgage subservicing; home warranty products; banking, trust and wealth management services; and other related products and services. With total revenue of
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
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 conditions 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; regulatory oversight and changes in applicable laws and government regulations, including privacy and data protection laws; 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; limitations on access to public records and other data; climate change, health crises, terrorist attacks, severe weather conditions and other catastrophe events; 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 or venture 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 or use of models; systems damage, failures, interruptions, cyberattacks and intrusions, or unauthorized data disclosures; innovation efforts of the company and other industry participants and any related market disruption; errors and fraud involving the transfer of funds; failures to recruit and retain qualified employees; the company’s use of a global workforce; inability of the company to fulfill parent company obligations and/or pay dividends; inability to realize anticipated synergies or produce returns that justify investment in acquired businesses; a reduction in the deposits at the company’s federal savings bank subsidiary; claims of infringement or inability to adequately protect the company’s intellectual property; and other factors described in the company’s quarterly report on Form 10-Q for the quarter ended September 30, 2023, 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 debt to capitalization ratio, personnel and other operating expense ratios, success ratios, net operating revenues; and adjusted revenues, adjusted pretax income, adjusted pretax margin, adjusted net income, and adjusted earnings per share. The company is presenting these non-GAAP financial measures because they provide the company’s management and investors with additional insight into the financial leverage, 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 millions, except per share amounts and title orders, unaudited) |
|||||||||||||
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
Three Months Ended |
|
Twelve Months Ended |
|||||||||
|
|
December 31, |
|
December 31, |
|||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||
Total revenues |
|
$ |
1,429.3 |
|
$ |
1,684.7 |
|
$ |
6,003.5 |
|
|
$ |
7,605.2 |
|
|
|
|
|
|
|
|
|
|||||
Income before income taxes |
|
$ |
38.4 |
|
$ |
57.7 |
|
$ |
274.4 |
|
|
$ |
325.7 |
Income tax expense |
|
|
4.1 |
|
|
3.1 |
|
|
58.9 |
|
|
|
60.4 |
Net income |
|
|
34.3 |
|
|
54.6 |
|
|
215.5 |
|
|
|
265.3 |
Less: Net income (loss) attributable to noncontrolling interests |
|
|
0.2 |
|
|
0.3 |
|
|
(1.3 |
) |
|
|
2.3 |
Net income attributable to the Company |
|
$ |
34.1 |
|
$ |
54.3 |
|
$ |
216.8 |
|
|
$ |
263.0 |
|
|
|
|
|
|
|
|
|
|||||
