# First American Financial Corp (FAF)

Informational only - not investment advice.

CIK: 0001472787
SIC: 6361 Title Insurance
SIC breadcrumb: [Finance, Insurance, And Real Estate](/division/H/) > [Insurance Carriers](/major-group/63/) > [SIC 6361 Title Insurance](/industry/6361/)
Latest 10-K filed: 2026-02-18
SEC page: https://www.sec.gov/edgar/browse/?CIK=1472787
Filing source: https://www.sec.gov/Archives/edgar/data/1472787/000119312526055516/faf-20251231.htm

## At a glance

FY2025 · period end 2025-12-31 · filed 2026-02-18 · accession 0001193125-26-055516 · source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001472787.json

| Metric | Value | FY | Provenance |
| --- | ---: | ---: | --- |
| Revenue | 7,452,200,000 USD | 2025 | verified |
| Net income | 621,800,000 USD | 2025 | verified |
| Assets | 16,228,800,000 USD | 2025 | verified |
| Free cash flow | 762,500,000 USD | 2025 | computed |
| Net margin | 8.34% | 2025 | computed |
| Revenue YoY | +21.61% | 2025 | computed |
| ROE | 11.31% | 2025 | computed |

Computed values are grepcent-computed from the verified facts above and may differ from ratios the company itself reports. Free cash flow = operating cash flow − capital expenditures. Net margin = net income ÷ revenue. Revenue YoY = FY2025 revenue ÷ FY2024 revenue − 1 (consecutive fiscal years only). ROE = net income ÷ period-end stockholders' equity.

No market price, no rating, no forecast on this site. Not investment advice.

### Peer percentile fingerprint

| Ratio | FAF | Peer median | Percentile | N |
| --- | ---: | ---: | ---: | ---: |
| Net margin | 8.3% | 9.5% | 42 | 93 |
| Revenue growth | 21.6% | 7.9% | 77 | 92 |
| FCF margin | 10.2% | 14.9% | 40 | 56 |
| ROE | 11.3% | 12.1% | 42 | 92 |
| ROA | 3.8% | 3.1% | 61 | 93 |
| Liabilities / equity | 1.95 | 3.05 | 22 | 92 |

Percentile = share of the N covered peers reporting that ratio whose value is lower (ties counted half); computed among grepcent-covered companies in SIC major-group 63 Insurance Carriers, not the whole market. A higher percentile means a higher value of the ratio, not a better company. Ratios with fewer than 8 reporting peers are omitted. Latest reported values per company; fiscal periods may differ. Descriptive arithmetic - not a score, rating, or ranking.

