The cash dividend is payable on July 16, 2012 to shareholders of record as of June 29, 2012.

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 and its affiliated companies also provide 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 $3.8 billion in 2011, the company offers its products and services directly and through its agents and partners in all 50 states and abroad. More information about the company can be found at www.firstam.com.

Download the press release as a PDF (78 kb)

Current Quarter Highlights

• Title Insurance and Services segment pretax margin of 6.8 percent
  • Highest first-quarter margin since 2006
• Title open orders up 31 percent compared to last year, primarily driven by refinance transactions
• Commercial division revenues of $81.5 million, up 21 percent compared to last year
• Specialty Insurance segment pretax margin of 17.3 percent
• Completed a new $600 million, four-year senior secured revolving credit facility on April 17, 2012

Total revenues for the first quarter of 2012 were $966.8 million, an increase of 4 percent relative to the first quarter of 2011. Net income in the current quarter was $31.3 million, or 29 cents per diluted share, compared with a net loss of $15.3 million, or 15 cents per diluted share, in the first quarter of 2011. Last year's results included a $45.3 million reserve-strengthening adjustment in the company's Canadian operations, which is $27.2 million on an after-tax basis, or 26 cents per diluted share.

"The year is off to a good start," said Dennis J. Gilmore, chief executive officer at First American Financial Corporation. "Our efficient and scalable cost structure coupled with improved market conditions enabled us to deliver our best first-quarter title margin since 2006.

"First-quarter open orders were the strongest in three years, up 31 percent year-over-year, driven primarily by a significant increase in refinance activity and a modest but encouraging increase in resale transactions. Growth in our commercial business continued, with revenues up 21 percent compared with last year. While current market conditions and order volumes have clearly improved, we continue to maintain tight control on expenses. 

"In April, we also completed a new $600 million revolving credit facility with improved pricing and terms compared to the previous facility. This new facility enhances our flexibility and strengthens our financial position."     

Total revenues for the Title Insurance and Services segment were $891.2 million, a 3 percent increase from the same quarter of 2011. Direct premiums and escrow fees were up 16 percent from the first quarter of 2011, directly comparable with the 16 percent increase in the number of direct title orders closed in the quarter. Average revenue per direct title order was $1,315, compared with $1,310 in the first quarter of 2011. Agent premiums were lower by 6 percent in the current quarter, which is comparable with the 4 percent decline in direct premiums experienced in the fourth quarter, reflecting the normal reporting lag of approximately one quarter.

Information and other revenues were $155.3 million this quarter, up 3 percent as compared to the same quarter of last year, primarily attributable to higher demand for the company's title plant information and increased international service revenues, offset in part by lower sales of default information products. Total investment income was down 5 percent in the first quarter, primarily reflecting higher net realized investment losses.

Personnel costs were $277.6 million in the first quarter, an increase of $18.5 million, or 7 percent, compared with the first quarter of 2011.  This increase was primarily due to higher incentive-based compensation, increased healthcare-related expenses, and one additional payroll day in the current quarter.

Other operating expenses were $171.8 million in the first quarter, down $3.8 million, or 2 percent, compared with the first quarter of 2011. This decrease was primarily due to lower office-related expenses resulting from the company's consolidation and closure of certain title offices. Further contributing to the decrease in other operating expenses was a decline in professional services costs. These decreases were partially offset by higher production-related expenses due to increased order activity.

The provision for policy losses and other claims was $52.2 million in the first quarter, or 7.2 percent of title premiums and escrow fees, down $44.2 million compared with the same quarter of the prior year. Last year's results included a $45.3 million reserve-strengthening adjustment in the company's Canadian operations. The current quarter rate of 7.2 percent reflects an ultimate loss rate of 6.2 percent for the current policy year and a net increase in the loss reserve estimates for prior policy years, primarily 2007 and 2008.

Pretax income for the Title Insurance and Services segment was $60.8 million in the first quarter, compared with a $15.7 million pretax loss in the first quarter of 2011. Pretax margin was 6.8 percent in the current quarter. 

Total revenues for the Specialty Insurance segment were $74.2 million in the first quarter of 2012, an increase of 8 percent compared with the first quarter of 2011. The overall loss ratio in the Specialty Insurance segment was 49 percent in the current quarter, down from 51 percent in the prior year. Pretax margin was 17.3 percent, down from 18.0 percent in the first quarter of 2011.