Net income per share attributable to stockholders: |
|
|
|
|
|
|
|
|
|||||
Basic |
|
$ |
0.33 |
|
$ |
0.52 |
|
$ |
2.08 |
|
|
$ |
2.46 |
Diluted |
|
$ |
0.33 |
|
$ |
0.52 |
|
$ |
2.07 |
|
|
$ |
2.45 |
|
|
|
|
|
|
|
|
|
|||||
Cash dividends declared per share |
|
$ |
0.53 |
|
$ |
0.52 |
|
$ |
2.10 |
|
|
$ |
2.06 |
|
|
|
|
|
|
|
|
|
|||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|||||
Basic |
|
|
104.0 |
|
|
104.6 |
|
|
104.3 |
|
|
|
107.0 |
Diluted |
|
|
104.4 |
|
|
104.9 |
|
|
104.6 |
|
|
|
107.3 |
|
|
|
|
|
|
|
|
|
|||||
Selected Title Insurance Segment Information |
|
|
|
|
|
|
|
|
|||||
Title orders opened(1) |
|
|
124,600 |
|
|
153,100 |
|
|
629,100 |
|
|
|
895,500 |
Title orders closed(1) |
|
|
100,600 |
|
|
125,300 |
|
|
455,500 |
|
|
|
695,900 |
Paid title claims |
|
$ |
44.4 |
|
$ |
36.1 |
|
$ |
169.5 |
|
|
$ |
177.1 |
|
|
|
|
|
|
|
|
|
|||||
(1) |
|||||||||||||
First American Financial Corporation |
|
|||||||
Selected Consolidated Balance Sheet Information |
|
|||||||
(in millions, unaudited) |
|
|||||||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
December 31, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Cash and cash equivalents |
|
$ |
3,605.3 |
|
|
$ |
1,223.5 |
|
Investments |
|
|
7,948.9 |
|
|
|
8,987.2 |
|
Goodwill and other intangible assets, net |
|
|
1,961.3 |
|
|
|
1,992.0 |
|
Total assets |
|
|
16,802.8 |
|
|
|
14,955.3 |
|
Reserve for claim losses |
|
|
1,282.4 |
|
|
|
1,325.3 |
|
Notes and contracts payable |
|
|
1,393.9 |
|
|
|
1,645.8 |
|
Total stockholders’ equity |
|
$ |
4,848.1 |
|
|
$ |
4,657.8 |
|
First American Financial Corporation |
||||||||||||||||
Segment Information |
||||||||||||||||
(in millions, unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Three Months Ended |
|
|
|
Title |
|
Home |
|
Corporate |
||||||||
December 31, 2023 |
|
Consolidated |
|
Insurance |
|
Warranty |
|
(incl. Elims.) |
||||||||
Revenues |
|
|
|
|
|
|
|
|
||||||||
Direct premiums and escrow fees |
|
$ |
539.1 |
|
|
$ |
440.3 |
|
|
$ |
98.7 |
|
|
$ |
0.1 |
|
Agent premiums |
|
|
569.7 |
|
|
|
569.7 |
|
|
|
— |
|
|
|
— |
|
Information and other |
|
|
215.6 |
|
|
|
211.1 |
|
|
|
4.8 |
|
|
|
(0.3 |
) |
Net investment income |
|
|
146.6 |
|
|
|
132.0 |
|
|
|
1.5 |
|
|
|
13.1 |
|
Net investment losses |
|
|
(41.7 |
) |
|
|
(32.0 |
) |
|
|
(6.2 |
) |
|
|
(3.5 |
) |
|
|
|
1,429.3 |
|
|
|
1,321.1 |
|
|
|
98.8 |
|
|
|
9.4 |
|
Expenses |
|
|
|
|
|
|
|
|
||||||||
Personnel costs |
|
|
501.2 |
|
|
|
463.7 |
|
|
|
18.5 |
|
|
|
19.0 |
|
Premiums retained by agents |
|
|
455.4 |
|
|
|
455.4 |
|
|
|
— |
|
|
|
— |
|
Other operating expenses |
|
|
262.2 |
|
|
|
227.3 |
|
|
|
20.4 |
|
|
|
14.5 |
|
Provision for policy losses and other claims |
|
|
73.4 |
|
|
|
30.3 |
|
|
|
43.0 |
|
|
|
0.1 |
|
Depreciation and amortization |
|
|
49.6 |
|
|
|
48.4 |
|
|
|
1.2 |
|
|
|
(0.0 |
) |
Premium taxes |
|
|
15.8 |
|
|
|
14.9 |
|
|
|
1.0 |
|
|
|
(0.1 |
) |
Interest |
|
|
33.3 |
|
|
|
21.3 |
|
|
|
— |
|
|
|
12.0 |
|
|
|
|
1,390.9 |
|
|
|
1,261.3 |
|
|
|
84.1 |
|
|
|
45.5 |
|
