First American(US:FAF)2024-04-25 21:52Revenue and Premiums - Total revenues decreased by $21.5 million, or 1.5%, in Q1 2024 compared to Q1 2023, primarily due to a decline in agent premiums of $26.6 million, or 4.5%[101] - Direct premiums and escrow fees were $403.2 million in Q1 2024, a decrease of $2.4 million, or 0.6%, compared to the same period last year[105] - Agent premiums were $563.8 million in Q1 2024, a decrease of $26.6 million, or 4.5%, reflecting a delay in recognition due to prior quarter mortgage origination activity[106] - Home warranty direct premiums increased to $97.7 million in Q1 2024, a rise of $1.1 million or 1.1% compared to Q1 2023[120] Investment Performance - Net investment income totaled $116.7 million in Q1 2024, down $7.9 million, or 6.3%, from Q1 2023, driven by declines in escrow and tax-deferred property exchange balances[109] - Net investment income for the corporate segment rose to $10.7 million in Q1 2024, up 30.5% from $8.2 million in Q1 2023[125] - Net investment gains were $18.9 million in Q1 2024, a significant increase from $6.5 million in Q1 2023, primarily from changes in fair values of marketable equity securities[110] - Net investment losses decreased to $10.6 million in Q1 2024 from $14.2 million in Q1 2023, reflecting improved investment performance[126] Expenses and Costs - Personnel costs were $452.5 million in Q1 2024, a decrease of $6.3 million, or 1.4%, attributed to lower salary expenses and headcount[111] - Other operating expenses increased by $9.6 million, or 4.3%, in Q1 2024, primarily due to higher legal expenses and an out-of-period adjustment[113] - Interest expense rose to $22.4 million in Q1 2024, an increase of $6.5 million, or 40.9%, mainly due to higher costs in the warehouse lending business[117] Profitability and Margins - The provision for policy losses was 3.0% in Q1 2024, down from 3.5% in Q1 2023, reflecting an ultimate loss rate of 3.75% for both years[114] - Title insurance segment recorded pretax margins of 5.5% for Q1 2024, down from 6.5% in Q1 2023[118] - Home warranty segment pretax margins improved to 19.3% in Q1 2024 from 15.3% in Q1 2023[123] - Net income attributable to the company was $46.7 million in Q1 2024, compared to $45.9 million in Q1 2023, representing an increase in earnings per diluted share from $0.44 to $0.45[132] Cash Flow and Liquidity - Cash provided by operating activities totaled $69.3 million in Q1 2024, compared to cash used of $92.3 million in Q1 2023[135] - The company paid a cash dividend of $0.53 per common share in Q1 2024, with expectations to maintain or increase future dividends[137] - As of March 31, 2024, the holding company had $104.1 million in cash and cash equivalents and $900.0 million available on its revolving credit facility[140] - The company plans to repay $300.0 million in senior unsecured notes due November 2024 using available cash or borrowings[141] Debt and Capitalization - The Company's debt to capitalization ratios were 30.3% and 28.6% at March 31, 2024, and December 31, 2023, respectively[143] - The Company has a $900.0 million revolving credit facility with JPMorgan Chase Bank, with no outstanding borrowings as of March 31, 2024[142] Investment Portfolio - As of March 31, 2024, 94% of the Company's investment portfolio consisted of debt securities, with 64% being U.S. government-backed or rated AAA[144] - Escrow deposits totaled $8.9 billion at March 31, 2024, down from $10.6 billion at December 31, 2023[146] - Trust assets administered by FA Trust amounted to $4.6 billion at March 31, 2024, compared to $4.4 billion at December 31, 2023[147] - Like-kind exchange funds administered by the Company totaled $1.7 billion at March 31, 2024, down from $1.8 billion at December 31, 2023[149] - Cash deposits in residential mortgage loan subservicing operations reached $1.0 billion at March 31, 2024, up from $830.5 million at December 31, 2023[150] Market Risks - The Company does not currently use derivative financial instruments on a significant scale to hedge interest rate risks[152] - There have been no material changes in the Company's market risks since the last annual report[153]