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FAF Q4 Earnings Top, Revenues Rise Y/Y on Strong Title Segment
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Key Takeaways
FAF posted Q4 EPS of $1.99, up 47%, as revenues rose 22% to $2B and beat estimates.
First American's Title segment revenues grew 21%, with margin up 220 bps to 14%.
FAF's full-year EPS rose 37.5% to $6.05; dividend raised 2% and $122M shares repurchased.
First American Financial Corporation (FAF - Free Report) reported fourth-quarter 2025 operating earnings of $1.99 per share, which beat the Zacks Consensus Estimate by 33.6% and rose 47.4% year over year.
Operating revenues climbed 22% to $2 billion, driven by growth in direct premiums, escrow fees, and Information and other revenues. The top line surpassed the consensus estimate by 10%.
The quarterly results were supported by higher premiums, stronger net investment income, expanded pretax margin and a lower claim loss rate. These gains were partly offset by elevated operating expenses.
First American Financial Corporation Price, Consensus and EPS Surprise
Direct premiums and escrow fees reached $789.4 million, marking a 17.3% increase from the prior-year level. The figure exceeded the Zacks Consensus Estimate by 11.4% and our model estimate by 11.3%.
Investment income totaled $161.8 million in the fourth quarter, up 3.1% year over year, beating our estimate of $155.7 million and the Zacks Consensus Estimate of $157.3 million.
Expenses increased 7% to $1.8 billion, caused by higher personnel costs, other operating expenses and interest. The figure exceeded our estimate of $1.6 billion.
FAF’s Segmental Results
Title Insurance and Services: Total revenues rose 21% year over year to $1.9 billion, which beat the Zacks Consensus Estimate of $1.7 billion. This was driven by higher direct and agent premiums, escrow fees, information and other revenues, and steady net investment income. Investment income increased 1% to $157 million, supported by higher portfolio interest income, partly offset by lower operating cash balances and reduced short-term rates.
Adjusted pretax margin expanded 220 bps to 14%. Title open orders grew 13.8% to 167,400, closed orders rose 14.2% to 141,500, and average revenue per direct title order increased 3.5% to $4,350, reflecting a 22% jump in commercial order revenues. This was partly offset by a mix shift toward lower-premium refinance and default transactions.
Home Warranty: Total revenues rose 7.3% to $110.3 million, surpassing our model estimate of $109.8 million. Pretax income climbed 25.3% year over year to $23.3 million. The claim loss rate improved to 40.1%, driven by lower claim frequency from favorable weather, partly offset by higher severity. Pretax margin expanded 300 bps to 21.1%.
Corporate: The Corporate segment reported a net pretax loss of $24 million, narrowing from a $45 million loss in the year-ago quarter. This year-over-year improvement was partly driven by a $15 million insurance recovery in the reported quarter.
Full-Year Highlights
Full-year 2025 adjusted income of $6.05 per share increased 37.5% year over year. The figure beat the Zacks Consensus Estimate by 8.8%.
Total revenues increased 21.6% year over year to $7.5 billion. The metric beat the Zacks Consensus Estimate by 2.4%.
FAF’s Financial Update
First American exited 2025 with cash and cash equivalents of $1.4 billion, down 19.3% year over year.
Notes and contracts payable were $1.5 billion, down 0.1%.
Stockholders’ equity was $5.5 billion at the end of 2025, up 12% from the 2024-end level. The debt-to-capital ratio was 30.7.
Cash flow from operations was $951 million, up 6% year over year.
Capital Deployment
The board of directors raised the dividend by 2% to an annual rate of $2.20 per share in 2025. FAF repurchased 2.1 million shares for $122 million in 2025 at an average price of $58.54 per share.
Chubb Limited (CB - Free Report) reported fourth-quarter 2025 core operating income of $7.52 per share, which beat the Zacks Consensus Estimate by 13.9%. The bottom line improved 24.9% year over year.
CB’s operating revenues improved 7.4% year over year to $15.3 billion. The top line beat the Zacks Consensus Estimate by 1.7%. Chubb’s strong performance was driven by solid underwriting profit, robust premium growth, and record investment income.
Arch Capital Group Ltd. (ACGL - Free Report) reported fourth-quarter 2025 operating income of $2.98 per share, which beat the Zacks Consensus Estimate by 19.7%. The bottom line increased 31.9% year over year.
ACGL’s operating revenues of $4.7 billion increased 4.4% year over year, driven by higher net premiums earned and net investment income. Revenues surpassed the Zacks Consensus Estimate by 2% on higher premiums in its insurance segment and improved net investment income. These positives were partially offset by higher taxes.
The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2025 earnings per share of $4.67 beat the Zacks Consensus Estimate by 5.2%. The bottom line increased 14.4% year over year.
PGR’s operating revenues increased 10.6% year over year to $22.49 billion and beat the consensus estimate by 2.5%. Net premiums earned grew 10% to $21 billion. The reported figure surpassed the Zacks Consensus Estimate of $20.9 billion.