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 7452200000 | USD | 2025 | 2026-02-18 |
| Net income | 621800000 | USD | 2025 | 2026-02-18 |
| Assets | 16228800000 | USD | 2025 | 2026-02-18 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-18. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001472787.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | 5,575,846,000 | 5,772,363,000 | 5,747,844,000 | 6,202,000,000 | 7,086,000,000 | 9,220,800,000 | 7,605,200,000 | 6,003,500,000 | 6,128,100,000 | 7,452,200,000 |
| Net income | 342,993,000 | 423,049,000 | 474,496,000 | 707,000,000 | 696,000,000 | 1,241,100,000 | 263,000,000 | 216,800,000 | 131,100,000 | 621,800,000 |
| Diluted EPS | 3.09 | 3.76 | 4.19 | 6.22 | 6.16 | 11.14 | 2.45 | 2.07 | 1.26 | 6.00 |
| Operating cash flow | 489,416,000 | 632,134,000 | 793,165,000 | 913,000,000 | 1,085,000,000 | 1,219,900,000 | 777,600,000 | 354,300,000 | 897,500,000 | 950,800,000 |
| Capital expenditures | 132,265,000 | 134,206,000 | 118,170,000 | 107,000,000 | 114,000,000 | 160,500,000 | 259,800,000 | 263,400,000 | 218,300,000 | 188,300,000 |
| Dividends paid | 131,541,000 | 159,284,000 | 178,487,000 | 188,000,000 | 199,000,000 | 213,000,000 | 217,500,000 | 216,600,000 | 220,700,000 | 223,000,000 |
| Share buybacks | 454,000 | 0.00 | 18,801,000 | 2,000,000 | 139,000,000 | 99,200,000 | 440,700,000 | 72,700,000 | 68,500,000 | 122,300,000 |
| Assets | 8,831,777,000 | 9,573,222,000 | 10,630,635,000 | 11,519,000,000 | 12,796,000,000 | 16,451,300,000 | 14,955,300,000 | 16,802,800,000 | 14,908,600,000 | 16,228,800,000 |
| Liabilities | 5,817,428,000 | 6,090,197,000 | 6,885,247,000 | 7,094,165,000 | 7,874,000,000 | 10,668,000,000 | 10,274,100,000 | 11,940,000,000 | 9,981,600,000 | 10,704,500,000 |
| Stockholders' equity | 3,008,179,000 | 3,479,955,000 | 3,741,881,000 | 4,420,484,000 | 4,910,000,000 | 5,767,000,000 | 4,657,800,000 | 4,848,100,000 | 4,908,500,000 | 5,499,500,000 |
| Cash and cash equivalents | 1,006,138,000 | 1,387,226,000 | 1,467,129,000 | 1,485,959,000 | 1,275,000,000 | 1,228,000,000 | 1,223,500,000 | 3,605,300,000 | 1,718,100,000 | 1,387,300,000 |
| Free cash flow | 357,151,000 | 497,928,000 | 674,995,000 | 806,000,000 | 971,000,000 | 1,059,400,000 | 517,800,000 | 90,900,000 | 679,200,000 | 762,500,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin | 6.15% | 7.33% | 8.26% | 11.40% | 9.82% | 13.46% | 3.46% | 3.61% | 2.14% | 8.34% |
| Return on equity | 11.40% | 12.16% | 12.68% | 15.99% | 14.18% | 21.52% | 5.65% | 4.47% | 2.67% | 11.31% |
| Return on assets | 3.88% | 4.42% | 4.46% | 6.14% | 5.44% | 7.54% | 1.76% | 1.29% | 0.88% | 3.83% |
| Liabilities / equity | 1.93 | 1.75 | 1.84 | 1.60 | 1.60 | 1.85 | 2.21 | 2.46 | 2.03 | 1.95 |

## As-reported value updates

No tracked differences above grepcent's stated thresholds and capped precision rule were found between the earliest XBRL-filed value and the value currently on file for the standardized annual metrics grepcent tracks.


## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-07-23. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001472787.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2022-Q3 | 2022-09-30 |  |  | 0.02 | reported discrete quarter |
| 2023-Q1 | 2023-03-31 |  |  | 0.44 | reported discrete quarter |
| 2023-Q2 | 2023-06-30 |  |  | 1.33 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 1,481,200,000 | -1,700,000 | -0.02 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 1,429,300,000 | 34,100,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2024-03-31 | 1,424,600,000 | 46,700,000 | 0.45 | reported discrete quarter |
| 2024-Q2 | 2024-06-30 | 1,612,300,000 | 116,000,000 | 1.11 | reported discrete quarter |
| 2024-Q3 | 2024-09-30 | 1,406,100,000 | -104,000,000 | -1.00 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 1,685,100,000 | 72,400,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-03-31 | 1,582,300,000 | 74,200,000 | 0.71 | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 1,841,300,000 | 146,100,000 | 1.41 | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 1,978,900,000 | 189,600,000 | 1.84 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 2,049,700,000 | 211,900,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2026-03-31 | 1,838,000,000 | 125,100,000 | 1.21 | reported discrete quarter |
| 2026-Q2 | 2026-06-30 | 2,117,300,000 | 218,500,000 | 2.12 | reported discrete quarter |

## Filed narrative (10-K & 10-Q)

## Business

Verbatim Item 1 Business section from FAF's latest 10-K: [/company/FAF/business/](/company/FAF/business/).

## Risk Factors

Verbatim Item 1A Risk Factors from FAF's latest 10-K: [/company/FAF/risk-factors/](/company/FAF/risk-factors/).

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1472787/000119312526314255/faf-20260630.htm

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary.
Confidence: high
Filing date: 2026-07-23
Report date: 2026-06-30

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CERTAIN STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING STATEMENTS MAY CONTAIN THE WORDS “BELIEVE,” “ANTICIPATE,” “EXPECT,” “PLAN,” “PREDICT,” “ESTIMATE,” “PROJECT,” “WILL BE,” “WILL CONTINUE,” “WILL LIKELY RESULT,” OR OTHER SIMILAR WORDS AND PHRASES.