Income (loss) before income taxes |
|
$ |
38.4 |
|
|
$ |
59.8 |
|
|
$ |
14.7 |
|
|
$ |
(36.1 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Three Months Ended |
|
|
|
Title |
|
Home |
|
Corporate |
||||||||
December 31, 2022 |
|
Consolidated |
|
Insurance |
|
Warranty |
|
(incl. Elims.) |
||||||||
Revenues |
|
|
|
|
|
|
|
|
||||||||
Direct premiums and escrow fees |
|
$ |
656.3 |
|
|
$ |
548.5 |
|
|
$ |
107.7 |
|
|
$ |
0.1 |
|
Agent premiums |
|
|
752.9 |
|
|
|
752.9 |
|
|
|
— |
|
|
|
— |
|
Information and other |
|
|
248.0 |
|
|
|
239.3 |
|
|
|
4.9 |
|
|
|
3.8 |
|
Net investment income |
|
|
140.9 |
|
|
|
131.9 |
|
|
|
1.5 |
|
|
|
7.5 |
|
Net investment losses |
|
|
(113.4 |
) |
|
|
(59.8 |
) |
|
|
(5.8 |
) |
|
|
(47.8 |
) |
|
|
|
1,684.7 |
|
|
|
1,612.8 |
|
|
|
108.3 |
|
|
|
(36.4 |
) |
Expenses |
|
|
|
|
|
|
|
|
||||||||
Personnel costs |
|
|
549.8 |
|
|
|
522.2 |
|
|
|
19.0 |
|
|
|
8.6 |
|
Premiums retained by agents |
|
|
598.9 |
|
|
|
598.9 |
|
|
|
— |
|
|
|
— |
|
Other operating expenses |
|
|
279.5 |
|
|
|
250.7 |
|
|
|
20.2 |
|
|
|
8.6 |
|
Provision for policy losses and other claims |
|
|
105.9 |
|
|
|
52.0 |
|
|
|
51.1 |
|
|
|
2.8 |
|
Depreciation and amortization |
|
|
43.5 |
|
|
|
42.1 |
|
|
|
1.3 |
|
|
|
0.1 |
|
Premium taxes |
|
|
19.8 |
|
|
|
18.8 |
|
|
|
1.1 |
|
|
|
(0.1 |
) |
Interest |
|
|
29.6 |
|
|
|
15.5 |
|
|
|
— |
|
|
|
14.1 |
|
|
|
|
1,627.0 |
|
|
|
1,500.2 |
|
|
|
92.7 |
|
|
|
34.1 |
|
Income (loss) before income taxes |
|
$ |
57.7 |
|
|
$ |
112.6 |
|
|
$ |
15.6 |
|
|
$ |
(70.5 |
) |
First American Financial Corporation |
||||||||||||||||
Segment Information |
||||||||||||||||
(in millions, unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Year Ended |
|
|
|
Title |
|
Home |
|
Corporate |
||||||||
December 31, 2023 |
|
Consolidated |
|
Insurance |
|
Warranty |
|
(incl. Elims.) |
||||||||
Revenues |
|
|
|
|
|
|
|
|
||||||||
Direct premiums and escrow fees |
|
$ |
2,252.1 |
|
|
$ |
1,856.4 |
|
|
$ |
395.6 |
|
|
$ |
0.1 |
|
Agent premiums |
|
|
2,449.3 |
|
|
|
2,449.3 |
|
|
|
— |
|
|
|
— |
|
Information and other |
|
|
938.5 |
|
|
|
917.1 |
|
|
|
21.7 |
|
|
|
(0.3 |
) |
Net investment income |
|
|
570.0 |
|
|
|
540.2 |
|
|
|
5.9 |
|
|
|
23.9 |
|
Net investment losses |
|
|
(206.4 |
) |
|
|
(38.2 |
) |
|
|
(6.0 |
) |
|
|
(162.2 |
) |
|
|
|
6,003.5 |
|
|
|
5,724.8 |
|
|
|
417.2 |
|
|
|
(138.5 |
) |
Expenses |
|
|
|
|
|
|
|
|
||||||||
Personnel costs |
|
|
1,989.1 |
|
|
|
1,876.0 |
|
|
|
77.8 |
|
|
|
35.3 |
|
Premiums retained by agents |
|
|
1,952.2 |
|
|
|
1,952.2 |
|
|
|
— |
|
|
|
— |
|
Other operating expenses |
|
|
1,067.0 |
|
|
|
937.7 |
|
|
|
82.8 |
|
|
|
46.5 |
|
Provision for policy losses and other claims |
|
|
336.3 |
|
|
|
139.9 |
|
|
|
193.1 |
|
|
|
3.3 |
|
Depreciation and amortization |
|
|
188.5 |
|
|
|
183.6 |
|
|
|
4.8 |
|
|
|
0.1 |
|
Premium taxes |
|
|
63.5 |
|
|
|
59.1 |
|
|
|
4.4 |
|
|
|
(0.0 |
) |
Interest |
|
|
132.5 |
|
|
|
82.3 |
|
|
|
— |
|
|
|
50.2 |
|
|
|
|
5,729.1 |
|
|
|
5,230.8 |
|
|
|
362.9 |
|
|
|
135.4 |
|
