First American Financial Reports First Quarter 2021 Results
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 first quarter ended March 31, 2021.
Current Quarter Highlights
-
Total revenue of
$2.0 billion , up 43 percent compared with last year- Closed title orders up 42 percent, driven by a 70 percent increase in refinance orders
- Average revenue per order down 9 percent, driven by the shift to refinance transactions
-
Net realized investment gains of
$66.8 million , or 46 cents per diluted share-
Primarily due to gains recognized on venture investments of
$42.1 million
-
Primarily due to gains recognized on venture investments of
-
Title Insurance and Services segment pretax margin of 17.1 percent, a first-quarter record
- 14.1 percent excluding net realized investment gains
-
Commercial revenues of
$163.2 million , up 2 percent compared with last year - Title Insurance and Services segment loss rate reduced to 4 percent from 5 percent
-
Specialty Insurance segment pretax margin of 4.6 percent
- 2.7 percent excluding net realized investment gains
-
Repurchased 1.2 million shares for a total of
$64.8 million at an average price of$52.86 -
Cashflow from operations of
$223.9 million compared with$24.2 million last year, a first-quarter record -
Debt-to-capital ratio of 25.0 percent, or 16.9 percent excluding secured financings payable of
$645.5 million - In April, named to the Fortune 100 Best Companies to Work For® list for the sixth consecutive year
Selected Financial Information
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Three Months Ended |
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March 31, |
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2021 |
|
|
2020 |
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Total revenue |
|
$ |
2,025.7 |
|
|
$ |
1,412.9 |
Income before taxes |
|
|
306.0 |
|
|
|
72.3 |
|
|
|
|
|
|
|
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Net income |
|
$ |
233.6 |
|
|
$ |
63.2 |
Net income per diluted share |
|
|
2.10 |
|
|
0.55 |
|
Total revenue for the first quarter of 2021 was
“First American delivered outstanding results this quarter as the purchase, refinance and commercial markets were all strong,” said Dennis J. Gilmore, chief executive officer at First American Financial Corporation. “Our title segment posted a pretax margin of 17.1 percent, a record for the first quarter.
“Our venture strategy is continuing to show financial benefit with
“I'm proud to share that First American has been named to the Fortune 100 Best Companies to Work For® list for the sixth consecutive year. I credit this outstanding accomplishment to our employees, as it was achieved through their commitment to each other, our customers and the communities where they live.”
Title Insurance and Services
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Three Months Ended |
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March 31, |
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|
2021 |
|
2020 |
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Total revenues |
|
$ |
1,885.1 |
|
|
$ |
1,300.6 |
|
|
|
|
|
|
|
|
|
|
Income before taxes |
|
$ |
321.6 |
|
|
$ |
73.0 |
|
Pretax margin |
|
|
17.1 |
% |
|
|
5.6 |
% |
|
|
|
|
|
|
|
|
|
Title open orders(1) |
|
|
363,200 |
|
|
|
354,400 |
|
Title closed orders(1) |
|
|
287,600 |
|
|
|
202,700 |
|
|
|
|
|
|
|
|
|
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U.S. Commercial |
|
|
|
|
|
|
|
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Total revenues |
|
$ |
163.2 |
|
|
$ |
159.3 |
|
Open orders |
|
|
32,700 |
|
|
|
31,600 |
|
Closed orders |
|
|
16,600 |
|
|
|
16,400 |
|
Average revenue per order |
|
$ |
9,800 |
|
|
$ |
9,700 |
|
(1) U.S. direct title insurance orders only. |
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Total revenues for the Title Insurance and Services segment during the first quarter were
Information and other revenues were
Investment income was
Personnel costs were
Other operating expenses were
The provision for policy losses and other claims was
Depreciation and amortization expense was
Pretax income for the Title Insurance and Services segment was
Specialty Insurance
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Three Months Ended |
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March 31, |
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|
|
2021 |
|
2020 |
||||
Total revenues |
|
$ |
136.5 |
|
|
$ |
122.0 |
|
|
|
|
|
|
|
|
|
|
Income before taxes |
|
$ |
6.3 |
|
|
$ |
12.9 |
|
Pretax margin |