RISKS AND UNCERTAINTIES EXIST THAT MAY CAUSE RESULTS TO DIFFER MATERIALLY FROM THOSE SET FORTH IN THESE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE THE ANTICIPATED RESULTS TO DIFFER FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS INCLUDE THE FACTORS SET FORTH ON PAGES 3-4 OF THIS QUARTERLY REPORT. THE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE TO UPDATE FORWARD-LOOKING STATEMENTS TO REFLECT CIRCUMSTANCES OR EVENTS THAT OCCUR AFTER THE DATE THE FORWARD-LOOKING STATEMENTS ARE MADE.

This Management’s Discussion and Analysis contains the financial measure adjusted debt to capitalization ratio that is not presented in accordance with generally accepted accounting principles (“GAAP”), as it excludes the effects of secured financings payable. The Company is presenting this non-GAAP financial measure because it provides the Company’s management and readers of this Quarterly Report on Form 10-Q with additional insight into the financial leverage of the Company. The Company does not intend for this non-GAAP financial measure to be a substitute for any GAAP financial information. In this Quarterly Report on Form 10-Q, this non-GAAP financial measure has been presented with, and reconciled to, the most directly comparable GAAP financial measure. Readers of this Quarterly Report on Form 10-Q should use this non-GAAP financial measure only in conjunction with the comparable GAAP financial measure. Because not all companies use identical calculations, the presentation of adjusted debt to capitalization ratio may not be comparable to other similarly titled measures of other companies.

CRITICAL ACCOUNTING ESTIMATES

A summary of the Company’s significant accounting policies that it considers to be the most dependent on the application of estimates and assumptions can be found in the Management’s Discussion and Analysis section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Pending Accounting Pronouncements

See Note 1 Basis of Condensed Consolidated Financial Statements to the condensed consolidated financial statements.

32

Results of Operations

Summary

[[GREPCENT_TABLE]]
[["","","Three Months Ended June 30,","","","Six Months Ended June 30,"],["(dollars in millions)","","2026","","","2025","","","$ Change","","","% Change","","","2026","","","2025","","","$ Change","","","% Change"],["Total Revenues by Segment"],["Title Insurance and Services","","$","2,014.6","","","$","1,722.9","","","$","291.7","","","","16.9","%","","$","3,746.9","","","$","3,207.3","","","$","539.6","","","","16.8","%"],["Home Warranty","","","113.8","","","","110.2","","","","3.6","","","","3.3","","","","223.6","","","","218.0","","","","5.6","","","","2.6"],["Corporate and Eliminations","","","(11.1",")","","","8.2","","","","(19.3",")","","","(235.4",")","","","(15.2",")","","","(1.7",")","","","(13.5",")","","NM1"],["","","$","2,117.3","","","$","1,841.3","","","$","276.0","","","","15.0","%","","$","3,955.3","","","$","3,423.6","","","$","531.7","","","","15.5","%"]]
[[/GREPCENT_TABLE]]

(1)
Not meaningful

A substantial portion of the revenues for the Company’s title insurance and services segment result from sales of, and refinancings of loans on, residential and commercial real estate. In the home warranty segment, revenues associated with the initial year of coverage are impacted by volatility in residential purchase transactions. Traditionally, the greatest volume of real estate activity, particularly residential purchase activity, occurs in the spring and summer months. However, changes in interest rates, as well as other changes in general economic conditions in the United States and abroad, can cause fluctuations in the traditional pattern of real estate activity.

The Company’s total revenues for the second quarter of 2026 were $2.1 billion, which reflected an increase of $276.0 million, or 15.0%, when compared with $1.8 billion for the second quarter of 2025. This increase was primarily attributable to increases in agent premiums of $103.2 million, or 14.4%, direct premiums and escrow fees in the title insurance business of $88.8 million, or 14.8%, and net investment gains of $12.0 million in the current quarter compared to $9.7 million of losses recognized in the second quarter of 2025. In the title insurance and services segment, direct premiums and escrow fees from domestic commercial and residential refinance and purchase transactions increased $79.9 million, or 34.1%, $5.7 million, or 18.2%, and $5.2 million, or 2.0% respectively, in the second quarter of 2026 when compared to the second quarter of 2025.