Income (loss) before income taxes |
|
$ |
274.4 |
|
|
$ |
494.0 |
|
|
$ |
54.3 |
|
|
$ |
(273.9 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Year Ended |
|
|
|
Title |
|
Home |
|
Corporate |
||||||||
December 31, 2022 |
|
Consolidated |
|
Insurance |
|
Warranty |
|
(incl. Elims.) |
||||||||
Revenues |
|
|
|
|
|
|
|
|
||||||||
Direct premiums and escrow fees |
|
$ |
3,084.8 |
|
|
$ |
2,662.9 |
|
|
$ |
413.1 |
|
|
$ |
8.8 |
|
Agent premiums |
|
|
3,547.6 |
|
|
|
3,547.6 |
|
|
|
— |
|
|
|
— |
|
Information and other |
|
|
1,148.5 |
|
|
|
1,127.1 |
|
|
|
13.3 |
|
|
|
8.1 |
|
Net investment income |
|
|
340.1 |
|
|
|
359.1 |
|
|
|
5.1 |
|
|
|
(24.1 |
) |
Net investment losses |
|
|
(515.8 |
) |
|
|
(149.8 |
) |
|
|
(12.5 |
) |
|
|
(353.5 |
) |
|
|
|
7,605.2 |
|
|
|
7,546.9 |
|
|
|
419.0 |
|
|
|
(360.7 |
) |
Expenses |
|
|
|
|
|
|
|
|
||||||||
Personnel costs |
|
|
2,339.6 |
|
|
|
2,272.9 |
|
|
|
77.3 |
|
|
|
(10.6 |
) |
Premiums retained by agents |
|
|
2,829.7 |
|
|
|
2,829.7 |
|
|
|
— |
|
|
|
— |
|
Other operating expenses |
|
|
1,272.3 |
|
|
|
1,155.4 |
|
|
|
75.7 |
|
|
|
41.2 |
|
Provision for policy losses and other claims |
|
|
486.3 |
|
|
|
248.4 |
|
|
|
211.8 |
|
|
|
26.1 |
|
Depreciation and amortization |
|
|
167.5 |
|
|
|
162.3 |
|
|
|
5.1 |
|
|
|
0.1 |
|
Premium taxes |
|
|
91.1 |
|
|
|
86.6 |
|
|
|
4.5 |
|
|
|
— |
|
Interest |
|
|
93.0 |
|
|
|
34.2 |
|
|
|
— |
|
|
|
58.8 |
|
|
|
|
7,279.5 |
|
|
|
6,789.5 |
|
|
|
374.4 |
|
|
|
115.6 |
|
Income (loss) before income taxes |
|
$ |
325.7 |
|
|
$ |
757.4 |
|
|
$ |
44.6 |
|
|
$ |
(476.3 |
) |
First American Financial Corporation |
||||||||||||||||
Reconciliation of Non-GAAP Financial Measures |
||||||||||||||||
(in millions, except margin and per share amounts, unaudited) |
||||||||||||||||
Consolidated |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
December 31, |
|
December 31, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Total revenues |
|
$ |
1,429.3 |
|
|
$ |
1,684.7 |
|
|
$ |
6,003.5 |
|
|
$ |
7,605.2 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
||||||||
Less: Net investment losses |
|
|
(41.7 |
) |
|
|
(113.4 |
) |
|
|
(206.4 |
) |
|
|
(515.8 |
) |
Adjusted total revenues |
|
$ |
1,471.0 |
|
|
$ |
1,798.1 |
|
|
$ |
6,209.9 |
|
|
$ |
8,121.0 |
|
|
|
|
|
|
|
|
|
|
||||||||
Pretax income |
|
$ |
38.4 |
|
|
$ |
57.7 |
|
|
$ |
274.4 |
|
|
$ |
325.7 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
||||||||
Less: Net investment losses |
|
|
(41.7 |
) |
|
|
(113.4 |
) |
|
|
(206.4 |
) |
|
|
(515.8 |
) |
Plus: Purchase-related intangible amortization |
|
|
9.6 |
|
|
|
9.0 |
|
|
|
38.4 |
|
|
|
37.9 |
|
Adjusted pretax income |
|
$ |
89.7 |
|
|
$ |
180.1 |
|
|
$ |
519.2 |
|
|
$ |
879.4 |
|
|
|
|
|
|
|
|
|
|
||||||||
Pretax margin |
|
|
2.7 |
% |
|
|
3.4 |
% |
|
|
4.6 |
% |
|
|
4.3 |
% |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
||||||||
Less: Net investment losses |
|
|
(2.7 |
)% |
|
|
(6.1 |
)% |
|
|
(3.1 |
)% |
|
|
(6.1 |
)% |
Plus: Purchase-related intangible amortization |