|
|
4.6 |
% |
|
|
10.5 |
% |
Total revenues for the Specialty Insurance segment were
Teleconference/Webcast
First American’s first-quarter 2021 results will be discussed in more detail on Thursday, April 22, 2021, 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 May 6, 2021, by dialing 201-612-7415 and using the conference ID 13718763. 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; banking, trust and wealth management services; and other related products and services. With total revenue of
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; 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 or other investments; 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 annual report on Form 10-K for the year ended December 31, 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 an adjusted debt to capitalization ratio, 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 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 |
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Summary of Consolidated Financial Results and Selected Information |
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(in thousands, except per share amounts and title orders, unaudited) |
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Three Months Ended |
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March 31, |
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2021 |
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|
2020 |
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Total revenues |
|
$ |
2,025,745 |
|
|
$ |
1,412,943 |
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
306,022 |
|
|
$ |
72,324 |
Income tax expense |
|
|
71,564 |
|
|
|
8,478 |
Net income |
|
|
234,458 |
|
|
|
63,846 |
Less: Net income attributable to noncontrolling interests |
|
|
842 |
|
|
|
642 |
Net income attributable to the Company |
|
$ |
233,616 |
|
|
$ |
63,204 |
|
|
|
|
|
|
|
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Net income per share attributable to stockholders: |
|
|
|
|
|
|
|
Basic |
|
$ |
2.10 |
|
|
$ |
0.56 |
Diluted |
|
$ |
2.10 |
|
|
$ |
0.55 |
|
|
|
|
|
|
|
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Cash dividends declared per share |
|
$ |
0.46 |
|
|
$ |
0.44 |
|
|
|
|
|
|
|
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Weighted average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
|
111,113 |
|
|
|
113,556 |
Diluted |
|
|
111,414 |
|
|
|
113,959 |
|
|
|
|
|
|
|
|
Selected Title Insurance Segment Information |
|
|
|
|
|
|
|
Title orders opened(1) |
|
|
363,200 |
|
|
|
354,400 |
Title orders closed(1) |
|
|
287,600 |
|
|
|
202,700 |
Paid title claims |
|
$ |
39,969 |
|
|
$ |
42,732 |
|
|
|
|
|
|
|
|
(1) U.S. direct title insurance orders only. |
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First American Financial Corporation |
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Selected Consolidated Balance Sheet Information |
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(in thousands, unaudited) |
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March 31, |
|
|
December 31, |
||
|
|
2021 |
|
|
2020 |
||
Cash and cash equivalents |
|
$ |
2,026,024 |
|
|
$ |
1,275,466 |
Investments |
|
|
8,101,230 |
|
|
|
7,214,820 |
Goodwill and other intangible assets, net |
|
|
1,558,227 |
|
|
|
1,573,102 |
Total assets |
|
|
14,431,903 |
|
|
|
12,795,988 |
Reserve for claim losses |
|
|
1,203,169 |
|
|
|
1,178,004 |
Notes and contracts payable |
|
|
1,009,447 |
|
|
|
1,010,756 |
Total stockholders’ equity |
|
$ |
4,955,273 |
|
|
$ |
4,909,972 |
First American Financial Corporation |
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Segment Information |
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(in thousands, unaudited) |
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Three Months Ended |
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Title |
|
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Specialty |
|
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Corporate |
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March 31, 2021 |
|
Consolidated |
|
|
Insurance |
|
|
Insurance |
|
|
(incl. Elims.) |
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Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct premiums and escrow fees |
|
$ |
785,675 |
|
|
$ |
657,497 |
|
|
$ |
128,178 |
|
|
$ |
— |
|
Agent premiums |
|
|
845,292 |
|
|
|
845,292 |
|
|
|
— |
|
|
|
— |
|
Information and other |
|
|
278,892 |
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