According to the Mortgage Bankers Association’s June 22, 2026 Mortgage Finance Forecast (the “MBA Forecast”), residential mortgage originations in the United States (based on the total dollar value of the transactions) are forecasted to increase 10.1% in the second quarter of 2026 when compared to the second quarter of 2025. According to the MBA Forecast, the dollar amount of purchase originations are forecasted to decrease 1.9% and refinance originations are forecasted to increase 39.9%. This volume of domestic residential mortgage origination activity contributed to an increase of 2.0% in direct premiums and escrow fees for the Company’s direct title operations from domestic residential purchase transactions and an increase of 18.2% from domestic refinance transactions in the second quarter of 2026 when compared to the second quarter of 2025.

During the second quarter of 2026, the level of domestic title orders opened per day by the Company’s direct title operations increased 0.7% when compared with the second quarter of 2025. Commercial and refinance opened orders per day increased 6.5% and 6.4%, respectively, while residential purchase opened orders per day decreased 2.4% in the second quarter of 2026 when compared with the second quarter of 2025.

33

Title Insurance and Services

[[GREPCENT_TABLE]]
[["","","Three Months Ended June 30,","","","Six Months Ended June 30,"],["(dollars in millions)","","2026","","","2025","","","$ Change","","","% Change","","","2026","","","2025","","","$ Change","","","% Change"],["Revenues"],["Direct premiums and escrow fees","","$","689.2","","","$","600.4","","","$","88.8","","","","14.8","%","","$","1,246.3","","","$","1,060.0","","","$","186.3","","","","17.6","%"],["Agent premiums","","","819.7","","","","716.5","","","","103.2","","","","14.4","","","","1,579.1","","","","1,371.1","","","","208.0","","","","15.2"],["Information and other","","","295.0","","","","264.3","","","","30.7","","","","11.6","","","","564.2","","","","500.3","","","","63.9","","","","12.8"],["Net investment income","","","164.0","","","","147.1","","","","16.9","","","","11.5","","","","318.2","","","","284.8","","","","33.4","","","","11.7"],["Net investment gains (losses)","","","46.7","","","","(5.4",")","","","52.1","","","NM1","","","","39.1","","","","(8.9",")","","","48.0","","","NM1"],["","","","2,014.6","","","","1,722.9","","","","291.7","","","","16.9","","","","3,746.9","","","","3,207.3","","","","539.6","","","","16.8"],["Expenses"],["Personnel costs","","","572.5","","","","523.0","","","","49.5","","","","9.5","","","","1,118.9","","","","1,007.8","","","","111.1","","","","11.0"],["Premiums retained by agents","","","658.6","","","","573.5","","","","85.1","","","","14.8","","","","1,260.8","","","","1,099.0","","","","161.8","","","","14.7"],["Other operating expenses","","","319.0","","","","277.8","","","","41.2","","","","14.8","","","","596.4","","","","524.2","","","","72.2","","","","13.8"],["Provision for policy losses and other claims","","","45.3","","","","39.5","","","","5.8","","","","14.7","","","","84.8","","","","72.9","","","","11.9","","","","16.3"],["Depreciation and amortization","","","52.3","","","","51.6","","","","0.7","","","","1.4","","","","105.4","","","","102.8","","","","2.6","","","","2.5"],["Premium taxes","","","20.6","","","","18.0","","","","2.6","","","","14.4","","","","40.6","","","","34.3","","","","6.3","","","","18.4"],["Interest","","","30.4","","","","22.8","","","","7.6","","","","33.3","","","","57.1","","","","42.8","","","","14.3","","","","33.4"],["","","","1,698.7","","","","1,506.2","","","","192.5","","","","12.8","","","","3,264.0","","","","2,883.8","","","","380.2","","","","13.2"],["Income before income taxes","","$","315.9","","","$","216.7","","","$","99.2","","","","45.8","%","","$","482.9","","","$","323.5","","","$","159.4","","","","49.3","%"],["Pretax margins","","","15.7","%","","","12.6","%","","","3.1","%","","","24.6","%","","","12.9","%","","","10.1","%","","","2.8","%","","","27.7","%"]]
[[/GREPCENT_TABLE]]

