First American Financial Reports Third Quarter 2020 Results

Reports Earnings of $1.62 per Diluted Share


October 22, 2020, Santa Ana, Calif.

First American Financial Corporation (NYSE: FAF), a leading global provider of title insurance, settlement services and risk solutions for real estate transactions, today announced financial results for the third quarter ended Sept. 30, 2020.

Download the complete press release as a PDF

Current Quarter Highlights

  • Total revenue of $1.9 billion, up 15 percent compared with last year
    • Closed title orders up 30 percent, driven by an 85 percent increase in refinance orders
    • Average revenue per order down 13 percent, driven by the shift to refinance transactions
  • Net realized investment gains of $45.0 million, or 30 cents per diluted share, primarily due to the change in the fair value of equity securities
  • Title Insurance and Services segment record pretax margin of 19.0 percent
    • 17.1 percent excluding net realized investment gains
  • Commercial revenues of $142.6 million, down 29 percent compared with last year
  • Cash flow from operations of $313.1 million, compared with $310.6 million last year
  • Initiated a process for the sale of the property and casualty business
    • Recorded pretax impairment on assets held for sale of $73.3 million, or 49 cents per diluted share, within the Specialty Insurance segment

Selected Financial Information

($ in millions, except per share data)

 

 

Three Months Ended

 

 

 

September 30,

 

 

 

2020

 

 

2019

 

Total revenue

 

$

1,913.7

 

 

$

1,671.2

 

Income before taxes

 

 

243.4

 

 

 

245.3

 

 

 

 

 

 

 

 

 

 

Net income

 

$

182.3

 

 

$

187.2

 

Net income per diluted share

 

 

1.62

 

 

1.65

 

 

Total revenue for the third quarter of 2020 was $1.9 billion, an increase of 15 percent relative to the third quarter of 2019. Net income in the current quarter was $182.3 million, or $1.62 per diluted share, compared with net income of $187.2 million, or $1.65 per diluted share, in the third quarter of 2019. Net realized investment gains in the current quarter were $45.0 million, or 30 cents per diluted share, compared with net realized investment gains of $1.5 million, or 1 cent per diluted share, in the third quarter of last year. In addition, a pretax impairment of assets held for sale of $73.3 million, or 49 cents per diluted share, was recorded related to the property and casualty business within the Specialty Insurance segment.

"Our third-quarter financial results were strong, achieving a record pretax title margin of 19 percent," said Dennis J. Gilmore, chief executive officer at First American Financial Corporation. "Our purchase and refinance businesses are performing well, benefiting from strong order trends and our continued focus on cost efficiency. Given low mortgage rates and robust demand for housing, we expect refinance and purchase activity to remain at elevated levels for the remainder of the year. The commercial market continued to improve during the quarter and we are optimistic, given a better pipeline, as we head into the seasonally strong fourth quarter.

"During the quarter, we initiated a process for the sale of our property and casualty business. While the business, until recently, has performed well, we decided to maintain focus on our core business and redeploy the capital to areas with higher expected returns."

Title Insurance and Services

($ in millions, except average revenue per order)

 

 

Three Months Ended

 

 

 

September 30,

 

 

 

2020

 

 

2019

 

Total revenues

 

$

1,772.0

 

 

$

1,540.7

 

 

 

 

 

 

 

 

 

 

Income before taxes

 

$

337.5

 

 

$

253.6

 

Pretax margin

 

 

19.0

%

 

 

16.5

%

 

 

 

 

 

 

 

 

 

Title open orders(1)

 

 

410,600

 

 

 

317,300

 

Title closed orders(1)

 

 

291,500

 

 

 

224,100

 

 

 

 

 

 

 

 

 

 

U.S. Commercial

 

 

 

 

 

 

 

 

   Total revenues

 

$

142.6

 

 

$

199.6

 

   Open orders

 

 

31,100

 

 

 

33,500

 

   Closed orders

 

 

15,900

 

 

 

18,500

 

   Average revenue per order

 

$

9,000

 

 

$

10,800

 

(1) U.S. direct title insurance orders only.

 

 

 

 

 

 

 

 

 

Total revenues for the Title Insurance and Services segment during the third quarter were $1.8 billion, up 15 percent compared with the same quarter of 2019. Direct premiums and escrow fees were up 12 percent compared with the third quarter of 2019, driven by a 30 percent increase in the number of direct title orders closed that was partially offset by a 13 percent decline in the average revenue per direct title order closed. The average revenue per direct title order declined to $2,193, primarily due to the shift in the order mix from higher-premium commercial transactions to lower-premium residential refinance transactions. Agent premiums, which are recorded on approximately a one-quarter lag relative to direct premiums, were up 10 percent in the current quarter as compared with last year.

