“Big Four” title insurer First American Financial Corp. announced a healthy $7.1 billion in total 2020 revenue in its annual earnings report, released Thursday.
That’s a 14% rise year over year, according to officials.
Net income was $696.4 million last year, or $6.16 per diluted share, and a pretax impairment of $54.9 million, or 45 cents per diluted share.
Also announced by the title insurer was a total of $1.1 billion in cash flow operations, a return on equity of 14.9%, and a 15.7% segment pretax margin of title insurance and services.
“Our 2020 performance demonstrated the remarkable resilience of our people amidst the challenges presented by the pandemic,” said First American CEO Dennis Gilmore. “The company closed over one million transactions while most of our people were working from home. We executed on our commitment to return capital to shareholders.”
First American’s total revenue for the fourth quarter of 2020 was $2.2 billion, an increase of 24% year over year. Net income in the fourth quarter was $280.3 million, or $2.49 per diluted share.
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Officials noted First American’s fourth quarter was impacted by two items – a reversal of a portion of the impairment initially taken in the third quarter, resulting in an $18.3 million benefit, and a permanent tax difference of $7.4 million, which adversely impacted the tax rate.
The average revenue per title order fell 6% in the fourth quarter, driven by the shift to refinance transactions, Gilmore said. Total commercial revenue was $226.6 million, down 5% year over year.
Direct premiums and escrow fees were up 24% compared with the fourth quarter of 2019, driven by a 32% increase in the number of
direct title orders closed. This was partially offset by a 6% decline in the average revenue per direct title order closed, officials said.
In January, First American announced it was selling its property and casualty subsidiaries. The sales were made with Safeco Insurance, a Liberty Mutual company, and Heritage Insurance Holdings. First American said the decision will help it focus on its core title business.
First American grew its market share in the title space by one basis point from the second to the third quarter.
Looking ahead, Gilmore said he is encouraged by the rebound in the commercial market in the fourth quarter and expect First American’s commercial business performance to improve throughout 2021.
“The robust mortgage market has continued into [the new year], with strong refinance and purchase activity driven by elevated housing demand and low mortgage rates,” he said.