(1)
Not meaningful

Direct premiums and escrow fees were $689.2 million and $1.2 billion for the three and six months ended June 30, 2026, respectively, increases of $88.8 million, or 14.8%, and $186.3 million, or 17.6%, when compared with the respective periods of the prior year. The increases were due to increases in domestic average revenues per order. Domestic average revenues per order closed were $4,572 and $4,412 for the three and six months ended June 30, 2026, increases of 17.3% and 15.2% when compared with $3,897 and $3,831 for the respective periods of the prior year. The increases in the average revenue per order closed were primarily due to an increase in average revenues per order on commercial and purchase transactions, partially offset by a shift in mix to lower premium refinance transactions. The Company’s direct title operations closed 137,300 and 257,200 domestic title orders during the three and six months ended June 30, 2026, a decrease of 0.7% and an increase of 3.5% when compared with 138,324 and 248,576 domestic title orders closed during the respective periods of the prior year, which were generally consistent with the changes in residential mortgage origination activity in the United States as reported in the MBA Forecast. Domestic residential refinance orders closed per day increased by 12.3% and 31.4% and domestic residential purchase orders closed per day decreased by 3.4% and 4.6% for the three and six months ended June 30, 2026, respectively, when compared to the respective periods of the prior year.

Agent premiums were $819.7 million and $1.6 billion for the three and six months ended June 30, 2026, respectively, increases of $103.2 million, or 14.4%, and $208.0 million, or 15.2%, when compared with the respective periods of the prior year. Agent premiums are recorded when notice of issuance is received from the agent, which is generally when cash payment is received by the Company. As a result, there is generally a delay between the agent’s issuance of a title policy and the Company’s recognition of agent premiums. Therefore, current quarter agent premiums typically reflect prior quarter mortgage origination activity. The increase in agent premiums for the three months ended June 30, 2026 is generally consistent with the 21.2% increase in the Company’s direct premiums and escrow fees in the first quarter of 2026 as compared with the first quarter of 2025.

Information and other revenues primarily consist of revenues generated from fees associated with title search and related reports, title and other real property records and images, other non-insured settlement services and risk mitigation products and

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A (excerpt)

Latest 10-K Item 7 source: https://www.sec.gov/Archives/edgar/data/1472787/000119312526055516/faf-20251231.htm
Complete FY 2025 MD&A: /company/FAF/mda/fy2025/

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high
Filing date: 2026-02-18
Report date: 2025-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CERTAIN STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-K ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING STATEMENTS MAY CONTAIN THE WORDS “BELIEVE,” “ANTICIPATE,” “EXPECT,” “PLAN,” “PREDICT,” “ESTIMATE,” “PROJECT,” “WILL BE,” “WILL CONTINUE,” “WILL LIKELY RESULT,” OR OTHER SIMILAR WORDS AND PHRASES.

RISKS AND UNCERTAINTIES EXIST THAT MAY CAUSE RESULTS TO DIFFER MATERIALLY FROM THOSE SET FORTH IN THESE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE THE ANTICIPATED RESULTS TO DIFFER FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS INCLUDE THE FACTORS SET FORTH ON PAGES 4-5 OF THIS ANNUAL REPORT. THE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE TO UPDATE FORWARD-LOOKING STATEMENTS TO REFLECT CIRCUMSTANCES OR EVENTS THAT OCCUR AFTER THE DATE THE FORWARD-LOOKING STATEMENTS ARE MADE.

This Management’s Discussion and Analysis contains the financial measure adjusted debt to capitalization ratio that is not presented in accordance with generally accepted accounting principles (“GAAP”) as it excludes the effects of secured financings payable. The Company is presenting this non-GAAP financial measure because it provides the Company’s management and readers of this Annual Report on Form 10-K with additional insight into the financial leverage of the Company. The Company does not intend for this non-GAAP financial measure to be a substitute for any GAAP financial information. In this Annual Report on Form 10-K, this non-GAAP financial measure has been presented with, and reconciled to, the most directly comparable GAAP financial measure. Readers of this Annual Report on Form 10-K should use this non-GAAP financial measure only in conjunction with the comparable GAAP financial measure. Because not all companies use identical calculations, the presentation of adjusted debt to capitalization ratio may not be comparable to other similarly titled measures of other companies.