|
|
0.7 |
% |
|
|
0.5 |
% |
|
|
0.7 |
% |
|
|
0.4 |
% |
Adjusted pretax margin |
|
|
6.1 |
% |
|
|
10.0 |
% |
|
|
8.4 |
% |
|
|
10.8 |
% |
|
|
|
|
|
|
|
|
|
||||||||
Net income |
|
$ |
34.1 |
|
|
$ |
54.3 |
|
|
$ |
216.8 |
|
|
$ |
263.0 |
|
Non-GAAP adjustments, net of tax: |
|
|
|
|
|
|
|
|
||||||||
Less: Net investment losses |
|
|
(30.9 |
) |
|
|
(86.5 |
) |
|
|
(152.5 |
) |
|
|
(389.9 |
) |
Plus: Purchase-related intangible amortization |
|
|
7.1 |
|
|
|
6.9 |
|
|
|
28.4 |
|
|
|
28.7 |
|
Adjusted net income |
|
$ |
72.1 |
|
|
$ |
147.7 |
|
|
$ |
397.7 |
|
|
$ |
681.6 |
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per diluted share (EPS) |
|
$ |
0.33 |
|
|
$ |
0.52 |
|
|
$ |
2.07 |
|
|
$ |
2.45 |
|
Non-GAAP adjustments, net of tax: |
|
|
|
|
|
|
|
|
||||||||
Less: Net investment losses |
|
|
(0.30 |
) |
|
|
(0.82 |
) |
|
|
(1.46 |
) |
|
|
(3.63 |
) |
Plus: Purchase-related intangible amortization |
|
|
0.07 |
|
|
|
0.07 |
|
|
|
0.27 |
|
|
|
0.27 |
|
Adjusted EPS |
|
$ |
0.69 |
|
|
$ |
1.41 |
|
|
$ |
3.80 |
|
|
$ |
6.35 |
|
|
|
|
|
|
|
|
|
|
||||||||
Purchase-related intangible amortization includes amortization of noncompete agreements, customer relationships, and trademarks acquired in business combinations. |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Totals may not sum due to rounding. |
||||||||||||||||
|
||||||||||||||||
First American Financial Corporation |
||||||||||||||||
Reconciliation of Non-GAAP Financial Measures |
||||||||||||||||
(in millions except margin, unaudited) |
||||||||||||||||
By Segment |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
December 31, |
|
December 31, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Title Insurance and Services Segment |
|
|
|
|
|
|
|
|
||||||||
Total revenues |
|
$ |
1,321.1 |
|
|
$ |
1,612.8 |
|
|
$ |
5,724.8 |
|
|
$ |
7,546.9 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
||||||||
Less: Net investment losses |
|
|
(32.0 |
) |
|
|
(59.8 |
) |
|
|
(38.2 |
) |
|
|
(149.8 |
) |
Adjusted total revenues |
|
$ |
1,353.1 |
|
|
$ |
1,672.6 |
|
|
$ |
5,763.0 |
|
|
$ |
7,696.7 |
|
|
|
|
|
|
|
|
|
|
||||||||
Pretax income |
|
$ |
59.8 |
|
|
$ |
112.6 |
|
|
$ |
494.0 |
|
|
$ |
757.4 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
||||||||
Less: Net investment losses |
|
|
(32.0 |
) |
|
|
(59.8 |
) |
|
|
(38.2 |
) |
|
|
(149.8 |
) |
Plus: Purchase-related intangible amortization |
|
|
9.5 |
|
|
|
9.0 |
|
|
|
38.3 |
|
|
|
37.8 |
|
Adjusted pretax income |
|
$ |
101.3 |
|
|
$ |
181.4 |
|
|
$ |
570.5 |
|
|
$ |
945.0 |
|
|
|
|
|
|
|
|
|
|
||||||||
Pretax margin |
|
|
4.5 |
% |
|
|
7.0 |
% |
|
|
8.6 |
% |
|
|
10.0 |
% |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
||||||||
Less: Net investment losses |
|
|
(2.3 |
)% |
|
|
(3.3 |
)% |
|
|
(0.6 |
)% |
|
|
(1.8 |
)% |
Plus: Purchase-related intangible amortization |
|
|
0.7 |
% |
|
|
0.5 |
% |
|
|
0.7 |
% |
|
|
0.5 |
% |
Adjusted pretax margin |
|
|
7.5 |
% |
|
|
10.8 |
% |
|
|
9.9 |
% |
|
|
12.3 |
% |
|
|
|
|
|
|
|
|
|