Information and other revenues were $282.7 million this quarter, up 38 percent compared with the same quarter of last year. The increase was primarily due to the growth in mortgage originations that led to higher demand for the company's title information products, the recent acquisition of Docutech and revenues from services provided to support a temporary pandemic-related government program in Canada.

Investment income was $44.7 million in the third quarter, down $27.3 million, or 38 percent, primarily due to the impact of the decline in short-term interest rates on the investment portfolio and cash balances. Net realized investment gains totaled $41.3 million in the current quarter, primarily due to the change in the fair value of equity securities, compared with gains of $0.4 million in the third quarter of 2019.

Personnel costs were $481.4 million in the third quarter, an increase of $33.6 million, or 8 percent, compared with the same quarter of 2019. This increase was primarily attributable to higher incentive compensation and salary expense, and higher costs as a result of recent acquisitions, partly offset by lower employee benefit expense.

Other operating expenses were $251.3 million in the third quarter, up $32.6 million, or 15 percent, compared with the third quarter of 2019. The increase was primarily due to higher production-related costs as a result of the growth in order volume.

The provision for policy losses and other claims was $70.2 million in the third quarter, or 5.0 percent of title premiums and escrow fees, an increase from a 4.0 percent loss provision rate in the prior year. The current quarter rate reflects an ultimate loss rate of 4.5 percent for the current policy year with a $7.0 million increase in the loss reserve estimates for prior policy years. In the third quarter, incurred title claims were $32.7 million, a 21 percent decline relative to 2019.

Depreciation and amortization expense was $36.2 million in the third quarter, up $6.4 million, or 21 percent, compared with the same period last year, primarily due to the amortization of intangibles related to recent acquisitions.

Pretax income for the Title Insurance and Services segment was $337.5 million in the third quarter, compared with $253.6 million in the third quarter of 2019. Pretax margin was 19.0 percent in the current quarter, compared with 16.5 percent last year. Excluding the impact of net realized investment gains, the pretax margin was 17.1 percent this year, compared with 16.4 percent last year.

Specialty Insurance

($ in millions)

 

Three Months Ended

 

 

 

September 30,

 

 

 

2020

 

 

2019

 

Total revenues

 

$

136.3

 

 

$

129.2

 

 

 

 

 

 

 

 

 

 

Income before taxes

 

$

(72.1

)

 

$

11.0

 

Pretax margin

 

 

(52.9

%)

 

 

8.5

%

 

Total revenues for the Specialty Insurance segment were $136.3 million in the third quarter of 2020, an increase of 6 percent compared with the third quarter of 2019. This quarter, the segment's financial results were driven by a $73.3 million impairment on assets held for sale in the property and casualty business. The overall loss ratio for the segment was 69.0 percent, up from 60.9 percent last year due to higher claim losses in both the property and casualty and home warranty businesses. The home warranty business continued to experience higher claim frequency in the third quarter, significantly driven by claims in the appliance and plumbing trades likely due to the coronavirus pandemic.

Teleconference/Webcast

First American's third quarter 2020 results will be discussed in more detail on Thursday, October 22, 2020, at 11 a.m. EDT, via teleconference. The toll-free dial-in number is 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 November 5, 2020, by dialing 201-612-7415 and using the conference ID 13711297. 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, settlement services and risk solutions for real estate transactions that traces its heritage back to 1889. First American also provides title plant management services; title and other real property records and images; valuation products and services; home warranty products; property and casualty insurance; banking, trust and wealth management services; and other related products and services. With total revenue of $6.2 billion in 2019, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2020, First American was named to the Fortune 100 Best Companies to Work For® list for the fifth consecutive year. 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 the performance of the real estate markets; volatility in the capital markets; unfavorable economic conditions; the coronavirus pandemic and responses thereto; impairments in the company's goodwill or other intangible assets; uncertainty from the expected discontinuance of LIBOR and transition to any other interest rate benchmark; 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; use of social media by the company and other parties; regulation of title insurance rates; limitations on access to public records and other data; climate change, health crises, 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; 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; 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; the company's use of a global workforce; inability of the company's subsidiaries to pay dividends or repay funds; and other factors described in the company's quarterly report on Form 10-Q for the quarter ended June 30, 2020, 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 personnel and other operating expense ratios, success ratios, net operating revenues; and adjusted revenues, adjusted pretax income, adjusted earnings per share, and adjusted pretax margins for the company, its title insurance and services segment and its specialty insurance segment. 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.

