This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

First American Financial Reports Third Quarter 2013 Results

Stocks in this article: FAF

Information and other revenues were $159.3 million this quarter, up less than 1 percent compared with the same quarter of last year. Higher demand for the company’s default and commercial title information products was largely offset by lower demand for title plant information due to the decline in refinance title orders during the quarter.

Investment income was $22.2 million in the third quarter, an increase of $2.7 million from the third quarter of 2012. This increase was primarily due to higher interest and dividends from the investment portfolio. Net realized investment losses in the current quarter were $5.5 million compared with realized investment gains of $19.8 million in the prior year.

Personnel costs were $350.9 million in the third quarter, an increase of $33.7 million, or 11 percent, compared with the third quarter of 2012. This increase was primarily due to higher staffing levels as compared with last year and increased incentive compensation driven by higher revenues.

In response to lower refinance activity during the third quarter, headcount was reduced by 715 employees, including temporary staffing. As a result, the company recorded severance costs of $7.8 million in the third quarter.

Other operating expenses were $204.7 million in the third quarter, up $7.7 million, or 4 percent, compared with the third quarter of 2012. This increase was primarily due to higher production-related expenses.

The provision for policy losses and other claims was $60.5 million in the third quarter, or 5.8 percent of title premiums and escrow fees, compared with $59.7 million, or 6.6 percent of title premiums and escrow fees, in the same quarter of the prior year. The current quarter rate of 5.8 percent reflects the ultimate loss rate for the 2013 policy year with no reserve adjustment for prior policy years.

Pretax income for the Title Insurance and Services segment was $125.0 million in the third quarter, compared with $141.9 million in the third quarter of 2012. Pretax margin was 10.3 percent in the current quarter, which included a reduction of 40 basis points from net realized investment losses, compared with 12.9 percent last year, which included an increase of 160 basis points from net realized investment gains.


Specialty Insurance

($ in millions)


For the Three Months Ended

September 30,

2013                 2012
Total revenues $ 86.1                 $ 81.4
Income before taxes $ 4.0 $ 8.1
Pretax margin 4.7 % 10.0 %

Total revenues for the Specialty Insurance segment were $86.1 million in the third quarter of 2013, an increase of 6 percent compared with the third quarter of 2012. The increase in revenues was driven by higher premiums earned in both the home warranty and property and casualty business lines, partially offset by $1.5 million in net realized investment losses this quarter compared with $2.1 million in net realized investment gains last year. The overall loss rate in the Specialty Insurance segment was 63.8 percent in the current quarter compared with a 60.6 percent loss rate in the prior year. Both business lines experienced higher losses in the quarter, resulting in a pretax margin of 4.7 percent, down from 10.0 percent in the third quarter of 2012.

3 of 5

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs