First American Financial (FAF) Q4 2024 earnings summary

Executive summary

• 2024 was challenging for the industry, with low residential purchase and refinance activity due to high mortgage rates and low inventory, but commercial business surged late in the year.

• Fourth quarter 2024 revenue rose 18% year-over-year to $1.7 billion; adjusted revenue up 20%.

• Strategic investments and expense management, especially in IT, supported operational efficiency.

• Adjusted pre-tax title margin for the year was 10.3%, with Q4 margin at 11.8%.

• Full-year 2024 revenue increased 2% to $6.1 billion; adjusted revenue up 5%.

Financial highlights

• Q4 GAAP earnings were $0.69 per diluted share; adjusted earnings were $1.35 per diluted share, excluding net investment losses and purchase-related amortization.

• Title segment revenue reached $1.6 billion, up 22% year-over-year; commercial revenue grew 47% to $252 million.

• Investment income in Q4 was $155 million, exceeding expectations and up $23 million year-over-year.

• Home warranty revenue grew 4% to $103 million, with an adjusted pre-tax margin of 18.2%.

• Net investment losses were $86 million in Q4 and $402 million for the year, mainly from portfolio rebalancing.

Outlook and guidance

• Expect modest improvement in residential purchase and refinance in 2025, with early signs of growth: purchase orders up 1% and refinance orders up 43% for the four weeks ending February 7, year-over-year.

• Commercial business anticipated to have a strong first half in 2025, following a 33% increase in the second half of 2024.

• Investment income projected to grow year-over-year in 2025, despite a $45 million headwind from Fed rate cuts, due to portfolio rebalancing and business growth.

• Margins expected to improve in 2025, with at least a 50 basis point lift from portfolio rebalancing and potential further gains from cost control and investment income.

• Company projects another year of earnings improvement as the real estate cycle turns.