First American Financial Corporation

 

Summary of Consolidated Financial Results and Selected Information

 

(in thousands, except per share amounts and title orders, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Total revenues

 

$

1,913,721

 

 

$

1,671,196

 

 

$

4,935,393

 

 

$

4,473,397

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

243,371

 

 

$

245,338

 

 

$

540,990

 

 

$

616,505

 

Income tax expense

 

 

59,780

 

 

 

57,171

 

 

 

121,859

 

 

 

131,263

 

Net income

 

 

183,591

 

 

 

188,167

 

 

 

419,131

 

 

 

485,242

 

Less: Net income attributable to noncontrolling interests

 

 

1,312

 

 

 

985

 

 

 

2,993

 

 

 

1,830

 

Net income attributable to the Company

 

$

182,279

 

 

$

187,182

 

 

$

416,138

 

 

$

483,412

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.62

 

 

$

1.65

 

 

$

3.69

 

 

$

4.28

 

Diluted

 

$

1.62

 

 

$

1.65

 

 

$

3.68

 

 

$

4.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

 

$

0.44

 

 

$

0.42

 

 

$

1.32

 

 

$

1.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

112,584

 

 

 

113,163

 

 

 

112,913

 

 

 

112,983

 

Diluted

 

 

112,843

 

 

 

113,741

 

 

 

113,176

 

 

 

113,509

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Title Insurance Segment Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Title orders opened(1)

 

 

410,600

 

 

 

317,300

 

 

 

1,116,300

 

 

 

841,300

 

Title orders closed(1)

 

 

291,500

 

 

 

224,100

 

 

 

748,700

 

 

 

571,600

 

Paid title claims

 

$

43,134

 

 

$

38,451

 

 

$

120,852

 

 

$

119,738

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) U.S. direct title insurance orders only.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First American Financial Corporation

 

Selected Consolidated Balance Sheet Information

 

(in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Cash and cash equivalents

 

$

1,512,369

 

 

$

1,485,959

 

Investments

 

 

6,699,607

 

 

 

6,589,443

 

Goodwill and other intangible assets, net

 

 

1,551,980

 

 

 

1,242,741

 

Total assets

 

 

12,638,810

 

 

 

11,519,167

 

Reserve for claim losses

 

 

1,069,859

 

 

 

1,063,044

 

Notes and contracts payable

 

 

1,011,758

 

 

 

728,232

 

Total stockholders' equity

 

$

4,723,770

 

 

$

4,420,484

 

 

First American Financial Corporation

 

Segment Information

 

(in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

Title

 

 

Specialty

 

 

Corporate

 

September 30, 2020

 

Consolidated

 

 

Insurance

 

 

Insurance

 

 

(incl. Elims.)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct premiums and escrow fees

 

$

807,947

 

 

$

680,910

 

 

$

127,037

 

 

$

--

 

Agent premiums

 

 

722,434

 

 

 

722,434

 

 

 

--

 

 

 

--

 

Information and other

 

 

285,882

 

 

 

282,671

 

 

 

3,450

 

 

 

(239

)

Net investment income

 

 

52,466

 

 

 

44,726

 

 

 

2,105

 

 

 

5,635

 

Net realized investment gains

 

 

44,992

 

 

 

41,252

 

 

 

3,740

 

 

 

--

 

 

 

 

1,913,721

 

 

 

1,771,993

 

 

 

136,332

 

 

 

5,396

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel costs

 

 

511,298

 

 

 

481,417

 

 

 

22,271

 

 

 

7,610

 

Premiums retained by agents

 

 

572,780

 

 

 

572,780

 

 

 

--

 

 

 

--

 

Other operating expenses

 

 

281,079

 

 

 

251,304

 

 

 

20,899

 

 

 

8,876

 

Provision for policy losses and other claims

 

 

157,836

 

 

 

70,167

 

 

 

87,669

 

 

 

--

 

Depreciation and amortization

 

 

38,227

 

 

 

36,194

 

 

 

1,995

 

 

 

38

 

Impairments on assets held for sale

 

 

73,264

 

 

 

--

 

 

 

73,264

 

 

 

--

 

Premium taxes

 

 

19,885

 

 

 

17,522

 

 

 

2,363

 

 

 

--

 

Interest

 

 

15,981

 

 

 

5,129

 

 

 

--

 

 

 

10,852

 

 

 

 

1,670,350

 

 

 

1,434,513

 

 

 

208,461

 

 

 