||||||||
Home Warranty Segment |
|
|
|
|
|
|
|
|
||||||||
Total revenues |
|
$ |
98.8 |
|
|
$ |
108.3 |
|
|
$ |
417.2 |
|
|
$ |
419.0 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
||||||||
Less: Net investment losses |
|
|
(6.2 |
) |
|
|
(5.8 |
) |
|
|
(6.0 |
) |
|
|
(12.5 |
) |
Adjusted total revenues |
|
$ |
105.0 |
|
|
$ |
114.1 |
|
|
$ |
423.2 |
|
|
$ |
431.5 |
|
|
|
|
|
|
|
|
|
|
||||||||
Pretax income |
|
$ |
14.7 |
|
|
$ |
15.6 |
|
|
$ |
54.3 |
|
|
$ |
44.6 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
||||||||
Less: Net investment losses |
|
|
(6.2 |
) |
|
|
(5.8 |
) |
|
|
(6.0 |
) |
|
|
(12.5 |
) |
Adjusted pretax income |
|
$ |
20.9 |
|
|
$ |
21.4 |
|
|
$ |
60.3 |
|
|
$ |
57.1 |
|
|
|
|
|
|
|
|
|
|
||||||||
Pretax margin |
|
|
14.9 |
% |
|
|
14.4 |
% |
|
|
13.0 |
% |
|
|
10.6 |
% |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
||||||||
Less: Net investment losses |
|
|
(5.0 |
)% |
|
|
(4.4 |
)% |
|
|
(1.2 |
)% |
|
|
(2.6 |
)% |
Adjusted pretax margin |
|
|
19.9 |
% |
|
|
18.8 |
% |
|
|
14.2 |
% |
|
|
13.2 |
% |
|
|
|
|
|
|
|
|
|
||||||||
Purchase-related intangible amortization includes amortization of noncompete agreements, customer relationships, and trademarks acquired in business combinations. |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Totals may not sum due to rounding. |
||||||||||||||||
First American Financial Corporation |
||||||||||||||||
Expense and Success Ratio Reconciliation |
||||||||||||||||
Title Insurance and Services Segment |
||||||||||||||||
($ in millions, unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
December 31, |
|
December 31, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Total revenues |
|
$ |
1,321.1 |
|
|
$ |
1,612.8 |
|
|
$ |
5,724.8 |
|
|
$ |
7,546.9 |
|
Less: Net investment losses |
|
|
(32.0 |
) |
|
|
(59.8 |
) |
|
|
(38.2 |
) |
|
|
(149.8 |
) |
Net investment income |
|
|
132.0 |
|
|
|
131.9 |
|
|
|
540.2 |
|
|
|
359.1 |
|
Premiums retained by agents |
|
|
455.4 |
|
|
|
598.9 |
|
|
|
1,952.2 |
|
|
|
2,829.7 |
|
Net operating revenues |
|
$ |
765.7 |
|
|
$ |
941.8 |
|
|
$ |
3,270.6 |
|
|
$ |
4,507.9 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Personnel and other operating expenses |
|
$ |
691.0 |
|
|
$ |
772.9 |
|
|
$ |
2,813.7 |
|
|
$ |
3,428.3 |
|
Ratio (% net operating revenues) |
|
|
90.2 |
% |
|
|
82.1 |
% |
|
|
86.0 |
% |
|
|
76.1 |
% |
Ratio (% total revenues) |
|
|
52.3 |
% |
|
|
47.9 |
% |
|
|
49.1 |
% |
|
|
45.4 |
% |
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Change in net operating revenues |
|
$ |
(176.1 |
) |
|
|
|
$ |
(1,237.3 |
) |
|
|
||||
Change in personnel and other operating expenses |
|
|
(81.9 |
) |
|
|
|
|
(614.6 |
) |
|
|
||||
Success Ratio(1) |
|
|
47 |
% |
|
|
|
|
50 |
% |
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
(1) Change in personnel and other operating expenses divided by change in net operating revenues. |
||||||||||||||||
First American Financial Corporation |
||||||||||||||||||||
Supplemental Direct Title Insurance Order Information(1) |
