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First American Financial (FAF) Q4 Earnings and Revenues Beat
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First American Financial Corporation (FAF - Free Report) reported fourth-quarter 2021 operating income per share of $2.28, which beat the Zacks Consensus Estimate by 30.3%. Also, the bottom line improved 8% year over year.
The company’s results reflect improved revenues in Title Insurance and Services segment, partially offset by soft performances in the Specialty Insurance segment.
First American Financial Corporation Price, Consensus and EPS Surprise
Operating revenues of $2.4 billion increased 10.3% year over year on the back of higher agent premiums, direct premiums and escrow fees and information and other revenues. The top line beat the Zacks Consensus Estimate by 24.2%.
Net investment income decreased 9.2% to $59 million.
The total expense of $2 billion increased 15.3% year over year due to higher personnel costs, premiums retained by agents, other operating expenses, depreciation and amortization, premium taxes and interest.
Segment Results
Title Insurance and Services: Total revenues, excluding net investment gains, increased 14.9% year over year to $2.2 billion. The upside was driven by improved direct premium and escrow fees, increased agent premiums as well as higher information and other revenues.
Pretax margin, excluding net investment gains, contracted 140 basis points year over year to 15.3%.
Title open orders decreased 25.7% to 263,500 while Title closed orders decreased 18.9% to 239,300.
The average revenue per direct title order increased to $3,339, primarily attributable to an increase in the average deal size in commercial business and the impact of strong home price appreciation on residential purchase transactions. Also, the shift in the order mix from lower-premium residential refinance transactions to higher-premium commercial and purchase transactions impacted the average revenue per order.
Specialty Insurance: Total revenues, excluding net investment gains, decreased 14.7% year over year to $116 million, primarily due to lower direct premiums and escrow fees.
Pretax margin, excluding net investment gains, was 6%, contracted 1020 basis points year over year.
Full-Year Highlights
Full-year 2021 adjusted income of $8.17 per share beat the Zacks Consensus Estimate of $7.61. The bottom line increased 50% year over year.
Total revenues increased 30.1% from the year-ago quarter to $9.2 billion and beat the consensus estimate of $8.7 billion.
Financial Update
First American exited the quarter with cash and cash equivalents of $1.2 billion, down 3.7% from 2020 end. Notes and contracts payable were $1.6 billion, up 63%.
Stockholders’ equity was $5.7 billion, up 17.4% from 2020 end.
Cash flow from operations was $1.2 billion, up 12% year over year.
Return on equity was a record 23.2%, expanded 830 basis points year over year. The debt-to-capital ratio was 27.4.
Share Repurchase and Dividend Update
The company bought back shares worth $99 million in 2021. It also raised its dividend by 11% in 2021 to an annual rate of $2.04 per share.
Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies (TRV - Free Report) , RenaissanceRe Holdings Ltd. (RNR - Free Report) and The Progressive Corporation (PGR - Free Report) beat the Zacks Consensus Estimate for earnings.
Travelers’ core income of $5.20 per share surpassed the Zacks Consensus Estimate of $3.86 and increased 6% year over year. Total revenues rose 7% to about $9 billion and beat the Zacks Consensus Estimate of $8.7 billion.
Travelers’ net written premiums increased 10% year over year to a record $8 billion. The combined ratio deteriorated 130 bps year over year to 88.
RenaissanceRe’s operating earnings per share of $4.71 surpassed the Zacks Consensus Estimate by 27% and rebounded from the year-ago loss of $1.59 per share. Total revenues of $1.39 billion dipped 0.1% year over year.
RenaissanceRe’s gross premiums written surged 40.4% year over year to $1.3 billion. The combined ratio improved 3530 bps year over year to 79.4.
Progressive’s earnings per share of $1.05 beat the Zacks Consensus Estimate of 99 cents but declined 43.2% from the year-ago quarter.
Progressive’s net premiums written were $10.7 billion in the quarter, up 13% from $9.5 billion a year ago. The combined ratio deteriorated 630 bps from the prior-year quarter to 94.7.