27,376

 

Income (loss) before income taxes

 

$

243,371

 

 

$

337,480

 

 

$

(72,129

)

 

$

(21,980

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

Title

 

 

Specialty

 

 

Corporate

 

September 30, 2019

 

Consolidated

 

 

Insurance

 

 

Insurance

 

 

(incl. Elims.)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct premiums and escrow fees

 

$

728,610

 

 

$

606,812

 

 

$

121,798

 

 

$

--

 

Agent premiums

 

 

656,154

 

 

 

656,154

 

 

 

--

 

 

 

--

 

Information and other

 

 

208,297

 

 

 

205,282

 

 

 

3,270

 

 

 

(255

)

Net investment income

 

 

76,628

 

 

 

72,044

 

 

 

3,064

 

 

 

1,520

 

Net realized investment gains

 

 

1,507

 

 

 

449

 

 

 

1,058

 

 

 

--

 

 

 

 

1,671,196

 

 

 

1,540,741

 

 

 

129,190

 

 

 

1,265

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel costs

 

 

470,683

 

 

 

447,795

 

 

 

20,742

 

 

 

2,146

 

Premiums retained by agents

 

 

518,824

 

 

 

518,824

 

 

 

--

 

 

 

--

 

Other operating expenses

 

 

248,252

 

 

 

218,687

 

 

 

19,230

 

 

 

10,335

 

Provision for policy losses and other claims

 

 

124,683

 

 

 

50,519

 

 

 

74,164

 

 

 

--

 

Depreciation and amortization

 

 

31,719

 

 

 

29,822

 

 

 

1,859

 

 

 

38

 

Impairments on assets held for sale

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

Premium taxes

 

 

19,484

 

 

 

17,310

 

 

 

2,174

 

 

 

--

 

Interest

 

 

12,213

 

 

 

4,214

 

 

 

--

 

 

 

7,999

 

 

 

 

1,425,858

 

 

 

1,287,171

 

 

 

118,169

 

 

 

20,518

 

Income (loss) before income taxes

 

$

245,338

 

 

$

253,570

 

 

$

11,021

 

 

$

(19,253

)

 

First American Financial Corporation

 

Segment Information

 

(in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

 

Title

 

 

Specialty

 

 

Corporate

 

September 30, 2020

 

Consolidated

 

 

Insurance

 

 

Insurance

 

 

(incl. Elims.)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct premiums and escrow fees

 

$

2,080,568

 

 

$

1,712,946

 

 

$

367,622

 

 

$

--

 

Agent premiums

 

 

1,920,011

 

 

 

1,920,011

 

 

 

--

 

 

 

--

 

Information and other

 

 

728,563

 

 

 

719,196

 

 

 

9,992

 

 

 

(625

)

Net investment income

 

 

156,760

 

 

 

147,628

 

 

 

7,005

 

 

 

2,127

 

Net realized investment gains

 

 

49,491

 

 

 

35,777

 

 

 

7,199

 

 

 

6,515

 

 

 

 

4,935,393

 

 

 

4,535,558

 

 

 

391,818

 

 

 

8,017

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel costs

 

 

1,392,445

 

 

 

1,320,097

 

 

 

64,398

 

 

 

7,950

 

Premiums retained by agents

 

 

1,520,559

 

 

 

1,520,559

 

 

 

--

 

 

 

--

 

Other operating expenses

 

 

788,407

 

 

 

700,090

 

 

 

61,731

 

 

 

26,586

 

Provision for policy losses and other claims

 

 

414,001

 

 

 

181,648

 

 

 

232,353

 

 

 

--

 

Depreciation and amortization

 

 

110,652

 

 

 

104,705

 

 

 

5,832

 

 

 

115

 

Impairments on assets held for sale

 

 

73,264

 

 

 

--

 

 

 

73,264

 

 

 

--

 

Premium taxes

 

 

53,554

 

 

 

47,360

 

 

 

6,194

 

 

 

--

 

Interest

 

 

41,521

 

 

 

12,838

 

 

 

--

 

 

 

28,683

 

 

 

 

4,394,403

 

 

 

3,887,297

 

 

 

443,772

 

 

 

63,334

 

Income (loss) before income taxes

 

$

540,990

 

 

$

648,261

 

 

$

(51,954

)

 

$

(55,317

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

 

Title

 

 

Specialty

 

 

Corporate

 

September 30, 2019

 

Consolidated

 

 

Insurance

 

 

Insurance

 

 

(incl. Elims.)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct premiums and escrow fees

 

$

1,910,830

 