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FAF Q4 Earnings Top, Revenues Rise Y/Y on Strong Title Segment
Key Takeaways
First American Financial Corporation (FAF - Free Report) reported fourth-quarter 2025 operating earnings of $1.99 per share, which beat the Zacks Consensus Estimate by 33.6% and rose 47.4% year over year.
Operating revenues climbed 22% to $2 billion, driven by growth in direct premiums, escrow fees, and Information and other revenues. The top line surpassed the consensus estimate by 10%.
The quarterly results were supported by higher premiums, stronger net investment income, expanded pretax margin and a lower claim loss rate. These gains were partly offset by elevated operating expenses.
First American Financial Corporation Price, Consensus and EPS Surprise
First American Financial Corporation price-consensus-eps-surprise-chart | First American Financial Corporation Quote
What’s Behind the Headlines for FAF?
Direct premiums and escrow fees reached $789.4 million, marking a 17.3% increase from the prior-year level. The figure exceeded the Zacks Consensus Estimate by 11.4% and our model estimate by 11.3%.
Investment income totaled $161.8 million in the fourth quarter, up 3.1% year over year, beating our estimate of $155.7 million and the Zacks Consensus Estimate of $157.3 million.
Expenses increased 7% to $1.8 billion, caused by higher personnel costs, other operating expenses and interest. The figure exceeded our estimate of $1.6 billion.
FAF’s Segmental Results
Title Insurance and Services: Total revenues rose 21% year over year to $1.9 billion, which beat the Zacks Consensus Estimate of $1.7 billion. This was driven by higher direct and agent premiums, escrow fees, information and other revenues, and steady net investment income. Investment income increased 1% to $157 million, supported by higher portfolio interest income, partly offset by lower operating cash balances and reduced short-term rates.
Adjusted pretax margin expanded 220 bps to 14%. Title open orders grew 13.8% to 167,400, closed orders rose 14.2% to 141,500, and average revenue per direct title order increased 3.5% to $4,350, reflecting a 22% jump in commercial order revenues. This was partly offset by a mix shift toward lower-premium refinance and default transactions.
Home Warranty: Total revenues rose 7.3% to $110.3 million, surpassing our model estimate of $109.8 million. Pretax income climbed 25.3% year over year to $23.3 million. The claim loss rate improved to 40.1%, driven by lower claim frequency from favorable weather, partly offset by higher severity. Pretax margin expanded 300 bps to 21.1%.
Corporate: The Corporate segment reported a net pretax loss of $24 million, narrowing from a $45 million loss in the year-ago quarter. This year-over-year improvement was partly driven by a $15 million insurance recovery in the reported quarter.
Full-Year Highlights
Full-year 2025 adjusted income of $6.05 per share increased 37.5% year over year. The figure beat the Zacks Consensus Estimate by 8.8%.
Total revenues increased 21.6% year over year to $7.5 billion. The metric beat the Zacks Consensus Estimate by 2.4%.
FAF’s Financial Update
First American exited 2025 with cash and cash equivalents of $1.4 billion, down 19.3% year over year.
Notes and contracts payable were $1.5 billion, down 0.1%.
Stockholders’ equity was $5.5 billion at the end of 2025, up 12% from the 2024-end level. The debt-to-capital ratio was 30.7.
Cash flow from operations was $951 million, up 6% year over year.
Capital Deployment
The board of directors raised the dividend by 2% to an annual rate of $2.20 per share in 2025. FAF repurchased 2.1 million shares for $122 million in 2025 at an average price of $58.54 per share.
Zacks Rank
FAF currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Chubb Limited (CB - Free Report) reported fourth-quarter 2025 core operating income of $7.52 per share, which beat the Zacks Consensus Estimate by 13.9%. The bottom line improved 24.9% year over year.
CB’s operating revenues improved 7.4% year over year to $15.3 billion. The top line beat the Zacks Consensus Estimate by 1.7%. Chubb’s strong performance was driven by solid underwriting profit, robust premium growth, and record investment income.
Arch Capital Group Ltd. (ACGL - Free Report) reported fourth-quarter 2025 operating income of $2.98 per share, which beat the Zacks Consensus Estimate by 19.7%. The bottom line increased 31.9% year over year.
ACGL’s operating revenues of $4.7 billion increased 4.4% year over year, driven by higher net premiums earned and net investment income. Revenues surpassed the Zacks Consensus Estimate by 2% on higher premiums in its insurance segment and improved net investment income. These positives were partially offset by higher taxes.
The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2025 earnings per share of $4.67 beat the Zacks Consensus Estimate by 5.2%. The bottom line increased 14.4% year over year.
PGR’s operating revenues increased 10.6% year over year to $22.49 billion and beat the consensus estimate by 2.5%. Net premiums earned grew 10% to $21 billion. The reported figure surpassed the Zacks Consensus Estimate of $20.9 billion.