First American(US:FAF)2025-02-21 00:45Financial Performance - The Company's total revenues for 2024 were $6.1 billion, reflecting an increase of $124.6 million, or 2.1%, compared to $6.0 billion for 2023[181]. - The home warranty segment's revenues increased by $8.5 million, or 2.0%, in 2024 compared to 2023[180]. - Net income attributable to the Company for 2024 was $131.1 million, a decrease of 39.5% from $216.8 million in 2023 and 50.1% from $263.0 million in 2022[215]. - Cash provided by operating activities totaled $897.5 million in 2024, compared to $354.3 million in 2023 and $777.6 million in 2022[218]. Premiums and Claims - The provision for title insurance losses for 2024 was 3.0% of title insurance premiums and escrow fees, reflecting an ultimate loss rate of 3.75% for the current policy year[161]. - Known title claims were $55.3 million in 2024, representing 4.6% of total claims, compared to $55.5 million, or 4.3%, in 2023[159]. - IBNR title claims decreased to $1,109.4 million in 2024 from $1,186.5 million in 2023, accounting for 93.0% of total title claims[159]. - The provision for policy losses and other claims was 3.0% in 2024, down from 3.25% in 2023 and 4.0% in 2022[196]. - The provision for home warranty claims as a percentage of premiums decreased to 46.4% in 2024 from 48.8% in 2023 and 51.3% in 2022, reflecting improved claims management[206]. Investment Performance - The Company's net investment losses for 2024 were $401.6 million, compared to $206.4 million in the prior year[181]. - Net investment gains for 2024 totaled $1.4 million, a significant recovery from losses of $6.0 million in 2023 and $12.5 million in 2022, primarily due to increases in fair values of marketable equity securities[204]. - Net investment losses amounted to $57.5 million in 2024, down from $162.3 million in 2023 and $353.4 million in 2022, indicating a significant reduction in investment impairments[209]. Operating Expenses - Personnel costs increased by $77.2 million, or 4.1%, in 2024 from 2023, while they decreased by $396.9 million, or 17.5%, in 2023 from 2022[193]. - Other operating expenses rose by $54.8 million, or 5.8%, in 2024 from 2023, but decreased by $217.7 million, or 18.8%, in 2023 from 2022[195]. - Depreciation and amortization expense increased by $18.6 million, or 10.1%, in 2024 from 2023, and by $21.3 million, or 13.1%, in 2023 from 2022[199]. Debt and Capital Structure - The Company's debt to capitalization ratio was 30.8% as of December 31, 2024, compared to 28.6% in 2023[228]. - The Company issued $450.0 million of 5.45% senior unsecured notes due in 2034 in September 2024[224]. - The Company had no outstanding borrowings under its credit facility as of December 31, 2024 and 2023, with a facility limit of $900.0 million[242]. Shareholder Returns - The quarterly cash dividend was increased to 54 cents per common share in September 2024, representing a 2% increase[220]. - The Company repurchased and retired 1.2 million shares of its common stock for a total purchase price of $68.5 million in 2024, with a total of 4.7 million shares repurchased under the current authorization for $254.6 million[221]. Market and Economic Conditions - The Mortgage Bankers Association reported a 22.0% increase in residential mortgage originations in the U.S. for 2024 compared to 2023, with refinance originations increasing by 124.2%[182]. - The level of domestic title orders opened per day remained flat in 2024 compared to 2023, while residential refinance opened orders per day increased by 20.2%[183]. Reserves and Claims Management - The total loss reserves as of December 31, 2024, amounted to $1,193.4 million, a decrease from $1,282.4 million in 2023[159]. - As of December 31, 2024, the IBNR claims reserve was $1.1 billion, with a reasonable estimate range of $965.8 million to $1.2 billion[197]. - A 50 basis point change in expected ultimate losses for the last six policy years could impact the IBNR reserve by $159.0 million[157]. Segment Performance - The title insurance and services segment saw an increase in direct premiums and escrow fees totaling $191.9 million, or 10.3%, driven by domestic residential refinance transactions, residential purchase transactions, and domestic commercial transactions[181]. - The home warranty segment currently operates in 36 states and the District of Columbia, selling residential service contracts[152]. - Home warranty segment recorded pretax margins of 15.1%, 13.0%, and 10.6% for 2024, 2023, and 2022, respectively, showing a positive trend in profitability[207].