First American Financial Corporation FAF reported fourth-quarter 2024 operating income per share of 1.35, which beat the Zacks Consensus Estimate by 26%. The bottom line increased 95.6% year over year.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Total revenues of $1.7 billion increased 18% year over year due to higher direct premiums and escrow fees, agent premiums, information and other, net investment income. The top line beat the Zacks Consensus Estimate by 2.7%.
The insurer’s mixed results reflect solid performances in the Title Insurance and Services segment and improved net investment income, partially offset by higher expenses and soft performances in the Home Warranty 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
Investment income was $156.6 million, up 6.8% year over year. The metric beat the Zacks Consensus Estimate by 4.7%. Our estimate was $158.4 million.
Expenses increased 14% to $1.6 billion due to higher personnel costs, premiums retained by agents, provision for policy losses and other claims, depreciation and amortization, premium taxes and interest. It came in higher than our estimate of $1.5 billion.
Segment Results
Title Insurance and Services: Adjusted total revenues increased 23.2% year over year to $1.7 billion. The increase was due to higher direct premiums and escrow fees, agent premiums, Information and other, net investment income. Adjusted pretax margin expanded 430 basis points (bps) year over year to 11.8%.
Title open orders per day increased 14.8%. Title closed orders per day rose 19%. Average revenue per direct title order rose to $4,343, due to the impact of a 39% increase in the average revenue per order for commercial transactions. It was partly offset by a shift in the closed order mix to lower-premium refinance transactions from higher-premium commercial transactions.
Home Warranty: Adjusted total revenues declined 2% to $102.9 million in the fourth quarter due to lower direct premiums and escrow fees, information and other and net investment income.
Pretax income of $19 million increased 26.7% year over year. The claim loss rate was 43.7% in the fourth quarter, expanding 10 bps, primarily due to higher claim frequency, partly offset by lower claim severity. Adjusted pretax margin was 18.2%, down 170 bps year over year.
Corporate: Net investment income was $0.4 million in the fourth quarter. The segment reported a net pretax loss of $45 million in the reported quarter, wider than the year-ago period’s loss of $36 million.
Full-Year Highlights
Full-year 2024 adjusted income of $4.40 per share increased 15.7% year over year, which beat the Zacks Consensus Estimate by 7.3%.
Total revenues increased 2% year over year in 2024 to $6.1 billion. The metric beat the Zacks Consensus Estimate by 0.6%.
Financial Update
First American exited the fourth quarter with cash and cash equivalents of $1.7 billion, which decreased 52.3% from 2023-end.
Notes and contracts payable were $1.5 billion, up 10.9% from 2023-end.
Stockholders’ equity was $4.9 billion, up 1.2% from 2023-end. The debt-to-capital ratio was 30.8%.
Capital Deployment
The board of directors increased dividend by 2% to an annual rate of $2.16 per share. FAF bought back shares worth $8 million in the fourth quarter of 2024. In 2025, through Feb. 11, FAF repurchased for a total of $11 million.
Zacks Rank
FAF currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Property and Casualty Insurers
AXIS Capital Holdings Limited AXS posted fourth-quarter 2024 operating income of $2.97 per share, which beat the Zacks Consensus Estimate by 10.8%. The bottom line increased 1% year over year. Total operating revenues of $1.6 billion missed the Zacks Consensus Estimate by 2.8%. The top line rose 6.7% year over year on higher net investment income and higher premiums earned. Net premiums written increased 14% to $1.2 billion, attributable to a 9% increase in the Insurance segment and a 64% surge in the Reinsurance segment.
Net investment income increased 5% year over year to $195.8 million, driven by income from fixed maturities portfolio due to increased yields, partially offset by lower returns on alternative investments. The Zacks Consensus Estimate was pegged at $190 million. Our estimate was $188.7 million. Total expenses in the quarter under review increased 38.4% year over year to $1.2 billion. Our estimate was pegged at $1.3 billion. Catastrophe and weather-related losses and net of reinsurance were $64 million, attributable to Hurricane Helene and other weather-related events.
NMI Holdings Inc. NMIH reported fourth-quarter 2024 operating net income per share of $1.07, which missed the Zacks Consensus Estimate by 3.6%. The bottom line increased 5.9% year over year. NMI Holdings’ total operating revenues of $167 million increased 10.6% year over year on higher net premiums earned (up 8%) and net investment income (up 25%). Revenues, however, missed the Zacks Consensus Estimate by 1.7%. Primary insurance in force increased 7% to $210.2 billion.
Annual persistency was 84.6%, down 150 basis points (bps) year over year. New insurance written was $11.9 billion, up 34% year over year. Underwriting and operating expenses totaled $31.1 million, up 5% year over year. Insurance claims and claim expenses were $17.3 million, up 110% year over year. The loss ratio of 12% deteriorated 580 bps year over year. Expense ratio improved 70 bps year over year while the combined ratio of 34 deteriorated 580 bps year over year.
American Financial Group, Inc. AFG reported fourth-quarter 2024 net operating earnings per share of $3.12, which missed the Zacks Consensus Estimate by 2.5%. The bottom line increased 9.9% year over year. Total revenues of $2.1 billion increased 7.2% year over year. The growth came on the back of higher P&C insurance net earned premiums and net investment income. The top line beat the Zacks Consensus Estimate by 3.5%.
Net investment income climbed 22% year over year to $194 million in the quarter under review. The figure was higher than our estimate of $166.9 million and beat the Zacks Consensus Estimate of $188 million. Total cost and expenses increased 4.6% year over year to $1.8 billion due to higher P&C insurance losses and expenses. Our estimate was also $1.8 billion.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