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First American Financial (FAF) Q4 Earnings and Revenues Beat
First American Financial Corporation (FAF - Free Report) reported fourth-quarter 2021 operating income per share of $2.28, which beat the Zacks Consensus Estimate by 30.3%. Also, the bottom line improved 8% year over year.
The company’s results reflect improved revenues in Title Insurance and Services segment, partially offset by soft performances in the Specialty Insurance segment.
First American Financial Corporation Price, Consensus and EPS Surprise
First American Financial Corporation price-consensus-eps-surprise-chart | First American Financial Corporation Quote
Behind the Headlines
Operating revenues of $2.4 billion increased 10.3% year over year on the back of higher agent premiums, direct premiums and escrow fees and information and other revenues. The top line beat the Zacks Consensus Estimate by 24.2%.
Net investment income decreased 9.2% to $59 million.
The total expense of $2 billion increased 15.3% year over year due to higher personnel costs, premiums retained by agents, other operating expenses, depreciation and amortization, premium taxes and interest.
Segment Results
Title Insurance and Services: Total revenues, excluding net investment gains, increased 14.9% year over year to $2.2 billion. The upside was driven by improved direct premium and escrow fees, increased agent premiums as well as higher information and other revenues.
Pretax margin, excluding net investment gains, contracted 140 basis points year over year to 15.3%.
Title open orders decreased 25.7% to 263,500 while Title closed orders decreased 18.9% to 239,300.
The average revenue per direct title order increased to $3,339, primarily attributable to an increase in the average deal size in commercial business and the impact of strong home price appreciation on residential purchase transactions. Also, the shift in the order mix from lower-premium residential refinance transactions to higher-premium commercial and purchase transactions impacted the average revenue per order.
Specialty Insurance: Total revenues, excluding net investment gains, decreased 14.7% year over year to $116 million, primarily due to lower direct premiums and escrow fees.
Pretax margin, excluding net investment gains, was 6%, contracted 1020 basis points year over year.
Full-Year Highlights
Full-year 2021 adjusted income of $8.17 per share beat the Zacks Consensus Estimate of $7.61. The bottom line increased 50% year over year.
Total revenues increased 30.1% from the year-ago quarter to $9.2 billion and beat the consensus estimate of $8.7 billion.
Financial Update
First American exited the quarter with cash and cash equivalents of $1.2 billion, down 3.7% from 2020 end. Notes and contracts payable were $1.6 billion, up 63%.
Stockholders’ equity was $5.7 billion, up 17.4% from 2020 end.
Cash flow from operations was $1.2 billion, up 12% year over year.
Return on equity was a record 23.2%, expanded 830 basis points year over year. The debt-to-capital ratio was 27.4.
Share Repurchase and Dividend Update
The company bought back shares worth $99 million in 2021. It also raised its dividend by 11% in 2021 to an annual rate of $2.04 per share.
Zacks Rank
First American currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other P&C Insurers
Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies (TRV - Free Report) , RenaissanceRe Holdings Ltd. (RNR - Free Report) and The Progressive Corporation (PGR - Free Report) beat the Zacks Consensus Estimate for earnings.
Travelers’ core income of $5.20 per share surpassed the Zacks Consensus Estimate of $3.86 and increased 6% year over year. Total revenues rose 7% to about $9 billion and beat the Zacks Consensus Estimate of $8.7 billion.
Travelers’ net written premiums increased 10% year over year to a record $8 billion. The combined ratio deteriorated 130 bps year over year to 88.
RenaissanceRe’s operating earnings per share of $4.71 surpassed the Zacks Consensus Estimate by 27% and rebounded from the year-ago loss of $1.59 per share. Total revenues of $1.39 billion dipped 0.1% year over year.
RenaissanceRe’s gross premiums written surged 40.4% year over year to $1.3 billion. The combined ratio improved 3530 bps year over year to 79.4.
Progressive’s earnings per share of $1.05 beat the Zacks Consensus Estimate of 99 cents but declined 43.2% from the year-ago quarter.
Progressive’s net premiums written were $10.7 billion in the quarter, up 13% from $9.5 billion a year ago. The combined ratio deteriorated 630 bps from the prior-year quarter to 94.7.