First American Financial Corporation (NYSE: FAF), a premier
provider of title, settlement and risk solutions for real estate
transactions and the leader in the digital transformation of its
industry, today announced financial results for the fourth quarter
ended Dec. 31, 2023.
Current Quarter Highlights
- Results were materially impacted by the company's previously
disclosed cybersecurity incident
- Earnings per diluted share of $0.33, or $0.69 per share on an
adjusted basis
- Total revenue of $1.4 billion, down 15 percent compared with
last year
- Adjusted total revenue of $1.5 billion, down 18 percent
compared with last year
- Title Insurance and Services segment investment income of $132
million, unchanged compared with last year
- Title Insurance and Services segment pretax margin of 4.5
percent, or 7.5 percent on an adjusted basis
- Commercial revenues of $172 million, down 32 percent compared
with last year
- 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 at an
average price of $53.85
Full Year Highlights
- Earnings per diluted share of $2.07, or $3.80 per share on an
adjusted basis
- Total revenue of $6.0 billion, down 21 percent compared with
last year
- Adjusted total revenue of $6.2 billion, down 24 percent
compared with last year
- Title Insurance and Services segment investment income of $540
million, up 50 percent compared with last year
- Title Insurance and Services segment pretax margin of 8.6
percent, or 9.9 percent on an adjusted basis
- Commercial revenues of $658 million, down 37 percent compared
with last year
- 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 at an
average price of $55.18
- Raised the common stock dividend by 2 percent to an annual rate
of $2.12 per share
- Named one of the 100 Best Companies to Work For by Great Places
to Work® and Fortune Magazine for the eighth consecutive year
Selected Financial Information
($ 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 $1.4 billion,
down 15 percent compared with the fourth quarter of 2022. Net
income in the current quarter was $34 million, or 33 cents per
diluted share, compared with net income of $54 million, or 52 cents
per diluted share, in the fourth quarter of 2022. Net investment
losses in the current quarter were $42 million, or 30 cents per
diluted share, compared with net investment losses of $113 million,
or 82 cents per diluted share, in the fourth quarter of last year.
The net investment losses in the current quarter were primarily due
to the sale of fixed-income securities in connection with the
company’s tax planning efforts, partly offset by gains from changes
in the fair market value of equity securities. Net investment
losses in the same quarter of last year were also due to the sale
of fixed-income securities in connection with the company’s tax
planning efforts and recognized losses in the company's venture
portfolio. Adjusted net income in the current quarter was $72
million, or 69 cents per diluted share, compared with $148 million,
or $1.41 per diluted share, in the fourth quarter of last year. The
effective tax rate in the current quarter of 10.7 percent was
driven by recognition of research and development tax credits. This
produced a net benefit of 5 cents per diluted share when compared
to a normalized tax rate of 24 percent.
Total revenue for the full year 2023 was $6.0 billion, down 21
percent compared with the prior year. Net income was $217 million,
or $2.07 per diluted share, compared with net income of $263
million, or $2.45 per diluted share. 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. Adjusted net income in 2023 was $398
million, or $3.80 per diluted share, compared with $682 million, or
$6.35 per diluted share in 2022.
“We were performing well in a challenging market ahead of the
cybersecurity incident that occurred in late December,” said Ken
DeGiorgio, chief executive officer at First American Financial
Corporation. "We elected to take systems offline which materially
impacted the company's operations and, consequently, our fourth
quarter financial results. Our title orders and related product
demand appear to have returned to normal levels, however. We expect
no significant ongoing impact from the incident.
“While difficult market conditions will likely persist this
year, we do expect to benefit from modest growth in both our
residential and commercial businesses, but this could change
depending on the path of mortgage rates. We continue to run our
business efficiently and maintain a strong balance sheet, which
allows us to invest in strategic initiatives that support long-term
growth, while returning capital to shareholders.
"We are grateful for the significant support provided by our
agents and customers and other industry participants during our
cybersecurity incident. I also appreciate the patience our
customers demonstrated as we worked through the process of
returning to normal operations.
"In addition, we have consistently highlighted the importance of
our people to the success of our business. The incredible
dedication and resilience they demonstrated in response to the
cybersecurity incident underscores this principle. I greatly
appreciate their tireless efforts to serve our customers and
restore our systems."
Title Insurance and Services ($ 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
U.S. Commercial
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) U.S. direct title insurance orders
only.
