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First American's International Title operations performed well in 2002. Revenues increased 42 percent as the
company's operations in Canada, the United Kingdom, Ireland, Australia, New Zealand, Hong Kong, South Korea,
and Mexico each reported record revenue levels. Revenues grew 47 percent in Canada alone, allowing the group
to maintain a significant market leadership position and a history of continuous revenue growth since it was first
licensed in 1991.
As it has for many years, First American's claims-paying ability ratings remained strong in 2002. The company
received an "A+" rating from A.M. Best Company; an "A" rating from Fitch IBCA, Duff & Phelps; an "A-" rating
from Standard & Poor's; an "A double prime" rating from Demotech, Inc.; and an "A3" (Exceptional) rating from
Moody's Investors Service.
MARKET GROWTH
In February of 2003, First American Title Insurance Company announced the
launch of a new operating division designed to aggressively compete for
market share in key regions across the United States. This division, The Talon
Group, will provide quality title and settlement services in the nation's leading,
high-volume real estate markets. It will issue title insurance policies underwritten
by First American Title Insurance Company and will market other First
American title-related products and services. While other national title
insurance underwriters have maintained multiple brands following acquisitions,
we are the first in the title industry to intentionally establish a competitive
brand in order to gain market share and improve long-term profitability. The Talon Group will leverage First
American's infrastructure by utilizing our automated title production systems to spread fixed costs, increasing the
impact of our sales force, and contributing to improved margins.
In 2002, First American Title Insurance Company also continued to increase its presence nationwide through the
acquisition of key local and regional title firms. The addition of these operations greatly increased the number of
vital property records within the company's databases, critical to the automated title search process. Acquisitions
during 2002 resulted in the addition of 32 offices and 14 title plants. Nationwide direct operations totaled
approximately 1,200 at the end of the year, which combined with an extensive network of thousands of agents to
sell First American Title products in the U.S. and abroad.
The company's national title insurance industry market share, based on premiums written, remained steady in 2001
as compared to 2000, according to the yearly recap provided in the most recent report available from the American
Land Title Association. This maintenance is notable in that refinance activity was high in 2001, and our company's
market share is traditionally healthier during years in which resale, rather than refinance, activity is predominant.
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