First American Title Insurance Company Introduces New Rate Plan for Refinance Transactions
—Single-Rate Title and Escrow Product Simplifies and Reduces Cost of Refinance Transactions—
March 16, 2005, SANTA ANA, Calif.
The First American Corporation (NYSE: FAF), the nation’s largest data provider, today announced that its largest subsidiary, First American Title Insurance Company, will file “First American One Rate,” a new title insurance rate plan for California mortgage refinance transactions. Leveraging the company’s increased operational efficiency, First American One Rate is the industry’s first look at simplifying, clarifying and reducing title insurance and escrow rates for residential refinancings.
Recently consumers, California Insurance Commissioner John Garamendi and the media have suggested that title insurance rates should be lower. In an industry-leading move to address these concerns, First American, through its investments in technology and centralized processing capability, can now offer this rate reduction on refinance transactions in California.
Under First American One Rate, refinance customers in this state will benefit by receiving a single rate that includes virtually all necessary title and escrow services. In addition to providing clarity, this new rate plan will significantly lower the overall cost to the consumer. California consumers will benefit from an average discount of approximately 30 percent on existing title rates for refinance transactions using First American’s One Rate. Available from First American directly or through its agents, this program provides unprecedented transparency for consumers to better understand the costs associated with the closing of a refinance loan.
“Consumers can now ask their mortgage broker or lender for First American’s One Rate and be assured that they are getting the highest value package of services in the market today,” said Parker S. Kennedy, chairman and chief executive officer of The First American Corporation. “Because of our significant investment in technology, data and efficiency tools exceeding $100 million over the last five years, we are now uniquely positioned to lead a new approach to refinance transactions and bring One Rate to market.”
Gary L. Kermott, president of First American Title Insurance Company, stated: “The multitude of new mortgage products that have recently emerged have caused what appears to be a permanent change in the nature of the refinance business on a go-forward basis. Our commitment to building the industry’s state-of-the-art centralized production environment combined with the increased frequency of title searches for successive refinance customers and improvements in title search and examination databases, now translate into cost savings for California consumers using First American’s One Rate program.”
Following examination and review by the California Department of Insurance, it is anticipated that the revised refinance title rate would become effective in 30 days.
Assuming that real estate values and the volume of activity, including the mix between refinance, resale, and commercial transactions, remain unchanged from 2004 levels, the company expects this rate reduction would result in a decrease in net income of approximately 6 cents per diluted share in 2005. However, any decrease in net income could be offset by factors such as anticipated market share gains, operating efficiencies and growth in the company’s bundling program.
The First American Corporation is a Fortune 500 company that traces its history to 1889. As the nation’s largest data provider, the company supplies businesses and consumers with information resources in connection with the major economic events of people’s lives, such as getting a job; renting an apartment; buying a car, house, boat or airplane; securing a mortgage; opening or buying a business; and planning for retirement. The First American Family of Companies, many of which command leading market share positions in their respective industries, operate within six primary business segments, including: Title Insurance and Services, Specialty Insurance, Mortgage Information, Property Information, Credit Information and Screening Information. With revenues of $6.72 billion in 2004, First American has 31,000 employees in approximately 1,800 offices throughout the United States and abroad. More information about the company and an archive of its press releases can be found at www.firstam.com.
Certain statements made in this press release, including those related to the effective date of the rate reduction and the effects on net income in 2005, are forward looking. 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; limitations on access to public records and other data; general volatility in the capital markets; changes in applicable government regulations; consolidation among the company’s significant customers and competitors; the company’s continued ability to identify businesses to be acquired; changes in the company’s ability to integrate businesses which it acquires; and other factors described in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2004, 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.