First American Posts $67 Million Loss
The First American Corp. (FAF) on Thursday reported a $66.9 million -- or 72 cents per share -- net loss in the fourth quarter, driven by $50.7 million in increased reserves, $13.7 million in intangible asset impairments and $11.3 million in employee separation and other restructuring costs. This compares with an $8.3 million net loss posted in the third quarter. The Santa Ana, Calif.-based title insurer and real estate information services giant posted a $26.3 million net loss for all of 2008, up dramatically from the $3.1 million net loss in 2007. The company's earnings were not immune to the continued weak housing market, which affected title insurance operations. First American reported a 32 percent decline in revenue for its title insurance business since the same quarter in 2007. The weakened business was driven not only by a decrease in orders, but also by a decrease in the average revenue per order closed. A $94.2 million pretax loss was also at the helm of the title insurance operations' weak revenue. The business had increased its loss provision to 17 percent of operating revenues in the quarter, from 14.8 percent in the year-ago quarter. It also cut 1,210 employees at a cost of $8 million. First American, like many other title insurers, has had to shed staff amid the falling revenue; it also let 1,250 employees go in the third quarter. “In 2008, we responded aggressively and decisively to restructure our company in the face of a very difficult economic environment,” said chairman and CEO Parker Kennedy. “We are encouraged by the recent government actions, which we feel will materially improve the real estate economy." Read the earnings statement. Write to Diana Golobay at email@example.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.