Teleconference/Webcast
First American's first quarter 2012 results will be discussed in more detail on Thursday, April 26, 2012, at 11 a.m. ET, via teleconference. The toll-free dial-in number is (877) 918-5752. Callers from outside the United States may dial (517) 319-9305. The pass code 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 May 3, 2012, by dialing (203) 369-0663. 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 and its affiliated companies also provide 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 $3.8 billion in 2011, the company offers its products and services directly and through its agents and partners in all 50 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 effects of the HARP 2.0 program, closed order projections, corporate net expense projections, and expense management 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 resulting from increases in the size of the company's customers; changes in measures of the strength of the company's title insurance underwriters, including ratings and statutory surpluses; 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 annual report on Form 10-K for the year ended December 31, 2011, 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 a personnel and other operating expense ratio. 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.

The facility was oversubscribed during the syndication and the company exercised its option to increase the size of the facility from $500 million to $600 million in connection with the closing.  This facility replaces the company’s $400 million revolving facility that would have matured on June 1, 2013.  J.P. Morgan Securities LLC, U.S. Bank National Association and Wells Fargo Securities, LLC served as joint lead arrangers and joint bookrunners under the new facility.

            Pricing under the facility reflects a 75 basis point reduction from the prior facility.  The financial covenants contained in the facility mirror those of the prior facility, while certain other provisions no longer apply at current ratings, have become less restrictive or have been removed. In addition, the facility provides for a release of the security if the company meets certain ratings levels.  

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 and its affiliated companies also provide 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 $3.8 billion in 2011, the company offers its products and services directly and through its agents and partners in all 50 states and abroad. More information about the company can be found at www.firstam.com.

The call will follow the release of the company’s earnings results for the first quarter of 2012, which is scheduled earlier that day at 7:00 a.m. ET.

The conference call, which will also be broadcast over the Internet and is open to investors, members of the financial community, the media and other members of the public, can be accessed online at www.firstam.com/investor or by dialing toll free (877) 918-5752. Callers from outside the United States may dial (517) 319-9305. The pass code for the event is “First American.”

An audio replay of the conference call will be available through May 3, 2012, by dialing (203) 369-0663. An audio archive of the call and a copy of the first-quarter 2012 earnings release, including the financial information contained therein, 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 and its affiliated companies also provide 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 $3.8 billion in 2011, the company offers its products and services directly and through its agents and partners in all 50 states and abroad. More information about the company can be found at www.firstam.com.

“It is with great sadness that we announce the passing of Don Kennedy,” said Dennis J. Gilmore, chief executive officer for First American. “Don was a true visionary and a man of tremendous integrity who was admired by all those who knew him. While we will greatly miss his wise counsel and quick wit, he leaves behind a legacy of creativity and innovation that will always remain with our company.”

When Kennedy began leading First American’s expansion efforts in 1957, the company’s revenues were less than $1.5 million. By 2006, they exceeded $8 billion. In a spin-off transaction completed in 2010, First American’s data businesses became a separate company known as CoreLogic.  First American and CoreLogic are now traded on the New York Stock Exchange.

The grandson of First American’s founder, C.E. Parker, Kennedy served First American for more than 60 years. He is credited with beginning the company’s expansion efforts in 1957 with the acquisition of title companies outside the Santa Ana area. Kennedy’s strategy of allowing the leadership of each First American office to operate as if it was its own company played a key role in driving this expansion and the company’s profitability. First American continued to grow in later decades through international expansion and through the addition of other businesses whose products and services were involved in the real estate transaction process. In 1985, the company began developing and acquiring extensive databases of real property information, and offered products and services using this data.

Parker S. Kennedy, First American’s chairman and Donald Kennedy’s son stated, “When Dad started with First American, the company had one office in one county and now it has hundreds of offices throughout the world. He saw the opportunity for growth and worked tirelessly to create a great company. I couldn’t have asked for a better dad and the company couldn’t have had a better leader.”

Donald Kennedy, whose family roots in Orange County date to  1873, attended Santa Ana High School and graduated from Stanford University in 1940. After serving in the Navy during World War II, where he took part in the landings in Southern France, he graduated from the University of Southern California School of Law.

Kennedy joined First American in 1948, when it was known as Orange County Title Company. After passing the bar exam in 1949, he served as the company’s associate counsel for three years, then was appointed vice president of First American in 1951, executive vice president in 1958, president in 1963, and chairman of the board in 1993. He was named chairman emeritus in 2003, a title he maintained after retiring from the board of directors in 2008. Kennedy also served as vice chairman of First American’s principal subsidiary, First American Title Insurance Company. He consistently went to his office at First American’s Santa Ana campus until he was 90 years old.

Kennedy has left an indelible mark not only on First American, but also on the title insurance industry, helping to usher in many of the advancements and practices that are commonplace today. Among his many professional affiliations, Kennedy served as president of both the California Land Title Association and the American Land Title Association, and chaired numerous committees in both organizations.

A lifelong philanthropist, Kennedy’s extensive involvement in community affairs included support of dozens of organizations focused on Orange County and Santa Ana. A past chairman of the Orange County Business Committee for the Arts, Kennedy also served on the boards of South Coast Repertory and the Bowers Museum of Cultural Art, among others. When serving on the board at Bowers, he was instrumental in negotiating the museum’s partnerships with the Smithsonian Institution and the British Museum. His support for the museum’s north wing, which was named the Dorothy and Donald Kennedy Wing in 2007, tripled the size of its exhibit space. He served on the board of trustees for Chapman University and was a member of Stanford University’s Athletic Board, as well.

Kennedy also provided key support for the creation of the Chapman University School of Law and was recognized in 1999 with the dedication of the Donald P. Kennedy Hall, a state-of-the-art teaching facility and home of the university’s school of law. That same year he was named “Man of the Century” by Orange Coast Magazine.

An avid life-long golfer, Kennedy scored his first hole-in-one in 1930 at the age of 12, and went on to score eight more over the next seven decades. Kennedy was a member of Stanford University’s 1939 NCAA championship golf team and also was an active member of the Santa Ana Country Club for most of his life. When elected as the club’s president in 1952, he was the youngest person to have served in that capacity.

Kennedy is survived by his wife of 65 years, Dorothy; his son, Parker S. Kennedy; two daughters, Elizabeth Myers and Amy Healey; six grandchildren; and two great-grandchildren. For more information on Kennedy’s life, please visit www.firstam.com.

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 and its affiliated companies also provide 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 $3.8 billion in 2011, the company offers its products and services directly and through its agents and partners in all 50 states and abroad. More information about the company can be found at www.firstam.com.

Download the complete release as a PDF (PDF 89kb)

Current Quarter Highlights

• Title Insurance and Services segment adjusted pretax margin of 10.0 percent
  • GAAP pretax margin of 7.7 percent, which includes $19.2 million charge for final settlement of the Bank of America lawsuit and $2.0 million in net realized investment losses
• Commercial division revenues of $107.3 million, up 10 percent compared to last year
• International division revenues of $87.4 million, up 5 percent compared to last year
• Specialty Insurance segment pretax margin of 13.9 percent
• Cash flow from operations of $107.6 million

Selected Financial Information
($ in millions, except per share data)

Total revenues for the fourth quarter of 2011 were $996.6 million, a decline of 3 percent relative to the fourth quarter of 2010. Net income in the current quarter was $40.2 million, or 38 cents per diluted share, compared with net income of $47.1 million, or 44 cents per diluted share, in the fourth quarter of 2010. The current quarter results include a $19.2 million charge, or 11 cents per diluted share, for the final settlement of the Bank of America lawsuit. The current quarter results also include net realized investment losses of $2.2 million, or 1 cent per diluted share, compared with $2.8 million, or 2 cents per diluted share, in the fourth quarter of 2010.

Total revenues for the full year of 2011 were $3.8 billion, a decline of 2 percent relative to the prior year. Net income was $78.3 million, or $0.73 per diluted share, compared with $127.8 million, or $1.20 per diluted share, in 2010.  The results for the full year 2011 include charges of $77.5 million, or 43 cents per diluted share, comprised of a total of $32.2 million taken in the third and fourth quarters for settlement of the Bank of America lawsuit and $45.3 million taken in the first quarter in connection with the guaranteed valuation product offered in Canada. In addition, the full year results for 2011 include $9.2 million of net realized investment losses, or 5 cents per diluted share, compared with net realized investment gains of $2.2 million, or 1 cent per diluted share, in 2010.

