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First American Financial Reports Second Quarter 2014 Results

Stocks in this article: FAF

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 second quarter ended June 30, 2014.

Current Quarter Highlights

  • Total revenue down 11 percent compared with last year
    • Refinance closed orders down 57 percent
  • Title Insurance and Services segment pretax margin of 8.0 percent
  • Title Insurance and Services segment loss ratio of 8.9 percent
    • Includes $25.1 million reserve strengthening, primarily due to a commercial claim from policy year 2007
  • Average revenue per direct title order up 27 percent compared with last year
    • Mix continues to shift to higher-premium purchase and commercial transactions
    • Average revenue per purchase transaction up 6 percent
  • Commercial revenues of $132.1 million, down 4 percent compared with last year
    • Commercial revenues up 7 percent in the first half of 2014
  • Specialty Insurance segment total revenues up 9 percent, with a pretax margin of 12.1 percent
  • Debt-to-capital ratio of 15.1 percent as of June 30, 2014
  • Amended existing revolving credit facility with improved terms
    • Increased capacity to $700 million and extended term to May 2019

Selected Financial Information ($ in millions, except per share data)


For the Three Months Ended

June 30,

2014                 2013
Total revenues $ 1,150.0                 $ 1,288.5
Income before taxes 76.5 59.2
Net income $ 50.6 $ 34.7
Net income per diluted share 0.47 0.31

Total revenues for the second quarter of 2014 were $1.1 billion, a decline of 11 percent relative to the second quarter of 2013. Net income in the current quarter was $50.6 million, or 47 cents per diluted share, compared with net income of $34.7 million, or 31 cents per diluted share, in the second quarter of 2013. The current quarter results include net realized investment gains of $6.3 million, or 4 cents per diluted share, compared with net realized investment gains of $4.5 million, or 2 cents per diluted share, in the same quarter of last year. The current quarter also benefited from a 34 percent tax rate, primarily due to a lower effective foreign tax rate, as well as the utilization of foreign net operating loss carryforwards.

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