Principles of Consolidation

The consolidated financial statements have been prepared in accordance with GAAP and reflect the consolidated operations of the Company. The consolidated financial statements include the accounts of First American Financial Corporation, all controlled subsidiaries and any variable interest entities where the Company is deemed the primary beneficiary. All significant intercompany transactions and balances have been eliminated. Equity investments in which the Company exercises significant influence but does not control and is not the primary beneficiary, are accounted for using the equity method of accounting. Equity investments in which the Company does not exercise significant influence over the investee and without readily determinable fair values, or non-marketable equity securities, are accounted for at cost, less impairment, and are adjusted up or down for any observable price changes.

28

Reportable Segments

The Company consists of the following reportable segments:

•
The title insurance and services segment issues title insurance policies on residential and commercial property in the United States and offers similar or related products and services internationally. This segment also provides closing and/or escrow services; accommodates tax-deferred exchanges of real estate; provides products, services and solutions designed to mitigate risk or otherwise facilitate real estate transactions; maintains, manages and provides access to title plant data and records; provides appraisals and other valuation-related products and services; provides lien release, document custodial and default-related products and services; provides document generation services; provides warehouse lending services; subservices mortgage loans; and provides banking, trust and wealth management services. The Company, through its principal title insurance subsidiary and such subsidiary’s affiliates, transacts its title insurance business through a network of direct operations and agents. Through this network, the Company issues policies in the 49 states that permit the issuance of title insurance policies, the District of Columbia and certain United States territories. The Company also offers title insurance, closing services and similar or related products and services, either directly or through third parties in other countries, including Canada, the United Kingdom, various countries in Europe, South Korea, Australia and New Zealand.

•
The home warranty segment sells products including residential service contracts that cover residential systems, such as heating and air conditioning systems, and certain appliances against failures that occur as the result of normal usage during the coverage period. This business currently operates in 36 states and the District of Columbia.

•
The corporate segment includes investments in venture-stage companies, certain financing facilities and corporate services that support the Company’s business operations.

Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP requires the application of accounting policies that often involve a significant degree of judgment. The Company’s management considers the accounting policies described below to be the most dependent on the application of estimates and assumptions in preparing the Company’s consolidated financial statements. See Note 1 Basis of Presentation and Significant Accounting Policies to the consolidated financial statements for a more detailed description of the Company’s significant accounting policies.

Provision for policy losses

The Company provides for title insurance losses through a charge to expense when the related premium revenue is recognized. The amount charged to expense is generally determined by applying a rate (the loss provision rate) to total title insurance premiums and escrow fees. The Company’s management estimates the loss provision rate at the beginning of each year and reassesses the rate quarterly to ensure that the resulting incurred but not reported (“IBNR”) loss reserve and known claims reserve included in the Company’s consolidated balance sheets together reflect management’s best estimate of the total costs required to settle all IBNR and known claims. If the ending IBNR reserve is not considered adequate, an adjustment is recorded.

The process of assessing the loss provision rate and the resulting IBNR reserve involves an evaluation of the results of an in-house actuarial review. The Company’s in-house actuary performs a reserve analysis utilizing generally accepted actuarial methods that incorporate cumulative historical claims experience and information provided by in-house claims and operations personnel. Current economic and business trends are also contemplated as part of the reserve analysis. These include conditions in the real estate and mortgage markets, changes in residential and commercial real estate values, and changes in the levels of defaults and foreclosures that may affect claims levels and patterns of emergence, as well as any company-specific factors that may be relevant to past and future claims experience. Results from the analysis include, but are not limited to, a range of IBNR reserve estimates and a single point estimate for IBNR as of the balance sheet date.

29

For recent policy years at early stages of development (generally the last four to five years), IBNR is generally estimated using a combination of expected loss rate and multiplicative loss development factor calculations. For more mature policy years, IBNR generally is estimated using multiplicative loss development factor calculations. The expected loss rate method estimates IBNR by applying an expected loss rate to total title insurance premiums and escrow fees and by adjusting for policy year maturity using estimated loss development patterns. Multiplicative loss development factor calculations estimate IBNR by applying factors derived from loss development patterns to losses realized to date. The expected loss rate and loss development patterns are based on historical experience and the relationship of the history to the applicable policy years.

The Company’s management uses the IBNR point estimate from the in-house actuary’s analysis and other relevant information concerning claims, including a range of IBNR reserve estimates, to determine what it considers to be the best estimate of the total amount required for the IBNR reserve.