"We are pleased with our company's performance in the fourth quarter," said Dennis J. Gilmore, chief executive officer at First American Financial Corporation. "Our efficiency initiatives, coupled with increased commercial and refinance activity, enabled us to deliver our strongest title segment margins of the year.

"Looking forward, we see positive momentum with total open orders per day up 19 percent in January compared with the fourth quarter, primarily driven by commercial and refinance activity. We also expect the HARP 2.0 program to stimulate additional refinance activity beginning in the second quarter. Given our efficient cost structure and conservative balance sheet, we are well positioned to capitalize on a gradually improving economy.

"I am also pleased to report that our board of directors has approved a 33 percent increase in the regular quarterly dividend from $0.06 per common share to $0.08 per share commencing in the first quarter of 2012."

Total revenues for the Title Insurance and Services segment were $922.5 million, a 3 percent decline from the same quarter of 2010. Direct premiums and escrow fees were down 4 percent as compared to the fourth quarter of 2010. This was due to a 16 percent decline in the number of direct title orders closed in the quarter, which reflects the decline in mortgage originations, largely offset by higher average revenue per order. Average revenue per direct title order was $1,504, an increase of 14 percent, compared with the fourth quarter of 2010. This was primarily due to a shift in the mix of revenues to higher-premium resale and commercial transactions, as well as an increase in the average revenue per closed commercial order. Agent premiums were lower by 2 percent in the current quarter, which is comparable with the 1 percent decline in direct premiums we experienced in the third quarter, reflecting the normal reporting lag of approximately one quarter.

Information and other revenues were $153.7 million this quarter, down 4 percent as compared to the same quarter of last year, driven by the same factors impacting direct title operations. Total investment income was up 7 percent in the fourth quarter, primarily reflecting lower net realized investment losses compared to last year.

Personnel costs were $287.5 million in the fourth quarter, a decrease of $12.3 million, or 4 percent, compared with the fourth quarter of 2010. This decline was primarily due to a reduction in  headcount and reduced costs related to employee benefit plans.  

Other operating expenses were $167.5 million in the fourth quarter, down $19.4 million, or 10 percent, compared with the fourth quarter of 2010. This decrease reflects reductions in professional and other outside service expenses in the current quarter.

The provision for policy losses and other claims was $64.5 million in the fourth quarter, or 8.6 percent of title premiums and escrow fees, up $21.9 million compared with the same quarter of the prior year. Excluding the $19.2 million charge for the final settlement of the Bank of America lawsuit, the current quarter rate of 6.0 percent reflects an ultimate loss rate of 5.6 percent for the current policy year and a net increase in the loss reserve estimates for prior policy years.

Pretax income for the Title Insurance and Services segment was $71.4 million in the fourth quarter, compared with $81.3 million in the fourth quarter of 2010, or a decrease of 12 percent. Pretax margin was 7.7 percent in the current quarter, compared with 8.6 percent in the fourth quarter of 2010.  

Total revenues for the Specialty Insurance segment were $72.2 million in the fourth quarter of 2011, essentially flat compared with the fourth quarter of 2010. Pretax margin was 13.9 percent, down from 14.3 percent in the fourth quarter of 2010. The overall loss ratio in the Specialty Insurance segment was 54 percent in both the current quarter and the prior year.  

Dividend Increase

The board of directors has approved a 33 percent increase in the regular quarterly dividend from $0.06 per common share to $0.08 per share commencing in the first quarter of 2012.  The board of directors declared the $0.08 per share cash dividend payable on April 16, 2012, to shareholders of record as of March 30, 2012.

Teleconference/Webcast

First American's fourth quarter and full year 2011 results will be discussed in more detail on Thursday, Feb. 23, 2012, at 11 a.m. ET, via teleconference. The toll-free dial-in number is (800) 593-8971. Callers from outside the United States may dial (212) 547-0240. The pass code 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 Feb. 28, 2012, by dialing (203) 369-1811. 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 and its affiliated companies also provide 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 $3.8 billion in 2011, the company offers its products and services directly and through its agents and partners in all 50 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 effects of the HARP 2.0 program, an improving economy, future performance, expense management, and future organic growth and strategic acquisitions 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; changes in measures of the strength of the company's title insurance underwriters, including ratings and statutory surpluses; increased claims or other costs and expenses attributable to the company's use of title agents; 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; reform of government-sponsored mortgage enterprises; limitations on access to public records and other data; regulation of title insurance rates; inability of the company's subsidiaries to pay dividends or repay funds; expenses of and funding obligations to the pension plan; material variance between actual and expected claims experience; systems interruptions and intrusions, wire transfer errors or unauthorized data disclosures; inability to realize the benefits of the company's offshore strategy; product migration; increases in the size of the company's customers; losses in the company's investment portfolio; and other factors described in the company's quarterly report on Form 10-Q for the quarter ended September 30, 2011, 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 margin. The company is presenting these non-GAAP financial measures because they provide the company's management and investors with additional insight into the operational 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.