 

$

1,561,926

 

 

$

348,904

 

 

$

--

 

Agent premiums

 

 

1,701,538

 

 

 

1,701,538

 

 

 

--

 

 

 

--

 

Information and other

 

 

581,858

 

 

 

573,150

 

 

 

9,490

 

 

 

(782

)

Net investment income

 

 

236,607

 

 

 

213,067

 

 

 

8,496

 

 

 

15,044

 

Net realized investment gains

 

 

42,564

 

 

 

35,114

 

 

 

7,450

 

 

 

--

 

 

 

 

4,473,397

 

 

 

4,084,795

 

 

 

374,340

 

 

 

14,262

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel costs

 

 

1,329,322

 

 

 

1,251,590

 

 

 

60,246

 

 

 

17,486

 

Premiums retained by agents

 

 

1,344,517

 

 

 

1,344,517

 

 

 

--

 

 

 

--

 

Other operating expenses

 

 

667,047

 

 

 

581,455

 

 

 

57,284

 

 

 

28,308

 

Provision for policy losses and other claims

 

 

331,525

 

 

 

130,539

 

 

 

200,986

 

 

 

--

 

Depreciation and amortization

 

 

97,537

 

 

 

92,043

 

 

 

5,379

 

 

 

115

 

Impairments on assets held for sale

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

Premium taxes

 

 

50,887

 

 

 

44,988

 

 

 

5,899

 

 

 

--

 

Interest

 

 

36,057

 

 

 

11,271

 

 

 

--

 

 

 

24,786

 

 

 

 

3,856,892

 

 

 

3,456,403

 

 

 

329,794

 

 

 

70,695

 

Income (loss) before income taxes

 

$

616,505

 

 

$

628,392

 

 

$

44,546

 

 

$

(56,433

)

 

First American Financial Corporation

 

Reconciliation of Pretax Margins and Earnings per Diluted Share

 

Excluding Net Realized Investment Gains and Losses ("NRIG(L)")

 

(in thousands, except margin and per share amounts, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

1,913,721

 

 

$

1,671,196

 

 

$

4,935,393

 

 

$

4,473,397

 

Less: NRIG(L)

 

 

44,992

 

 

 

1,507

 

 

 

49,491

 

 

 

42,564

 

Total revenues excluding NRIG(L)

 

$

1,868,729

 

 

$

1,669,689

 

 

$

4,885,902

 

 

$

4,430,833

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax income

 

$

243,371

 

 

$

245,338

 

 

$

540,990

 

 

$

616,505

 

Less: NRIG(L)

 

 

44,992

 

 

 

1,507

 

 

 

49,491

 

 

 

42,564

 

Pretax income excluding NRIG(L)

 

$

198,379

 

 

$

243,831

 

 

$

491,499

 

 

$

573,941

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax margin

 

 

12.7

%

 

 

14.7

%

 

 

11.0

%

 

 

13.8

%

Less: Pretax margin impact of NRIG(L)

 

 

2.1

%

 

 

0.1

%

 

 

0.9

%

 

 

0.8

%

Pretax margin excluding NRIG(L)

 

 

10.6

%

 

 

14.6

%

 

 

10.1

%

 

 

13.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per diluted share (EPS)

 

$

1.62

 

 

$

1.65

 

 

$

3.68

 

 

$

4.26

 

Less: EPS impact of NRIG(L)

 

 

0.30

 

 

 

0.01

 

 

 

0.34

 

 

 

0.30

 

EPS excluding NRIG(L)

 

$

1.31

 

 

$

1.63

 

 

$

3.34

 

 

$

3.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Title Insurance and Services Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

1,771,993

 

 

$

1,540,741

 

 

$

4,535,558

 

 

$

4,084,795

 

Less: NRIG(L)

 

 

41,252

 

 

 

449

 

 

 

35,777

 

 

 

35,114

 

Total revenues excluding NRIG(L)

 

$

1,730,741

 

 

$

1,540,292

 

 

$

4,499,781

 

 

$

4,049,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax income

 

$

337,480

 

 

$

253,570

 

 

$

648,261

 

 

$

628,392

 

Less: NRIG(L)

 

 

41,252

 

 

 

449

 

 

 

35,777

 

 

 

35,114

 

Pretax income excluding NRIG(L)

 

$

296,228

 

 

$

253,121

 

 

$

612,484

 

 

$

593,278

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax margin

 

 

19.0

%

 

 

16.5

%

 

 

14.3

%

 

 

15.4

%

Less: Pretax margin impact of NRIG(L)