||||||||||||||||||||
(unaudited) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Q423 |
|
Q323 |
|
Q223 |
|
Q123 |
|
Q422 |
||||||||||
Open Orders per Day |
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase |
|
|
1,105 |
|
|
|
1,461 |
|
|
|
1,584 |
|
|
|
1,459 |
|
|
|
1,168 |
|
Refinance |
|
|
325 |
|
|
|
356 |
|
|
|
355 |
|
|
|
349 |
|
|
|
363 |
|
Refinance as % of residential orders |
|
|
23 |
% |
|
|
20 |
% |
|
|
18 |
% |
|
|
19 |
% |
|
|
24 |
% |
Commercial |
|
|
349 |
|
|
|
399 |
|
|
|
402 |
|
|
|
412 |
|
|
|
391 |
|
Default and other |
|
|
231 |
|
|
|
280 |
|
|
|
387 |
|
|
|
564 |
|
|
|
546 |
|
Total open orders per day |
|
|
2,010 |
|
|
|
2,497 |
|
|
|
2,728 |
|
|
|
2,784 |
|
|
|
2,469 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Closed Orders per Day |
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase |
|
|
930 |
|
|
|
1,141 |
|
|
|
1,171 |
|
|
|
936 |
|
|
|
1,081 |
|
Refinance |
|
|
221 |
|
|
|
280 |
|
|
|
279 |
|
|
|
248 |
|
|
|
337 |
|
Refinance as % of residential orders |
|
|
19 |
% |
|
|
20 |
% |
|
|
19 |
% |
|
|
21 |
% |
|
|
24 |
% |
Commercial |
|
|
252 |
|
|
|
236 |
|
|
|
239 |
|
|
|
241 |
|
|
|
293 |
|
Default and other |
|
|
219 |
|
|
|
249 |
|
|
|
315 |
|
|
|
294 |
|
|
|
310 |
|
Total closed orders per day |
|
|
1,623 |
|
|
|
1,905 |
|
|
|
2,005 |
|
|
|
1,719 |
|
|
|
2,021 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average Revenue per Order (ARPO)(2) |
|
|
|
|
|
|
|
|
|
|||||||||||
Purchase |
|
$ |
3,421 |
|
|
$ |
3,474 |
|
|
$ |
3,472 |
|
|
$ |
3,302 |
|
|
$ |
3,292 |
|
Refinance |
|
|
1,284 |
|
|
|
1,227 |
|
|
|
1,258 |
|
|
|
1,283 |
|
|
|
1,245 |
|
Commercial |
|
|
11,001 |
|
|
|
10,763 |
|
|
|
11,614 |
|
|
|
9,926 |
|
|
|
13,780 |
|
Default and other |
|
|
421 |
|
|
|
469 |
|
|
|
314 |
|
|
|
315 |
|
|
|
332 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total ARPO |
|
$ |
3,899 |
|
|
$ |
3,653 |
|
|
$ |
3,640 |
|
|
$ |
3,428 |
|
|
$ |
4,020 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Business Days |
|
|
62 |
|
|
|
63 |
|
|
|
64 |
|
|
|
62 |
|
|
|
62 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(1) |
||||||||||||||||||||
(2) Average revenue per order (ARPO) defined as direct premiums and escrow fees divided by closed title orders. |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Totals may not sum due to rounding. |
||||||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240207182650/en/
Media Contact:
Marcus Ginnaty
Corporate Communications
First American Financial Corporation
714-250-3298
Investor Contact:
Craig Barberio
Investor Relations
First American Financial Corporation
714-250-5214
Source: First American Financial Corporation
FAQ
What is the ticker symbol for First American Financial Corporation?
What were the earnings per diluted share for Q4 2023?
What was the total revenue for the full year 2023?
What were the net investment losses for the full year 2023?
What is the pretax margin for the Title Insurance and Services segment in Q4 2023?
