First American Financial Corp · Q4 2020 earnings

Briefing

First American reported fourth quarter earnings, demonstrating resilience amidst the pandemic with revenue increase and pretax margin improvement.

First American Financial Corporation reported a 24 percent increase in total revenue to $2.2 billion for the fourth quarter of 2020. Net income was $280.3 million, or $2.49 per diluted share, compared to $224.0 million, or $1.97 per diluted share, in the fourth quarter of 2019. The Title Insurance and Services segment's pretax margin was 18.9 percent.

• Total revenue increased by 24 percent compared to last year, reaching $2.2 billion.
• Closed title orders were up 32 percent, driven by a 75 percent increase in refinance orders.
• Net realized investment gains totaled $55.5 million, or 38 cents per diluted share.
• Title Insurance and Services segment achieved a record pretax margin of 18.9 percent.

Headline financials

Revenue & EPS history

The robust mortgage market has continued into 2021, with strong refinance and purchase activity, driven by elevated housing demand and low mortgage rates. The company is also encouraged by the rebound in the commercial market in the fourth quarter and expect our commercial business performance will continue to improve throughout the year. In January, the company also entered into book transfer agreements to facilitate our exit from the property and casualty insurance business, enabling us to maintain focus on our core business and redeploy the capital to areas with higher expected returns. We expect to complete the transfer by the third quarter of 2022.