The volume and timing of title insurance claims are subject to cyclical influences from both the real estate and mortgage markets. Title policies issued to lenders constitute a large portion of the Company’s title insurance volume. These policies insure lenders against losses on mortgage loans due to title defects in the collateral property. Even if an underlying title defect exists that could result in a claim, often the lender must realize an actual loss, or at least be likely to realize an actual loss, for a title insurance liability to exist. As a result, title insurance claims exposure is sensitive to lenders’ losses on mortgage loans and is affected in turn by external factors that affect mortgage loan losses, particularly macroeconomic factors.

A general decline in real estate prices can expose lenders to greater risk of losses on mortgage loans, as loan-to-value ratios increase and defaults and foreclosures increase. Title insurance claims exposure for a given policy year is also affected by the quality of mortgage loan underwriting during the corresponding origination year. The Company believes that the sensitivity of claims to external conditions in the real estate and mortgage markets is an inherent feature of title insurance’s business economics that applies broadly to the title insurance industry.

Title insurance policies are long-duration contracts with the majority of the claims reported to the Company within the first few years following the issuance of the policy. Generally, 65% to 75% of claim amounts become known in the first six years of the policy life, and the majority of IBNR reserves relate to the six most recent policy years. Changes in expected ultimate losses and corresponding loss rates for recent policy years are considered likely and could result in a material adjustment to the IBNR reserves. Based on historical experience, management believes a 50 basis point change to the loss rates for recent policy years, positive or negative, is reasonably likely given the long duration nature of a title insurance policy. In uncertain economic times an even larger change is more likely. As examples, if the expected ultimate losses for each of the last six policy years increased or decreased by 50 basis points, the resulting impact on the Company’s IBNR reserve would be an increase or decrease, as the case may be, of $162.7 million, and if expected ultimate losses for those same years were to fluctuate by 100 basis points, the resulting impact would be $325.4 million. A material change in expected ultimate losses and corresponding loss rates for older policy years is also possible, particularly for policy years with loss ratios exceeding historical norms. The estimates made by management in determining the appropriate level of IBNR reserves could ultimately prove to be materially different from actual claims experience.

The Company provides for claims losses relating to its home warranty business based on the average cost per claim and historical loss experience as applied to the total of current claims incurred. The average cost per home warranty claim is calculated using the average of the most recent 12 months of claims experience adjusted for estimated future increases in costs.

A summary of the Compa

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]

Read the full FY 2025 MD&A: /company/FAF/mda/fy2025/
All MD&A years: /company/FAF/mda/


## MD&A history

Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. Each year's full verbatim text is on its own sub-page.

- [FY 2024 MD&A](/company/FAF/mda/fy2024/): filed 2025-02-21; accession 0000950170-25-024488 (https://www.sec.gov/Archives/edgar/data/1472787/000095017025024488/faf-20241231.htm)
- [FY 2023 MD&A](/company/FAF/mda/fy2023/): filed 2024-02-21; accession 0000950170-24-017418 (https://www.sec.gov/Archives/edgar/data/1472787/000095017024017418/faf-20231231.htm)
- [FY 2022 MD&A](/company/FAF/mda/fy2022/): filed 2023-02-15; accession 0000950170-23-002816 (https://www.sec.gov/Archives/edgar/data/1472787/000095017023002816/faf-20221231.htm)
- [FY 2021 MD&A](/company/FAF/mda/fy2021/): filed 2022-02-17; accession 0001564590-22-005550 (https://www.sec.gov/Archives/edgar/data/1472787/000156459022005550/faf-10k_20211231.htm)




## Macro cross-references

Indicators mapped to this company's SIC classification (industry 6361 Title Insurance) by grepcent's deterministic macro-sector crosswalk. A navigational mapping, not a statistical or causal claim.

- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index

Macro-to-micro threads including this sector: [Money & trade](/thread/money-trade/), [Government finances](/thread/government-finances/), [Sector employment](/thread/sector-employment/).

All macro indicators: /indicators/


## For LLMs & downloads

Markdown twin: /company/FAF.md · JSON record: /company/FAF.json · verified financials: /company/FAF/financials.json / /company/FAF/financials.csv · machine TOC for the whole site: /llms.txt