First American Corporation (New) · NYSE:FAF

First American Corporation (New) — The First American — Q3 2009 Earnings Presentation

29 slides from First American Corporation (New)'s earnings presentation, Oct 29, 2009

  1. Slide 1: Third Quarter 2009 Earnings

    Third Quarter 2009 Earnings The First American Corporation October 29, 2009

  2. Slide 2: Safe Harbor Statement

    Safe Harbor Statement Certain statements made in this presentation, including but not limited to those relating to new sales commitments, potential closings and a strong sales pipeline for the Information Solutions Group; opportunities created by the acquisition of BasePoint Analytics, including the

  3. Slide 3: Use of Non-GAAP Financial Measures

    Use of Non-GAAP Financial Measures This slide presentation contains certain financial measures that are not presented in accordance with generally accepted accounting principles (GAAP), including adjusted pretax income, EBITDA and adjusted EBITDA. Adjusted pretax income and adjusted EBITDA are adjus

  4. Slide 4: Consolidated Earnings Summary

    Consolidated Earnings Summary ($ in millions, except per share data) Q3 2009 Q3 2008 Q3 2009 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Revenues: Direct $ 1,059.4 $ 1,152.8 $ 1,020.9 $ 943.4 $ 1,076.1 (1.6)% (8.1)% Agent 450.8 351.0 298.3 360.4 437.0 3.2% 28.4% $ 1,510.2 $ 1,5

  5. Slide 5: Information Solutions Group Financial Highlights

    Information Solutions Group Financial Highlights (a) ƒ Total revenues were $526.3 million, an increase of 5.1% compared with the third quarter of 2008 ƒ Pretax earnings were $83.5 million, an increase of 23.0% compared with the third quarter of 2008 ƒ Controllable expenses (b) were $282.4 million, a

  6. Slide 6: Information Solutions Group Earnings

    Information Solutions Group Earnings ($ in thousands) Q3 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Operating revenue $ 502,943 $ 544,569 $ 519,601 $ 474,197 $ 489,008 2.8% (7.6)% Investment 23,342 26,161 22,523 14,401 11,837 97.2% (10.8)% Total revenues $

  7. Slide 7: Information Solutions Group Earnings

    Information Solutions Group Earnings ($ in thousands) Q3 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Pretax income $ 83,532 $ 115,267 $ 102,097 $ 45,500 $ 67,908 23.0% (27.5)% - Net realized investment gains (losses) 1,021 1,569 (598) (318) (3,936) + Employ

  8. Slide 8: Information Solutions Group Key Business Metrics

    Information Solutions Group Key Business Metrics ($ in thousands) Q3 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Loans under tax service (a) 31,287 31,250 29,257 29,698 28,737 8.9% 0.1% Flood certifications (b) 1,852 2,500 2,322 1,724 1,957 (5.4)% (25.9)% B

  9. Slide 9: Information Solutions Group Operational Highlights

    Information Solutions Group Operational Highlights ƒ Sales activities – New sales commitments in the quarter representing $33 million in annual revenue – Continued market share gains in many key lines of business – Enhanced “Go-to-market” strategy ƒ New products and markets – Introduction of Encore,

  10. Slide 10: Financial Services Q3 Summary

    Financial Services Q3 Summary ƒ GAAP title insurance pretax margin: 5.9% ƒ Adjusted title insurance pretax margin: 4.9% (a) ƒ Ultimate loss ratio for policy year 2009 lowered from 6.5% to 6.0%, due to improved claims experience ƒ Fee per file: $1,423 (up 9% from Q2) Opened Orders / Day Closed Orders

  11. Slide 11: Financial Services Group Earnings

    Financial Services Group Earnings ($ in thousands) Q3 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Operating revenue $ 1,034,635 $ 988,842 $ 826,168 $ 858,293 $ 1,055,452 (2.0)% 4.6% Investment 33,449 10,903 36,042 37,441 (4,838) NM NM Total revenues $ 1,068

  12. Slide 12: Title Insurance Results

    Title Insurance Results ($ in millions) Q3 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Revenues: Direct $ 515.5 $ 570.4 $ 460.8 $ 427.8 $ 546.5 (5.7)% (9.6)% Agent 450.9 351.1 298.3 360.4 436.9 3.2% 28.4% $ 966.4 $ 921.5 $ 759.1 $ 788.2 $ 983.4 (1.7)% 4.9%

  13. Slide 13: Liquidity Summary

    Liquidity Summary ($ in millions) Target sources of holding company cash for remainder of 2009 Cash at holding company (as of 9/30/09) $ 113 Dividends and distributions from subsidiaries 96 Total sources $ 209 Expected uses of holding company cash for remainder of 2009 Principal and interest payment

  14. Slide 14: Dividend Policy

    Dividend Policy ƒ Pre-spin: – Current $82 million / year dividend expected to continue until spin-off ƒ Post-spin expected dividend policy: – Financial Services: $24 million / year – Information Solutions: No dividend 14