Download the complete release as a PDF (PDF 89kb)

The cash dividend is payable on April 16, 2012 to shareholders of record as of March 30, 2012.
 

About First American
First American Financial Corporation 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 and its affiliated companies also provide 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 $3.8 billion in 2011, the company offers its products and services directly and through its agents and partners in all 50 states and abroad. More information about the company can be found at www.firstam.com.

The call will follow the release of the company’s earnings results for the fourth quarter of 2011, which is scheduled earlier that day at 7:00 a.m. ET.

The conference call, which will also be broadcast over the Internet and is open to investors, members of the financial community, the media and other members of the public, can be accessed online at www.firstam.com/investor or by dialing toll free (800) 593-8971. Callers from outside the United States may dial (212) 547-0240. The pass code for the event is “First American.”

An audio replay of the conference call will be available through Feb. 28, 2012, by dialing (203) 369-1811. An audio archive of the call and a copy of the third-quarter 2011 earnings release, including the financial information contained therein, 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 and its affiliated companies also provide 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 $3.9 billion in 2010, the company offers its products and services directly and through its agents and partners in all 50 states and abroad. More information about the company can be found at www.firstam.com.

At the present time, the company expects to issue press releases announcing quarterly and year-to-date financial results on the following dates:

• Thursday, Feb. 23, 2012 – 2011 Fourth Quarter and Year-End Results
• Thursday, April 26, 2012 – First Quarter Results
• Thursday, July 26, 2012 – Second Quarter Results
• Thursday, Oct. 25, 2012 – Third Quarter Results

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 and its affiliated companies also provide 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 $3.9 billion in 2010, the company offers its products and services directly and through its agents and partners in all 50 states and abroad. More information about the company can be found at www.firstam.com.

The cash dividend is payable on Jan. 17, 2012, to shareholders of record as of Dec. 30, 2011. 

About First American
First American Financial Corporation 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 and its affiliated companies also provide 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 $3.9 billion in 2010, the company offers its products and services directly and through its agents and partners in all 50 states and abroad. More information about the company can be found at www.firstam.com.

SANTA ANA, Calif., Oct. 27, 2011 /PRNewswire/ -- First American Financial Corporation (NYSE: FAF), a leading global provider of title insurance and settlement services for real estate transactions, today announced financial results for the third quarter ended Sept. 30, 2011.

Current Quarter Highlights

• Title Insurance and Services segment pretax income of $48.9 million, which includes:
  • $13.0 million reserve charge in connection with Bank of America's pending lawsuit
  • $14.7 million increase in claim loss reserves for prior policy years, primarily 2007
• Commercial division revenues of $89.0 million, up 22 percent compared to last year
• International division revenues of $97.4 million, up 24 percent compared to last year
• Specialty Insurance segment pretax income of $6.7 million for a 9.0 percent margin
• Cash flow from operations of $53.2 million
• Debt-to-total-capital ratio of 12.3 percent as of Sept. 30, 2011

Total revenues for the third quarter of 2011 were $965.0 million, a decline of 4 percent relative to the third quarter of 2010. Net income in the current quarter was $21.0 million, or 20 cents per diluted share, compared with net income of $33.1 million, or 31 cents per diluted share, in the third quarter of 2010. The current quarter results include net realized investment losses of $3.3 million, or 2 cents per diluted share, compared with $0.4 million, or 0.2 cents per diluted share in the third quarter of 2010. The current quarter results also include total reserve additions of $27.7 million, or 15 cents per diluted share, compared with $10.3 million, or 6 cents per diluted share in the third quarter of 2010.