Total revenues for the Title Insurance and Services segment
during the fourth quarter were $1.3 billion, down 18 percent
compared with the same quarter of 2022. Operating revenue line
items in the current quarter were negatively impacted by the
previously disclosed cybersecurity incident that occurred in late
December.
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 $3,899,
primarily attributable to the impact of lower average revenue per
order for commercial transactions. Agent premiums, which are
recorded on approximately a one-quarter lag relative to direct
premiums, declined 24 percent in the current quarter as compared
with last year.
Information and other revenues were $211 million during the
quarter, down $28 million, or 12 percent, compared with last year.
This decline was primarily due to reduced demand for the company’s
data and property information products in our direct title
businesses.
Investment income was $132 million in the fourth quarter,
unchanged compared with the same quarter last year. Lower average
balances in the company’s investment portfolio, escrow balances and
tax-deferred property exchange balances were offset by higher
interest rates. Net investment losses totaled $32 million in the
current quarter, compared with net investment losses of $60 million
in the fourth quarter of 2022. Net investment losses in both
periods were primarily due to the sale of fixed-income securities
in connection with the company’s tax planning efforts, partly
offset by a favorable change in the fair value of marketable equity
securities.
Personnel costs were $464 million in the fourth quarter, down
$59 million, or 11 percent, compared with the same quarter of 2022.
The decline in personnel costs was primarily due to lower salary
expense driven by fewer employees, reduced incentive compensation
as a result of the decline in revenue and profitability, and a
decline in severance expense compared with the fourth quarter of
2022.
Other operating expenses were $227 million in the fourth
quarter, a decrease of $23 million, or 9 percent, compared with the
fourth quarter of 2022. The decrease was primarily attributable to
lower production expense across several business units due to lower
transaction volumes, and reduced discretionary expense.
The provision for policy losses and other claims was $30 million
in the fourth quarter, or 3.0 percent of title premiums and escrow
fees, down from the 4.0 percent loss provision rate in the prior
year. The fourth quarter rate reflects an ultimate loss rate of
3.75 percent for the current policy year and a net decrease of $8
million in the loss reserve estimate for prior policy years.
Depreciation and amortization expense was $48 million in the
fourth quarter, up $6 million, or 15 percent, compared with the
same period last year, due to higher amortization of internally
developed software.
Interest expense was $21 million in the current quarter, up $6
million, or 37 percent from last year primarily due to higher cost
of funds on deposit balances at the company's banking
operations.
Pretax income for the Title Insurance and Services segment was
$60 million in the fourth quarter, compared with $113 million in
the fourth quarter of 2022. Pretax margin was 4.5 percent in the
current quarter, compared with 7.0 percent last year. Adjusted
pretax margin was 7.5 percent in the current period, compared with
10.8 percent last year.
Home Warranty ($ 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 $99 million in
the fourth quarter, down $10 million, or 9 percent, compared with
the fourth quarter of 2022, which included an $8 million deferred
revenue benefit. The segment posted pretax income of $15 million
this quarter, compared with $16 million last year. The claim loss
rate was 43.6 percent in the fourth quarter, compared with 47.4
percent last year, due to fewer claims and lower claim severity.
Home Warranty’s pretax margin was 14.9 percent this quarter,
compared with 14.4 percent last year. Adjusted pretax margin was
19.9 percent this quarter, compared with 18.8 percent last
year.
Corporate
Net investment income was $13 million this quarter, primarily
attributable to changes in the value of investments associated with
the company’s deferred compensation program. This amount was
largely offset by higher personnel expense reflecting returns on
the plan participants’ investments.
Net investment losses were $4 million this quarter, compared
with losses of $48 million last year. Net investment losses were
higher in the fourth quarter of 2022 primarily due to higher
unrealized losses recognized in the company’s venture
portfolio.
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 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, 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 $6.0 billion in 2023, the company offers its products
and services directly and through its agents throughout the United
States and abroad. In 2023, First American was named one of the 100
Best Companies to Work For by Great Place to Work® and Fortune
Magazine for the eighth consecutive year and was named one of the
100 Best Workplaces for Innovators by Fast Company. More
information about the company can be found at www.firstam.com.
Website Disclosure
First American posts information of interest to investors at
www.firstam.com/investor. This includes opened and closed title
insurance order counts for its U.S. direct title insurance
operations, which are posted approximately 10 to 12 days after the
end of each month.
Forward-Looking Statements
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) U.S. direct title insurance orders
only.
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) U.S. operations only.
(2) Average revenue per order (ARPO)
defined as direct premiums and escrow fees divided by closed title
orders.
Totals may not sum due to rounding.
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
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