  15. Slide 15: Minority Interest Update

    Minority Interest Update ƒ FADV exchange offer projected to close November 10, 2009 (Issuance of approximately $300 million of FAF common equity – including $69 million to Experian) ƒ Buy-out of Experian interest in FARES joint venture: – D Value Consideration – D DataTree / DataTrace buyout $48 mil

  16. Slide 16: Spin-off Timing and Next Steps

    Spin-off Timing and Next Steps Milestone Timing ƒ Tax free ruling submission November ƒ Form 10 / Investor Call Early December ƒ Investor Day March ƒ Targeted Completion Date April 1st 16

  17. Slide 17: Appendix

    17 Appendix YEARS OF SERVICE

  18. Slide 18: Information and Outsourcing Solutions Results

    Information and Outsourcing Solutions Results ($ in thousands) Q3 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Tax and flood $ 82,861 $ 90,065 $ 82,298 $ 63,007 $ 73,246 13.1% (8.0)% Collateral valuation 79,926 98,556 65,135 46,147 46,610 71.5% (18.9)% Defau

  19. Slide 19: Data and Analytic Solutions Results

    Data and Analytic Solutions Results ($ in thousands) Q3 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Property data and analytics $ 99,725 $ 106,308 $ 108,276 $ 105,018 $ 105,228 (5.2)% (6.2)% Other real estate products 17,718 18,757 18,047 19,096 18,677 (5.1

  20. Slide 20: Risk Mitigation and Business Solutions Results

    Risk Mitigation and Business Solutions Results ($ in thousands) Q3 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Total revenues (a) $ 170,154 $ 178,079 $ 203,231 $ 193,990 $ 188,453 (9.7)% (4.5)% Adj. pretax income (b) $ 19,593 $ 21,809 $ 18,721 $ 20,322 $ 25

  21. Slide 21: Information Solutions Group Operational and Financial Highlights

    Information Solutions Group Operational and Financial Highlights Total Revenues Controllable Expenses (a) Q3 year-over-year increase of 5.1% Q3 year-over-year decrease of 3.9% Q3 sequential decrease of 7.8% Q3 sequential increase of 1.8% ƒ Strong origination and default markets fueled ƒ Domestic hea

  22. Slide 22: Information Solutions Group Operational and Financial Highlights

    Information Solutions Group Operational and Financial Highlights ($ in millions) $600 28% $500 26% $400 24% $300 22% $200 20% $100 18% $0 16% Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Domestic Headcount 8,000 7,600 7,600 7,700 7,700 Total Revenue Controllable Expenses Pretax Income EBITDA Margin 22 Note: See re

  23. Slide 23: Title Insurance Results

    Title Insurance Results ƒ National Commercial Services (a) generated revenue of $52.4 million in the third quarter, a 33.9% decrease over prior year ($ in millions) Q3 2009 Q3 2009 Q3 2008 Q2 2009 National Commercial Services Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Total revenues $

  24. Slide 24: Reconciliation of Segment Results

    Reconciliation of Segment Results Q3 2009 Q3 2009 ($ in thousands) Q3 2008 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Consolidated GAAP investment income $ 55,301 $ 33,582 $ 58,644 $ 46,854 $ 5,897 NM 64.7% - Net realized investment gains (losses) 5,106 (21,760) 1,030 (3,081)

  25. Slide 25: Reconciliation of Segment Results

    Reconciliation of Segment Results ($ in thousands) Q3 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Information Solutions GAAP total revenues $ 526,285 $ 570,730 $ 542,124 $ 488,598 $ 500,845 5.1% (7.8)% - Net realized investment gains (losses) 1,021 1,569 (5

  26. Slide 26: Reconciliation of Segment Results

    Reconciliation of Segment Results ($ in thousands) Q3 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Information and Outsourcing Solutions GAAP total revenues $ 227,660 $ 255,139 $ 203,245 $ 161,017 $ 181,845 25.2% (10.8)% - Net realized investment (losses) ga

  27. Slide 27: Reconciliation of Segment Results

    Reconciliation of Segment Results ($ in thousands) Q3 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Data & Analytic Solutions GAAP total revenues $ 129,317 $ 137,625 $ 135,690 $ 133,634 $ 130,936 (1.2)% (6.0)% - Net realized investment gains (losses) 1,993 2,

  28. Slide 28: Reconciliation of Segment Results

    Reconciliation of Segment Results ($ in thousands) Q3 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Risk Mitigation & Business Solutions GAAP total revenues $ 169,309 $ 177,966 $ 203,189 $ 193,947 $ 188,063 (10.0)% (4.9)% - Net realized investment losses (845

  29. Slide 29: Reconciliation of Segment Results

    Reconciliation of Segment Results ($ in thousands) Q3 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Variance Variance Title Insurance GAAP investment income (loss) $ 30,645 $ 13,851 $ 32,918 $ 35,125 $ (5,579) NM NM - Net realized investment gains (losses) 5,474 (15,525) 1,490

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