"We are encouraged by the continued strength in our commercial business, a strong rebound in our International division, and a significant increase in refinance orders opened during the third quarter," said Dennis J. Gilmore, chief executive officer at First American Financial Corporation.  "The quarter also benefited from the $40 million annualized expense reduction program that we implemented last quarter.

"As lower mortgage interest rates took hold in the quarter, we experienced a significant increase in open orders in August that has largely continued through September and into October.  This improved order flow, coupled with continued momentum in our commercial business, provides us with a strong pipeline going into the fourth quarter."  

Total revenues for the Title Insurance and Services segment were $897.8 million, a 3 percent decline from the same quarter of 2010. The lower total revenues were driven by a decline in both direct and agent title premiums, partly offset by higher information and other revenues. Direct premiums and escrow fees were down 1 percent, compared to the third quarter of 2010, due to an 18 percent decline in the number of direct title orders closed in the quarter that was largely offset by higher average revenue per order. Average revenue per direct title order was $1,561, an increase of 21 percent, compared with the third quarter of 2010, primarily due to a change in the mix toward higher-premium resale and commercial transactions. Agent premiums were lower by 8 percent in the current quarter, reflecting the normal reporting lag of approximately one quarter.

Information and other revenues were $160.2 million this quarter, up 5 percent as compared to the same quarter of last year, driven by our Canadian operations. Total investment income was up 2 percent in the third quarter, reflecting lower net realized investment losses compared to last year.

Personnel costs were $279.0 million in the third quarter, a decrease of $6.1 million, or 2 percent, compared with the third quarter of 2010. This decline was primarily due to a reduction in U.S. headcount and reduced costs related to employee benefit plans.  

Other operating expenses were $174.0 million in the third quarter, down $8.7 million, or 5 percent, compared with the third quarter of 2010. This decrease was primarily due to lower office-related costs and a reduction in consulting expenses that were partially offset by an increase in production-related expenses in the company's commercial, default and international businesses.

The provision for policy losses and other claims was $69.5 million in the third quarter, or 9.7 percent of title premiums and escrow fees, up $20.0 million compared with the same quarter of the prior year. The current quarter rate of 9.7 percent reflects an ultimate loss rate of 5.8 percent for the current policy year and includes $14.7 million in unfavorable development for prior policy years, primarily 2007, and a $13.0 million reserve in connection with Bank of America's pending lawsuit against the Company.

While the Company estimates its financial exposure from this lawsuit to be between $13 million and $42 million, its best estimate of its financial exposure is $13 million, which is also the amount for which the Company has offered to settle the case. These amounts do not reflect any potential recovery from third parties.  

Pretax income for the Title Insurance and Services segment was $48.9 million in the third quarter, compared with $60.0 millionin the third quarter of 2010, or a decrease of 19 percent. Pretax margin was 5.4 percent in the current quarter, compared with 6.5 percent in the third quarter of 2010.

Total revenues for the Specialty Insurance segment were $74.3 million in the third quarter of 2011, essentially flat compared with the third quarter of 2010. Pretax margin was 9.0 percent, down from 16.4 percent in the third quarter of 2010. The overall loss ratio in the Specialty Insurance segment was 60 percent in the current quarter, compared with 53 percent in the prior year.  Policy losses were higher in both the home warranty and property and casualty business lines during the quarter.

First American Financial Corporation (NYSE: FAF), a leading global provider of title insurance and settlement services for real estate transactions, today announced financial results for the third quarter ended Sept. 30, 2011.

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 15 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 fourth quarter pipeline, the estimated financial exposure from the Bank of America litigation, the outlook for our commercial business, CoreLogic's review of strategic alternatives, future market conditions, and future organic growth and strategic investments, 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; changes in measures of the strength of the company's title insurance underwriters, including ratings and statutory surpluses; 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; reform of government-sponsored mortgage enterprises; limitations on access to public records and other data; regulation of title insurance rates; inability of the company's subsidiaries to pay dividends or repay funds; expenses of and funding obligations to the pension plan; weakness in the commercial real estate market and increases in the amount or severity of commercial real estate transaction claims; material variance between actual and expected claims experience; systems interruptions and intrusions, wire transfer errors or unauthorized data disclosures;inability to realize the benefits of the company's offshore strategy; product migration; increases in the size of the company's customers; losses in the company's investment portfolio; and other factors described in the company's quarterly report on Form 10-Q for the quarter ended June 30, 2011, 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.