First American Financial announces 4Q results
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.