First Amer­i­can Fi­nan­cial an­nounces 4Q re­sults

The Pak Banker - - 6BUSINESS -

First Amer­i­can Fi­nan­cial Cor­po­ra­tion to­day an­nounced fi­nan­cial re­sults for the fourth quar­ter and year ended Dec. 31, 2012.

Ti­tle In­surance and Ser­vices seg­ment pre­tax mar­gin of 12.7 per­cent; Com­mer­cial di­vi­sion rev­enues of $146.0 mil­lion, up 36 per­cent com­pared to last year; Spe­cialty In­surance seg­ment pre­tax mar­gin of 16.6 per­cent; Cash flow from op­er­a­tions of $178.2 mil­lion; Com­pleted $250 mil­lion of­fer­ing of 10-year, 4.3 per­cent se­nior notes on Jan. 29, 2013.

To­tal rev­enues for the fourth quar­ter of 2012 were $1.3 bil­lion, an in­crease of 28 per­cent rel­a­tive to the fourth quar­ter of 2011. Net in­come in the cur­rent quar­ter was $93.3 mil­lion, or 85 cents per di­luted share, com­pared with net in­come of $40.2 mil­lion, or 38 cents per di­luted share, in the fourth quar­ter of 2011. The cur­rent quar­ter re­sults in­clude net re­al­ized in­vest­ment gains of $6.2 mil­lion, or 4 cents per di­luted share, com­pared with net re­al­ized losses of $2.2 mil­lion, or 1 cent per di­luted share, in the prior year. The fourth quar­ter re­sults for 2011 also in­clude a $19.2 mil­lion charge for a le­gal set­tle­ment, or 11 cents per di­luted share.

To­tal rev­enues for the full year of 2012 were $4.5 bil­lion, an in­crease of 19 per­cent rel­a­tive to the prior year. Net in­come was $301.0 mil­lion, or $2.77 per di­luted share, com­pared with $78.3 mil­lion, or 73 cents per di­luted share, in 2011. The re­sults for the full year 2012 in­clude $57.0 mil­lion of net re­al­ized in­vest­ment gains, or 34 cents per di­luted share, pri­mar­ily due to the sale of CoreLogic com­mon stock, com­pared with net re­al­ized in­vest­ment losses of $9.2 mil­lion, or 5 cents per di­luted share, in 2011. In ad­di­tion, the prior year re­sults for 2011 in­clude charges of $77.5 mil­lion, or 43 cents per di­luted share, which in­cor­po­rate a $ 45.3 mil­lion re­serve ad­di­tion for the guar­an­teed val­u­a­tion prod­uct of­fered in Canada and $32.2 mil­lion for a le­gal set­tle­ment.

2012 was a suc­cess­ful year for the com­pany, said Dennis J. Gil­more, chief ex­ec­u­tive of­fi­cer at First Amer­i­can Fi­nan­cial Cor­po­ra­tion. We grew to­tal rev­enue by 19 per­cent and, due to strong op­er­at­ing lever­age, we sig­nif­i­cantly im­proved our prof­itabil­ity. Our pre­tax ti­tle mar­gin of 11.3 per­cent and re­turn on eq­uity of 13.7 per­cent both ex­ceeded the goals we es­tab­lished back in 2010 prior to the spinoff. Dur­ing the fourth quar­ter, closed or­ders in our ti­tle busi­ness were the strong­est of the year, driven by refi- nance and com­mer­cial ac­tiv­ity. Rev­enues in our com­mer­cial di­vi­sion were $146 mil­lion for the quar­ter, up 36 per­cent com­pared to the prior year. The com­pany de­liv­ered a strong ti­tle seg­ment pre­tax mar­gin of 12.7 per­cent. In late Jan­uary of this year, we com­pleted a $250 mil­lion of­fer­ing of 10-year, 4.3 per­cent se­nior notes to pro­vide the com­pany with longterm fi­nanc­ing that in­creases our fi­nan­cial flex­i­bil­ity go­ing for­ward.

To­tal rev­enues for the Ti­tle In­surance and Ser­vices seg­ment were $1.2 bil­lion in the fourth quar­ter of 2012, an in­crease of 30 per­cent from the same quar­ter of 2011. Di­rect pre­mi­ums and es­crow fees were up 38 per­cent com­pared to the fourth quar­ter of 2011, due to a 34 per­cent in­crease in the num­ber of di­rect ti­tle or­ders closed in the quar­ter and a small in­crease in av­er­age rev­enue per or­der. Av­er­age rev­enue per di­rect ti­tle or­der was $1,547, an in­crease of 3 per­cent com­pared with the fourth quar­ter of 2011, as the shift in the mix of rev­enues to lower-pre­mium re­fi­nance trans­ac­tions was more than off­set by an in­crease in the av­er­age rev­enue per closed or­der for com­mer­cial and pur­chase trans­ac­tions. Agent pre­mi­ums were up by 30 per­cent in the cur­rent quar­ter, re­flect­ing the nor­mal re­port­ing lag of ap­prox­i­mately one quar­ter.

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